Exhibit 2.1
STOCK PURCHASE AGREEMENT
AGREEMENT made as of the 2nd day of October, 2006 by and among ▇▇▇▇▇ BROS.
ELECTRONICS, INC. ("Buyer"), a Virginia corporation, having an address at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ BROS. ELECTRONICS, INC.
("Parent"), a Delaware corporation, having an address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, CIS SECURITY SYSTEMS CORPORATION ("Company"), a
Virginia corporation, having an address at ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. ("Seller"), an individual having an
address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Seller is the owner of 600 shares of the capital stock, $1.00 par
value, of the Company (the "Shares"), which Shares constitute all of the
presently issued and outstanding securities of the Company of every class;
WHEREAS, Seller has agreed to sell, and Buyer has agreed to purchase, all
of the Shares upon the terms, subject to the conditions and in reliance on the
representations and warranties hereinafter set forth;
NOW, THEREFORE, in consideration of the respective agreements hereinafter
set forth, the parties agree as follows:
ARTICLE ONE
SALE OF SHARES, CONSIDERATION, PAYMENT AND RELATED MATTERS
On the basis of the representations and warranties contained in and subject
to the terms and conditions of this Agreement:
1.1 Sale. Seller shall at the Closing (as hereinafter defined) sell,
assign, transfer, convey and deliver to Buyer, and Buyer shall purchase, the
Shares, free and clear of all liens, claims, charges, equities, encumbrances,
restrictions and voting agreements of every kind, for the consideration, and
payable as hereinafter provided. Certificates for the Shares shall be delivered
by Seller to Buyer at the Closing duly endorsed, or accompanied by stock powers
duly endorsed, in blank. The certificates for the Shares and stock powers, if
any, shall be delivered at the Closing to the Company which shall promptly issue
new certificates for the Shares, in the amounts the Buyer shall request, in the
name of Buyer.
1.2 Purchase Price and Payment.
(a) The aggregate purchase price for the Shares shall be determined as
specified in Sections 1.2(b) and 1.2(c) (the "Purchase Price").
(b) Closing Events:
(i) At the Closing, Buyer shall pay the sum of $850,000 to
Seller, subject to reduction by the amount, if any, that Company's
total indebtedness upon Closing, as scheduled on Seller schedule 1.2
(b)(i), exceeds $625,000. Payment to Seller of said amount shall be
made in accordance with wiring instructions provided to the Buyer by
the Seller, by wire transfer in immediately available funds. For the
purposes of this section 1.2(b)(i), indebtedness shall not include any
trade debt incurred by the Company in the ordinary course of business.
(ii) On the Closing or as soon thereafter as may be practicable,
Buyer shall, or shall cause the Company to, repay the existing bank
and other debt on the balance sheet of the Company pursuant to Seller
Schedule 1.2(b)(i), and shall assume, or shall cause the Company to
assume, and cause Seller to be released therefrom, to the extent
permitted by obligee(s), any and all guarantees of Seller which may
relate to such indebtedness, given by Seller on behalf of Company and
both said indebtedness and any such guarantees shall be disclosed on
Seller Schedule 1.2. Seller shall promptly, without compensation,
execute all documents reasonably necessary to accomplish the
foregoing. If any obligee(s) under any Company indebtedness assumed by
Buyer refuses to permit Seller to be released from such indebtedness,
Buyer shall indemnify and hold Seller harmless from any claims arising
from such indebtedness.
(iii) On or within fifteen days of Closing, Parent shall issue in
the name of Seller, twenty thousand (20,000) shares of common stock
($.01 par value) of Parent ("HBE Shares").
(c) Post-Closing Payments:
(i) The "Revenue Goal" shall be the achievement by the Company or
the Buyer (in the event that Company shall have been merged into
Buyer), of average quarterly revenue (calculated pursuant to United
States
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generally accepted accounting principles as in effect from time to
time ("GAAP")) equal to or greater than $900,000 at each quarterly
period beginning from the Closing.
(ii) Each of March 31, June 30, September 30 and December 31 in
each of the five (5) calendar years 2007, 2008, 2009, 2010 and 2011
shall be deemed a "Cash Determination Date." With respect to each Cash
Determination Date where the Revenue Goal is achieved, Buyer shall pay
Seller the amount of $12,500, plus the total, if any, of prior cash
payments pursuant to this sub-clause that had not been paid to Seller,
due to failure to achieve the Revenue Goal on a prior Cash
Determination Date.
(iii) Each of March 31, June 30, September 30 and December 31 in
each of the four (4) calendar years 2007, 2008, 2009 and 2010 shall be
deemed a "Share Determination Date." With respect to each Share
Determination Date where the Revenue Goal is achieved, Buyer shall
cause Parent to issue to Seller five thousand (5,000) HBE Shares, plus
the total, if any, of prior share issuances pursuant to this
sub-clause that had not been made to Seller, due to failure to achieve
the Revenue Goal on a prior Share Determination Date.
(iv) Any cash payments not made pursuant to 1.2(c)(ii) at the
final Cash Determination Date or HBE Shares not issued pursuant to
1.2(c)(iii) at the final Share Determination Date shall be forfeited.
(v) Promptly after the completion of Buyer's and Parent's
quarterly accounting process for each fiscal quarter ending upon a
Cash Determination Date, but no later than 30 days after the end of
the quarter, Buyer shall provide Seller with a calculation of the
Buyer's average quarterly revenue since the Closing Date and a
determination as to whether the Revenue Goal had been achieved as of
said date. Upon a determination that a payment under either or both of
Sections 1.2(c)(ii) or 1.2(c)(iii) are payable, Buyer shall promptly
remit the same to Seller. If Seller objects to the aforementioned
calculation within five (5) business days of Buyer providing him with
such calculation, Seller shall meet with a representative of Buyer and
Parent to attempt to resolve any such disagreement and shall
thereafter have an additional twenty (20) business days, at
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Seller's cost and expense, to have an independent certified public
accountant review the calculation, and Buyer and Parent shall
cooperate with such review by making books and records available. If,
following the review by the independent certified public accountant, a
disagreement continues to exist with respect to the calculation, the
matter may be submitted to binding arbitration in accordance with
Section 1.2(d).
