Exhibit 6
EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
This EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered
into by and among Make Your Move, Inc., a Nevada corporation, and its assignees
("Purchaser"), and ▇▇▇▇ ▇▇▇ Ban, an unmarried woman ("Seller"), with reference
to the following facts:
A. Allpaq Technologies Corporation, a California corporation is engaged in
the business of TN, STN and TFT LCD Technology, designing and manufacturing
computers, computer Liquid Crystal Display (LCD) monitors, Game Board Systems,
MP3 Players and LCD panels, and providing other original equipment manufacturers
services under the Allpaq trade name and ▇▇▇▇. LCD Displays are frequently used
in electronic computer games.
B. Seller is the owner of one hundred thousand (100,000) shares of
one-tenth of one cent ($.001) par value common stock of the described
corporation representing all the issued and outstanding capital stock of the
described corporation.
C. Seller wishes to sell, and Purchaser wishes to acquire, all of the
capital stock of the described corporation, on the terms and subject to the
conditions hereinafter set forth.
Based upon the foregoing, and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows.
1. DEFINITIONS . In addition to the terms defined elsewhere in this
Agreement, as used in this Agreement, the following terms shall have the
following meanings:
1.1 "Aboveground Storage Tanks" and "Underground Storage Tanks" shall
have the meaning given them in Section 6901 et seq., as amended, of RCRA,
or any applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Aboveground Storage Tanks or
Underground Storage Tanks.
1.2 "Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, as in effect on the date hereof.
1.3 "Assets" means all of the assets and properties of Corporation,
including, without limitation, all assets and properties necessary for the
conduct of the Business in the manner in which and to the extent to which
such business is currently being conducted and include, without limitation,
all tangible and intangible assets owned by Corporation including all
vehicles, equipment and inventory and all Contracts, customer lists,
intellectual property, cash and accounts receivable and all other
facilities whether contemplated or under development, and licenses and
permits of Corporation.
1.4 "Business" means the business of TN, STN and TFT LCD Technology,
designing and manufacturing computers, computer Liquid Crystal Display
(LCD) monitors, Game Board Systems, MP3 Players and LCD panels, and
providing other original equipment manufacturers services under the Allpaq
trade name and ▇▇▇▇.
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1.5 "Charter Documents" means the Articles of Incorporation, Bylaws,
restrictive stock agreements of Corporation, including all amendments
thereto.
1.6 "Closing" means the closing of the transactions under this
Agreement.
1.7 "Code" means the Internal Revenue Code of 1986, as amended.
1.8 "Contract" means any indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust, commitment,
obligation or other contract, agreement or instrument, whether written or
oral.
1.9 "Corporation" means Allpaq Technologies Corporation, a California
corporation, and its subsidiaries, collectively.
1.10 "Corporation Shares" means the one hundred thousand (100,000)
shares of one-tenth of one cent ($.001) par value stock of Corporation
collectively owned by Seller.
1.11 "Environmental, Health and Safety Laws" means all federal, state,
regional or local statutes, laws, rules, regulations, codes, orders, plans,
injunctions, decrees, rulings, and changes or ordinances or judicial or
administrative interpretations thereof, whether currently in existence or
hereafter enacted or promulgated, any of which govern (or purport to
govern) or relate to pollution, protection of the environment, public
health and safety, air emissions, water discharges, hazardous or toxic
substances, solid or hazardous waste or occupational health and safety, as
any of these terms are or may be defined in such statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations
thereof, including, without limitation, the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and
subsequent Hazardous and Solid Waste Amendments of 1984 (collectively,
"RCRA"); the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendment and
Reauthorization Act (collectively, "CERCLA"); the Hazardous Materials
Transportation Act; the Toxic Substances Control Act; the Clean Air Act;
the Clean Water Act; the Federal Insecticide, Fungicide and Rodenticide
Act, as amended ("FIFRA"); the Emergency Planning and Community
Right-to-Know Act of 1986, as amended ("EPCRA"); the Occupational Safety
and Health Act of 1970, as amended ("OSHA"); and all applicable foreign
laws.
1.12 "Exchange Shares" means two hundred thousand (200,000) shares of
one-tenth of one cent () par value common stock of Purchaser.
1.13 "Financial Statements" means the Balance Sheet dated not earlier
than December 31, 2000 and related Statement of Earnings, Statement of Cash
Flow and related notes of Corporation for the year ended December 31, 2000,
audited by reputable CPA firm such as Pricewaterhouse ▇▇▇▇▇▇.
1.14 "GAAP" means generally accepted accounting principles.
1.15 "Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
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1.16 "Insurance Policies" means valid, outstanding and enforceable
policies of insurance issued to Corporation by reputable insurers covering
the Assets and the Business against risks of the nature normally insured
against by corporations in the same or similar lines of business and in
coverage amounts typically and reasonably carried by such corporations
1.17 "Intellectual Property" means (i) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof,
(ii) all trademarks, service marks, trade dress, logos, together with all
translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (iii) all
copyrightable works, all copyrights, and all applications, registrations,
and renewals in connection therewith, (iv) all mask works and all
applications, registrations, and renewals in connection therewith, (v) all
trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (vi) all computer software
(including data and related documentation), (vii) all registered domain
names, website content, website related software, and all other Internet
related tools and applications, (viii) all other proprietary rights, and
(ix) all copies and tangible embodiments thereof (in whatever form or
medium).
1.18 "Lien" means any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including, but not
limited to, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable law or
any jurisdiction in connection with such mortgage, pledge, security
interest, encumbrance, lien or charge).
1.19 "Material Adverse Change (or Effect)" means a change (or effect),
in the condition (financial or otherwise), properties, assets, liabilities,
rights, obligations, operations, business or prospects of Corporation which
change (or effect) individually or in the aggregate, is materially adverse
to such condition, properties, assets, liabilities, rights, obligations,
operations, business or prospects.
1.20 "Percentage Interest" means each Seller's proportionate interest
in the Exchange Shares calculated by dividing (i) the number of Corporation
Shares owned by such Seller immediately prior to the transfer thereof at
the Closing by (ii) the total number of Corporation Shares transferred to
Purchaser at the Closing.
1.21 "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature.
1.22 "Permits" means all licenses and required governmental or
official approvals, permits or authorizations for the Business and
operations.
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1.23 "Securities Act" means the Securities Act of 1933, as amended.
1.24 "Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to any
Taxes.
1.25 "Taxes" means all taxes, fees or other assessments, including,
but not limited to, income, excise, property, sales, franchise, intangible,
withholding, social security and unemployment taxes imposed by any federal,
state, local or foreign governmental agency, and any interest or penalties
related thereto.
2. EXCHANGE OF SHARES.
2.1 Exchange. Upon the Closing, in accordance with the terms and
conditions hereof, Seller shall sell, transfer, convey and assign to
Purchaser the Corporation Shares and, in consideration for the conveyance
to Purchaser of the Exchange Shares, Purchaser shall issue to Seller the
Exchange Shares. The Exchange Shares shall be adjusted for Purchaser stock
splits and stock dividends issued prior to the Closing Date.
2.2 Contingent Consideration. As additional consideration for the
conveyance to Purchaser of the Corporation Shares, Purchaser agrees to pay
to Seller the sum of One Million, Two Hundred Thousand Dollars
($1,200,000), in the form of a (5%) royalty payment based on yearly net
sales. Once the total of said royalty is satisfied, the Purchaser will be
under no further obligation to make said royalty payment. The Purchaser
reserves the right to make a lump sum payment of One Million, Two Hundred
Thousand Dollars ($1,200,000) to satisfy its royalty obligation.
2.3 Tax Treatment . Purchaser and Seller intend that the transactions
contemplated by this Agreement qualify as a reorganization under the
provisions of Section 368(a) of the Code; provided that no party hereto
makes any representations to any other party hereto that this transaction
will in fact qualify as such.
3. CLOSING, ITEMS TO BE DELIVERED, FURTHER ASSURANCES AND EFFECTIVE
DATE.
3.1 Time and Place . Subject to the terms and conditions of this
Agreement, the Closing of the exchange shall take place at 9:00 a.m. on or
before June 30, 2001, at the offices of Purchaser's counsel, or such other
time and place as the parties may otherwise agree.
3.2 Closing Obligations. At the Closing:
(a) Seller's Deliveries. Seller shall deliver to Purchaser:
(1) Certificates representing the Corporation Shares with
duly executed and notarized stock powers attached, for transfer
to Purchaser;
(2) A release in the form of Exhibit 3.2(a)(ii) executed by
Seller (the "Release");
(3) A written opinion of counsel dated as of the Closing
Date in substantially the form of Exhibit 3.2(a)(iii) with only
such changes therein as shall be in form and substance reasonably
satisfactory to Purchaser (the "Opinion of Seller's Counsel");
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(4) Employment agreement in the form of Exhibit 3.2(a)(iv),
executed by Seller (the "Seller Employment Agreement");
(5) Duly adopted resolutions of Corporation's Board of
Directors satisfactory to Purchaser in its sole discretion (A)
terminating Corporation's Employee Benefits Plans (other than
employee welfare benefit plans), with such termination effective
prior to the Closing Date, (B) providing that no contributions
shall be made to Corporation's 401(k) Plan after such date, and
(C) directing Corporation's legal counsel to apply for a
determination letter from the Internal Revenue Service with
respect to the termination of the 401(k) Plan and to submitting
Notice of Intent to Terminate to all participants and
beneficiaries under the 401(k) Plan; and
(6) A certificate executed by Seller representing and
warranting to Purchaser that Seller's representations and
warranties hereunder was accurate in all respects as of the date
of this Agreement and is accurate in all respects as of the
Closing Date as if made on the Closing Date (giving full effect
to any supplements to the Schedules that were delivered by Seller
to Purchaser prior to the Closing Date).
