Exhibit 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF
JUNE 12, 2003
BY AND AMONG
RJL MARKETING SERVICES INC.,
ALL SHAREHOLDERS OF RJL MARKETING SERVICES INC.
AND
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
TABLE OF CONTENTS
SECTION 1: GENERAL DEFINITIONS..........................................-1-
1.1 BEST KNOWLEDGE...............................................-1-
1.2 BUSINESS DAY.................................................-1-
1.3 CODE.........................................................-1-
1.4 ERISA........................................................-1-
1.5 EXCHANGE ACT.................................................-1-
1.6 FISCAL YEAR..................................................-1-
1.7 GOVERNMENTAL AUTHORITY.......................................-2-
1.8 GOVERNMENTAL REQUIREMENT.....................................-2-
1.9 IRS..........................................................-2-
1.10 LEGAL REQUIREMENTS...........................................-2-
1.11 OWNERSHIP INTEREST...........................................-2-
1.12 PERSON.......................................................-2-
1.13 SEC..........................................................-2-
1.14 SECTION......................................................-2-
1.15 SECURITIES ACT...............................................-2-
1.16 TAXES........................................................-3-
SECTION 2: ACQUISITION .................................................-3-
2.1 EXCHANGE OF SHARES...........................................-3-
2.2 DESCRIPTION OF GUARDIAN PREFERRED STOCK......................-3-
2.3 INCOME TAX CONSIDERATIONS....................................-3-
2.4 COMPLIANCE WITH SECURITIES LAWS..............................-3-
2.5 RESTRICTIVE LEGEND...........................................-3-
SECTION 3: APPROVALS ...................................................-3-
3.1 GUARDIAN BOARD OF DIRECTORS APPROVAL.........................-3-
3.2 RJL BOARD OF DIRECTOR APPROVAL...............................-3-
3.3 RJL SHAREHOLDER APPROVAL.....................................-4-
3.4 SEC APPROVAL.................................................-4-
SECTION 4: ADDITIONAL AGREEMENTS........................................-4-
4.1 RJL FINANCIAL STATEMENTS.....................................-4-
4.2 SPIN OFF.....................................................-4-
4.3 RJL PRIVATE PLACEMENT........................................-5-
4.4 DIAGNOS DISTRIBUTOR AGREEMENT................................-5-
4.5 NOTIFICATION OF CERTAIN MATTERS..............................-5-
4.6 FURTHER ACTION...............................................-5-
4.7 PUBLIC ANNOUNCEMENTS.........................................-5-
4.8 COOPERATION IN SECURITIES FILINGS............................-6-
4.9 ADDITIONAL DOCUMENTS.........................................-6-
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SECTION 5: CLOSING .....................................................-6-
5.1 GENERAL PROCEDURE............................................-6-
5.2 TIME AND PLACE...............................................-6-
5.3 EFFECTIVE DATE OF CLOSING....................................-6-
5.4 COVENANTS REGARDING CLOSING..................................-6-
5.5 CONDITIONS TO OBLIGATION OF GUARDIAN.........................-7-
5.6 CONDITIONS TO OBLIGATION OF RJL AND SHAREHOLDERS.............-9-
5.7 SPECIFIC ITEMS TO BE DELIVERED AT THE CLOSING...............-11-
5.8 ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS OF
GUARDIAN AND RJL ...........................................-13-
SECTION 6: REPRESENTATIONS AND WARRANTIES BY
RJL AND SHAREHOLDERS .......................................-13-
6.1 ORGANIZATION AND STANDING...................................-13-
6.2 SUBSIDIARIES, ETC...........................................-13-
6.3 QUALIFICATION...............................................-13-
6.4 CORPORATE AUTHORITY.........................................-13-
6.5 FINANCIAL STATEMENTS........................................-14-
6.6 FINANCIAL INFORMATION.......................................-14-
6.7 CAPITALIZATION OF THE CORPORATION...........................-14-
6.8 TAXES.......................................................-14-
6.9 NO ACTIONS, PROCEEDINGS, ETC................................-15-
6.10 POST BALANCE SHEET CHANGES..................................-15-
6.11 NO BREACHES.................................................-15-
6.12 CONDITION OF THE CORPORATION'S ASSETS.......................-16-
6.13 CORPORATE ACTS AND PROCEEDINGS..............................-16-
6.14 REGISTERED RIGHTS AND PROPRIETARY INFORMATION...............-16-
6.15 NO LIENS OR ENCUMBRANCES....................................-17-
6.16 EMPLOYEE MATTERS............................................-18-
6.17 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW...................-18-
6.18 CONTRACT SCHEDULES..........................................-18-
6.19 LABOR MATTERS...............................................-19-
6.20 INSURANCE...................................................-19-
6.21 ENVIRONMENTAL...............................................-19-
6.22 DISCLOSURE OF INFORMATION...................................-21-
6.23 REPRESENTATION AND WARRANTIES...............................-21-
6.24 ABSENCE OF QUESTIONABLE PAYMENTS.............................-24
SECTION 7: COVENANTS OF RJL ...........................................-21-
7.1 PRESERVATION OF BUSINESS....................................-21-
7.2 ORDINARY COURSE.............................................-23-
7.3 NEGATIVE COVENANTS..........................................-23-
7.4 ADDITIONAL COVENANTS........................................-23-
7.5 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC..................-23-
7.6 COMPENSATION................................................-23-
7.7 NO SOLICITATION.............................................-23-
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SECTION 8: REPRESENTATIONS AND WARRANTIES OF GUARDIAN..................-24-
8.1 ORGANIZATION AND STANDING...................................-21-
8.2 SUBSIDIARIES, ETC...........................................-21-
8.3 QUALIFICATION...............................................-21-
8.4 CORPORATE AUTHORITY.........................................-21-
8.5 SEC DOCUMENTS; FINANCIAL STATEMENTS.........................-25-
8.6 CAPITALIZATION OF THE CORPORATION...........................-25-
8.7 NO ACTIONS, PROCEEDINGS, ETC................................-26-
8.8 TAXES.......................................................-26-
8.9 POST BALANCE SHEET CHANGES..................................-26-
8.10 NO BREACHES.................................................-31-
8.11 CORPORATE ACTS AND PROCEEDINGS..............................-26-
8.11 CORPORATE ACTS AND PROCEEDINGS..............................-27-
8.12 REGISTERED RIGHTS AND PROPRIETARY INFORMATION...............-27-
8.13 NO LIENS OR ENCUMBRANCES....................................-28-
8.14 EMPLOYEE MATTERS............................................-28-
8.15 CONTRACT SCHEDULES..........................................-33-
8.16 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW...................-34-
8.17 INSURANCE...................................................-35-
8.18 ENVIRONMENTAL...............................................-35-
8.19 DISCLOSURE OF INFORMATION...................................-36-
8.20 REPRESENTATIONS AND WARRANTIES..............................-36-
8.21 ABSENCE OF QUESTIONABLE PAYMENTS............................-36-
SECTION 9: COVENANTS OF GUARDIAN.......................................-29-
9.1 PRESERVATION OF BUSINESS....................................-29-
9.2 ORDINARY COURSE.............................................-29-
9.3 NEGATIVE COVENANTS..........................................-29-
9.4 ADDITIONAL COVENANTS........................................-30-
9.5 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC..................-30-
9.6 COMPENSATION................................................-39-
9.7 NO SOLICITATION.............................................-39-
9.8 DELIVERY OF ADDITIONAL FILINGS; ADDITIONAL ACCESS...........-31-
SECTION 10: REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS..............-31-
10.1 SHARE OWNERSHIP.............................................-31-
10.2 RIGHTS OWNERSHIP............................................-31-
10.3 RESTRICTION ON FUTURE TRANSFER..............................-31-
10.4 UNREGISTERED STOCK..........................................-31-
10.5 STOCK ACQUIRED FOR INVESTMENT; LIMITATIONS ON DISPOSITIONS..-31-
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SECTION 11: TERMINATION.................................................-31-
11.1 TERMINATION.................................................-31-
11.2 EFFECT OF TERMINATION.......................................-31-
11.3 TERMINATION FEE.............................................-31-
SECTION 12: INDEMNIFICATION.............................................-32-
12.1 INDEMNIFICATION COVENANTS OF GUARDIAN.......................-32-
12.2 INDEMNIFICATION COVENANTS OF RJL............................-33-
12.3 INDEMNIFICATION COVENANTS OF HOLDINGS.......................-33-
12.4 LIMITATION ON CLAIMS AND LIABILITY..........................-44-
12.5 METHOD OF ASSERTING CLAIMS..................................-44-
SECTION 13: NONDISCLOSURE OF CONFIDENTIAL INFORMATION...................-34-
13.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION...................-34-
13.2 NO PUBLICITY................................................-35-
SECTION 14: EXPENSES....................................................-35-
SECTION 15: MISCELLANEOUS...............................................-36-
15.1 ATTORNEY'S FEES.............................................-36-
15.2 NO BROKERS..................................................-36-
15.3 SURVIVAL AND INCORPORATION OF REPRESENTATIONS...............-36-
15.4 INCORPORATION BY REFERENCE..................................-36-
15.5 PARTIES IN INTEREST.........................................-36-
15.6 AMENDMENTS AND WAIVERS......................................-36-
15.7 WAIVER......................................................-36-
15.8 GOVERNING LAW - CONSTRUCTION................................-37-
15.9 REPRESENTATIONS AND WARRANTIES..............................-37-
15.10 NOTICES.....................................................-37-
15.11 FAX/COUNTERPARTS............................................-38-
15.12 CAPTIONS....................................................-38-
15.13 SEVERABILITY................................................-38-
15.14 GOOD FAITH COOPERATION AND ADDITIONAL DOCUMENTS.............-38-
15.15 SPECIFIC PERFORMANCE........................................-38-
15.16 ASSIGNMENT..................................................-39-
15.17 TIME........................................................-39-
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
("Agreement") is made and entered into effective this 12th day of June, 2003, by
and among GUARDIAN TECHNOLOGIES INTERNATIONAL, INC., a Delaware corporation,
("Guardian") and RJL MARKETING SERVICES INC., a Delaware corporation, ("RJL")
and each of the undersigned shareholders of RJL who own one hundred percent
(100%) of the issued and outstanding shares of RJL (such shareholders shall
hereafter collectively be referred to as "Shareholders").