(d) If there is a dispute between the parties with respect to any
matter in Sections 1.2(c), such dispute shall be submitted to binding
arbitration within the City of New York, before a single arbitrator agreed
upon by the parties, or if they cannot agree, appointed by JAMS. The
arbitrator shall award costs (including, but not limited to, travel costs)
and attorneys' fees to the prevailing party as a part of his judgment.
1.3 Additional Closing Transaction.
(a) At the Closing or as soon thereafter as may be practicable, the
Buyer shall transfer to Seller the 2001 Lexus LS430 automobile owned by
Company in exchange for Seller's payment therefor to Buyer of $1.00 and
Seller's assumption of all taxes and transfer fees associated with such
transfer and Seller's assumption of future registration and insurance costs
associated therewith.
ARTICLE TWO
CLOSING AND RELATED MATTERS
2.1 Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") will take place at such date, location and time as may
be mutually agreeable to the parties hereto.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to and agrees with Parent and Buyer that,
except as otherwise set forth or referred to in this Agreement or enumerated
upon a separate schedule dated and executed contemporaneously herewith from the
Seller (hereinafter referred to as the "Seller Schedule"):
3.1 Corporate Organization, Standing and Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Virginia and
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has all requisite corporate power and authority to conduct its business and own,
lease and operate its properties as and in the places where such business is now
conducted and such properties are now owned, leased or operated. Copies of the
Articles of Incorporation, By Laws and minutes of the Company heretofore
delivered to Buyer are true, correct and complete copies of each thereof, in the
case of the Articles of Incorporation and By Laws each as amended to date and
presently in full force and effect. At the Closing, Seller shall deliver to
Buyer a certificate to the foregoing effect executed by the Company's Secretary.
The Company is duly qualified and in good standing under the laws of each
jurisdiction where the failure to be so qualified reasonably could be expected
to have a material adverse effect on the Company. Seller shall deliver to Buyer
current certificates from each such jurisdiction confirming good standing. The
Company has no subsidiaries. The Company has no interest in any partnership,
corporation or other entity, other than as set forth in the Seller Schedule 3.1.
3.2 Capital Stock, Ownership, Etc.
(a) The authorized securities of the Company consists of 5,000 shares
of Common Stock, $1.00 par value, of which the Shares are the only issued
and outstanding securities. The Shares are duly and validly issued and
outstanding, fully paid and non-assessable, with no personal liability
attaching to the ownership thereof. The Company has no outstanding
subscriptions, options, warrants, rights, calls or other agreements,
obligations or commitments of any kind to issue, sell or purchase, or
convert any obligations into, any securities of any kind or class.
(b) The Seller is the sole record and beneficial owners of the Shares,
free and clear of all liens, claims, charges, equities, encumbrances,
restrictions, options and voting and other agreements of every kind, and
Seller has full and unrestricted right and authority to sell and transfer
his Shares to Buyer in accordance with this Agreement and is conveying to
Buyer good and unencumbered title thereto.
3.3 Financial Statements; Financial Condition and Changes.
(a) The compiled financial statements of the Company at and for the
fiscal year ended May 31, 2006, and the interim financial statements at and
for the quarter ended August 31, 2006, including balance sheet and
statement of operations and retained earnings heretofore delivered by the
Seller to Buyer (the "Compiled Financial Statements") are true, correct and
complete in all material respects and in conformity with
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the books and records of the Company, consistently applied through the
periods covered (except as otherwise stated therein) and fairly present in
all material respects the financial condition and results of operations of
the Company as at the date thereof and for the period covered thereby.
Except as set forth in the Seller Schedule 3.3(a), there have been no
occurrences or developments since August 31, 2006, which would require any
material adverse changes to be made in the Compiled Financial Statements.
(b) Except as set forth in Seller Schedule 3.3(b), as of the date of
this Agreement, the Company has no liabilities or obligations of any kind,
whether absolute, accrued, contingent, or otherwise, other than those (i)
set forth or referred to in the Compiled Financial Statements, (ii)
incurred since August 31, 2006 in the ordinary course of business, and
(iii) to be performed under (A) executory agreements entered into in each
case in the ordinary course of business and of a type not required under
generally accepted accounting principles to be included in financial
statements, and (B) the other agreements listed or referred to in the
Seller Schedules or elsewhere in this Agreement (but excluding any claim of
or liability for breach by the Company of any such agreements), but only to
the extent that the liabilities and obligations referred to in the
preceding clauses (i) through (iii) inclusive do not otherwise constitute a
breach of any of the other representations or warranties of the Seller in
this Article Three or elsewhere in this Agreement.
(c) Except as set forth in Seller Schedule 3.3(c), since August 31,
2006, there have been no changes in the financial condition, assets,
liabilities, operating results or business of the Company, other than
changes in the ordinary course of business, none of which has been,
individually or in the aggregate, materially adverse, nor any material
damage, destruction or loss of any of its property, and the business and
operations of the Company have been conducted only in the usual, regular
and ordinary course. Without limiting the generality of the foregoing,
since August 31, 2006, the Company has not (i) declared or paid, or set
aside for payment, any dividend or other distribution in respect of its
outstanding securities, (ii) entered into any material agreements or
transactions or incurred any material liabilities or obligations other
than, in each case, in the ordinary course of business and none of which,
individually or in the aggregate, has been or to the best of the Seller's
knowledge and belief, will be materially adverse; (iii) borrowed or agreed
to borrow any money or loaned or agreed to loan to, or guaranteed or agreed
to
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guarantee the obligations of, any person; (iv) canceled, compromised or
waived any amounts owing to or any claims heretofore made by it except for
immaterial amounts in the ordinary course of business or otherwise waived,
surrendered or released any material rights, contractual or other; (v)
acquired any assets, tangible or intangible, subject to, or subjected any
of its assets, tangible or intangible, to, any mortgage, pledge, lien,
security interest or other encumbrance; (vi) sold, leased, abandoned or
otherwise disposed of any of its property, tangible or intangible, or
interests therein, other than in the ordinary course of business; (vii)
made any increase in the compensation payable to any of its employees or
agents, or agreed so to do, or paid or agreed to pay any deferred
compensation or bonus to any such person, or entered into any employment
agreement with any such person, other than in the ordinary course of
business, or established any incentive, deferred compensation or other
employee benefit plans or arrangements, other than in each case those
terminable by the Company without payment or penalty on not more than
fourteen days notice or those required by any collective bargaining
agreements referred to in the Seller Schedule or elsewhere in this
Agreement; (viii) terminated or agreed to terminate any material contract,
agreement or other arrangement or relationship with any of its major
suppliers or customers or lost, or received information that it may lose,
the business of any customer or customers; (ix) made or entered into any
agreement or commitment to make any capital expenditures requiring the
payment after the date of this Agreement of more than $1,000 in the
aggregate; (x) experienced any material labor troubles or disputes; or (xi)
to the best of the Seller's knowledge, experienced any other event or
condition of any character which has materially adversely affected or may
in the future be anticipated to materially adversely affect its assets,
business, operations or prospects.