(b) Purchaser Deliveries. Purchaser shall deliver to Seller:
(1) Certificates representing the number of Exchange Shares
to be issued to Seller at the Closing pursuant to Section 2.1
hereof;
(2) A written opinion of counsel dated as of the Closing
Date in substantially the form of Exhibit 3.2(b)(ii) with only
such changes therein as shall be in form and substance reasonably
satisfactory to Purchaser (the "Opinion of Purchaser's Counsel");
(3) The Seller Employment Agreement, executed by Purchaser;
and
(4) A certificate executed by Purchaser to the effect that,
except as otherwise stated in such certificate, each of
Purchaser's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date.
(c) Mutual Performance. At or prior to the Closing, the parties
shall also deliver to each other the agreements, certificates, and
other documents and instruments referred to in Articles 7. and 8.
hereof.
3.3 Third Party Consents. To the extent that the Corporation
Shares may not be transferred to Purchaser hereunder without the
consent of another Person which has not been obtained, this
Agreement shall not constitute an agreement to transfer the same
if an attempted transfer would constitute a breach thereof or be
unlawful, and Seller, at her expense, shall use their best
efforts to obtain any such required consent(s) as promptly as
possible. If any such consent shall not be obtained or if any
attempted transfer would be ineffective or would impair
Purchaser's rights so that Purchaser would not in effect acquire
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the benefit of all such rights, Seller, to the maximum extent
permitted by law, shall act after the Closing as Purchaser's
agent in order to obtain for it the benefits thereunder and shall
cooperate, to the maximum extent permitted by law, with Purchaser
in any other reasonable arrangement designed to provide such
benefits to Purchaser.
3.4 Further Assurances. Each of the parties hereto will
cooperate with the others and execute and deliver to the other
parties such other instruments and documents and take such other
actions as may be reasonably requested from time to time by such
other party as necessary to carry out, evidence and confirm the
intended purposes of this Agreement.
3.5 Effective Date. The effective date of this Agreement and
all related instruments executed at the Closing shall be the
Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. As a
material inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser makes
the following representations and warranties to Seller.
4.1 Corporate Status . Purchaser is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Nevada.
4.2 Corporate Power and Authority . Purchaser has the
corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. Purchaser has taken all
action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby.
4.3 Enforceability . This Agreement has been duly executed
and delivered by Purchaser and constitutes a legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether
such enforceability is considered in a proceeding at law or in
equity.
4.4 No Commissions . Other than pursuant to ongoing
contracts or arrangements with employees or consultants of
Purchaser or any of its subsidiaries, Purchaser has not incurred
any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the
transactions contemplated hereby, other than such compensation as
may be due and payable to its officers or employees.
4.5 Capitalization. All of the Purchaser Shares (i) have
been duly authorized and validly issued and are fully paid and
non-assessable, (ii) were issued in compliance with all
applicable state and federal securities laws, (iii) were not
issued in violation of any preemptive rights or rights of first
refusal, and (iv) represent sixteen and 67/100ths percent
(16.67%) of the issued and outstanding shares of capital stock of
Purchaser on a fully diluted basis as of the Closing Date.
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5. REPRESENTATIONS AND WARRANTIES OF SELLER. As a material
inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller makes
the following representations and warranties to Purchaser.
5.1 Corporate Status . Corporation is a corporation duly
organized, validly existing and in good standing under the laws
of the State of California and has the requisite power and
authority to own or lease the Assets and to carry on the Business
as now being conducted. Corporation is duly authorized and
qualified, under all applicable laws, regulations, ordinances and
orders of public authorities, to carry on the Business in the
places and in the manner as now conducted, except as disclosed on
Schedule 5.1, where the failure to be so authorized or qualified
would not have a Material Adverse Effect on the Business or on
the operations, Assets or condition (financial or otherwise), of
Corporation. 5.2 Power and Authority . Seller has the power and
authority to execute and deliver this Agreement, to perform their
obligations hereunder and to consummate the transactions
contemplated hereby. Seller has taken all action necessary to
authorize the execution and delivery of this Agreement, the
performance of their obligations hereunder, and the consummation
of the transactions contemplated hereby.
5.3 Enforceability . This Agreement has been duly executed
and delivered by Seller, and constitutes the legal, valid and
binding obligation of Seller, enforceable against Seller in
accordance with its terms.
5.4 Capitalization . Seller is the record and beneficial
owner of all of the outstanding shares of stock of Corporation.
Seller owns the Corporation Shares free and clear of all Liens,
restrictions and claims of any kind. All of the Corporation
Shares (i) have been duly authorized and validly issued and are
fully paid and non-assessable, (ii) were issued in compliance
with all applicable state and federal securities laws, (iii) were
not issued in violation of any preemptive rights or rights of
first refusal, (iv) were issued for fair market value in exchange
for cash, and (v) no preemptive rights or rights of first refusal
exist, and no such rights arise by virtue of or in connection
with the transactions contemplated hereby. There are no
outstanding or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange
rights or other agreements or commitments of any kind that could
require Corporation to issue or sell, or require any Seller to
sell or transfer, any shares of Corporation's capital stock (or
securities convertible into or exchangeable for shares of its
capital stock). There are no outstanding stock appreciation,
phantom stock, profit participation or other similar rights with
respect to Corporation. There are no proxies, voting rights or
other agreements or understandings with respect to the voting or
transfer of the shares of Corporation. Except as set forth on
Schedule 5.4, (i) Corporation is not obligated to redeem or
otherwise acquire any of its shares of stock, and (ii) there has
been no transaction or action taken with respect to the equity
ownership of Corporation in contemplation of the transactions
described in this Agreement.
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5.5 Subsidiaries . Schedule 5.5 lists the name of each of
Corporation's subsidiaries and sets forth the number and class of
the authorized capital stock of each of Corporation's
subsidiaries and the number of shares of each of Corporation's
subsidiaries which are issued and outstanding, all of which
shares (except as set forth on Schedule 5.5) are owned by
Corporation, free and clear of all Liens and claims of every
kind. In addition, Schedule 5.5 also sets forth all rights,
options, warrants, convertible securities, subscription rights,
conversion rights, exchange rights or other agreements or
commitments of any kind that could require any such subsidiary to
issue or sell any shares of the its capital stock (or securities
convertible into or exchangeable for shares of its capital
stock). Except as set forth in Schedule 5.5, Corporation does not
presently own of record or beneficially, or control, directly or
indirectly, any capital stock, securities convertible into
capital stock, or any other equity interest in any corporation,
association or business entity, nor is Corporation, directly or
indirectly, a participant in any joint venture, partnership or
other non-corporate entity.
5.6 No Violation . The execution and consummation of this
Agreement will not (i) contravene any provision of the Charter
Documents, (ii) violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment
or order of any Governmental Authority or of any arbitration
award which is either applicable to, binding upon or enforceable
against Corporation or Seller, or the assets of Corporation,
(iii) conflict with, result in any breach of, or constitute a
default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give
rise to a right to terminate, amend, modify, abandon or
accelerate, any Contract which is applicable to, binding upon or
enforceable against Seller or the Assets, (iv) result in or
require the creation or imposition of any Lien upon or with
respect to any of the assets of Corporation, or (v) require the
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or
tribunal or any other Person.
5.7 No Commissions. Seller and Corporation have not incurred
any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the
transactions contemplated hereby.
5.8 Financial Statements . Seller has delivered to Purchaser
the Financial Statements, a copy of which is attached hereto as
Schedule 5.8. The balance sheet dated as of May 31, 2001 of
Corporation included in the Financial Statements is referred to
herein as the "Current Balance Sheet." The Financial Statements
have been audited by ▇▇▇▇ ▇▇▇▇▇, CPA, have been prepared in
accordance with GAAP, and fairly present the financial position
of Corporation at each of the balance sheet dates and the results
of operations for the periods covered thereby. The books and
records of Corporation fully and fairly reflect all transactions,
properties, assets and liabilities of Corporation. There are no
material special or non-recurring items of income or expense
during the periods covered by the Financial Statements, and the
Current Balance Sheet does not reflect any write up or
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revaluation increasing the book value of any assets, except as
specifically disclosed in the notes thereto. The Financial
Statements reflect all adjustments necessary for a fair
presentation of the financial information contained therein.
5.9 Changes Since the Current Balance Sheet . Except as
specifically set forth in Schedule 5.9, since the date of the
Current Balance Sheet, Corporation has not (i) issued any capital
stock or other securities; (ii) made any distribution of or with
respect to its capital stock or other securities or purchased or
redeemed any of its securities; (iii) paid any bonus to or
increased the rate of compensation of any of its officers or
salaried employees, or amended any other terms of employment of
such persons; (iv) sold, leased or transferred any of its
properties or assets other than in the ordinary course of
business consistent with past practice; (v) made or obligated
itself to make capital expenditures other than in the ordinary
course of business consistent with past practice; (vi) made any
payment in respect of its liabilities other than in the ordinary
course of business consistent with past practice; (vii) incurred
any obligations or liabilities (including any indebtedness) or
entered into any transaction or series of transactions involving
in excess of Five Thousand Dollars ($5,000) in the aggregate
other than in the ordinary course of business consistent with
past practice, except for this Agreement and the transactions
contemplated hereby; (viii) waived, cancelled, compromised or
released any rights having a value in excess of Five Thousand
Dollars ($5,000) in the aggregate; (ix) made or adopted any
change in its accounting practice or policies; (x) made any
adjustment to its books and records other than in respect of the
conduct of its business activities in the ordinary course
consistent with past practice; (xi) entered into any transaction
with any Affiliate other than intercompany transactions in the
ordinary course of business consistent with past practice; (xii)
entered into any employment agreement; (xiii) terminated, amended
or modified agreements in the aggregate involving an amount in
excess of Five Thousand Dollars ($5,000); (xiv) imposed any
security interest or other Lien on any of its Assets; (xv)
delayed paying any account payable which is due and payable
except to the extent being contested in good faith; (xvi) made or
pledged any charitable contribution; (xvii) entered into any
other transaction or was subject to any event which had or may
have a Material Adverse Effect on Corporation or the Business;
(xviii) engaged in any transaction other than in the ordinary
course of the Business; (xix) suffered or incurred any work
interruptions, labor grievances, or claims filed, or any similar
event which has or would have a Material Adverse Effect on
Corporation or the Business; or (xx) agreed to do or authorized
any of the foregoing.