WITNESSETH
WHEREAS, Shareholders are the record and beneficial owners of one
hundred percent (100%) of the issued and outstanding shares of RJL (the
"Shares"); and
WHEREAS, Guardian desires to acquire RJL (the "Acquisition") through
the acquisition of the Shares in consideration of the issuance of shares of
common stock, $.001 par value, and preferred stock, $.20 par value, of Guardian;
and
WHEREAS, the parties intend this Agreement to be a Plan of
Reorganization within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended, (the "Code") and the regulations thereunder;
and
WHEREAS, the parties entered into an Agreement and Plan of
Reorganization, dated effective as of May 1, 2003 (the "Original Agreement and
Plan of Reorganization"), and amended the Original Agreement Plan of
Reorganization pursuant to the terms of Amendment Agreements, dated May 6, May
15, and June 6, 2003, the effect of which Amendment Agreements was to extend the
closing date of the Acquisition to June 30, 2003.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and other good and
valuable consideration, the receipt and adequacy whereof is hereby acknowledged,
the parties agree as follows:
SECTION 1: GENERAL DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 BEST KNOWLEDGE. "Best Knowledge" shall mean both what a Person knew
as well as what the Person should have known had the Person exercised reasonable
diligence. When used with respect to a Person other than a natural person, the
1
term "Best Knowledge" shall include matters that are known or should have known
as the result of the exercise of reasonable diligence by the current directors
and executive officers of the Person.
1.2 BUSINESS DAY. "Business Day" means any day which is not a Saturday,
Sunday or a permitted or required bank holiday in Denver, Colorado.
1.3 CODE. "Code" means the Internal Revenue Code of 1986, as amended.
1.4 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.5 EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1.6 FISCAL YEAR. "Fiscal Year" shall mean a twelve-month period
beginning December 31.
1.7 GOVERNMENTAL AUTHORITY. "Governmental Authority" shall mean any and
all foreign, federal, state or local governments, governmental institutions,
public authorities and governmental entities of any nature whatsoever, and any
subdivisions or instrumentalities thereof, including, but not limited to,
departments, boards, bureaus, commissions, agencies, courts, administrations and
panels, and any division or instrumentalities thereof, whether permanent or ad
hoc and whether now or hereafter constituted or existing.
1.8 GOVERNMENTAL REQUIREMENT. "Governmental Requirement" shall mean any
and all laws (including, but not limited to, applicable common law principles),
statutes, ordinances, codes, rules regulations, interpretations, guidelines,
directions, orders, judgments, writs, injunctions, decrees, decisions or similar
items or pronouncements, promulgated, issued, passed or set forth by any
Governmental Authority.
1.9 IRS. "IRS" means the Internal Revenue Service.
1.10 LEGAL REQUIREMENTS. "Legal Requirements" means applicable common
law and any statute, ordinance, code or other laws, rule, regulation, order,
technical or other standard, requirement, judgment, or procedure enacted,
adopted, promulgated, applied or followed by any governmental authority,
including, without limitation, any order, decree, award, verdict, findings of
fact, conclusions of law, decision or judgment, whether or not final or
appealable, of any court, arbitrator, arbitration board or administrative
agency.
1.11 OWNERSHIP INTEREST. "Ownership Interest" shall mean any form of
direct or indirect interest in the ownership, equity or profits of RJL or
Guardian, whether certificated or non-certificated, issued or unissued,
2
contingent or otherwise, including, without limitation, the following: shares,
or the right thereto, executory rights to receive shares, options, warrants,
instruments or obligations convertible into shares or profit interests.
1.12 PERSON. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or otherwise.
1.13 SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
1.14 SECTION. Unless otherwise stated herein, the term "Section" when
used in this Agreement shall refer to the Sections of this Agreement.
1.15 SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.16 TAXES. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or collected by
any Governmental Authority or pursuant to any Governmental Requirement, and
shall also include any and all penalties, interest, deficiencies, assessments
and other charges with respect thereto.
SECTION 2: ACQUISITION
2.1 EXCHANGE OF SHARES. Subject to the terms and conditions hereinafter
set forth, on the Closing Date (as hereinafter defined), the Shareholders of RJL
shall deliver to Guardian, and Guardian shall accept from Shareholders,
certificates representing an aggregate of Nine Thousand One Hundred and Five
(9,105) shares of the outstanding common stock, no par value, of RJL, which
shares shall represent one hundred percent (100%) of the issued and outstanding
common stock and equity securities of RJL (the "RJL Common Stock"). In exchange
for the RJL Common Stock, Guardian shall issue and deliver to the Shareholders
at Closing, pro rata and proportionately, an aggregate of Five Million Five
Hundred and Eleven Thousand Five Hundred (5,511,500) shares of common stock,
$.001 par value per share, of Guardian (the "Guardian Common Stock"), and an
aggregate of Four Thousand and Ninety Seven (4,097) shares of Guardian Series A
Convertible Preferred Stock, $.20 par value per share (the "Guardian Preferred
Stock") (hereafter the Guardian Common Stock and Guardian Preferred Stock shall
collectively be referred to as the "Exchange Shares"). (Hereafter the exchange
of the RJL Common Stock for the Exchange Shares shall be referred to as the
"Exchange" or the "Acquisition.")
2.2 DESCRIPTION OF GUARDIAN PREFERRED STOCK. Guardian shall designate
6,000 of its authorized but unissued shares of preferred stock as Guardian
Preferred Stock. The relative rights, preferences and designations of the
3
Guardian Preferred Stock shall be as set forth on the Certificate of Designation
substantially in the form of Exhibit 2.2 hereto. The Certificate of Designations
shall be filed with the Delaware Secretary of State concurrently with the
Closing, as hereinafter defined, as a Certificate of Amendment to the
Certificate of Incorporation of Guardian. The relative rights and preferences of
holders of the Guardian Preferred Stock shall be as follows:
STATED VALUE. $.20 per share
LIQUIDATION PREFERENCE: $.20 per share
VOTING RIGHTS: Holders of the Guardian Preferred Stock shall
be entitled to one (1) vote for each share of Guardian Common Stock into which
the Guardian Preferred Stock is convertible (notwithstanding the condition for
automatic conversion provided hereinbelow has not been met) on any matter
presented to a vote of the shareholders of Guardian until the expiration of two
(2) years from the Closing Date, unless sooner converted into shares of Common
Stock. After two (2) years following the Closing Date, the holders of
outstanding shares of Guardian Preferred Stock shall have no voting rights
except as required by the Delaware General Corporation Law ("DGCL").
DIVIDENDS. Holders of outstanding shares of Guardian Preferred
Stock shall not be entitled to receive any dividends thereon and shall not be
entitled to participate in any dividends declared and paid on outstanding shares
of Guardian Common Stock.
REDEMPTION. Guardian shall have no option or right to redeem
any outstanding shares of Guardian Preferred Stock; and the holders of
outstanding shares of Guardian Preferred Stock shall have no right to compel
Guardian to purchase or redeem any such shares.
CONVERSION. Each share of Guardian Preferred Stock shall
automatically convert into one thousand (1,000) shares of Guardian Common Stock
immediately upon Guardian achieving from continuing operations at any time
during the two-year period commencing immediately following the Closing Date an
aggregate Earnings Before Income Taxes Depreciation and Amortization ("EBITDA")
of $2,500,000. The EBITDA of $2.5 million shall be evidenced by Guardian's
financial statements filed with the SEC in reports prepared and filed under
Section 13 of the Exchange Act. Except for such automatic conversion, the
Guardian Preferred Stock shall not be convertible into and the holders of
Guardian Preferred Stock shall have no right to convert such shares into shares
of Guardian Common Stock.
2.3 INCOME TAX CONSIDERATIONS. It is the intention of the parties
hereto that the exchange of stock contemplated by this Agreement will qualify
for treatment as a tax-free reorganization under Section 368(a)(1)(B) of the
4
Internal Revenue Code of 1986, as amended, and the parties hereby agree to
undertake all reasonable actions necessary both before and after the
consummation of the Exchange to effect such treatment.
2.4 COMPLIANCE WITH SECURITIES LAWS. The Exchange provided for in this
Section 2 shall be undertaken in reliance upon an exemption from the
registration requirements contained in Section 5 of the Securities Act contained
in Section 4(2) and/or Rule 506 of Regulation D. The Exchange Shares shall be
"restricted securities" within the meaning of Rule 144 under the Securities Act.
Guardian shall take such actions as may be necessary or advisable in order to
consummate the Exchange in conformity with applicable laws including, without
limitation, federal and state securities laws; and RJL, together with its
directors and officers, agrees to take such actions as may be necessary or
advisable upon the reasonable request of Guardian to consummate the Exchange in
conformity with such Legal Requirements.
2.5 RESTRICTIVE LEGEND. Certificates representing the Exchange Shares
to be issued to the Shareholders shall bear a legend in substantially the
following form:
The shares represented by this certificate have not
been registered under the Securities Act of 1933, as amended, (the
"Act") or any state securities laws (the "State Acts"), and are
restricted securities. The restricted securities have been acquired for
the holder's own account and not with a view to distribute them.
Restricted securities must be held indefinitely and may not be sold or
otherwise transferred unless they are subsequently registered under
said Act and any applicable State Acts or an exemption from such
registration is available.
SECTION 3: APPROVALS
3.1 GUARDIAN BOARD OF DIRECTORS APPROVAL. Subject to the provisions
hereof, the Board of Directors of Guardian shall, by written unanimous consent,
approve the Exchange and the transactions provided for or contemplated by this
Agreement; provided, however, that such approval shall be subject to their
satisfaction that the issuance of the Exchange Shares to the Shareholders shall
be and is exempt from the registration requirements of the Securities Act, is
undertaken without violation of the anti-fraud provisions of the Securities Act
and has been consummated in conformity with all other applicable Legal
Requirements.
3.2 RJL BOARD OF DIRECTORS APPROVAL. Subject to the provisions hereof,
the Board of Directors of RJL shall, by written unanimous consent, approve the
Exchange and the transactions provided for or contemplated by this Agreement;
provided, however, that such approval shall be subject to their satisfaction
that the issuance of the Exchange Shares to the Shareholders shall be and is
exempt from the registration requirements of the Securities Act, is undertaken
without violation of the anti-fraud provisions of the Securities Act and has
been consummated in conformity with all other applicable Legal Requirements.
5
3.3 RJL SHAREHOLDER APPROVAL. As promptly as practicable after the date
hereof, RJL shall take all action necessary or appropriate under the DGCL, and
its Certificate of Incorporation and By-Laws, to obtain the approval of its
Shareholders of the Exchange and the other transactions provided for or
contemplated by this Agreement. Such approval shall be obtained in conformity
with all applicable Legal Requirements.