(d) The books of account and other records of the Company are in all
material respects complete and correct, have been maintained in accordance
with good business practices and accurately reflect the information
contained therein.
(e) Seller's Additional Balance Sheet Warranty. In addition to any
other representation and warranty of Seller contained in this Agreement,
the Seller warrants that, at Closing and thereafter, the Company's last
pre-Closing Balance Sheet delivered to Buyer shall be free of errors,
inaccuracies, misrepresentations or omissions. Any negative adjustments to
the Balance Sheet that are required to be made in accordance
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with GAAP by May 1, 2009 for matters that should have been reflected at
Closing, exceeding in the aggregate the sum of $25,000, will result in a
corresponding offset and reduction, against the next amount or amounts that
become payable to Seller pursuant to Section 1.2(c)(ii), until the amount
or amounts of such adjustments shall have been repaid in full. If amounts
payable pursuant to such Section 1.2(c)(ii) are determined to be
insufficient to repay such adjustments, Seller shall repay the remaining
amount due hereunder to Buyer.
3.4 Taxes; Tax Returns. Except as specified on Seller Schedule 3.4, the
Company (i) has filed, or will file before the date due, as such may be
extended, all applicable Federal, state, county and local tax and franchise
returns and reports required to be filed by it as of August 31, 2006 and has
paid (or, as to taxes not currently due and payable, has made adequate provision
for the payment of) all income and other taxes, assessments, franchise fees and
other governmental charges required by law (including, without limitation,
withholding, social security, payroll and similar taxes) and all interest and
penalties, if any, thereon and (ii) is not a party to any pending action or
proceeding by any governmental authority for the assessment or collection of any
taxes, assessments, franchise fees or other governmental charges and no claim
for any thereof is pending or to the best of Seller's knowledge threatened.
Copies of the Company's Federal tax return for the fiscal year ended May 31,
2006, heretofore delivered to Buyer, are true, correct and complete.
3.5 Material Agreements. The Seller Schedule 3.5 contains a true, correct,
and complete list of (and, except as therein set forth, the Company is not a
party to nor is it or any of its properties or assets bound by or subject to)
any material written or oral agreement, commitment or understanding (i) not made
in the ordinary course of business; (ii) relating to loans, credits and
guarantees, whether to or for the benefit of or made by the Company; (iii) for
the purchase or leasing by or furnishing to the Company of any merchandise,
supplies or services not to be performed within three months or individually or
in the aggregate representing a commitment by the Company of more than $1,000;
(iv) for the sale, leasing or furnishing by the Company of any merchandise,
supplies or services; (v) relating to the employment of any person or with any
labor union or association not terminable without penalty or premium on notice
of fourteen days or less; (vi) involving incentive, bonus or deferred
compensation plans or arrangements or stock option, stock purchase or similar
plans or arrangements; (vii) for the
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leasing of any property, real or personal, whether as lessor or lessee; (viii)
relating to the furnishing of brokerage, agency, dealer, distributorship, sales
representative, consulting or advertising services, whether to, for or by the
Company; (ix) relating to partnerships or joint ventures or involving the
sharing of profits; (x) providing for the furnishing of services or the sale of
property by the Company for less than the fair value thereof; or (xi) providing
for expenditures, capital or otherwise, in excess of $1,000 individually or in
the aggregate. All such agreements are valid, binding, and enforceable in
accordance with their respective provisions, performance by the Company of any
thereof will not, individually or in the aggregate, have any material adverse
effect on the business, assets, operations or financial condition of the
Company, and true and complete copies of all such agreements which are in
writing have been delivered or made available to Buyer except as otherwise
indicated in Seller Schedule 3.5.
3.6 Property Leases.
(a) The Company has good and marketable title to all of its assets,
real, personal and mixed, tangible and intangible, in each case free and
clear of all liens, security interests, claims, charges and encumbrances
except (i) as expressly set forth in Seller Schedule 3.6(a) and (ii) the
lien, if any, of current taxes not yet due and payable. All machinery,
fixtures, equipment and similar assets of, and all real property of or
leased by the Company are in good operating condition and repair.
(b) All leases to which the Company is a party are in good standing,
are valid, binding and enforceable in accordance with the respective
provisions thereof and are listed on Seller Schedule 3.6(b).
3.7 Default. Except as set forth in Seller Schedule 3.7, neither the
Company nor, to the best of Seller's knowledge, any other party hereto is in
material violation of or default under, and no event (including, without
limitation, execution of and consummation of the transactions provided for in
this Agreement) has occurred which with the passage of time or notice from or
action by any party thereto or otherwise could result in a material breach of or
default under, or give any other person the right to terminate, as the case may
be, any material indenture, mortgage, security, loan, lease or other agreement
(including, without limitation, those listed or referred to in the Seller
Schedules) to which the Company is a party or by which it is bound or to which
any of its assets are subject or result in the creation, imposition or
acceleration
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of any material lien, encumbrance, charge, equity or restriction of any nature
in favor of any other person upon any of the assets of the Company.
3.8 Permits; Compliance with Laws. The Company possesses all necessary
valid licenses, permits, franchises, consents, authorizations and approvals of
or from governmental departments, agencies and instrumentalities for the
business and operations of the Company as presently conducted and is not in
material default with respect to nor in violation of, and has not received
notice of any violation of or of any proceedings for the termination or
revocation of, any such license, permit, franchise, consent, authorization or
approval or any applicable Federal, state, local or foreign law, statute,
ordinance, regulation, order or requirement relating to its business, operations
or assets, or the use thereof, which default or violation could have a
materially adverse affect upon its business, operations or assets. Seller
Schedule 3.8 includes a list (including expiration dates) of all material
licenses, permits, consents, authorizations and approvals of or from
governmental departments, agencies and instrumentalities held by the Company in
the conduct of its business.