5.10 Litigation . Except as set forth in Schedule 5.10,
there is no action, suit, or other legal or administrative
proceeding or governmental investigation pending, threatened,
anticipated or contemplated against, by or affecting Seller,
Corporation, the Business, or the Assets, or which questions the
validity or enforceability of this Agreement or the transactions
contemplated hereby, and there is no basis for any of the
foregoing. There are no outstanding orders, decrees or
stipulations issued by any Governmental Authority in any
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proceeding to which Seller or Corporation is or was a party which
have not been complied with in full or which continue to impose
any material obligations on Seller, Corporation or the Assets.
5.11 Liabilities; Bank Accounts . Schedule 5.11 sets forth
all liabilities or obligations, whether accrued, absolute,
contingent or otherwise, of Corporation, including, without
limitation, (i) liabilities and obligations reflected on the
Current Balance Sheet and not paid or discharged, (ii)
liabilities and obligations exceeding Ten Thousand Dollars
($10,000) in the aggregate, incurred in the ordinary course of
business consistent with past practice since the date of the
Current Balance Sheet, and (iii) liabilities incurred in the
ordinary course of business prior to the date of the Current
Balance Sheet which, in accordance with GAAP consistently
applied, were not required to be recorded thereon (the
liabilities and obligations referenced in (i), (ii) and (iii)
above are referred to as the "Designated Liabilities"). None of
the Designated Liabilities relates to any breach of contract,
breach of warranty, tort, infringement, or violation of law, and
none arose out of any action, suit, claim, governmental
investigation, or arbitration proceeding. Schedule 5.11 also sets
forth the outstanding principal amount of and outstanding
interest on (as of the date set forth in the Schedule) all
indebtedness for borrowed money and capitalized lease obligations
(including the outstanding principal amount and accrued but
unpaid interest and the name of the lender) owed to a bank or any
other Person by Corporation. Schedule 5.11 also lists the account
numbers and names of each bank, broker or other depository
institution at which Corporation maintains a depository account,
and the names of all persons authorized to withdraw funds from
each such account.
5.12 Undisclosed Liabilities. Corporation has no
liabilities, and there is no basis for any present or future
charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand against Corporation giving rise to
any liability, except those liabilities reflected in the
Financial Statements. Corporation has not guaranteed the
obligations of any third Person.
5.13 Environmental Matters .
(a) Corporation is and has at all times been in compliance
with all Environmental, Health and Safety Laws governing the
Business and its operations, Assets, including, without
limitation, Environmental, Health and Safety Laws with respect to
discharges into the ground water, surface water and soil,
emissions into the ambient air, and generation, accumulation,
storage, treatment, transportation, transfer, labeling, handling,
manufacturing, use, spilling, leaking, dumping, discharging,
release or disposal of Hazardous Substances (as defined herein),
or other Waste (as described herein). Corporation is not
currently liable for any penalties, fines or forfeitures for
failure to comply with any Environmental, Health and Safety Laws.
Corporation is in full compliance with all notice, record keeping
and reporting requirements of all Environmental, Health and
Safety Laws, and has complied with all informational requests or
demands arising under the Environmental, Health and Safety Laws.
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(b) Corporation has not generated, manufactured, used,
transported, transferred, stored, handled, treated, spilled,
leaked, dumped, discharged, released or disposed, nor has it
allowed or arranged for any third parties to generate,
manufacture, use, transport, transfer, store, handle, treat,
spill, leak, dump, discharge, release or dispose of, Hazardous
Substances or other Waste to or at any location other than a site
lawfully permitted to receive such Hazardous Substances or other
Waste for such purposes, nor has it performed, arranged for or
allowed by any method or procedure such generation, manufacture,
use, transportation, transfer, storage, treatment, transport,
spillage, leakage, dumping, discharge, release or disposal in
contravention of any Environmental, Health and Safety Laws.
Corporation has not generated, manufactured, used, stored,
handled, treated, transported, spilled, leaked, dumped,
discharged, released or disposed of, or allowed or arranged for
any third parties to generate, manufacture, use, store, handle,
treat, transport, spill, leak, dump, discharge, release or
dispose of, Hazardous Substances or other Waste upon property
owned or leased by it, except as permitted by law. For purposes
of this Section, the term "Hazardous Substances" shall be
construed broadly to include any toxic or hazardous substance,
material, or waste, and any other contaminant, pollutant or
constituent thereof, whether liquid, solid, semi-solid, sludge
and/or gaseous, including without limitation, chemicals,
compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated
biphenyls, the presence of which requires investigation or
remediation under any Environmental, Health and Safety Laws or
which are or become regulated, listed or controlled by, under or
pursuant to any Environmental Health and Safety Laws. For
purposes of this Section, the term "Waste" shall be construed
broadly to include agricultural wastes, biomedical wastes,
biological wastes, bulky wastes, construction and demolition
debris, garbage, household wastes, industrial solid wastes,
liquid wastes, recyclable materials, sludge, solid wastes,
special wastes, used oils, white goods, and yard trash.
(c) Corporation has not caused, or allowed to be caused or
permitted, either by action or inaction, a Release or Discharge,
or threatened Release or Discharge, of any Hazardous Substance
on, into or beneath the surface of any property owned or leased
by it (for purposes of this Section, the "Premises"). There has
not occurred, nor is there presently occurring, a Release or
Discharge, or threatened Release or Discharge, of any Hazardous
Substance on, into or beneath the surface of the Premises. For
purposes of this Section, the terms "Release" and "Discharge"
shall have the meanings given them in the Environmental, Health
and Safety Laws.
(d) Corporation has not generated, handled, manufactured,
treated, stored, used, shipped, transported, transferred, or
disposed of, nor has it allowed or arranged, by contract,
agreement or otherwise, for any third parties to generate,
handle, manufacture, treat, store, use, ship, transport, transfer
or dispose of, any Hazardous Substance or other Waste to or at a
site which, pursuant to CERCLA or any similar state law (i) has
been placed on the National Priorities List or its state
equivalent; or (ii) the Environmental Protection Agency or the
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relevant state agency has notified Corporation that it has
proposed or is proposing to place on the National Priorities List
or its state equivalent. Neither Corporation nor Seller has
received notice, and Corporation and Seller have no knowledge of
any facts which could give rise to any notice, that Corporation
is a potentially responsible party for a federal, state or local
environmental cleanup site or for corrective action under CERCLA,
RCRA or any other applicable Environmental Health and Safety
Laws. Corporation has not submitted nor was required to submit
any notice pursuant to Section 103(c) of CERCLA with respect to
the Premises. Corporation has not received any written or oral
request for information in connection with any federal or state
environmental cleanup site, or in connection with any of the real
property or premises where Corporation have transported,
transferred or disposed of other Wastes. Corporation has not been
required to undertake, nor has it undertaken, any response or
remedial actions or clean-up actions of any kind at the request
of any Governmental Authorities or at the request of any other
third party. Corporation has no liability under any
Environmental, Health and Safety Laws for personal injury,
property damage, natural resource damage, or clean up
obligations.
(e) Corporation does not use, nor has it used, any
Aboveground Storage Tanks or Underground Storage Tanks, and there
are not now nor have there ever been any Underground Storage
Tanks on the Premises.
(f) Schedule 5.13 identifies the operations and activities,
and locations thereof, which have been conducted and are being
conducted by Corporation on the Premises which have involved the
generation, accumulation, storage, treatment, transportation,
labeling, handling, manufacturing, use, spilling, leaking,
dumping, discharging, release or disposal of Hazardous
Substances. Schedule 5.13 also identifies the locations to which
Corporation has transferred, transported, hauled, moved, or
disposed of Waste over the past five (5) years and the types and
volumes of Waste transferred, transported, hauled, moved, or
disposed of to each such location.