3.4 SEC APPROVAL. If Guardian together with its legal counsel
determines that it is required, as promptly as practicable after the date
hereof, Guardian shall exercise reasonable effort to prepare and file with the
SEC, and mail to its shareholders of record, an information statement conforming
to the requirements of Rule 14f-1 under the Exchange Act (the "14f-1 Filing").
It shall be a condition precedent to the obligation of the parties to consummate
the Exchange that the 14f-1 Filing be cleared by the SEC and mailed to the
Guardian shareholders of record in conformity with Rule 14f-1 under the Exchange
Act and other applicable Legal Requirements.
SECTION 4: ADDITIONAL AGREEMENTS
4.1 RJL FINANCIAL STATEMENTS. RJL has delivered to Guardian copies of
unaudited balance sheets and income statements for the period from inception
through December 31, 2002, and for the interim period ended March 31, 2003 (the
"RJL Financial Statements"). The RJL Financial Statements (including any related
schedules and/or notes), show all liabilities, direct or contingent, required at
the time of preparation to be shown in accordance with generally accepted
accounting principles ("GAAP") and fairly present the financial position and
results of operations of RJL as of the date thereof and for the periods
indicated in accordance with GAAP, consistently applied. Except as otherwise
disclosed herein, RJL has no liability or obligation of any nature (whether
liquidated, unliquidated, accrued, absolute, contingent or otherwise, whether
due or to become due) except those set forth on the RJL Financial Statements and
current liabilities (determined in accordance with GAAP) incurred since the date
of the RJL Financial Statements in the ordinary course of business consistent
with past practice. As promptly as practicable following the execution of this
Agreement, RJL shall engage the services of an independent auditing firm (the
"Auditor"), to prepare financial statements of RJL as well as financial
statements of any affiliates or subsidiaries of RJL (hereafter collectively the
"Audited Financial Statements"). At the Closing, RJL shall deliver to Guardian a
certificate executed by the Auditor engaged to prepare the RJL Audited Financial
Statements that it has examined the financial books and records of RJL and has
determined that the RJL financial statements can and will be audited and a
report thereon issued without condition or qualification in accordance with the
requirements of Regulation SB, Item 310 under the Securities Act. The Audited
Financial Statements shall conform in all respects to the requirements of
Regulation SB, Item 310 under the Securities Act and shall include, at a
minimum, audited balance sheets as of December 31, 2002, audited statements of
6
operation and statements of cash flow for the period from inception to December
31, 2002, and audited statements of stockholders' equity at December 31, 2002.
The Financial Statements to be prepared following the Closing shall also include
unaudited balance sheets at March 31, 2003 and unaudited statements of
operations and statements of cash flow for the interim period ended March 31,
2003 (the "Unaudited Interim Financial Statements") and pro forma financial
information ("Pro Forma Financial Information") in accordance with the
requirements of Regulation SB, Item 310. RJL covenants and agrees to cause the
Audited Financial Statements, Unaudited Interim Financial Statements and Pro
Forma Financial Information to be prepared immediately following the Closing and
to be filed with the SEC under cover of Form 8-K in accordance and conformity
with the requirements of such form, applicable SEC rules and other Legal
Requirements. RJL agrees to indemnify, defend and hold harmless Guardian, Black
Mountain Holdings, as defined in Section 4.2 below, and their respective past
and present officers and directors from any debt, damage, liability or
obligation whatsoever arising from any failure on the part of RJL to prepare the
Audited Financial Statements and Unaudited Interim Financial Statements, and Pro
Forma Financial Information and to file same with the SEC under cover of Form
8-K in conformity with all applicable Legal Requirements. All costs and expenses
incurred in connection with the preparation of the RJL Financial Statements, and
the Audited and Unaudited Financial Statements, including fees and disbursements
of the Auditor, shall be borne exclusively by RJL.
4.2 SPIN-OFF. Prior to and as a condition to Closing, Guardian shall
transfer to a newly-formed wholly-owned subsidiary, Black Mountain Holdings,
Inc., a Delaware corporation ("Black Mountain Holdings") all of its assets (the
"Guardian Assets") subject to all of its liabilities (the "Guardian
Liabilities") in a reorganization under Section 351 of the Code. Guardian
Holdings shall assume the Guardian Liabilities and shall agree to defend,
indemnify and hold harmless Guardian and its successors and assigns from any
obligation with respect to said Guardian Liabilities and from any and all
liabilities, demands, claims, actions or causes of action, assessments, losses,
fines, penalties, costs, damages, and expenses, including but not limited to
reasonable attorney's fees, sustained by Guardian and RJL and their Affiliates
in connection with the spin-off.. In exchange for the Guardian Assets and
Guardian Liabilities, Black Mountain Holdings shall issue to Guardian a total of
approximately 2,150,000 shares of Black Mountain Holdings common stock (the
"Spin-off Shares"). The Spin-off Shares shall be transferred to a spin-off trust
for the benefit of the pre-Exchange Guardian shareholders. As soon as
practicable following the dropdown of the Guardian Assets and Guardian
Liabilities into Black Mountain Holdings, Black Mountain Holdings shall prepare
and file with the SEC a registration statement ("Spin-off Registration
Statement") registering the distribution of the Spin-off Shares to the
pre-Exchange Guardian shareholders, pro rata, pursuant to which the pre-Exchange
Guardian shareholders shall receive, in the nature of a dividend, one share of
Black Mountain Holdings common stock for each share of Guardian common stock
owned as of the record date of the spin-off. All legal, audit and registration
and other costs incurred in connection with the spin-off of Black Mountain
Holdings shall be borne by Black Mountain Holdings. In the event that the
Spin-off Registration Statement is not declared effective by the SEC within two
years from the date of Closing or is withdrawn at the request or suggestion of
the SEC, Black Mountain Holdings shall be dissolved, its assets disposed of, its
liabilities discharged and any remaining assets distributed to the pre-Exchange
Guardian shareholders.
7
4.3 RJL PRIVATE PLACEMENT. As soon as practicable following the
execution of this Agreement, and contemporaneous with the Closing , RJL agrees
to effect a private offering of shares of Guardian common stock exclusively to
persons who qualify as "accredited investors" within the meaning of Rule 501(a)
of Regulation D (the "RJL Private Placement"). The RJL Private Placement shall
raise gross proceeds of not less than $500,000 at a price equal to $0.50 per
share of Guardian common stock, and its consummation shall be contingent upon
consummating the Exchange. The RJL Private Placement shall be undertaken without
registration under the Securities Act in reliance upon an exemption from such
registration requirements contained in Section 4(2) of the Securities Act and/or
Regulation D thereunder, or Regulation S under the Securities Act, as may be
applicable. RJL agrees to undertake the RJL Private Placement in conformity with
all applicable Legal Requirements including, without limitation, applicable
federal and state securities laws. The completion of the RJL Private Placement
shall be a condition precedent to the obligations of the parties to consummate
the Exchange.
4.4 DIAGNOS DISTRIBUTOR AGREEMENT. At or prior to Closing, RJL shall
execute and deliver a definitive Distributor Agreement between RJL, on the one
hand, and Diagnos, Inc., a Canadian corporation, on the other hand, with such
amendments thereto as the parties shall agree in writing prior to Closing (the
"Diagnos Distributor Agreement"), pursuant to which RJL shall have been granted
certain exclusive reseller rights with regard to the United States government
and United States bio/medical market, and with regard to certain products
developed by Diagnos. The provisions, terms and conditions of the Diagnos
Distributor Agreement shall be reasonably satisfactory in all respects to RJL
and Guardian and their respective legal counsel and advisors. The execution and
delivery of the Diagnos Distributor Agreement shall be a condition precedent to
the obligations of the parties to consummate the Exchange.
4.5 NOTIFICATION OF CERTAIN MATTERS. RJL shall give prompt notice to
Guardian and Guardian shall give prompt notice to RJL of (i) the occurrence or
non-occurrence of any event which would cause any representation or warranty
made by the respective parties in this Agreement to be materially untrue or
inaccurate and (ii) any failure of Guardian or RJL, as the case may be, to
materially comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this section shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice and, provided
further, that the failure to give such notice shall not be treated as a breach
of covenant for the purposes of this Agreement unless the failure to give such
notice results in material prejudice to the other party.
4.6 FURTHER ACTION. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall use reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all other things
8
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and to otherwise satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
4.7 PUBLIC ANNOUNCEMENTS. RJL and Guardian shall consult with each
other before issuing any press release or other public statement with respect to
the Acquisition, the spin off or this Agreement and shall not issue any such
press release or make any such public statement without the prior consent of the
other party, which consent shall not be unreasonably withheld; provided,
however, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may, upon the advice of
counsel, be required by law if it has used reasonable efforts to first consult
with the other party.
4.8 COOPERATION IN SECURITIES FILINGS. RJL shall provide such
information regarding RJL, its business, its officers, directors and affiliates,
as is reasonably required by Guardian for purposes of preparing any notices,
reports and other filings with the SEC. Moreover, following the Closing, J.
▇▇▇▇▇▇ ▇▇▇▇▇▇, the Chief Executive Officer and Chief Financial Officer of
Guardian, and Black Mountain Holdings (as hereinafter defined) and its auditor
(and the current auditor of Guardian) shall provide such information as RJL
shall reasonably request for the purpose of preparing any notices, reports and
other filings by Guardian with the SEC, including but not limited to, in
connection with the preparation of any financial statements required to be filed
under the Exchange Act or Securities Act by Guardian and shall provide
reasonable access to the books and records of Black Mountain Holdings (as
hereinafter defined) and its Affiliates solely to enable Guardian to comply with
its SEC periodic and other filing requirements. Guardian shall be responsible
for any fees, expenses or other charges billed or assessed by Guardian's auditor
for complying with RJL's request for information.
4.9 ADDITIONAL DOCUMENTS. The parties shall deliver or cause to be
delivered such documents or certificates as may be necessary, in the reasonable
opinion of counsel for either of the parties, to effectuate the transactions
provided for in this Agreement. If at any time the parties or any of their
respective successors or assigns shall determine that any further conveyance,
assignment or other document or any further action is necessary desirable to
further effectuate the transactions set forth herein or contemplated hereby, the
parties and their officers, directors and agents shall execute and deliver, or
cause to be executed and delivered, all such documents as may be reasonably
required to effectuate such transactions.
SECTION 5: CLOSING
5.1 GENERAL PROCEDURE. Subject to the terms and conditions hereinafter
set forth, at the Closing each party shall deliver such documents, instruments
9
and materials as may be reasonably required in order to effectuate the intent
and provisions of this Agreement, and all such documents, instruments and
materials shall be satisfactory in form and substance to counsel for each party.