3.9 Employee Benefit Plans. Seller Schedule 3.9 includes a list of all
Company Benefit Plans between the Company and any of its employees whereby the
Company is obligated to provide any benefit to any employees arising out of the
employment relationship. As used herein, the term "Benefit Plan" shall mean any
"employee benefit plan" within the meaning of ERISA Section 3(3) and the term
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended. Except as set forth in Seller Schedule 3.9, the Company's Benefit Plans
are fully funded, as of May 31, 2006, and each is maintained in accordance with
its terms and Summary Plan Description.
3.10 Intangible Rights. Except as set forth in Seller Schedule 3.10, the
Company does not own any Intangible Rights. As used herein, the term "Intangible
Rights" means and includes all right, title and interest in, to and under, any
United States and foreign patents, trademarks, trade names, trade styles,
service marks, designs, copyrights, domain names and labels, together in each
case with all registrations, applications, recordings, reissuances, extensions,
renewals, licenses and rights, if any, and all books, records, documents,
advertising materials, brochures, and instruments, thereof or therefor or
relating thereto, the goodwill of the business symbolized thereby, and all
claims against third parties for violation or infringement of any thereof.
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3.11 Litigation. Except as set forth in Seller Schedule 3.11, there are no
actions, suits, claims, arbitrations, administrative or other proceedings or
governmental investigations pending or, to the best of the Seller's knowledge,
threatened against, relating to or affecting the Company or its business,
operations or assets, whether or not fully covered by insurance, or which
question or seek to prevent consummation of the transactions provided for in
this Agreement, whether at law or in equity, or before or by any Federal, state,
local, foreign or other governmental department, agency or instrumentality nor
to the best of Seller's knowledge is there any basis therefor. The Company is
not bound or adversely affected by or in default with respect to any judgment,
order, writ, injunction or decree of any court or of any governmental
department, agency or instrumentality.
3.12 Employees; Insurance; Banks; Etc. Seller Schedule 3.12 contains a
complete and correct list and, where applicable, a summary description of:
(a) The names, employment job titles and current annual rates of
compensation paid by the Company to each employee or agent.
(b) All insurance policies of the Company (including insurance on the
lives of any employees of the Company) and performance, surety and similar
bonds presently in force and effect with respect to the business,
operations and assets of the Company, all of which policies and bonds are
validly outstanding and in full force and effect. The Company has not been
advised that any insurer or surety intends or proposes to cancel any such
policy or bond prior to the present expiration or termination dates thereof
or to increase the applicable premium rate, rate classification or charge
therefor prior to or following such expiration or termination dates or is
unwilling to renew or extend any such policy or bond following its normal
expiration or termination dates.
(c) The names of each bank in which the Company maintains an account
or safe deposit box and of each security broker with which the Company
maintains an account (including, in each case, the name and account number
or other designation thereof) and the names of all persons authorized to
draw thereon or to give instructions with respect or having access thereto.
(d) The names of all persons, if any, holding tax, customs and other
powers of attorney from the Company and a brief description thereof.
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3.13 Transactions with the Company. Except as set forth in Seller Schedule
3.13, neither the Seller nor any director, officer or employee of the Company
nor any associate (as such term is hereinafter defined) of any of the foregoing,
directly or indirectly (i) has any claim of any kind against the Company; or is
owed any amounts by the Company other than compensation payable by the Company
for its current (but not any prior) pay period, all such other claims and
obligations, if any, of Seller as against or owing to Seller by the Company
being hereby waived and released by Seller, (ii) is obligated to the Company,
(iii) has any interest in the assets of the Company whether pursuant to any
lease, other agreement or otherwise, (iv) is a party to any executory agreement
with the Company, (v) is an adverse party, directly or indirectly, to any
litigation or other proceedings to which the Company or any of its assets are or
may be subject, or (vi) owns, manages, operates, controls, is employed by or is
otherwise in any manner connected with or interested in any entity with which
the Company has had any material business relationships, whether as a customer,
supplier or otherwise, or which has been a competitor, directly or indirectly,
of the Company. As used in this Section, the term "associate" means any relative
by blood or marriage or any company, partnership, trust or other entity in which
any of the Seller or any such person or entity has, directly or indirectly, an
interest of five percent (5%) or more or any other person who, directly or
indirectly, controls or is controlled by or is under common control with the
Seller or any such relative, other person or entity.
3.14 Investment Purpose. Seller is acquiring the HBE Shares for investment
and not with a view to the sale or distribution thereof, for his or her own
account and not on behalf of others and has not granted any other person any
right or option or any participation or beneficial interest in any of the HBE
Shares. Seller acknowledges his understanding that the HBE Shares are restricted
securities within the meaning of Rule 144 of the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended (the "Securities
Act"), and that the HBE Shares may not be sold, except pursuant to an effective
registration statement under the Securities Act or in a transaction exempt from
registration under the Securities Act, and Seller acknowledges that he
understands the meaning and effect of such restriction. Seller is aware that no
federal or state regulatory agency or authority has passed upon the issuance of
the HBE Shares or the terms of the issuance or the accuracy or adequacy of any
material being provided to Seller and that the price of the HBE Shares was
negotiated between Buyer and Seller and does not
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necessarily bear any relationship to the underlying assets or value of Parent.
Seller understands that an investment in HBE Shares involves a high degree of
risk.
At any time after any HBE Shares have been held for at least one year by
Seller, and provided that the Seller is not then and has not been during the
three months prior to the date of such request an "affiliate" of the Parent, on
the surrender to the Parent of the certificate representing such HBE Shares, a
stock power executed by the Seller, medallion signature guaranteed, a written
instruction letter and such other supporting documents as the Parent may
reasonably require, together with evidence reasonably satisfactory to the Parent
demonstrating compliance with applicable securities laws, which shall include
without limitation, a legal opinion from Seller's counsel that the sale of the
HBE Shares by Seller will be exempt from the registration requirements of
applicable securities laws, the Parent shall replace such surrendered
certificate with a certificate for a like number of shares, but absent any
legend to the effect that the HBE Shares are "restricted securities."
3.15 Authorization; Validity. This Agreement and each of the other
agreements, instruments and documents executed or to be executed by Seller
pursuant to this Agreement has been duly authorized and constitutes the valid
and legally binding obligations of Seller in accordance with its terms except as
enforcement may be limited by applicable bankruptcy, insolvency and other laws
relating to or affecting creditors' rights generally and subject also to general
principles of equity affecting the right to specific performance and injunctive
relief.