5.14 Real Property, Leases and Significant Personal Property
. Schedule 5.14 sets forth all real and personal property
included (or that will be included) on the Current Balance Sheet,
all other real and personal property of Corporation with a value
in excess of Two Thousand, Five Hundred Dollars ($2,500) and
acquired since the Current Balance Sheet Date, and all leases for
real and personal property to which Corporation is a party
involving real or personal property having a value in excess of
Two Thousand, Five Hundred ($2,500), including, in each case, and
indication as to which real and personal property is currently
owned, or was formerly owned, by Seller or Corporation or their
Affiliates. True, complete and correct copies of all such leases
have been provided to Purchaser. Except as set forth in Schedule
5.14, (i) all of the trucks and other material machinery and
equipment and all other tangible assets of Corporation are in
good working order and condition, ordinary wear and tear excepted
and have been maintained in accordance with all applicable
specifications and warranties; (ii) all leases set forth in
Schedule 5.14, are in full force and effect and constitute valid
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and binding agreements of Corporation and constitute valid and
binding agreements of the other parties thereto in accordance
with their respective terms; and (iii) all fixed assets used by
Corporation are either owned by Corporation or leased under a
valid agreement. Schedule 5.14 also sets forth a summary
description of all plans or projects involving the opening of new
operations or the acquisition of any real property or existing
business, with respect to which Corporation has made any
expenditure in the two-year period prior to the date of the
Agreement in excess of Ten Thousand Dollars ($10,000) in the
aggregate, or which if pursued by Corporation would require
additional expenditures of capital in excess of Ten Thousand
Dollars ($10,000) in the aggregate.
5.15 Good Title, Adequacy and Condition . Except as set
forth in Schedule 5.15, Corporation has, and at Closing will
have, good, legal, and marketable title to the Assets with full
power to sell, transfer and assign the same, free and clear of
any Lien. The Assets constitute, in the aggregate, all of the
assets and properties necessary for the conduct of the Business
in the manner in which and to the extent to which such business
is currently being conducted and include, without limitation, all
tangible and intangible assets owned by Corporation including all
vehicles, equipment and inventory (more particularly described in
Schedule 5.15), and all Contracts, customer lists, Intellectual
Property, cash and accounts receivable, and Permits of
Corporation.
5.16 Compliance with Laws . Corporation is not in violation
of any law or regulation or any order of any court or federal,
state, local or other Governmental Authority having jurisdiction
over Corporation, and, except to the extent set forth on Schedule
5.16, there are no claims, actions, suits or proceedings pending
or, to the knowledge of Corporation, threatened, against or
affecting Corporation or the Business, at law or in equity, or
before or by any federal, state, local or other Governmental
Authority having jurisdiction over any of them, and no notice of
any such claim, action, suit or proceeding, whether pending or
threatened, has been received. Corporation has conducted and is
conducting the Business in compliance with the requirements,
standards, criteria and conditions set forth in applicable
federal, state and local statutes, ordinances, orders, approvals,
variances, rules and regulations and is not in violation of any
of the foregoing.
5.17 Employee Benefit Plans.
(a) Schedule 5.17 contains a list setting forth each
employee benefit plan or arrangement of Corporation, including
but not limited to employee profit sharing plans, as defined in
Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), multiemployer plans, as defined in
Section 3(37) of ERISA, employee welfare benefit plans, as
defined in Section 3(1) of ERISA, deferred compensation plans,
stock option plans, bonus plans, stock purchase plans,
hospitalization, disability and other insurance plans, severance
or termination pay plans and policies, whether or not described
in Section 3(3) of ERISA, in which employees, their spouses or
dependents, of Corporation participate ("Employee Benefit Plans")
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(true and accurate copies of which, together with the most recent
annual reports on Form 5500 and summary plan descriptions with
respect thereto, were furnished to Purchaser). With respect to
each Employee Benefit Plan (i) each has been administered in all
material respects in compliance with its terms and with all
applicable laws, including, but not limited to, ERISA and the
Code; (ii) no actions, suits, claims or disputes are pending, or
threatened; (iii) no audits, inquiries, reviews, proceedings,
claims, or demands are pending with any governmental or
regulatory agency; (iv) there are no facts which could give rise
to any material liability in the event of any investigation,
claim, action, suit, audit, review, or other proceeding; (v) all
material reports, returns, and similar documents required to be
filed with any governmental agency or distributed to any plan
participant have been duly or timely filed or distributed; and
(vi) no "prohibited transaction" has occurred within the meaning
of the applicable provisions of ERISA or the Code.
(b) With respect to each Employee Benefit Plan intended to
qualify under Code Section 401(a) or 403(a): (i) the Internal
Revenue Service has issued a favorable determination letter, true
and correct copies of which have been furnished to Purchaser,
that such plans are qualified and exempt from federal income
taxes; (ii) no such determination letter has been revoked nor, to
the best knowledge of Corporation and Seller, has revocation been
threatened, nor has any amendment or other action or omission
occurred with respect to any such plan since the date of its most
recent determination letter or application therefor in any
respect which would adversely affect its qualification or
materially increase its costs; (iii) no such plan has been
amended in a manner that would require security to be provided in
accordance with Section 401(a)(29) of the Code; (iv) no
reportable event (within the meaning of Section 4043 of ERISA)
has occurred, other than one for which the 30-day notice
requirement has been waived; and (v) as of the Closing Date, the
present value of all liabilities that would be "benefit
liabilities" under Section 4001(a)(16) of ERISA if benefits
described in Code Section 411(d)(6)(B) were included will not
exceed the then current fair market value of the assets of such
plan (determined using the actuarial assumptions used for the
most recent actuarial valuation for such plan).
(c) None of the Employee Benefit Plans obligates Corporation
to pay separation, severance, termination or similar benefits
solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change of control" (as such
term is defined in Section 280G of the Code), and all required or
discretionary (in accordance with historical practices) payments,
premiums, contributions, reimbursements, or accruals for all
periods ending prior to or as of the Closing shall have been made
or properly accrued on the Current Balance Sheet of Corporation
as of the Closing, and none of the Employee Benefit Plans has any
unfunded liabilities which are not reflected on the Current
Balance Sheet of Corporation.
5.18 Tax Returns and Examinations. Except as set forth on
Schedule 5.18, (i) all Tax Returns required to have been filed by
or with respect to Corporation and any affiliated, combined,
consolidated, unitary or similar group of which Corporation is or
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was a member (a "Relevant Group") with any Governmental Authority
have been duly filed, and each such Tax Return correctly and
completely reflects the income, franchise or other Tax liability
and all other information, including the tax basis and recovery
periods for assets, required to be reported thereon; (ii)
Corporation has furnished or made available to Purchaser complete
and accurate copies of all income and franchise tax returns, and
any amendments thereto, filed by Corporation for all taxable
years ending on or after December 31, 2000; (iii) all Taxes
(whether or not shown on any Tax Return and whether or not
assessed) owed by Corporation have been paid; (iv) the provisions
for Taxes due by Corporation (as opposed to any reserve for
deferred Taxes established to reflect timing differences between
book and tax income) in the Financial Statements are sufficient
for, and adequate to cover, all unpaid Taxes of Corporation; (v)
Corporation is not a party to any current agreement extending the
time within which to file any Tax Return; (vi) no claim has ever
been made by any Taxing Authority in a jurisdiction in which
Corporation does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction; (vii) Corporation has
withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party; (viii)
Corporation does not expect any Governmental Authority to assess
any additional Taxes against or in respect of it for any past
period; (ix) there is no dispute or claim concerning any Tax
liability of Corporation either (a) claimed or raised by any
Governmental Authority or (b) otherwise known to Corporation; (x)
no issues have been raised in any examination by any Governmental
Authority with respect to which, by application of similar
principles, reasonably could be expected to result in a proposed
deficiency for any other period not so examined; (xi) Schedule
5.18 lists all federal, state, local and foreign income Tax
Returns filed by or with respect to Corporation for all taxable
periods ended on or after January 1, ____, and indicates those
tax returns that currently are the subject of audit; (xii)
Corporation has delivered to Purchaser complete and correct
copies of all federal, state, local and foreign income Tax
Returns filed by, and all Tax examination reports and statements
of deficiencies assessed against or agreed to by, Corporation
since January 1, 2001; (xiii) Corporation has not waived any
statute of limitations in respect of Taxes or agreed to any
extension of time with respect to any Tax assessment or
deficiency; (xiv) Corporation has not made any payments, is not
obligated to make any payments, and is not a party to any
agreement that under certain circumstances could require it to
make any payments, that would not be deductible by reason of the
application of Section 280G of the Code; (xv) Corporation is not
a party to any Tax allocation or sharing agreement; (xvi) none of
the assets of Corporation constitutes tax-exempt bond-financed
property or tax-exempt use property, within the meaning of
Section 168 of the Code; (xvii) Corporation is not a party to any
"safe harbor lease" that is subject to the provisions of Section
168(f)(8) of the Code as in effect prior to the Tax Reform Act of
1986, or to any "long-term contract" within the meaning of
Section 460 of the Code; (xviii) Corporation is not a party to
any joint venture, partnership or other arrangement that is
treated as a partnership for federal income Tax purposes; (xix)
there are no accounting method changes, or proposed or threatened
15
accounting method changes, of Corporation that could give rise to
any adjustment under Section 481 of the Code for periods after
the Closing Date; (xx) Corporation has not received any written
ruling of a Governmental Authority related to Taxes or entered
into any written and legally binding agreement with a
Governmental Authority relating to Taxes; (xxi) Corporation has
substantial authority for the treatment of, or has disclosed (in
accordance with Section 6662(d)(2)(ii) of the Code) on its
federal income Tax Returns, all positions taken on its relevant
federal income Tax Returns that could give rise to a substantial
understatement of federal income Tax within the meaning of
Section 6662(d) of the Code; (xxii) Corporation has no liability
for Taxes of any Person other than Corporation (a) under Section
1.1502-6 of the Treasury regulations (or any similar provision of
state, local or foreign law), (b) as a transferee or successor,
(c) by contract or (d) otherwise; (xxiii) no consent has been
filed relating to Corporation pursuant to Section 341(f) of the
Code, nor has Corporation made any tax election that would
materially increase the amount of Taxes payable by Corporation in
any period after the Closing; (xxiv) Seller will pay her
respective expenses incurred in connection with this transaction;
(xxv) Corporation is not an investment company defined in Section
368(a)(2)(F)(iii) and (iv) of the Code; and (xxvi) the fair
market value of the Assets of Corporation exceeds the sum of its
liabilities, plus the amount of liabilities, if any, to which the
transferred assets are subject; (xxvii) Corporation is not under
the jurisdiction of a court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code.