5.2 TIME AND PLACE. Upon the terms and subject to the conditions set
forth in this Agreement, the Exchange transactions contemplated by Section 2.1
shall be consummated and closed (the "Closing") at a time and place to be
determined by mutual agreement on or before five business days after the date on
which the conditions set forth in Sections 5.5 and 5.6 hereinbelow shall have
been satisfied or waived or such other time, date and place as the parties shall
agree upon but in any event no later than June 30, 2003, unless extended with
the mutual consent of the parties (the date of the Closing being herein referred
to as the "Closing Date").
5.3 EFFECTIVE DATE OF CLOSING. Notwithstanding any other provision of
this Agreement, the parties stipulate and agree that the effective date of
Closing and the effective date of Exchange shall be no later than April 30,
2003.
5.4 COVENANTS REGARDING CLOSING. RJL and Guardian each hereby covenant
and agree that they shall (i) use reasonable efforts to cause any amendments to
their respective Exhibits to be prepared and exchanged with the other party, and
its legal counsel, prior to Closing , except to the extent the express terms of
this Agreement provide for a different time period for such delivery to be
accomplished, (ii) use reasonable efforts to cause all of their respective
representations and warranties set forth in this Agreement, and Exhibits hereto,
to be true on and as of the Closing Date, (iii) use reasonable efforts to cause
all of their respective obligations that are to be fulfilled on or prior to the
Closing Date to be so fulfilled, (iv) use reasonable efforts to cause all
conditions to the Closing set forth in this Agreement to be satisfied on or
prior to the Closing Date, and (v) use reasonable efforts to deliver to each
other at the Closing the certificates, updated lists, notices, consents,
authorizations, approvals, agreements, transfer documents, receipts and
amendments required hereby (with such additions or exceptions to such items as
are necessary to make the statements set forth in such items true and correct,
provided that if any such additions or exceptions cause any of the conditions to
its respective obligations hereunder as set forth herein below not to be
performed, satisfied or fulfilled, such additions and exceptions shall in no way
limit the rights of the parties hereto to terminate this Agreement or refuse to
consummate the transactions contemplated hereby).
5.5 CONDITIONS TO OBLIGATION OF GUARDIAN. The obligation of Guardian to
complete the Exchange on the Closing Date on the terms set forth in this
Agreement is, at the option of Guardian, subject to the satisfaction or written
waiver by Guardian of each of the following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by RJL in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
10
the Closing Date, except to the extent that such representations and warranties
expressly relate to an earlier date in which case they shall have been true and
correct as of such earlier date.
(b) COMPLIANCE WITH COVENANTS. All covenants which RJL is
required to perform, satisfy or comply with on or before the Closing Date shall
have been fully complied with or performed in all material respects.
(c) CORPORATE APPROVALS. Any action required to be taken by
the Board of Directors of RJL or its Shareholders to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken.
(d) CONSENTS AND APPROVALS. To the extent that any material
lease, mortgage, deed of trust, contract or agreement to which RJL is a party
shall require the consent of any person to the Exchange or any other transaction
provided for herein, such consent shall have been obtained and Guardian shall
have received reasonably satisfactory evidence thereof; provided, however, that
RJL shall not make, as a condition for the obtaining of any such consent, any
agreements or undertakings not approved in writing by Guardian to the extent
that such condition otherwise has an effect on Guardian. Guardian shall have
been furnished with evidence satisfactory to it of the timely consent or
approval of, filing with or notice to, each Governmental Authority or Person
which in the good faith judgment of Guardian is necessary or required with
respect to the execution and delivery by RJL and the consummation by RJL of the
transactions contemplated hereby.
(e) REVIEW AND DUE DILIGENCE. Guardian, its investment
bankers, legal counsel and/or auditors shall have had the opportunity to
complete, and shall have completed, a satisfactory due diligence investigation
of RJL, together with a satisfactory review of RJL's corporate status and RJL's
property, all of which shall be satisfactory in form and substance to Guardian
in its sole discretion.
(f) NO LITIGATION, ETC. No action, investigation, litigation
or arbitration or proceeding by or before any Governmental Authority, or before
any arbitral, mediation panel or tribunal of any kind shall have been instituted
or threatened (i) to restrain or prohibit the transactions contemplated by this
Agreement, or (ii) to claim that the consummation of any such transaction is
illegal or (iii) which, if determined adversely, would effect adversely Guardian
or RJL following consummation of the transactions contemplated hereby and RJL
shall have delivered to Guardian a certificate dated as of the Closing Date and
executed by RJL, stating that to its Best Knowledge, no such items exist. No
governmental authority or arbitral, mediation panel or tribunal of any kind
shall have taken any other action as a result of which the management of
Guardian, in its sole discretion, reasonably deems it inadvisable to proceed
with the transactions contemplated by this Agreement.
11
(g) NO MATERIAL ADVERSE CHANGE. No material adverse change in
the business, property or assets of RJL shall have occurred, and no loss or
damage to any of the assets, whether or not covered by insurance, with respect
to RJL hereto has occurred, and RJL shall have delivered to Guardian a
certificate dated as of the Closing Date to such effect.
(h) UPDATE OF CONTRACTS. RJL shall have delivered to Guardian
an accurate list, as of the Closing Date, showing (i) all agreements, contracts
and commitments of the type listed on Exhibit 6.8 entered into since the date of
this Agreement; and (ii) all other agreements, contracts and commitments related
to the businesses or the assets of RJL entered into since the date of this
Agreement, together with true, complete and accurate copies of all such
documents (the "RJL New Contracts"). Guardian shall have had the opportunity to
review and approve the RJL New Contracts of the other, and any of the Companies
shall have the right to delay the Closing for up to ten (10) days if it in its
sole discretion deems such delay necessary to enable it to adequately review the
RJL New Contracts.
(i) NO ADVERSE INFORMATION. The investigations with respect to
RJL, the assets and the respective businesses of RJL, performed by Guardian's
respective professional advisors and other representatives shall not have
revealed any information concerning RJL, its assets, liabilities or its business
that has not been made known to Guardian, in writing prior to the date of this
Agreement and that, in the opinion of such party and its advisors, materially
and adversely affects the business or assets of the other party or the viability
of the transaction contemplated by this Agreement.
(j) ORDINARY COURSE OF BUSINESS. During the period from the
date of this Agreement until the Closing Date, RJL shall have carried on its
business in the ordinary and usual course, and shall have delivered to Guardian
a certificate to that effect.
(k) LIENS. RJL shall have delivered to Guardian a reasonably
current lien and judgment search (both state and county levels in each
jurisdiction where the party is qualified to or is doing business or owns
material assets) confirming the absence of any judicial liens, security
interests, tax liens and similar such liens ("Liens") affecting any of its
business or assets, except for such liens as may be acceptable to Guardian.
(l) APPROVAL OF COUNSEL. All actions, proceedings, instruments
and documents required or incidental to carry out this Agreement, including all
schedules and exhibits thereto, and all other related legal matters shall have
been approved by ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC, counsel to Guardian.
(m) OTHER DOCUMENTS. RJL shall have delivered or caused to be
delivered all other documents, agreements, resolutions, certificates or
declarations as Guardian or its attorneys may have reasonably requested.
12
(n) COMPLIANCE WITH SECURITIES LAWS. Guardian shall have
undertaken all actions necessary or advisable to consummate the Exchange and the
spin-off of the Spin-off Shares to a spin-off trust, in conformity with all
Governmental Requirements including, without limitation, applicable federal and
state securities laws.
(o) SHAREHOLDER SUBSCRIPTION AGREEMENTS AND ASSIGNMENTS. At
Closing, one hundred percent (100%) of the combined voting power of the issued
and outstanding shares of RJL Common Stock shall have been delivered for
exchange pursuant to Section 2 of this Agreement. Surrendering RJL Shareholders
shall have executed and delivered to Guardian Assignments and Subscription
Agreements substantially in the form of Exhibit 5.5(o) hereto assigning to
Guardian their RJL Common Stock.
(p) FINANCIAL ADVISORY FEES. At or prior to Closing, all
obligations or commitments of Guardian and RJL to their respective financial
advisors and investment bankers shall have been paid, provided for or otherwise
satisfied upon terms satisfactory to the parties, and Guardian and RJL shall
each have been delivered and received such written consents, approvals, estoppel
certificates or other instruments or undertakings from its advisors or other
third parties as each may deem reasonable, necessary or advisable.
(r) Reserved.
(s) RJL AUDITOR CERTIFICATE AND FINANCIAL STATEMENTS. The RJL
Auditor Certificate and RJL Financial Statements described in Section 4.1 shall
have been completed and shall be in a form and substance satisfactory to
Guardian.
(t) RJL PRIVATE PLACEMENT. RJL shall have completed in escrow
subject to Closing the RJL Private Placement and shall have received and
collected in escrow gross proceeds therefrom in an amount not less than
$500,000.
(u) DIAGNOS DISTRIBUTOR AGREEMENT. RJL shall have executed and
delivered the Diagnos Distributor Agreement as amended in form reasonably
satisfactory to RJL and Guardian and their respective legal counsel and their
advisors.
5.6 CONDITIONS TO OBLIGATION OF RJL AND SHAREHOLDERS. The obligations
of RJL and Shareholders on the Closing Date under the terms set forth in this
Agreement are, at the option of RJL and Shareholders, subject to the
satisfaction or written waiver by RJL and Shareholders of each of the following
conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by Guardian in this Agreement shall be true
and correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
the Closing Date, except to the extent that such representations and warranties
expressly relate to an earlier date in which case they shall have been true and
correct as of such earlier date.
13
(b) COMPLIANCE WITH COVENANTS. All covenants which Guardian is
required to perform, satisfy or comply with on or before the Closing Date shall
have been fully complied with or performed in all material respects.
(c) CORPORATE APPROVALS. Any action required to be taken by
the Board of Directors of Guardian and shareholders to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including, but not limited to, the spin off of
Black Mountain Holdings shares to a spin-off trust (and subject to subsequent
registration of the spin-off under the Securities Act as contemplated by Section
4.2 hereinabove) shall have been duly and validly taken.
(d) CONSENTS AND APPROVALS. To the extent that any material
lease, mortgage, deed of trust, contract or agreement to which Guardian is a
party shall require the consent of any person to the exchange of Guardian's
shares of Common Stock or any other transaction provided for herein, such
consent shall have been obtained and RJL shall have received reasonably
satisfactory evidence thereof; provided, however, that Guardian shall not make,
as a condition for the obtaining of any such consent, any agreements or
undertakings not approved in writing by RJL to the extent that such condition
otherwise has an effect on RJL or Guardian. RJL shall have been furnished with
evidence satisfactory to it of the timely consent or approval of, filing with or
notice to, each Governmental Authority or Person which in the good faith
judgment of RJL is necessary or required with respect to the execution and
delivery by Guardian and the consummation by Guardian of the transactions
contemplated hereby.