3.16 Authorization Approvals. The Company's Board of Directors has
authorized the Company to enter into this Agreement, and all other documents to
be executed pursuant to or in connection with this Agreement and minutes of the
meeting so attesting have been provided to Buyer by the Company's Secretary. No
authorization or approval of, or filing with, or compliance with any applicable
order, judgment, decree, statute, rule or regulation of, any court or
governmental authority, or approval, consent, release or action of any third
party, is required in connection with the execution and delivery by the Seller
of, or the performance or satisfaction of any agreement of the Seller contained
in or contemplated by this Agreement.
3.17 Disclosure. Neither this Agreement nor the schedules and exhibits to
this Agreement nor any other written certificate, statement or document
furnished or to be furnished by Seller in connection with the transactions
provided for in this Agreement contains or will contain any untrue statement of
a material fact or omits or will omit to state any material fact
13
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which made, not misleading, and to the best of
Seller's knowledge and belief, all such material books, records, agreements,
documents, financial and operating data and other information of or relating to
the Company as Buyer has requested or may request has heretofore been or will be
made available to Buyer. Without limiting the generality of the foregoing, to
the best of Seller's knowledge, there has not occurred and does not exist in any
event, circumstance or development not disclosed to Buyer relating to the
Company (as contrasted with general industry, economic or business conditions)
which has materially adversely affected or in the future reasonably may, so far
as any Seller can now foresee, materially adversely affect the business,
operations or assets of the Company.
3.18 Opportunity to Meet with Management. Seller acknowledge that he has
had an opportunity to meet with and ask questions of Parent's management.
3.19 Receipt of Disclosure Documents. Seller acknowledges that he has had
access to and has reviewed copies of the following (the "Financial Statements")
from Parent: its Annual Report on Form 10-KSB for the fiscal year ended December
31, 2005 and its 10-Q for the quarter ended June 30, 2006.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
4.1 Organization; Authorization. Buyer is a company duly organized, validly
existing and in good standing under the laws of the State of Virginia. Parent is
a company duly organized, validly existing and in good standing under the laws
of the State of Delaware. Buyer and Parent each possess all requisite corporate
power and authority to enter into and perform all of its respective obligations
under this Agreement and all agreements, documents and instruments contemplated
herein.
4.2 No Violations; Validity. No provision of Parent's or Buyer's respective
Certificate of Incorporation or By laws, or of any material agreement,
instrument or understanding, or of any material order, judgment, decree,
statute, rule or regulation of any court or governmental authority, to which
Parent or Buyer is a party or by which it is bound or subject, has been or will
be violated by the execution by Parent or Buyer, as the case may be, of, or the
performance or satisfaction of any agreement or condition upon its part to be
performed or satisfied under, this Agreement and all agreements, documents and
instruments contemplated
14
herein, and all requisite corporate and other authorizations for such execution,
delivery, performance and satisfaction have been duly obtained by Parent and
Buyer, respectively. This Agreement and each of the other agreements,
instruments and documents executed or to be executed by Parent or Buyer, as the
case may be, pursuant to this Agreement, constitutes the valid and legally
binding obligation of Parent or Buyer, as the case may be, in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency and other laws relating to or affecting creditors' rights generally
and subject also to general principles of equity affecting the right to specific
performance and injunctive relief.
4.3 Authorizations; Approvals. No authorization or approval of, or filing
with, or compliance with any applicable order, judgment, decree, statute, rule
or regulation of, any court or governmental authority, or approval, consent,
release or action of any third party, is required in connection with the
execution and delivery by Parent or Buyer, as the case may be, of, or the
performance or satisfaction of any agreement of Parent or Buyer, as the case may
be, contained in or contemplated by, this Agreement other than in connection
with any applicable laws and/or rules pertaining to the issuance of the HBE
Shares.
4.4 Investment Representation. Buyer is acquiring the Shares for its own
account and not with a view to the distribution thereof within the purview of,
and none of the Shares will be offered, sold, or otherwise disposed of by Buyer,
in violation of any applicable provisions of, the Securities Act or any
applicable state securities laws.
4.5 Authorization of HBE Shares. The issuance and delivery by Parent of the
HBE Shares to Seller has been duly authorized by all requisite corporate action
of the Parent and the HBE Shares issued to Seller and to be issued to Seller,
when issued and delivered in accordance with the terms of this Agreement, will
be validly issued and outstanding, fully paid and nonassessable, free and clear
of any liens and not subject to preemptive or other similar rights of
stockholders of the Parent.
ARTICLE FIVE
PRE-CLOSING MATTERS
5.1 Information as to Operations of the Company. Until the Closing:
(a) The Company shall, and Seller shall cause the Company to, afford
to Buyer, its attorneys, accountants and other representatives, upon
reasonable request, access to all properties, books, records and other
documents of the Company, including
15
the right to make extracts therefrom or copies thereof, and shall furnish
Buyer with, or with copies of, all such agreements, documents and records,
financial and operating data and other information concerning the Company
as Buyer may reasonably request. Buyer shall hold in strict confidence and
shall not use or otherwise publicly disclose, and shall cause its officers,
attorneys, accountants and other representatives to hold in strict
confidence and not to use or publicly disclose, all information so
furnished or made available by the Company which the Company indicates in
writing in advance is confidential other than information which is or
becomes publicly available or otherwise in the public domain through no
fault of the Buyer or Parent. Should this Agreement be terminated or the
transactions contemplated hereby not be consummated for any reason, Buyer
shall, upon written request from Company, return all written information so
furnished and all copies thereof and extracts therefrom.
(b) The Company shall, and the Seller shall cause the Company to,
refrain from taking or omitting to take any action or entering into any
transaction which, had such action been taken or omitted or such
transaction entered into immediately prior to execution of this Agreement,
would have caused any of the representations, warranties or agreements of
the Seller or the Company in this Agreement to be untrue, incorrect or
inaccurate in any material respect as of the time of execution of this
Agreement or would cause any such representations, warranties or agreements
to be untrue, incorrect or inaccurate in any material respect as of the
time immediately following such action, omission or transaction or as of
the date of Closing. Without limiting the generality of the foregoing,
except as otherwise set forth or provided in Seller Schedule 5.1(b), the
Company shall and the Seller shall cause the Company to (i) conduct its
business only in the usual, regular and ordinary course in the same manner
as heretofore, (ii) use its commercially reasonable efforts to preserve its
business, properties and assets, maintain its business organization intact,
keep available the services of its present officers and employees and
preserve its goodwill and existing relationships with customers, suppliers
and others having dealings with it, (iii) maintain its properties in
customary repair, good order and condition, reasonable use and wear and
tear excepted, (iv) maintain insurance on its properties and with respect
to the conduct of its business in amounts not less than
16
and of such kinds as are comparable to the insurance in effect on the date
of this Agreement, and (v) maintain its books, accounts and records in the
usual, regular and ordinary manner.