5.19 Insurance . Corporation and the Business are covered by
valid, outstanding and enforceable policies of insurance issued
to Corporation by reputable insurers covering its properties,
Assets and the Business against risks of the nature normally
insured against by corporations in the same or similar lines of
business and in coverage amounts typically and reasonably carried
by such corporations (the "Insurance Policies"). The Insurance
Policies are in full force and effect, and all premiums due
thereon have been paid. Corporation has complied with the
provisions of the Insurance Policies. Corporation has not failed
to give, in a timely manner, any notice required under any of the
Insurance Policies to preserve its rights thereunder.
5.20 Receivables . All of the receivables being transferred
to Purchaser hereunder are valid and legally binding, represent
bona fide transactions, and arose in the ordinary course of
business of Corporation. All of such receivables are good and
collectible receivables, and will be collected in full in
accordance with the terms of such receivables (and in any event
within six months following the Closing), without setoff or
counterclaims.
5.21 Licenses and Permits . Corporation possesses all
Permits for its Business and operations. All Permits are valid
and in full force and effect, Corporation is in compliance in all
material respects with their requirements, and no proceeding is
pending or threatened to revoke or amend any of the Permits. None
of the Permits is or will be impaired or in any way affected by
the execution and delivery of this Agreement or the transactions
contemplated hereby.
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5.22 Contracts, Customer Lists and Employment Matters .
Schedule 5.22 lists all customers and Contracts of Corporation,
including, without limitation, (i) any written arrangement (or
group of written arrangements) for the furnishing or receipt of
services that calls for performance over a period of more than
one (1) year; (ii) any written arrangement concerning a
partnership or joint venture; (iii) any written arrangement (or
group of written arrangements) under which Corporation has
created, incurred or assumed or may create, incur or assume
indebtedness (including capitalized lease obligations) involving
more than Ten Thousand Dollars ($10,000) or under which it has
imposed (or may impose) a security interest on any of its Assets,
tangible or intangible; (iv) any employment agreement; (v) any
written arrangement concerning confidentiality or
non-competition; (vi) any written arrangement involving
Corporation and its present or former affiliates, officers,
directors or shareholders; (vii) any written arrangement under
which the consequences of a default or termination could have a
material adverse effect on the assets, liabilities, business,
financial condition, operations or future prospects of
Corporation; (viii) any other written arrangement (or group of
related arrangements) either involving more than Ten Thousand
Dollars ($10,000) or not entered into in the ordinary course of
Business; and (ix) that account for more than one percent (1%) of
Corporation's annual revenue for the twelve-month period ending
May 31, 2001. All of the Contracts (i) are valid and binding
obligations of the parties, (ii) are not in default nor will
become in default solely upon notice or the passage of time
without curative action and (iii) will remain in full force and
effect following the Closing, without requiring the consent of
the other parties thereto and without causing a default, right to
terminate or right to modify any terms under any such Contracts.
Corporation has delivered to Purchaser true, complete and correct
copies of all Contracts. None of the parties to the Material
Contracts (which include all of Corporation's significant
customers) has cancelled or substantially reduced or, to the
knowledge of Corporation or Seller, is currently attempting or
threatening to cancel any Contract or substantially reduce
utilization of the services provided by Corporation, and
Corporation has complied with all commitments and obligations
pertaining to any Contract, and is not in default under any such
Contract, and no notice of default has been received. Corporation
has not been the subject of any election in respect of union
representation of employees and is not bound by or subject to any
arrangement with any labor union. No employees of Corporation are
represented by any labor union or covered by any collective
bargaining agreement and no campaign to establish such
representation has ever occurred or is in progress. There is no
pending, or to Seller's knowledge, threatened labor dispute
involving Corporation and any group of employees, nor has
Corporation experienced any labor interruptions over the past
three years and Corporation considers its relationship with
employees to be good, except as set forth on Schedule 5.22. The
Corporation is not a party to any verbal contract, agreement or
other arrangement which, if reduced to written form, would be
required to be listed in Schedule 5.22. Seller has delivered to
Purchaser a correct and complete copy of each written
arrangement, as amended to date, listed in Schedule 5.22.
17
5.23 Officers, Directors and Key Employees; Employment
Agreements; Compensation . Schedule 5.23 sets forth an accurate
list showing all officers, directors and key employees of
Corporation, listing all employment agreements with such
officers, directors and key employees (and any other employees
having employment agreement with Corporation) and the rate of
compensation (and the portions thereof attributable to salary,
bonus and other compensation, respectively) of each of such
persons. Schedule 5.23 also lists any increase in compensation or
any special bonus payable to any officer, director, key employee
or other employee of Corporation.
5.24 Predecessor Status, etc. Schedule 5.24 sets forth all
names of all predecessor corporations for the past five years of
Corporation, including the names of any entities from whom
Corporation previously acquired material assets. Except as
disclosed in Schedule 5.24, Corporation has not been a subsidiary
or division of another corporation or a part of an acquisition
which was later rescinded.
5.25 Spin-Off by Corporation . Except as set forth in
Schedule 5.25, there has not been, within the preceding two (2)
years, any sale, spin-off or split-up of material assets of
Corporation or any other person or entity that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, Corporation other
than in the ordinary course of business.
5.26 Securities Law Representations.
(a) Seller was granted access to the business premises,
offices, properties, and business, corporate and financial books
and records of Purchaser. Seller was permitted to examine the
foregoing records, to question officers of Purchaser, and to make
such other investigations as they considered appropriate to
determine or verify the business and financial condition of
Purchaser. Purchaser furnished to Seller all information
regarding its business and affairs that Seller requested.
(b) Seller recognizes that the Exchange Shares will not be
registered under the Securities Act and will therefore constitute
"restricted securities" as defined pursuant to Rule 144(a)(3)
under the Securities Act under which means, among other things,
that Seller generally will not be able to sell the Exchange
Shares for a period of at least one (1) year following the
Closing Date, and may not be sold, offered for sale, transferred,
pledged, hypothecated or otherwise disposed of except in
compliance with the Securities Act, as such, by way of
illustration but without limitation, in compliance the safe
harbor provisions of Rule 144; further, the legal consequences of
the foregoing mean that Seller must bear the economic risk of the
investment in the Exchange Shares for an indefinite period of
time; further, if either Seller desires to sell or transfer all
or any part of the Exchange Shares, Purchaser may require such
Seller's counsel to provide a legal opinion that the transfer may
be made without registration under the Securities Act; further,
other restrictions discussed elsewhere herein may be applicable;
further, Seller is subject to the restriction on transfer
described herein and Purchaser will issue stop transfer orders
18
with Purchaser's transfer agent to enforce such restrictions;
further, the Exchange Shares will bear a legend restricting
transfer; and further, the following paragraph, or language
substantially equivalent thereto, will be inserted in or stamped
on the certificates evidencing the same:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT. THIS STOCK MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THE SAME UNDER THE SECURITIES
ACT OF 1933 OR OPINION OF COUNSEL SATISFACTORY TO CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE SECURITIES LAWS.
(c) Because of their considerable knowledge and experience
in financial and business matters, Seller is able to evaluate the
merits, risks, and other factors bearing on the suitability of
the Exchange Shares as an investment. Seller, individually or by
virtue of a "purchaser representative" (as defined pursuant to
Rule 501(h) under the Securities Act), qualifies as an
"accredited investor" as defined under Rule 501(a) under the
Securities Act.
(d) Each Seller's annual income and net worth are such that
he would not now be, and does not contemplate being, required to
dispose of any investment in the Exchange Shares, including the
risk of losing all or any part of his investment and the
inability to sell, transfer, pledge, or otherwise dispose of any
of the Exchange Shares for an indefinite period.
(e) Each Seller's acquisition of the Exchange Shares will be
solely for his own account, as principal, for investment, and not
with a view to, or for resale in connection with, any
underwriting or distribution.
(f) Lock-up Agreement. At any time before or after the
Closing Date, Seller agrees to execute any and all stock
restriction agreements, lock-up agreements, and other agreements
affecting the transfer of the Exchange Shares consistent with
agreements executed by other stockholders of Purchaser.
5.27 Intellectual Property.
(a) Corporation owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual
Property necessary or desirable for the operation of the
businesses of Corporation as presently conducted and as presently
proposed to be conducted. Each item of Intellectual Property
owned or used by Corporation immediately prior to the Closing
hereunder shall be owned or available for use by Purchaser on
identical terms and conditions immediately subsequent to the
Closing hereunder. Corporation has taken all necessary and
desirable action to maintain and protect each item of
Intellectual Property that it owns or uses.
(b) Corporation has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and Seller nor the
19
directors and officers (and employees with responsibility for
Intellectual Property matters) of Corporation has ever received
any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation
(including any claim that Corporation must license or refrain
from using any Intellectual Property rights of any third party).
No third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
Intellectual Property rights of Corporation.
(c) Schedule 5.28(c) identifies each patent issued in
Corporation's name, each patent application filed or pending,
trade name and registered or unregistered trademark or service
▇▇▇▇ used by Corporation, license, agreement, or other permission
that Corporation has granted to any third party with respect to
any of its Intellectual Property (together with any exceptions).