(e) REVIEW AND DUE DILIGENCE. RJL, its investment bankers,
legal counsel and/or auditors shall have had the opportunity to complete, and
shall have completed, a satisfactory due diligence investigation of Guardian,
its assets and liabilities, together with a satisfactory review of Guardian's
corporate status and the marketability of title to Guardian's property, all of
which shall be satisfactory in form and substance to RJL in its sole discretion.
In connection therewith, immediately following the execution of this Agreement,
Guardian shall provide RJL and its counsel a Schedule 5.6(e), dated March 31,
2003, setting forth in reasonable detail all liabilities, obligations, expenses,
claims, and similar items accrued or provided for on the books of Guardian but
not paid, satisfied or discharged as of such date, and shall provide an update
of such schedule dated as of the date immediately prior to the Closing Date. In
addition, at or prior to Closing, Guardian shall provide to RJL evidence that
all such liabilities, obligations, expenses, claims, or similar items accrued
but not paid, satisfied or discharged have been so paid, satisfied or discharged
by Guardian or assumed by Black Mountain Holdings prior to Closing.
(f) NO LITIGATION, ETC. No action, investigation, litigation
or arbitration or proceeding by or before any Governmental Authority, or before
any arbitral, mediation panel or tribunal of any kind shall have been instituted
or threatened (i) to restrain or prohibit the transactions contemplated by this
14
Agreement or (ii) to claim that the consummation of any such transaction is
illegal or (iii) which, if determined adversely, would effect adversely Guardian
or RJL following consummation of the transactions contemplated hereby and the
Corporation shall have delivered to RJL a certificate dated as of the Closing
Date and executed by Guardian , stating that to its Best Knowledge, no such
items exist. No Governmental Authority or arbitral or mediation panel or
tribunal of any kind shall have taken any other action as a result of which the
management of RJL, in its sole discretion, reasonably deems it inadvisable to
proceed with the transactions contemplated by this Agreement.
(g) NO MATERIAL ADVERSE CHANGE. No material adverse change in
the business, property, assets or liabilities of Guardian shall have occurred,
and no loss or damage to any of the assets, whether or not covered by insurance,
with respect to Guardian has occurred, and Guardian shall have delivered to RJL
a certificate dated as of the Closing Date to such effect.
(h) NO ADVERSE INFORMATION. The investigations with respect to
Guardian, the assets, liabilities and their respective businesses performed by
RJL's respective professional advisors and other representatives shall not have
revealed any information concerning Guardian, its assets, liabilities or
business that has not been made known to RJL, in writing prior to the date of
this Agreement and that, in the opinion of RJL and its advisors, materially and
adversely affects the business, liabilities or assets of Guardian or the
viability of the transactions contemplated by this Agreement.
(i) ORDINARY COURSE OF BUSINESS. During the period from the
date of this Agreement until the Closing Date, Guardian shall have undertaken no
material business operations and shall have delivered to RJL a certificate to
that effect.
(j) APPROVAL OF COUNSEL. All actions, proceedings, instruments
and documents required or incidental to carry out this Agreement, including all
schedules and exhibits thereto, and all other related legal matters shall have
been approved as to substance and form by ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇,
P.C., counsel to RJL.
(k) OTHER DOCUMENTS. Guardian shall have delivered or caused
to be delivered all other documents, agreements, resolutions, certificates or
declarations as RJL or its attorneys may have reasonably requested.
(l) COMPLIANCE WITH SECURITIES LAWS. Guardian shall otherwise
have undertaken all actions necessary or advisable to consummate the RJL Private
Placement and the Exchange in conformity with all Governmental Requirements,
including, without limitation, applicable federal and state securities laws.
(m) 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 Exchange shall be in effect.
15
(n) RJL PRIVATE PLACEMENT. RJL shall have completed in escrow
subject to Closing the RJL Private Placement and shall have received and
collected in escrow gross proceeds therefrom in an amount not less than
$500,000.
(o) DIAGNOS DISTRIBUTOR AGREEMENT. RJL shall have executed and
delivered the Diagnos Distributor Agreement in form reasonably satisfactory to
RJL and Guardian and their respective legal counsel.
(p) LIENS. Guardian shall have delivered to RJL a reasonably
current lien and judgment search (both state and county levels in each
jurisdiction where the party is qualified to or is doing business or owns
material assets) confirming the absence of any judicial liens, security
interests, tax liens and similar such liens ("Liens") affecting any of its
business or assets, except for such liens as may be acceptable to RJL.
(q) SPIN- OFF. The spin-off of the Black Mountain Holdings
shares to the spin-off trust, as contemplated by Section 4.2 hereinabove, shall
have been effected (subject to the registration of the Spin-off Shares under the
Securities Act) in conformity with all Governmental Requirements, and Guardian
and Black Mountain Holdings shall have delivered to RJL copies of all final
transaction documents relating thereto.
(r) WARRANT MODIFICATION AGREEMENTS. Guardian shall have
obtained agreements from holders of outstanding Class A through F Warrants to
cancel those Warrants in exchange for the issuance of not more than 150,000
shares of Guardian Common Stock in such numbers and on such terms as shall be
satisfactory to RJL and its legal counsel.
5.7 SPECIFIC ITEMS TO BE DELIVERED AT THE CLOSING. The parties shall
deliver the following items to the appropriate party at the Closing of the
transactions contemplated by this Agreement.
(a) TO BE DELIVERED BY RJL:
(i) A certificate dated the Closing Date of RJL,
signed by the President of RJL stating that
the representations and warranties of RJL
set forth in this Agreement are true and
correct in all material respects. Said
certificate shall further verify and affirm
that all consents or waivers, if any, which
may be necessary to execute and deliver this
Agreement have been obtained and are in full
force and effect.
16
(ii) A certificate dated the Closing Date of RJL,
signed by the President of RJL, in form and
substance satisfactory to Guardian and its
legal counsel, certifying that all
conditions precedent set forth in this
Agreement to the obligations of Guardian to
close, have been fulfilled or waived in
writing, and that no event of default
hereunder and no event which, with the
giving of notice or passage of time, or
both, would be an event of default, has
occurred as of such date.
(iii) Certificates dated the Closing Date of RJL,
signed by the Secretary of RJL, (i)
certifying attached copies of resolutions
duly adopted by the Board of Directors of
RJL, authorizing the execution of this
Agreement and the other transactions to be
consummated pursuant thereto; (ii)
certifying the names and incumbency of the
officers of RJL who executed the Agreement
and any certificates delivered pursuant to
this Section 5.7(a) for and on behalf of
RJL; (iii) certifying the authenticity of
copies of the Certificate of Incorporation
and Bylaws of RJL, as amended; and (iv)
certifying the authenticity of a reasonably
current Certificate of Good Standing, from
all jurisdictions in which the company is
qualified to conduct business.
(iv) Unaudited financial statements of RJL
containing balance sheets, together with
statements of operation as of and for the
periods ended December 31, 2002; and
unaudited financial statements as of and for
the interim period ended March 31, 2003.
(v) Subscription agreements and other
documentation in form satisfactory to
Guardian related to the RJL Private
Placement.
(vi) Diagnos Distributor Agreement as amended, in
form reasonably satisfactory to RJL and
Guardian.
(vii) Auditor Certificate described in Section
4.1.
(b) TO BE DELIVERED BY SHAREHOLDERS:
(i) Certificate or certificates representing not
less than one hundred percent (100%) of the
issued and outstanding common shares of RJL,
which stock certificates shall be endorsed
in favor of Guardian.
17
(ii) Assignments, if any, with unconditional
warranties of title, duly executed by
Shareholders, assigning to Guardian any and
all equity rights, including, but not
limited to, options, warrants, puts and so
forth, which Shareholders may own in RJL at
the time of Closing.
(iii) Certificate of Shareholders in which they
state that they own the shares and other
rights of RJL free and clear of all liens,
encumbrances, security interests and
limitations on transfer whatsoever.
(iv) Certificate of Shareholders confirming the
accuracy, as of the Closing Date, of the
representations and warranties of
Shareholders set forth in this Agreement.
(v) Subscription Agreements.
(c) TO BE DELIVERED BY GUARDIAN:
(i) Certificate or certificates representing the
Exchange Shares and the shares to be issued
by Guardian in the RJL Private Placement;
and
(ii) A certificate dated the Closing Date of
Guardian, signed by the President of
Guardian stating that the representations
and warranties of Guardian set forth in this
Agreement are true and correct in all
material respects. Said certificate shall
further verify and affirm that all consents
or waivers, if any, which may be necessary
to execute and deliver this Agreement have
been obtained and are in full force and
effect.
(iii) A certificate dated the Closing Date of
Guardian, signed by the Chief Executive
Officer and the Chief Financial Officer of
Guardian, in form and substance satisfactory
to RJL and its legal counsel, certifying
that all conditions precedent set forth in
this Agreement to the obligations of
Guardian to close, have been fulfilled or
waived in writing, and that no event of
default hereunder and no event which, with
the giving of notice or passage of time, or
both, would be an event of default, has
occurred as of such date.
(iv) Certificates dated the Closing Date of
Guardian, signed by the Secretary of
Guardian, (i) certifying attached copies of
resolutions duly adopted by the Board of
Directors of Guardian, authorizing the
18
execution of this Agreement and the other
transactions to be consummated pursuant
thereto, including but not limited to the
election of the directors to be designated
by RJL pursuant to Section 5.8 below; (ii)
certifying the names and incumbency of the
officers of Guardian who executed the
Agreement and any certificates delivered
pursuant to this Section for and on behalf
of Guardian; (iii) certifying the
authenticity of copies of the Articles of
Incorporation and Bylaws of Guardian and its
Subsidiaries; and (iv) certifying the
authenticity of a reasonably current
Certificate of Good Standing, from all
jurisdictions in which Guardian and its
Subsidiaries are qualified to conduct
business.
(v) A list of shareholders of Guardian, dated as
of a date five (5) business days prior to
the Closing Date, certified by Guardian's
stock transfer agent.
(vi) A copy of all transactional documents and
Board of Directors' minutes related to the
spin-off, duly certified by the Secretary as
to their authenticity.
(vii) All ▇▇▇▇▇ codes and other information and
authorizations necessary to enable Guardian
to make all filings that may be required to
be made under the Exchange Act and
Securities Act with the SEC post-Closing.