5.2 Adverse Circumstances.
(a) The Seller and the Company shall promptly notify Buyer, as soon as
any of them obtains knowledge, of any facts, circumstances or occurrences
which have adversely affected or might reasonably be expected to adversely
affect the business, properties, assets, financial condition or prospects
of the Company or which could or reasonably might be expected to cause any
of their representations, warranties or agreements in this Agreement to be
untrue, incorrect or inaccurate in any material respect.
(b) Should Buyer elect to consummate the Closing after receipt of any
notice pursuant to subsection 5.2(a), then, anything elsewhere in this
Agreement to the contrary notwithstanding, Buyer shall be deemed to have
waived any rights or claims which it might possess under this Agreement, or
otherwise, against the Seller or the Company with respect to the matters
expressly referred to (but only if and to the extent such matters are
adequately and properly referred to or disclosed) in such notice.
ARTICLE SIX
CONDITIONS PRECEDENT
6.1 Conditions Precedent to Obligation of Buyer. The obligation of Parent
and Buyer to consummate the transactions provided for in this Agreement shall be
subject to the fulfillment at or prior to the Closing of each of the following
conditions (any or all of which may be waived, in whole or in part, by Buyer in
its discretion):
(a) Each of the representations and warranties of the Seller in, or in
any instrument delivered in connection with or pursuant to, this Agreement
shall, except as otherwise contemplated or permitted by this Agreement, be
true and correct in all material respects on and as of the date of Closing
as if made at and as of such time. The Seller and the Company shall have
each duly performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing. Buyer shall
have received from the Company and Seller a certificate, dated the date of
Closing, to the foregoing effect.
(b) Buyer shall receive from the Seller a general release dated the
date of Closing of all then-existing claims of every kind against the
Company excluding,
17
however, such claims, if any, as are expressly referred to or described in
the Seller Schedule.
(c) The Seller and the Company shall have delivered to Buyer the
minute and stock books of the Company and the resignation of all present
directors and officers of the Company other than those, if any, designated
by Buyer at or prior to the Closing.
(d) Parent and Buyer shall have received the opinion of ▇▇▇▇▇ ▇.
▇▇▇▇▇, Esq. counsel for Seller and the Company, dated the date of Closing,
in substantially the form of Exhibit 6.1(d) attached hereto, to the effect
that as set forth in Sections 3.1, 3.2, 3.8, 3.11, 3.15 and 3.16 (to the
best of counsel's knowledge, based on counsel's review of the corporate
books and records specified in counsel's opinion but without having made
any independent investigation thereof as to Sections 3.1, 3.2, 3.8 and
3.11), (i) this Agreement has been duly executed and delivered by and
constitutes the valid and legally binding obligation of Seller and the
Company in accordance with its terms, (ii) upon the sale of the Shares to
Buyer in accordance with this Agreement, Buyer will acquire good and
marketable title thereto, free and clear of all liens, claims, equities,
encumbrances, restrictions, options and voting agreements of every kind
(assuming, for purposes of such opinion, that Buyer is a bona fide
purchaser within the meaning of Article VIII of the Uniform Commercial
Code) and (iii) such counsel, without however having made any independent
investigation thereof, has no reason to believe that any of the other
representations and warranties of Seller in this Agreement or in the
certificate of Seller referred to in subsection 6.1(a) are untrue,
incorrect or inaccurate in any material respect.
(e) All actions, proceedings, instruments, documents and other legal
matters relating to the transactions provided for in this Agreement or
incidental thereto shall be reasonably satisfactory to and approved by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Green, P.C., counsel to Parent and Buyer, and Seller and
the Company shall have furnished to such counsel all such instruments,
documents and papers as such counsel may have reasonably requested for this
purpose.
6.2 Conditions Precedent to Obligation of Seller. The obligation of the
Seller to consummate the transactions provided for in this Agreement shall be
subject to the fulfillment
18
at or prior to the Closing of each of the following conditions (any or all of
which may be waived, in whole or in part, by the Seller in their discretion):
(a) Each of the representations and warranties of Parent and Buyer in,
or in any instrument delivered in connection with or pursuant to, this
Agreement shall, except as otherwise contemplated or permitted by this
Agreement, be true and correct in all material respects on and as of the
date of Closing as if made at and as of such time. Parent and Buyer shall
have duly performed and complied in all material respects with all
agreements, covenants, and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing. The Seller
shall have received Parent's and Buyer's certificates, dated the date of
Closing, to the foregoing effect.
(b) The Seller shall have received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Green, P.C., counsel for Parent and Buyer, dated the date of Closing, in
substantially the form of Exhibit 6.2(b) attached hereto, to the effect
that as set forth in Section 4.1, 4.2, 4.3 and 4.5, such counsel, without
however having made any independent investigation thereof, has no reason to
believe that any of the representations and warranties of Parent and Buyer
in this Agreement or in the certificates of Parent and Buyer referred to in
subsection 6.2(a) are untrue, incorrect or inaccurate in any material
respect.
(c) All actions, proceedings, instruments, documents and other legal
matters relating to the transactions provided for in this Agreement or
incidental thereto shall be reasonably satisfactory to and approved by
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. counsel to the Seller and the Company, and Parent and
Buyer shall have furnished to such counsel all such instruments, documents
and papers as such counsel may have reasonably requested for this purpose.
(d) Seller shall have a letter of employment from the Buyer in the
form set forth on Exhibit 6.2(d) hereto.
6.3 Compliance with Conditions.
(a) All of the conditions to the obligations of Parent, Buyer and the
Seller respectively set forth in Sections 6.1 and 6.2 are and shall be
deemed covenants and agreements by the other and also by the Company to
comply with and fulfill such conditions as require action by it or them (to
the extent within its or their power) and to use its or their commercially
reasonable efforts to obtain compliance with and satisfaction
19
of each such condition as requires action by any other party or persons,
including any person not a party hereto.