Corporation has delivered to Purchaser correct and complete
copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date) and
has made available to Purchaser correct and complete copies of
all other written documentation evidencing ownership and
prosecution (if applicable) of each such item.. With respect to
each item of Intellectual Property required to be identified in
Schedule 5.28(c):
(1) Corporation possesses all right, title, and interest in
and to the item, free and clear of any security interest,
license, or other restriction;
(2) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(3) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or is threatened
that challenges the legality, validity, enforceability, use, or
ownership of the item; and
(4) Corporation has never agreed to indemnify any person or
entity for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(d) Schedule 5.28(d) identifies each item of Intellectual
Property that any third party owns and that Corporation uses
pursuant to license, sublicense, agreement, or permission.
Corporation has delivered to Purchaser correct and complete
copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in Schedule
5.28(d):
(1) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in
full force and effect;
(2) the license, sublicense, agreement, or permission shall
continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of
the transactions contemplated hereby;
20
(3) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred
that with notice or default or permit termination, modification,
or acceleration thereunder;
(4) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(5) with respect to each sublicense, the representations and
warranties set forth in clauses (i) through (iv) above are true
and correct with respect to the underlying license;
(6) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(7) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the
Knowledge of Seller or Corporation, is threatened that challenges
the legality, validity, or enforceability of the underlying item
of Intellectual Property; and
(8) Corporation has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
(e) Corporation shall not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the
continued operation of its Businesses as presently conducted and
as presently proposed to be conducted.
5.28 No Misrepresentations. None of the representations and
warranties of Seller set forth in this Agreement or in the
attached Schedules, notwithstanding any investigation thereof by
Purchaser, contains any untrue statement of a material fact, or
omits the statement of any material fact necessary to render the
statements made not misleading.
6. CONDUCT OF BUSINESS PENDING THE CLOSING.
6.1 Conduct of Business by Corporation Pending the Closing .
Seller covenants and agrees that, except as otherwise expressly
required or permitted by the terms of this Agreement, between the
date of this Agreement and the Closing, the Business of
Corporation shall be conducted only in, and Corporation shall not
take any action except in, the ordinary course of business
consistent with past practice. Corporation and Seller shall use
its or their reasonable best efforts to preserve intact
Corporation's Business organizations, to keep available the
services of its current officers, employees and consultants, and
to preserve its present relationships with customers, suppliers
and other Persons with which it has business relations. By way of
amplification and not limitation, Corporation shall not, except
as expressly required or permitted by the terms of this Agreement
between the date of this Agreement and the Closing, directly or
indirectly, do or propose or agree to do any of the following
without the prior written consent of Purchaser:
21
(a) amend or otherwise change its Charter Documents;
(b) issue, sell, pledge, dispose of, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of
any of its Assets, tangible or intangible, except in the
ordinary course of business consistent with past practice; or any
shares of its capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock or other securities;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock or other securities;
(a) sell, lease or transfer any of its Assets (other than in
the ordinary course of business consistent with past practice),
or acquire (including, without limitation, for cash or shares of
stock, by merger, consolidation or acquisition of stock or
assets) any interest in any corporation, partnership or other
business organization or division thereof or any assets; or make
any investment either by purchase of stock or securities,
contributions of capital or property transfer, or purchase any
property or assets of any other Person (except in the ordinary
course of business consistent with past practice); make or
obligate itself to make capital expenditures other than in the
ordinary course of business consistent with past practice; other
than in the ordinary course of business consistent with past
practice, incur any obligations or liabilities including, without
limitation, any indebtedness for borrowed money, issue any debt
securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any
Person, or make any loans or advances, modify, terminate, amend
or enter into any Contract other than as expressly required or
permitted herein or in the ordinary course of business consistent
with past practice, or impose any security interest or other
Lien on any of its assets other than in the ordinary course of
business consistent with past practice;
(b) pay any bonus to its officers or employees, or increase
the compensation payable or to become payable to its officers or
employees or, except as presently bound to do, grant any
severance or termination pay to, or enter into any employment or
severance agreement with, any of its directors, officers or
employees, or establish, adopt, enter into or amend or take any
action to accelerate any rights or benefits which any collective
bargaining, bonus, profit sharing trust, compensation, stock
option, restricted stock pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(c) take any action with respect to accounting policies or
procedures other than in the ordinary course of business and in a
manner consistent with past practices;
22
(d) pay, discharge or satisfy any existing claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and
consistent with past practice of due and payable liabilities
reflected or reserved against in the Financial Statements, as
appropriate, or liabilities incurred after the date thereof in
the ordinary course of business and consistent with past practice
or delay paying any amount payable beyond forty-five (45) days
following the date on which it is due, except to the extent being
contested in good faith;
(e) enter into any transaction or agreement with Seller or
an Affiliate thereof except for such transactions or agreements
expressly permitted herein;
(f) make or pledge any charitable contributions in excess of
Five Thousand Dollars ($5,000) in the aggregate; or
(g) agree, in writing or otherwise, to take or authorize any
of the foregoing actions or any action which would make any
representation or warranty in Article V untrue or incorrect in
any respect.
7. CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES.
7.1 Further Assurances . Each party shall execute and
deliver such additional instruments and other documents and shall
take such further actions as may be necessary or appropriate to
effectuate, carry out and comply with all of the terms of this
Agreement and the transactions contemplated hereby and to satisfy
the conditions set forth in Articles 8. and 9. Seller shall cause
Corporation to comply with all of the covenants under this
Agreement.
7.2 Confidentiality; Publicity . Seller and Corporation
shall not disclose the terms of this transaction to any third
party nor make any public announcement related to this Agreement
or the transactions contemplated hereby without the prior written
approval of Purchaser.
7.3 No Other Discussions . Seller, Corporation and their
respective Affiliates, employees, agents and representatives will
not (i) initiate, encourage the initiation by others of or
entertain discussions or negotiations with third parties or
respond to solicitations by third persons relating to any merger,
sale or other disposition of any substantial part of the assets,
the Business or the properties of Corporation (whether by merger,
consolidation, sale of stock, sale of assets, or otherwise), or
(ii) enter into any agreement or commitment (whether or not
binding) with respect to any of the foregoing transactions.
Seller will immediately notify Purchaser if any third party
attempts to initiate any solicitation, discussion or negotiation
with respect to any of the foregoing transactions.
7.4 Due Diligence Investigation . Purchaser shall be
entitled to conduct, prior to Closing, a due diligence
investigation of Corporation, the Assets and the Business.
23
Corporation shall provide Purchaser and its designated agents and
consultants with the access to Corporation's Business and the
Assets and all books, records, documents, correspondence and
other materials related thereto which Purchaser, its agents and
consultants require to conduct such due diligence review. If the
results of Purchaser's due diligence review are not satisfactory
to Purchaser in its sole and absolute discretion, then Purchaser
may elect not to close the transactions contemplated by this
Agreement by delivery of written notice to Seller on or before
the Closing Date.
7.5 Access to Information. Upon reasonable notice, Seller
shall cause to afford to the officers, employees, accountants,
counsel, and other authorized representatives of Purchaser full
access, during the period prior to the Closing Date, to all of
the properties, books, contracts, commitments, records, and
senior management of . Unless otherwise required by law,
Purchaser will hold any such information that is nonpublic in
confidence, will not use such information in its business if the
transaction does not close, and will return such information if
the transaction does not close.
7.6 Covenant not to Compete . Seller agrees that for the
period of five (5) years immediately following the Closing,
Seller shall not, directly or indirectly:
(a) alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent
contractor, or security holder, of any Person, engage in any
business activity which is directly or indirectly in
competition with the Business; provided, however, that the
beneficial ownership of less than five percent (5%) of any
class of securities of any entity having a class of equity
securities actively traded on a national securities exchange
or the Nasdaq Stock Market shall not be deemed, in and of
itself, to violate the prohibitions of this Section;
(b) induce any customer acquired hereunder or any other
customer of Purchaser or any of its Affiliates to patronize
any business which is directly or indirectly in competition
with the Business; (ii) canvass, solicit or accept for or on
behalf of any such competitive business any customer of
Purchaser or any of its Affiliates; or (iii) request or
advise any customer of Purchaser or any of its Affiliates to
withdraw, curtail or cancel any such customer's business
with Purchaser or any of its Affiliates or their successors;
(c) employ any person who was employed by Purchaser or
any of its Affiliates, within one year prior to the date
being employed by Seller or any of its Affiliates, or in any
manner seek to induce any employee of Purchaser or any of
its Affiliates to leave his or her employment;
(d) in any way utilize, disclose, copy, reproduce or
retain in his possession any of the proprietary rights, or
records acquired by Purchaser hereunder, including, but not
limited to, any customer lists.
24
Seller agrees and acknowledges that the restrictions contained in this Section
are reasonable in scope and duration, and are necessary to protect Purchaser. If
any provision of this Section is adjudged by a court of competent jurisdiction
to be invalid or unenforceable, the same will in no way affect the validity or
enforceability of the remainder of this Agreement. If any such provision, or any
part thereof, is held to be unenforceable because of the duration of such
provision, the area covered thereby or otherwise, then the parties agree that
the court making such determination shall have the power to reduce the duration,
area or scope of such provision, and/or to delete specific words or phrases, and
in its reduced or modified form, such provision shall then be enforceable and
shall be enforced. Seller further agrees and acknowledge that any breach of this
Section will cause irreparable injury to Purchaser and upon any breach or
threatened breach of any provision of this Section, Purchaser shall be entitled
to injunctive relief, specific performance or other equitable relief, without
the necessity of posting bond; provided, however, that this shall in no way
limit any other remedies which Purchaser may have as a result of such breach,
including the right to seek monetary damages.