(vii) Letters of resignation from each of the
incumbent officers, directors and other
employees of Guardian effective as of the
Closing Date, together with such releases
from such individuals as counsel to RJL
shall reasonably request with regard to
claims they may have against Guardian
related to their employment, termination of
any employment agreement, and ownership of
shares of Guardian or other derivative
securities of Guardian.
(viii) Lock-up agreements in the form attached
hereto as Exhibit 5.7(c)(viii) executed by
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, and ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, and such other shareholders of
Guardian as RJL may reasonably request.
(ix) A copy of the final executed transaction
documents related to the spin-off
contemplated by Section 4.2.
19
5.8 ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS OF GUARDIAN AND RJL.
(a) At Closing, the Board of Directors of Guardian shall
resign and be reconstituted to consist of directors designated by RJL.
(b) At Closing, the executive officers of Guardian shall
resign and the newly-constituted Board of Directors of Guardian shall elect
persons determined by the newly constituted Board to serve as executive officers
of Guardian until the next regular annual meeting of the Company's directors.
SECTION 6: REPRESENTATIONS AND WARRANTIES BY RJL AND SHAREHOLDERS
As a material inducement to Guardian to enter into this Agreement and
with the understanding and expectations that Guardian will be relying thereon in
consummating the Exchange contemplated hereunder, RJL (hereinafter referred to
as the "Corporation" or "RJL" for the purposes of this Section 6 only) and
Shareholders, jointly and severally, represent and warrant as follows:
6.1 ORGANIZATION AND STANDING. RJL is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own its assets and
properties and to carry on its business as it is now being conducted.
6.2 SUBSIDIARIES, ETC. The Corporation does not have any direct or
indirect Ownership Interest in any corporation, partnership, joint venture,
association or other business enterprise.
6.3 QUALIFICATION. Except as set forth on Exhibit 6.3 and for any
jurisdiction where the failure to be qualified to engage in business as a
foreign corporation would not have a material adverse affect on the Corporation,
the Corporation is not qualified to engage in business as a foreign corporation
in any state and there is no other jurisdiction wherein the character of the
properties presently owned by the Corporation or the nature of the activities
presently conducted by the Corporation makes necessary the qualification,
licensing or domestication of the Corporation as a foreign corporation.
6.4 CORPORATE AUTHORITY. Except as set forth on Exhibit 6.4 hereto,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by the Corporation with any on
the provisions hereof will:
(a) Conflict with or result in a breach of any provision of
its Certificate of Incorporation or By-Laws;
20
(b) Result in a default (or give rise to any right of
termination, cancellation, or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Corporation is a party, or by which
any of its properties or assets may be bound except for such default (or right
of termination, cancellation, or acceleration) as to which requisite waivers or
consents shall either have been obtained by the Corporation prior to the Closing
Date or the obtaining of which shall have been waived by Guardian; or
(c) Violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to the
Corporation or any of its properties or assets. No consent or approval by any
Governmental Authority is required in connection with the execution and delivery
by the Corporation of this Agreement or the consummation by the Corporation of
the transactions contemplated hereby.
6.5 FINANCIAL STATEMENTS. Except as otherwise provided, the following
statements will be attached to this Agreement as Exhibit 6.5 on or before the
Closing Date:
(a) Unaudited financial statements of RJL containing balance
sheets and statements of operations as of and for the periods ended December 31,
2002.
(b) Unaudited financial statements of RJL containing balance
sheets and statements of operations as of and for the period ended March 31,
2003.
Such financial statements, together with and subject to the
disclosures and notes thereto: (i) are in accordance with the books and records
of the Corporation; (i) present fairly and accurately the financial condition of
the Corporation as of the dates of the balance sheets; (iii) present fairly and
accurately the results of operations for the periods covered by such statements;
(iv) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis; and (v) include all adjustments
(consisting of only normal recurring accruals) which are necessary for a fair
presentation of the financial condition of the Corporation, and of the results
of operations of the Corporation for the periods covered by such statements.
As of the date hereof and as of the Closing Date, the
Corporation does not have any liabilities or payables (absolute or contingent,
known or unknown), except for liabilities or payables set forth in the RJL
Financial Statements or otherwise disclosed in writing to Guardian.
6.6 FINANCIAL INFORMATION. In connection with the investigations
performed by and audit to be undertaken by Guardian of ▇▇▇, ▇▇▇ furnished
certain financial information and data including, without limitation, tax and
accounting records, financial records, statements, worksheets and other
information requested by RJL and its auditors necessary to undertake the
21
complete the audited financial examinations. RJL represents and warrants that
any and all such information furnished in connection with the conduct of such
investigations and audits shall be true, accurate and complete in all material
respects and shall not contain any material misstatements nor any material
omissions of fact or information respecting the financial condition or results
of operation of the business for the respective periods covered by the audits.
6.7 CAPITALIZATION OF THE CORPORATION. The authorized capital stock of
RJL consists of Fifteen Thousand (15,000) shares of Common Stock, no par value
per share, of which Nine Thousand One Hundred and Five (9,105) shares are issued
and outstanding. The names of one hundred percent (100%) of the record owners of
the issued and outstanding Common Stock are set forth on Exhibit 6.7 hereto. All
issued and outstanding shares of RJL Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable, free and clear of any
liens, encumbrances, claims of any kind and nature except restrictions against
transferability without compliance with applicable federal and state securities
laws. There are no other outstanding rights, options, warrants, subscriptions,
calls, convertible securities or agreement of any character or nature under
which the Corporation is or may become obligated to issue any shares of its
capital stock of any kind, other than those shares indicated in this Section as
presently outstanding. There are no voting trusts, stockholder agreements, or
other voting arrangements to which the Corporation is a party or, to the Best
Knowledge of the Corporation, to which any of the Corporation's stockholders is
a party or bound.
6.8 TAXES. Except as set forth in Exhibit 6.8:
(a) The Corporation has filed (or has obtained extensions for
filing) all income, excise, sales, corporate franchise, property, payroll and
other tax returns or reports required to be filed by it, as of the date hereof
by the United States of America, any state or other political subdivision
thereof or any foreign country and has paid all Taxes or assessments relating to
the time periods covered by such returns or reports; and
(b) The Corporation has paid all tax liabilities imposed or
assessed by any governmental authority for all periods prior to the Closing Date
for which such taxes have become due and payable and has received no notice from
any such governmental authority of any deficiency or delinquency with respect to
such obligation. The Corporation is not currently undergoing any audit conducted
by any taxing authority and has received no notice of audit covering any prior
period for which taxes have been paid or are or will be due and payable prior to
the Closing Date. There are no present disputes as to taxes of any nature
payable by the Corporation.
6.9 NO ACTIONS, PROCEEDINGS, ETC. Except as listed on the attached
Exhibit 6.9, there is no action or proceeding (whether or not purportedly on
behalf of the Corporation) pending or to its knowledge threatened by or against
the Corporation which might result in any material adverse change in the
condition, financial or otherwise, of the Corporation's business or assets. No
22
order, writ or injunction or decree has been issued by, or requested of any
court or Governmental Agency which does, nor may result in, any material adverse
change in the Corporation's assets or properties or in the financial condition
or the business of the Corporation. Except for liabilities referred to in
attached Exhibit 6.9, the Corporation is not liable for damages to any employee
or former employee as a result of any violation of any state, federal or foreign
laws directly or indirectly relating to such employee or former employee.
6.10 POST BALANCE SHEET CHANGES. Except as set forth on the attached
Exhibit 6.10 and as contemplated by this Agreement, since March 31, 2003, the
Corporation has not (a) issued, bought, redeemed or entered into any agreements,
commitments or obligations to sell, buy or redeem any shares of its capital
stock; (b) incurred any obligation or liability (absolute or contingent), other
than current liabilities incurred, and obligations under contracts entered into,
in the ordinary course of business; (c) discharged or satisfied any lien or
encumbrance or paid any obligation or liability (absolute or contingent), other
than current liabilities incurred in the ordinary course of business; (d)
mortgaged, pledged or subjected to lien charges, or other encumbrance any of its
assets, other than the lien of current or real property taxes not yet due and
payable; (e) waived any rights of substantial value, whether or not in the
ordinary course of business; (f) suffered any damage, destruction or loss,
whether or not covered by insurance, materially and adversely affecting its
assets or its business; (g) made or suffered any amendment or termination of any
material contract or any agreement which adversely affects its business; (h)
received notice or had knowledge of any labor trouble other than routine
grievance matters, none of which is material; (i) increased the salaries or
other compensation of any of its directors, officers or employees or made any
increase in other benefits to which employees may be entitled, other than
employee salary increases made in the ordinary course of business and reflected
on an exhibit hereto; (j) sold, transferred or otherwise disposed of any of its
assets, other than in the ordinary course of business; (k) declared or made any
distribution or payments to any of its shareholders, officers or employees,
other than wages and salaries made to employees in the ordinary course of
business; (l) revalued any of its assets; or (m) entered into any transactions
not in the ordinary course of business.
6.11 NO BREACHES. The Corporation is not in violation of, and the
consummation of the transactions contemplated hereby do not and will not result
in any material breach of, any of the terms or conditions of any mortgage, bond,
indenture, agreement, contract, license or other instrument or obligation to
which the Corporation is a party or by which its assets are bound; nor will the
consummation of the transactions contemplated hereby cause RJL to violate any
statute, regulation, judgment, writ, injunction or decree of any court,
threatened or entered in a proceeding or action in which the Corporation is, was
or may be bound or to which any of the Corporation's assets are subject.
6.12 CONDITION OF THE CORPORATION'S ASSETS. Except as set forth on
Exhibit 6.12, RJL's assets are currently in good and usable condition and there
are no defects or other conditions which, in the aggregate, materially and
adversely affect the operation or values of such assets taken as a whole. Except
23
as disclosed on Exhibit 6.12, no person other than RJL (including any officer or
employee of the Corporation) has any proprietary interest in any know-how or
other intangible assets used by the Corporation in the conduct of its business.
The Company does not currently market any products for sale.
6.13 CORPORATE ACTS AND PROCEEDINGS. This Agreement has been duly
authorized by all necessary corporate action on behalf of RJL, has been duly
executed and delivered by an authorized officer of RJL, and is a valid and
binding Agreement on the part of RJL that is enforceable against RJL in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, fraudulent transfers, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
to judicial limitations on the enforcement of the remedy of specific performance
and other equitable remedies.