ARTICLE SEVEN
ADDITIONAL AGREEMENTS OF THE PARTIES
7.1 Covenant Not to Compete.
(a) In order to induce Buyer to enter into and consummate the
transactions provided for in this Agreement, Seller hereby covenants and
agrees that during any period of Seller's employment by any of the Company,
Buyer or Parent, following the date of Closing, and during the period of
two (2) years following the date of termination of any such employment, and
except for such employment by Company, Buyer or Parent, he will not, (i)
without the prior written consent of Parent in each instance, directly or
indirectly, whether for himself or for any other person and whether as
proprietor, principal, stockholder, partner, agent, director, officer,
employee, consultant, independent contractor or in any other capacity,
engage in, or have any interest in any other business or other entity that
provides products and support for commercial security systems or other like
products of Company, Buyer, Parent or any subsidiary of the Parent; or (ii)
at any time after the Closing knowingly do any act which would impair the
value of the business, operations or assets of, or injure the goodwill or
reputation of, Buyer, Parent, any subsidiary of the Parent or the Company
or divert any of their business or employees unless such actions are
permitted by clause (i) above. Notwithstanding the foregoing restrictions,
nothing in the foregoing shall prevent Seller from accepting employment
with a manufacturer of products used in commercial security systems
provided, however, this shall not relieve Seller from the obligations
specified in the succeeding sentence. Without limiting the generality of
the foregoing, Seller hereby covenants and agrees that during the two year
period beginning on the date of termination of employment with the Company,
Buyer or Parent, as the case may be, he will not solicit any business from
any person, firm, corporation or entity which was a customer of the Company
within the two year period prior to the Closing or a customer of Company,
Buyer or Parent during any period of his post-Closing employment by any
such party, nor will he hire any person who was an employee of the Company,
Buyer, Parent or any subsidiary of the Parent as of the date of Closing or
during the term of his employment.
20
(b) Seller agrees that each provision of subsection 7.1(a) is
reasonable and necessary for the protection of Buyer; that each such
provision, and the period or periods of time, broad geographical area and
type and scope of restrictions on his activities specified therein, are and
are intended to be divisible; that if any portion thereof (including any
sentence, clause or part) shall be held contrary to law or invalid or
unenforceable in any respect in any jurisdiction, or as to any one or more
periods of time, areas or business activities, or any part thereof, the
remaining provisions shall not be affected but shall remain in full force
and effect as to the other and remaining parts; and that any such invalid
or unenforceable provision shall be deemed, without further action on the
part of the parties hereto, modified, amended and limited to the least
extent necessary to render the same valid and enforceable in such
jurisdiction. Seller further recognizes and agrees that any violation of
his agreement in subsection 7.1(a) would cause such damages to Buyer as
would be irreparable and the exact amount of which would be impossible to
ascertain and that, for such reason, among others, Buyer shall be entitled,
as a matter of course, to injunctive relief from any court of competent
jurisdiction restraining any further violation. Such right to injunctive
relief shall be cumulative and in addition to and not in limitation of all
other rights and remedies which Buyer may possess.
7.2 Further Assurances. From and after the date of this Agreement and the
date of Closing, the parties hereto shall from time to time, at the request of
any other party and without further consideration, do, execute and deliver, or
cause to be done, executed and delivered, all such further acts, things and
instruments as may be reasonably requested or required more effectively to
evidence and give effect to the transactions provided for in this Agreement.
Without limiting the generality of the foregoing, the parties shall cooperate
with each other (i) in connection with the filing of the Company's tax returns
with respect to any period up to the Closing, and (ii) at the expense of the
requesting party (provided that the foregoing shall only apply to actual
out-of-pocket costs), in the furnishing of information, evidence, testimony and
other assistance in connection with any legal actions, proceedings or disputes
involving any of the parties based upon any contracts, agreements, arrangements
or other matters whether occurring prior or subsequent to the date of this
Agreement and the date of Closing.
21
ARTICLE EIGHT
SURVIVAL, INDEMNIFICATION AND RELATED MATTERS
8.1 Survival.
(a) The representations and warranties of Seller contained in Article
3 (except for Sections 3.1, 3.2, 3.3(e), 3.4, 3.9, 3.11, 3.14 and 3.15
hereof) and those of Parent and Buyer contained in Article 4 hereof shall
survive the Closing and continue in full force and effect for two (2) years
thereafter. The representations and warranties of the Seller contained in
Sections 3.1, 3.2, 3.4, 3.9, 3.11, 3.14 and 3.15 hereof shall survive the
Closing and continue in full force and effect indefinitely, subject to any
applicable statutes of limitations.
(b) The covenants of Buyer and Seller contained herein shall survive
the Closing and continue in full force and effect, subject to any
limitation specifically made applicable to any such covenant under the
provisions of Article 7 hereof.
8.2 Indemnification.
(a) Parent and Buyer, on the one hand, and Seller, on the other:
(i) Shall each indemnify and hold the other free and harmless
from and against and shall reimburse the other for any and all claims,
liabilities, damages, losses, judgments, costs and expenses including
reasonable counsel fees and other reasonable out-of-pocket expenses
(the foregoing being hereinafter collectively referred to as
"damages") arising out of or resulting from any inaccuracy or
inadequacy in or breach or default of any of its or his
representations, warranties, covenants or agreements in, or in any
document or other instrument executed or delivered pursuant to or in
connection with, this Agreement.
(ii) Shall give the other written notice of any claim, demand,
action, suit or proceeding raised, brought, threatened, made or
commenced against it or the Company relating to any matter to which
the indemnification provisions of this Section 8.2 apply, and such
other party shall have the right, at its expense, to participate in
the settlement and defense thereof using counsel of its own choice.
Failure to give such notice shall not, however, affect the liability
of any other party under this Agreement unless such failure shall
materially adversely prejudice the
22
defense thereof by such other party. Nothing herein shall limit the
right of any party to settle any claim, demand, action, suit or
proceeding brought or threatened against it, provided, however, that
in any such event no other party shall be bound by the amount or terms
of any such settlement not consented to by it.
(b) Limitations on Indemnification Amount.