7.7 Termination of Related Party Agreements . All existing
agreements between Corporation and Seller or their Affiliates,
other than those set forth in Section 7.7, shall have been
cancelled prior to the Closing.
7.8 Code Section 338(h)(10) Election. At Purchaser's
election, Purchaser may make, and Seller and Corporation shall
join in making, an election under Section 338(h)(10) of the Code
with respect to the Assets and any comparable election under
state or local Tax law, and Seller shall cooperate with Purchaser
in the completion and timely filing of such elections in
accordance with the provisions of Treasury Regulation
1.338(h)(10)-1 (or any comparable provisions of state or local
Tax law) or any successor provision. Should Purchaser make such
election, Seller and Purchaser shall act together in good faith
to (i) determine and agree upon the amount of the modified
aggregate deemed sales price ("MADSP") (within the meaning to
Treas. Reg. 1.338(h)(10)-1(f) and (ii) agree upon the proper
allocations (the "Allocations") of the MADSP among the Assets in
accordance with Treas. Reg. 1.338(h)(10)-1(f). Seller and
Purchaser will calculate the gain or loss, if any, resulting from
the election in a manner consistent with the Allocations and will
not take any position inconsistent with the election or the
Allocations in any tax return or otherwise. Seller will allocate
the MADSP among the Assets in a manner consistent with the
Allocations and will not take any position inconsistent with the
election or the Allocations in any tax return or otherwise.
8. CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The
obligations of Purchaser to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions, any or all of which may
be waived in whole or in part by Purchaser;
8.1 Accuracy of Representations and Warranties and
Compliance with Obligations . The representations and warranties
of Seller contained in this Agreement shall be true and correct
in all material respects at and as of the Closing Date with the
same force and effect as though made at and as of that time
except (i) for changes specifically permitted by or disclosed
pursuant to this Agreement, and (ii) that those representations
25
and warranties which address matters only as of a particular date
shall remain true and correct as of such date. Seller and
Corporation shall have performed and complied with all of their
obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date, including these
obligations set forth in Article 7. herein. Seller and
Corporation shall have delivered to Purchaser a certificate,
dated as of the Closing Date, duly signed, certifying that such
representations and warranties are true and correct and that all
such obligations have been performed and complied with.
8.2 No Material Adverse Change or Destruction of Property .
Between the date hereof and the Closing Date, (i) there shall
have been no Material Adverse Change of Corporation, the
Business, or the Assets, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change
affecting in any material respect the service, or products of
Corporation or the Business, and (iii) none of the Assets shall
have been damaged by fire, flood, casualty, riot or other cause
(regardless of insurance coverage for such damage), and there
shall have been delivered to Purchaser a certificate to that
effect, dated as of the Closing Date and signed by Seller.
8.3 Corporate Certificate . Corporation shall have delivered
to Purchaser (i) copies of the Charter Documents as in effect
immediately prior to the Closing Date, (ii) copies of resolutions
adopted by its Board of Directors and shareholders authorizing
the transactions contemplated by this Agreement, (iii) written
resignations of Corporation's officers and Board of Directors and
(iv) a certificate of good standing issued by the Secretary of
State of the State of California as of a date not more than ten
(10) days prior to the Closing Date, certified in the case of
subsections (i) and (ii) as of the Closing Date by the Secretary
of Corporation as being true, correct and complete.
8.4 Delivery of Shares . At Closing, Seller shall deliver to
Purchaser certificates representing the Corporation Shares
accompanied by duly executed stock powers, and such other
instruments of transfer of title as are necessary to transfer to
Purchaser good and marketable title to the Corporation Shares.
8.5 Consents . Corporation and Seller shall have received
consents to the transactions contemplated hereby and waivers of
rights to terminate or modify any material rights or obligations
of Corporation and Seller from any person from whom such consent
or waiver is required under any Contract to which Seller,
Corporation or the Assets are bound as of a date not more than
ten (10) days prior to the Closing Date, or who, as a result of
the transactions contemplated hereby, would have such rights to
terminate or modify such contracts, either by the terms thereof
or as a matter of law.
8.6 No Adverse Litigation . There shall not be pending or
threatened any action or proceeding by or before any court or
other governmental body which shall seek to restrain, prohibit,
invalidate or collect damages arising out of the transactions
contemplated hereby, and which, in the judgment of Purchaser,
makes it inadvisable to proceed with the transactions
contemplated hereby.
26
8.7 Due Diligence Review . Purchaser shall have completed
its due diligence review of Corporation, the Assets and the
Business pursuant to Section 7.4, and shall be satisfied with the
results of such review and assessment.
8.8 Seller Employment Agreement . Seller shall have entered
into the Seller Employment Agreement.
8.9 Opinion of Counsel . Purchaser shall have received the
Opinion of Seller's Counsel.
8.10 Release . At the Closing, Seller and such of her
Affiliates as may be designated by Purchaser shall deliver to
Purchaser the Release.
8.11 Approvals. All authorizations, consents, orders, or
approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Authority, the
failure to obtain which would have a material adverse effect on ,
shall have been filed, occurred, or been obtained.
8.12 No Injunctions or Restraints. 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 transaction
shall be in effect.
8.13 Termination of Employee Benefit Plans. Purchaser shall
have received copies of duly adopted resolutions of Corporation's
Board of Directors satisfactory to Purchaser in its sole
discretion (i) terminating Corporation's Employee Benefits Plans
(other than Employee Welfare Benefit Plans), with such
termination effective prior to the Closing Date, (ii) providing
that no contributions shall be made to Corporation's 401(k) Plan
after such date, and (iii) directing Corporation's legal counsel
to apply for a determination letter from the Internal Revenue
Service with respect to the termination of the 401(k) Plan and to
submit a Notice of Intent to Terminate to all participants and
beneficiaries under 401(k) Plan.
8.14 No Liens or Encumbrances. All liens, judgments, and
other encumbrances on the Corporation Shares shall have been
satisfied and released prior to Closing.
8.15 Spousal Consent. Pursuant to Nevada community property
law, Purchaser shall have received executed written consents to
this Agreement and the transactions contemplated herein from the
spouse of Seller, if applicable.
9. CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations
of Seller to effect the transactions contemplated hereby shall be
subject to the fulfillment at or prior to the Closing Date of the
following conditions, any or all of which may be waived in whole
or in part by Seller:
9.1 Accuracy of Representations and Warranties and
Compliance with Obligations . The representations and warranties
of Purchaser contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date
27
with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or
disclosed pursuant to this Agreement, and (ii) that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date.
Purchaser shall have performed and complied in all material
respects with all of its obligations required by this Agreement
to be performed or complied with at or prior to the Closing Date.
Purchaser shall have delivered to Seller a certificate, dated as
of the Closing Date, and signed by an executive officer thereof,
certifying that such representations and warranties are true and
correct, and that all such obligations have been performed and
complied with, in all material respects.
9.2 Other Conditions . Purchaser shall have delivered to
Seller the Purchaser Shares.
9.3 Opinion of Counsel . Seller shall have received the
Opinion of Purchaser's counsel.
10. INDEMNIFICATIONS.
10.1 Survival of Representations, Warranties, Indemnities
and Covenants. The representations, warranties and indemnities
set forth in this Agreement and any right to bring an action at
law, in equity, or otherwise for any misrepresentation or breach
of warranty under this Agreement shall survive for a period of
three (3) years from the Closing Date. All post-closing covenants
(including, without limitation, the obligation to pay contingent
consideration pursuant to Section 2.2 above) shall survive the
Closing for the period specified in this Agreement or, if not
specified, for a period of three (3) years following the Closing
Date. Indemnification Provisions for the Benefit of Purchaser.
Seller agrees to indemnify and hold Purchaser, and their
respective officers, directors and affiliates harmless from and
against any and all Adverse Consequences (as defined below) that
any of such parties may suffer or incur resulting from, arising
out of, relating to, or caused by (i) the breach of any of
Seller's representations, warranties, obligations or covenants
contained herein, or (ii) the operation of the Business or
ownership of the Assets on or prior to the Closing Date,
including, without limitation, any claims or lawsuits based on
conduct of Corporation, its employees or Seller occurring before
the Closing. For purposes of this Article 10., the phrase
"Adverse Consequences" means all charges, complaints, actions,
suits, proceedings, hearings, investigations, claims, demands,
judgments, orders, decrees, stipulations, injunctions, damages,
dues, penalties, fines, costs, amounts paid in settlement,
liabilities (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated, and whether due
or to become due), obligations, taxes, liens, losses, expenses,
and fees, including all attorneys' fees and court costs. In
addition to and without limiting the foregoing, Seller agrees,
from and after the Closing, to indemnify Purchaser from and
against the entirety of any Adverse Consequences Purchaser may
suffer resulting from, arising out of, relating to, in the nature
of, or caused by any liability of for the unpaid taxes of any
person or entity (including Seller) under United States Treasury
Regulation 1.1502-6 (or any similar provision of state, local,
28
or foreign law), as a transferee or successor, by contract, or
otherwise. Indemnification Provisions for the Benefit of Seller.
Purchaser agrees to indemnify and hold Seller harmless from and
against any and all Adverse Consequences Seller may suffer or
incur resulting from, arising out of, relating to, or caused by
the breach of any of Purchaser's representations, warranties,
obligations or covenants contained herein. Survival of
Representations, Warranties, Indemnities and Covenants. The
representations, warranties and indemnities set forth in this
Agreement and any right to bring an action at law, in equity, or
otherwise for any misrepresentation or breach of warranty under
this Agreement shall survive for a period of three (3) years from
the Closing Date. All post-closing covenants (including, without
limitation, the obligation to pay contingent consideration
pursuant to Section 2.2 above) shall survive the Closing for the
period specified in this Agreement or, if not specified, for a
period of three (3) years following the Closing Date.