6.14 REGISTERED RIGHTS AND PROPRIETARY INFORMATION.
(a) Exhibit 6.14 hereto contains a true and complete list of
all patents, letters patent and patent applications, service marks, trademark
and service ▇▇▇▇ registrations and applications, copyright, copyright
registrations and applications, grants of licenses and rights to the Corporation
with respect to the foregoing, both domestic and foreign, claimed by the
Corporation or used or proposed to be used by the Corporation in the conduct of
its business (collectively herein, "RJL Registered Rights"). Exhibit 6.14 hereto
also contains a true and complete list of all and every trade secret, know-how,
process, formula, discovery, development, research, design, technique, customer
and supplier list, contracts, product development plans, product development
concepts, author contracts, marketing and purchasing strategy, invention, and
any other matter required for, incident to, or related to the conduct of its
business (hereafter collectively the "RJL Proprietary Information"). Except as
described in Exhibit 6.14 hereto, the Corporation is not obligated or under any
liability whatever to make any payments by way of royalties, fees or otherwise
to any owner or licensor of, or other claimant to, any RJL Registered Right or
RJL Proprietary Information with respect to the use thereof in the conduct of
its business or otherwise.
(b) Except as described in Exhibit 6.14 hereto, to the
Corporation's Best Knowledge, the Corporation owns and has the unrestricted
right to use the RJL Registered Rights and RJL Proprietary Information required
for or incident to the design, development, manufacture, operation, sale and use
of all products and services sold or rendered or proposed to be sold or rendered
by the Corporation or relating to the conduct or proposed conduct of its
business free and clear of any right, title, interest, equity or claim of
others. As soon as practicable following the execution of this Agreement, and
except as described in Exhibit 6.14 hereto, the Corporation agrees to take all
necessary steps (including without limitation entering into appropriate
confidentiality, assignment of rights and non-competition agreements with all
officers, directors, employees and consultants of the Corporation and others
with access to or knowledge of the RJL Proprietary Information) to safeguard and
maintain the secrecy and confidentiality of, and its proprietary rights in, the
RJL Proprietary Information and all related documentation and intellectual
property rights therein necessary for the conduct or proposed conduct of its
business.
24
(c) Except as described in Exhibit 6.14 hereto, the
Corporation has not sold, transferred, assigned, licensed or subjected to any
right, lien, encumbrance or claim of others, any RJL Proprietary Information,
including without limitation any RJL Registered Right, or any interest therein,
related to or required for the design, development, manufacture, operation, sale
or use of any product or service currently under development or manufactured, or
proposed to be developed, sold or manufactured, by it. Exhibit 6.14 contains a
true and complete list and description of all licenses of RJL Proprietary
Information granted to the Corporation by others or to others by the
Corporation. Except as described in Exhibit 6.14 hereto, there are no claims or
demands of any person pertaining to, or any proceedings that are pending or
threatened, which challenge the rights of the Corporation in respect of any RJL
Proprietary Information used in the conduct of its business.
(d) Except as described in Exhibit 6.14 hereto, the
Corporation owns and on the Closing Date shall own, has and shall have, holds
and shall hold, exclusively all right, title and interest in the RJL Registered
Rights, free and clear of all liens, encumbrances, restrictions, claims and
equities of any kind whatsoever, has and shall have the exclusive right to use,
sell, license or dispose of, and has and shall have the exclusive right to bring
action for the infringement of the RJL Registered Rights and the RJL Proprietary
Information. To the Best Knowledge of Corporation, the marketing, promotion,
distribution or sale by the Corporation of any products or interests subject to
the RJL Registered Rights or making use of RJL Proprietary Information shall not
constitute an infringement of any patent, copyright, trademark, service ▇▇▇▇ or
misappropriation or violation of any other party's proprietary rights or a
violation of any license or agreement by the Corporation. Except as described in
Exhibit 6.16 hereto, to the knowledge of the Corporation after due inquiry no
facts or circumstances exist that could result in the invalidation of any of the
RJL Registered Rights.
6.15 NO LIENS OR ENCUMBRANCES. The Corporation has good and marketable
title to all of the property and assets, tangible and intangible, employed in
the operations of its business, free of any material mortgages, security
interests, pledges, easements or encumbrances of any kind whatsoever and except
for such property and assets as may be leased by RJL.
6.16 EMPLOYEE MATTERS. Exhibit 6.16 attached hereto contains a true,
complete and accurate list of all employees of the Corporation and the
remuneration of each (including wages, salaries and fringe benefits). The
Corporation has no information or facts indicating that any employee listed on
Exhibit 6.16 intends to terminate his/her employment relationship with the
Corporation prior or subsequent to the Closing Date, except as may be required
by this Agreement. Except as specifically described on Exhibit 6.16, the
Corporation has no employee benefit plans (including, but not limited to,
pension plans and health or welfare plans), arrangements or understandings,
25
whether formal or informal. The Corporation does not now and has never
contributed to a "multi-employer plan" as defined in Section 400(a)(3) of the
ERISA. The Corporation has complied with all applicable provisions of ERISA and
all rules and regulations promulgated thereunder, and neither the Corporation
nor any trustee, administrator, fiduciary, agent or employee thereof has at any
time been involved in a transaction that would constitute a "prohibited
transaction" within the meaning of Section 406 of ERISA as to any covered plan
of the Corporation. The Corporation is not a party to any collective bargaining
or other union agreement. The Corporation has not, within the past five (5)
years had, or been threatened with, any union activities, work stoppages or
other labor trouble with respect to its employees which had a material adverse
effect on the Corporation, its business or assets. Except as set forth in
Exhibit 6.16, the Corporation has not made any commitment or agreements to
increase the wages or modify the conditions or terms of employment of any of the
employees of the Corporation used in connection with its business, and between
the date of this Agreement and the Closing Date, the Corporation will not make
any agreement to increase the wages or modify the conditions or terms of
employment of any of the employees of the Corporation used in the conduct of its
business, without the prior written consent of all parties hereto.
6.17 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW. Except as set forth in
▇▇▇▇▇▇▇ ▇.▇▇, ▇▇▇ has not received notice of any legal, administrative,
arbitration or other proceeding or governmental investigation pending or
threatened (including those relating to the health, safety, employment of labor,
or protection of the environment) pertaining to RJL which might result in the
aggregate in money damages payable by RJL in excess of insurance coverage or
which might result in a permanent injunction against RJL. Except as set forth in
such ▇▇▇▇▇▇▇ ▇.▇▇, ▇▇▇ has substantially complied with, and is not in default in
any respect under any laws, ordinances, requirements, regulations, or orders
applicable to the business of RJL, the violation of which might materially and
adversely affect it. Except as set forth in such Exhibit 6.17, RJL is not a
party to any agreement or instrument, nor is it subject to any charter or other
corporate restriction or any judgment, order, writ, injunction, decree, rule,
regulation, code or ordinance which materially and adversely affects, or might
reasonably be expected materially and adversely to affect the business,
operations, prospects, property, assets or condition, financial or otherwise, of
RJL.
6.18 CONTRACT SCHEDULES. Attached as Exhibit 6.18 hereto is an accurate
list of the following:
(a) All contracts, leases, agreements, covenants, licenses,
instruments or commitments of RJL pertaining to the business of RJL calling for
the payment of Five Thousand Dollars ($5,000) or more or which is otherwise
material to the business of RJL, including, without limitation, the following:
(i) Licenses and contracts held in the ordinary
course of business;
26
(ii) Executory contracts for the purchase, sale
or lease of any assets;
(iii) Management or consulting contracts;
(iv) Patent, trademark and copyright
applications, registrations or licenses, and
know-how, intellectual property and trade
secret agreements or other licenses;
(v) Note agreements, loan agreements, indentures
and the like, other than those entered into
and executed in the ordinary course of
business;
(vi) All sales, agency, distributorship or
franchise agreements; and
(vii) Any other contracts not in the ordinary
course of business.
(b) All labor contracts, employment agreements and collective
bargaining agreements to which RJL is a party.
(c) All instruments evidencing any liens or security interest
securing any indebtedness of RJL covering any asset of RJL.
(d) All profit sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plans, agreements, arrangements or commitments of any
nature whatsoever, whether or not legally binding, and all agreements with any
present or former officer, director or shareholder of the Corporation.
(e) Any and all documents, instruments and other writings not
listed in any other schedule hereto which are material to the business
operations of RJL.
Except as set forth in Exhibit 6.18, all of such contracts,
agreements, leases, licenses, plans, arrangements and commitments and all other
such items set forth above are valid, binding and in full force and effect in
accordance with their terms and conditions, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, fraudulent transfer,
reorganization or other similar laws affecting the enforcement of contracts
generally, and there is no existing material default thereunder or breach
thereof by the Corporation, or to RJL's knowledge by any party to such
contracts, or any conditions which, with the passage of time or the giving of
notice or both, might constitute such a default by the Corporation or by any
other party to the contracts.
27
6.19 LABOR MATTERS. There are no strikes, slowdowns, stoppages,
organizational efforts, discrimination charges or other labor disputes pending
or, to the knowledge of RJL or any of its agent or employees, threatened against
RJL.
6.20 INSURANCE. RJL maintains no insurance coverage on its assets and
business.
6.21 ENVIRONMENTAL. Except as disclosed on ▇▇▇▇▇▇▇ ▇.▇▇, ▇▇▇ has never
owned or operated any real property except for leased office space:
(a) To the Best Knowledge of RJL, no real property (or the
subsurface soil and the ground water thereunder) now or previously leased by RJL
(the "Leased Premises") either contains any Hazardous Substance (as hereinafter
defined) or has underneath it any underground fuel or liquid storage tanks;
(b) To the Best Knowledge of RJL, there has been no
generation, transportation, storage, treatment or disposal of any Hazardous
Substance on or beneath the Leased Premises, now or in the past;
(c) RJL is not aware of any pending or threatened litigation
or proceedings before any court or administrative agency in which any person
alleges, or threatens to allege, the presence, release, threat of release,
placement on or in the Leased Premises, or the generation, transportation,
storage, treatment or disposal at the Leased Premises, of any Hazardous
Substance;
(d) RJL has not received any written notice and has no
knowledge that any Governmental Authority or any employee or agent thereof has
determined or alleged, or is investigating the possibility, that there is or has
been any presence, release, threat of release, placement on or in the Leased
Premises, or any generation, transportation, storage, treatment or disposal at
the Leased Premises, of any Hazardous Substance;
(e) To the Best Knowledge of RJL, there have been no
communications or agreements with any Governmental Authority or agency (federal,
state, or local) or any private person or entity (including, without limitation,
any prior owner of the Leased Premises and any present or former occupant or
tenant of the Leased Premises) relating in any way to the presence, release,
threat of release, placement on or in the Leased Premises, or any generation,
transportation, storage, treatment or disposal at the Leased Premises, of any
Hazardous Substance. RJL further agrees and covenants that RJL will not store or
deposit on, otherwise release or bring onto or beneath, the Leased Premises any
Hazardous Substance prior to the Closing Date; and
(f) There is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, to RJL's Best Knowledge,
threatened, against ▇▇▇, ▇▇▇ ▇▇▇ knows of no facts or circumstances which might
give rise to any future litigation, proceeding, citizen's suit or governmental
or other investigation, which relate to RJL's compliance with environmental
laws, regulations, rules, guidelines and ordinances.