(i) Deductible. Seller shall have no liability for
indemnification with respect to claims under Section 8.2(a) until
the total amount of all damages with respect to such claims
exceeds twenty-five thousand dollars ($25,000) and then only for
the amount by which such damages exceed twenty-five thousand
dollars ($25,000). Parent and Buyer shall have no liability for
indemnification with respect to claims under Section 8.2(a) until
the total amount of all damages with respect to such claims
exceeds twenty-five thousand dollars ($25,000) and then only for
the amount by which such damages exceed twenty-five thousand
dollars ($25,000); provided, however, that the foregoing shall
not apply to the failure of Parent and Buyer to make payments or
distributions pursuant to Section 1.2(c) when and as required.
(ii) Aggregate Amount. Notwithstanding anything to the
contrary herein, the aggregate liability of Seller for damages
shall not exceed an amount equal to the aggregate amount of all
consideration actually paid to Seller pursuant to this Agreement.
Notwithstanding anything to the contrary herein, the aggregate
liability of Buyer and Parent for damages shall not exceed
$250,000; provided, however, that the foregoing shall not apply
with respect to the failure of Parent or Buyer to make payments
or distributions pursuant to Section 1.2(c).
(c) Notwithstanding anything to the contrary in this Section 8.2,
Seller's obligation to indemnify Buyer and Parent shall not apply to the
extent such loss is covered by any insurance the Company may have.
(d) The provisions of this Section 8.2 shall not be construed as a
waiver by any party of any other rights or remedies which it may possess,
whether under this Agreement, at law or in equity, arising out of or
resulting from any breach or default of or inaccuracy or inadequacy in any
other party's representations, warranties, covenants or agreements.
23
ARTICLE NINE
MISCELLANEOUS
9.1 Expenses. Each party shall bear and pay all legal, accounting and other
fees and expenses incurred by it in connection with, and with the transactions
provided for in, this Agreement and the performance of all its obligations and
agreements hereunder.
9.2 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered or if mailed by first
class registered or certified mail return receipt requested, or by first class
mail if received, addressed to the parties at their respective addresses set
forth or referred to on the first page and signature page of this Agreement,
with copies to their respective counsel, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Green, P.C., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., in the case of Parent
and Buyer, and ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., Law Offices of ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, in the case of Seller and the Company
(until the Closing, after which time copies of notices, requests, demands and
other communications to the Company shall be sent to Buyer at the address set
forth on the first page, with a copy to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Green, P.C., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., or to such other
person or address as may be designated by like notice hereunder.
9.3 Parties in Interest. This Agreement shall be binding upon, and shall
inure to the benefit of and be enforceable by, the parties hereto and their
respective legal representatives, successors and assigns, but no other person
shall acquire or have any rights under this Agreement.
9.4 Entire Agreement; Modification; Waiver. This Agreement contains the
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes all prior negotiations and understandings,
if any, and there are no agreements, representations or warranties other than
those set forth, provided for or referred to herein. All exhibits and schedules
to this Agreement are expressly made a part of this Agreement as fully as though
completely set forth herein and all references to this Agreement herein, in any
of such writings or elsewhere shall be deemed to refer to and include all such
writings. Neither this Agreement nor any provisions hereof may be modified,
amended, waived, discharged or terminated, in whole or in part, except in
writing signed by the party to be charged. Any party
24
may extend the time for or waive performance of any obligation of any other
party or waive any inaccuracies in the representations or warranties of any
other party or compliance by any other party with any of the provisions of this
Agreement. No waiver of any such provisions or of any breach of or default under
this Agreement shall be deemed or shall constitute a waiver of any other
provisions, breach or default, nor shall any such waiver constitute a continuing
waiver.
9.5 Interpretation. All pronouns and words used in this Agreement shall
be read in the appropriate number and gender, the masculine, feminine and neuter
shall be interpreted interchangeably and the singular shall include the plural
and vice versa, as the circumstances may require.
9.6 Applicable Law. This Agreement shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said state applicable to contracts made and to be
performed entirely within such State. Except as otherwise provided in Section
1.2(d), the Parent, Buyer and the Seller each hereby agree that any legal suit,
action or proceeding arising out of or relating to this Agreement shall be
instituted exclusively in the State and Federal Courts located within the State
of New York.
9.7 Headings; Counterparts. The article and section headings in this
Agreement are for reference purposes only and shall not define, limit or affect
the meaning or interpretation of this Agreement. This Agreement is being
executed in two or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same instrument. This Agreement
may be executed and delivered by facsimile and the parties agree that such
facsimile execution and delivery shall have the same force and effect as
delivery of an original document with original signatures, and that each party
may use such facsimile signatures as evidence of the execution and delivery of
this Agreement by all parties to the same extent that an original signature
could be used.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
25
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
▇▇▇▇▇ BROS. ELECTRONICS, INC.
(Parent)
By: /s/ ▇▇▇▇▇ Reach
-------------------------------------------------
▇▇▇▇▇ Reach, Chief Operating Officer
▇▇▇▇▇ BROS. ELECTRONICS, INC.
(Buyer)
By: /s/ ▇▇▇▇▇ Reach
-------------------------------------------------
▇▇▇▇▇ Reach, Chief Operating Officer
CIS SECURITY SYSTEMS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., President
SELLER:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
SCHEDULES AND EXHIBITS
Schedules
---------
Schedule 1.2(b)(i) Indebtedness
Schedule 1.2(b)(ii) Personal Guarantees
Schedule 3.1 Company Interest in any Partnership, Corporation,
or Other Entity
Schedule 3.3 Financial Statements; Financial Condition and
Changes
Schedule 3.4 Taxes; Tax Returns
Schedule 3.5 Material Agreements
Schedule 3.6 Property Leases
Schedule 3.7 Defaults
Schedule 3.8 Permits; Compliance with Laws
Schedule 3.9 Employee Benefit Plans
Schedule 3.10 Intangible Rights
Schedule 3.11 Litigation
Schedule 3.12 List of Employees, Insurance Company, Bonding
Company and Bank
Schedule 3.13 Transactions with the Company
Schedule 5.1(b) Actions Taken on Behalf of the Company Not in the
Ordinary Course of Business
Schedule 6.1(b) Conditions Precedent--Claims of Any Kind Against
the Company
Exhibits
--------
Exhibit 6.1(d) Opinion of Counsel to Company and Seller
Exhibit 6.2(b) Opinion of Counsel to Parent and Buyer
Exhibit 6.2(d) Letter of Employment