Indemnification Provisions for the Benefit of Purchaser. Seller
agrees to indemnify and hold Purchaser, and their respective
officers, directors and affiliates harmless from and against any
and all Adverse Consequences (as defined below) that any of such
parties may suffer or incur resulting from, arising out of,
relating to, or caused by (i) the breach of any of Seller's
representations, warranties, obligations or covenants contained
herein, or (ii) the operation of the Business or ownership of the
Assets on or prior to the Closing Date, including, without
limitation, any claims or lawsuits based on conduct of
Corporation, its employees or Seller occurring before the
Closing. For purposes of this Article 10., the phrase "Adverse
Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands,
judgments, orders, decrees, stipulations, injunctions, damages,
dues, penalties, fines, costs, amounts paid in settlement,
liabilities (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated, and whether due
or to become due), obligations, taxes, liens, losses, expenses,
and fees, including all attorneys' fees and court ▇▇▇▇▇.▇▇
addition to and without limiting the foregoing, Seller agrees,
from and after the Closing, to indemnify Purchaser from and
against the entirety of any Adverse Consequences Purchaser may
suffer resulting from, arising out of, relating to, in the nature
of, or caused by any liability of for the unpaid taxes of any
person or entity (including Seller) under United States Treasury
Regulation 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or
otherwise. Indemnification Provisions for the Benefit of Seller.
Purchaser agrees to indemnify and hold Seller harmless from and
against any and all Adverse Consequences Seller may suffer or
incur resulting from, arising out of, relating to, or caused by
the breach of any of Purchaser's representations, warranties,
obligations or covenants contained herein. 10.1 Indemnification
Provisions for the Benefit of Purchaser.
(a) Seller agrees to indemnify and hold Purchaser, and
their respective officers, directors and affiliates harmless
from and against any and all Adverse Consequences (as
defined below) that any of such parties may suffer or incur
resulting from, arising out of, relating to, or caused by
(i) the breach of any of Seller's representations,
29
warranties, obligations or covenants contained herein, or
(ii) the operation of the Business or ownership of the
Assets on or prior to the Closing Date, including, without
limitation, any claims or lawsuits based on conduct of
Corporation, its employees or Seller occurring before the
Closing. For purposes of this Article 10., the phrase
"Adverse Consequences" means all charges, complaints,
actions, suits, proceedings, hearings, investigations,
claims, demands, judgments, orders, decrees, stipulations,
injunctions, damages, dues, penalties, fines, costs, amounts
paid in settlement, liabilities (whether known or unknown,
whether absolute or contingent, whether liquidated or
unliquidated, and whether due or to become due),
obligations, taxes, liens, losses, expenses, and fees,
including all attorneys' fees and court costs.
(b) In addition to and without limiting the foregoing,
Seller agrees, from and after the Closing, to indemnify
Purchaser from and against the entirety of any Adverse
Consequences Purchaser may suffer resulting from, arising
out of, relating to, in the nature of, or caused by any
liability of for the unpaid taxes of any person or entity
(including Seller) under United States Treasury Regulation
1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or
otherwise.
10.2 Indemnification Provisions for the Benefit of Seller.
Purchaser agrees to indemnify and hold Seller harmless from and
against any and all Adverse Consequences Seller may suffer or
incur resulting from, arising out of, relating to, or caused by
the breach of any of Purchaser's representations, warranties,
obligations or covenants contained herein.
11. TERMINATION, AMENDMENT AND WAIVER
11.1 Termination . This Agreement may be terminated at any
time prior to the Closing:
(a) by notification from Purchaser as a result of
Purchaser's due diligence investigation pursuant to Section
7.4 above;
(b) by mutual written consent of all of the parties
hereto at any time prior to the Closing;
(c) by Purchaser in the event of a breach by Seller of
any provision of this Agreement; or
(d) by Purchaser or Seller if the Closing shall not
have occurred by September 1, 2001.
11.2 Effect of Termination . Except as provided in Article
10. and for the provisions of Section 7.2, in the event of
termination of this Agreement pursuant to Section 12.1, this
Agreement shall forthwith become void; provided, however, that
nothing herein shall relieve any party from liability for the
breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
30
12. GENERAL PROVISIONS.
12.1 Notices . All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be
delivered (and shall be deemed delivered) by certified or
registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such
transmission is confirmed by delivery by certified or registered
mail (first class postage pre-paid) or guaranteed overnight
delivery, to the following addresses and telecopy numbers (or to
such other addresses or telecopy numbers which such party shall
designate in writing to the other party):
(a) if to Purchaser:
Make Your Move, Inc.
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. Rolling, President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Walther, Key, Maupin, Oats, Cox & LeGoy
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Seller:
▇▇▇▇ ▇▇▇ Ban
c/o Allpaq Technologies
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇, Esq.
c/o Allpaq Technologies
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Entire Agreement . This Agreement (including the Exhibits
and Schedules attached hereto) and other documents delivered at
the Closing pursuant hereto, contains the entire understanding of
the parties in respect of its subject matter and supersedes all
prior agreements and understandings (oral or written) between or
among the parties with respect to such subject matter. The
Exhibits and Schedules constitute a part hereof as though set
forth in full above.
12.2 Expenses . Except as otherwise provided herein, the
parties shall pay their own fees and expenses, including their
own counsel fees, incurred in connection with this Agreement or
any transaction contemplated hereby. Seller hereby agrees to pay
31
any and all sales and/or use taxes which may become due and owing
as a result of the completion of the transactions contemplated
hereby.
12.3 Amendment; Binding Effect; Assignment . This Agreement
may not be modified, amended, supplemented, canceled or
discharged, except by written instrument executed by all parties.
The rights and obligations of this Agreement shall bind and inure
to the benefit of the parties and their respective successors and
assigns. Except as expressly provided herein, the rights and
obligations of this Agreement may not be assigned by Seller
without the prior written consent of Purchaser.
12.4 Counterparts . This Agreement may be executed in any
number of counterparts, each of which shall be an original but
all of which together shall constitute one and the same
instrument.
12.5 Governing Law; Interpretation . This Agreement shall be
construed in accordance with and governed for all purposes by the
laws of the State of Nevada applicable to contracts executed and
to be wholly performed within such State.
12.6 Joint Efforts. This Agreement is the result of the
joint efforts and negotiations of the parties hereto, with each
party being represented, or having the opportunity to be
represented, by legal counsel of its own choice, and no singular
party is the author or drafter of the provisions hereof. Each of
the parties assumes joint responsibility for the form and
composition of this Agreement and each party agrees that this
Agreement shall be interpreted as though each of the parties
participated equally in the composition of this Agreement and
each and every provision and part hereof. The parties agree that
the rule of judicial interpretation to the effect that any
ambiguity or uncertainty contained in an agreement is to be
construed against the party that drafted the agreement shall not
be applied in the event of any disagreement or dispute arising
out of this Agreement.
12.7 Headings. All paragraph headings herein are inserted
for convenience of reference only and shall not modify or affect
the construction or interpretation of any provision of this
Agreement.
12.8 Severability. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be
illegal, invalid or unenforceable, either in whole or in part,
such illegality, invalidity or unenforceability shall not affect
the legality, validity or enforceability of the remaining
provisions or covenants, or any part thereof, all of which shall
remain in full force and effect.
12.9 Attorneys' Fees. The prevailing party in any proceeding
brought to enforce the provisions of this Agreement shall be
entitled to an award of reasonable attorneys' fees and costs
incurred at both the trial and appellate levels incurred in
enforcing its rights hereunder.
32
Make Your Move, Inc., a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇. Rolling
------------------------------------
Name: ▇▇▇▇▇ ▇. Rolling
Title: President
"Purchaser"/s/▇▇▇▇▇ Rolling
"Date"September 1, 2001
By: /s/ ▇▇▇▇ ▇▇▇ Ban
------------------------------------
Name: ▇▇▇▇ ▇▇▇ Ban
"Seller"/s/▇▇▇▇ ▇▇▇ Ban
"Date"September 1, 2001
SCHEDULES AND EXHIBITS
Schedule 5.1: Corporate Status
Schedule 5.4: Capitalization
Schedule 5.5: Corporation's Subsidiaries
Schedule 5.8: Financial Statements
Schedule 5.9: Current Balance Sheet
Schedule 5.10: Litigation
Schedule 5.11: Liabilities; Bank Accounts
Schedule 5.13: Environmental Matters
Schedule 5.14: Real Property, Leases and Significant Personal Property
Schedule 5.15: Good Title, Adequacy and Condition
Schedule 5.16: Compliance With Law
Schedule 5.17: Employee Benefit Plans
Schedule 5.18: Tax Returns
Schedule 5.22: Contracts, Customer Lists and Employment Matters
Schedule 5.23: Officers, Directors and Key Employees
Schedule 5.24: Predecessor Corporations
Schedule 5.25: Spin-Off by Corporation
Schedule 5.27(c): Trade Names and Service Marks
Schedule 5.27(d): Intellectual Property
Exhibit 3.2(a)(ii): Release
Exhibit 3.2(a)(iii): Opinion of Seller's Counsel
Exhibit 3.2(a)(iv): Seller Employment Agreement
Exhibit 3.2(b)(ii): Opinion of Purchaser's Counsel
33