28
For purposes of this Section 6.21, "Hazardous Substance" shall
mean and include (i) a hazardous substance as defined in 42 U.S.C. Section
9601(14), the Regulations at 40 C.F.R. Part 302, (2) any substance regulated
under the Emergency Planning and Community Right to Know Act (including without
limitation any extremely hazardous substances listed at 40 C.F.R. Part 355 and
any toxic chemical listed at 40 C.F.R. Part 372), (iii) hazardous wastes and
hazardous substances as specified under any California state or local
Governmental Requirement governing water pollution, groundwater protection, air
pollution, solid wastes, hazardous wastes, spills and other releases of toxic or
hazardous substances, transportation of hazardous substances, materials and
wastes and occupational or employee health and safety, and (iv) any other
material, gas or substance known or suspected to be toxic or hazardous
(including, without limitation, any radioactive substance, methane gas, volatile
hydrocarbon, industrial solvent, and asbestos) or which could cause a material
detriment to, or materially impair the beneficial use of, the Leased Premises,
or constitute a material health, safety or environmental risk to any person
exposed thereto or in contact therewith. For purposes of this Section 6.21,
"Hazardous Substance" shall not mean and shall not include the following, to the
extent used normally and required for everyday uses or normal housekeeping or
maintenance: (a) fuel oil and natural gas for heating, (b) lubricating,
cleaning, coolant and other compounds customarily used in building maintenance,
(c) materials routinely used in the day-to-day operations of an office, such as
copier toner, (d) consumer products, (e) material reasonably necessary and
customarily used in construction and repair of an office project, and (f)
fertilizers, pesticides and herbicides commonly used for routine office
landscaping.
6.22 DISCLOSURE OF INFORMATION. The Corporation represents and warrants
that all statements, data and other written information provided by it to any
party hereto as well as their respective consultants and representatives have
been accurate copies or true originals. The Corporation represents and warrants
that, to its Best Knowledge, (i) there exists no material information concerning
the Corporation which has been requested but not been disclosed to or made
available to the other parties and their representatives or consultants and
which would be material to a decision to consummate the transactions provided
for in this Agreement and (ii) in the aggregate, such information does not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made in them, in light of the
circumstances under which they are made, not misleading.
6.23 REPRESENTATION AND WARRANTIES. The representations and warranties
contained in this Agreement shall be true on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date. Such representations and warranties shall
survive the Closing Date and shall remain operative in full force and effect for
the period of three years from the date of Closing regardless of any
investigation at any time made by or on behalf of Guardian and shall not be
deemed merged in any document or instruction so executed and/or delivered by RJL
or Shareholders.
29
6.23 ABSENCE OF QUESTIONABLE PAYMENTS. To the Best Knowledge of ▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇, nor any director, officer, agent, employee or other person acting
on any its behalf has (i) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds in violation of
Section 30A of the Exchange Act or any other applicable foreign, federal or
state law; or (ii) accepted or received any unlawful contributions, payments,
expenditures or gifts.
SECTION 7: COVENANTS OF RJL
7.1 PRESERVATION OF BUSINESS. Until Closing, RJL shall use its best
efforts to cause RJL to:
(a) Preserve intact the present business organization of RJL;
(b) Maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) Preserve and protect the goodwill and advantageous
relationships of RJL with its customers and all other persons having
business dealings with RJL;
(d) Preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade
secrets, service marks, copyrights, bonds and other similar rights of
RJL; and
(e) Comply with all laws applicable to the conduct of its
business
7.2 ORDINARY COURSE. Until Closing, RJL shall conduct its business only
in the usual, regular and ordinary course, in substantially the same manner as
previously, and shall not make any substantial change to its methods of
management or operation in respect of such business or property. Without
limiting the foregoing, RJL shall not, with respect to RJL:
(a) Sell, mortgage, pledge or encumber or agree to sell,
mortgage, pledge or encumber, any of its property or assets, other than in the
ordinary course of business;
(b) Incur any obligation (contingent or otherwise) or
purchase, acquire, transfer, or convey, any material assets or property or enter
into any contract or commitment, except in the ordinary course of business.
30
7.3 NEGATIVE COVENANTS. Until Closing, except as contemplated by this
Agreement or disclosed in exhibits to this Agreement, from the date hereof until
the Closing Date, unless and until Guardian otherwise consents in writing, which
consent shall not be unreasonably withheld, RJL will not (a) change or alter the
physical contents or character of the tangible and intangible assets so as to
materially affect the nature of RJL's business; (b) incur any obligations or
liabilities (absolute or contingent) other than current liabilities incurred and
obligations under contracts entered into in the ordinary course of business; (c)
mortgage, pledge or voluntarily subject to lien, charge or other encumbrance any
assets, tangible or intangible, other than the lien of current property taxes
not due and payable; (d) sell, assign or transfer any of its assets or cancel
any debts or claims, other than in the ordinary course of business; (e) waive
any right of any substantial value; (f) declare or make any payment or
distribution to Shareholders or issue, purchase or redeem any shares of its
capital stock or other equity securities or issue or sell any rights to acquire
the same, or effect any stock split or recapitalization or reorganization; (g)
grant any increase in the salary or other compensation of any of its directors,
officers, or employees or make any increase in any benefits to which such
employees might be entitled; (h) institute any bonus, benefit, profit sharing,
stock option, pension, retirement plan or similar arrangement, or make any
changes in any such plans or arrangements presently existing; or (i) enter into
any material transactions or series of transactions other than in the ordinary
course of business.
7.4 ADDITIONAL COVENANTS.
(a) RJL will promptly pay and discharge, or cause to be paid
and discharged, when due and payable, all lawful taxes, assessments, and
governmental charges or levies imposed upon the income, profits, property or
business of RJL or any subsidiary; provided, however, that any such tax,
assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if RJL shall
have set aside on its books adequate reserves therefor; and provided, further,
that RJL will pay all such taxes, assessments, charges or levies forthwith upon
the commencement of proceedings to foreclose any lien that may have attached as
security therefor. RJL will promptly pay or cause to be paid when due, or in
conformance with customary trade terms, all other indebtedness incident to the
operations of RJL;
(b) RJL will keep its properties and those of its subsidiaries
in good repair, working order and condition, reasonable wear and tear excepted,
and from time to time make all needful and proper repairs, renewals,
replacements, additions and improvements thereto; and RJL will at all times
comply with the provisions of all material leases to which any of them is a
party or under which any of them occupies property so as to prevent any loss or
forfeiture thereof or thereunder;
(c) RJL will keep its assets that are of an insurable
character insured by financially sound and reputable insurers against loss or
damage by fire, extended coverage and explosion insurance in amounts customary
for companies in similar businesses similarly situated; and immediately
following the Closing, RJL will maintain, with financially sound and reputable
insurers, insurance against other hazards, risks and liabilities to persons and
property to the extent and in the manner customary for companies in similar
businesses similarly situated;
▇▇
(▇) ▇▇▇ will keep true records and books of account in which
full, true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with its past practices
consistently applied;
(e) RJL will comply with the requirements of all applicable
laws, rules, regulations and orders of any governmental authority, a breach of
which could have a material adverse effect on its business or credit;
(f) RJL shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
patents, processes, licenses, trademarks, trade names or copyrights owned or
possessed by it or any subsidiary and deemed by RJL to be necessary to the
conduct of its business;
(g) RJL will, consistent with its practices in the ordinary
course of business, endeavor to retain its business relationships with its
customers and suppliers that it believes to be advantageous; and
(h) RJL shall deliver to Guardian copies of its statements of
operation and financial condition and similar statements as and when prepared
(if at all) in the ordinary course of its business.
7.5 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC. From the date of this
Agreement through the Closing Date, RJL will grant Guardian and its authorized
representatives reasonable access to its books and records, premises, products,
employees and customers and other parties with whom it has contractual relations
during reasonable business hours and in a manner not to disrupt or interfere
with RJL's business relationships for purposes of enabling Guardian to fully
investigate the business of RJL. RJL will also deliver copies of its monthly
statements of operations and financial condition for the period subsequent to
its financial statements referred to in Section 6.5 to Guardian within a
reasonable time of such statements becoming available.
7.6 COMPENSATION. Except as contemplated by this Agreement, RJL shall
not enter into or agree to enter into any employment contract or agreement for
consulting, professional, or other services which will adversely and materially
affect the operation of RJL prior to the Closing Date, except for any extensions
of said contracts or agreements on substantially the same terms and conditions
as were previously in effect.
32
7.7 NO SOLICITATION.
(a) Except in connection with the transactions contemplated by
this Agreement, RJL shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any officer, director or employee of or any
investment banker, attorney or other advisor or representative of, RJL or any of
its subsidiaries to, (i) solicit, initiate or encourage the submission of, any
takeover proposal, (ii) enter into any agreement with respect to any takeover
proposal or (iii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any takeover proposal. Without limiting
the foregoing, it is understood that any violation of the restrictions set forth
in the preceding sentence by any executive officer of RJL or any of its
subsidiaries or any investment banker, attorney or other advisor or
representatives of RJL or any of its subsidiaries or otherwise, shall be deemed
to be a breach of this Section by RJL. For purposes of this Agreement, "takeover
proposal" means any proposal for a merger, consolidation or reorganization or
other business combination involving RJL or any of its subsidiaries or any
proposal or offer to acquire in any manner, directly or indirectly, an equity
interest in, any voting securities of, or options, rights, warrants or other
interests convertible or exercisable for or into such voting securities, or a
substantial or material portion of the assets or business of RJL or any of its
subsidiaries, other than the transactions contemplated by this Agreement.
(b) Except upon a material breach of this Agreement by
Guardian or following termination hereof and except for action permitted or
contemplated by this Agreement, including a party's right to terminate this
Agreement under certain circumstances, neither the Board of Directors of RJL nor
any committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Guardian, the approval or recommendation by such
Board of Directors of any such committee of this Agreement or the Exchange or
(ii) approve or recommend, or propose to approve or recommend, any takeover
proposal.
(c) RJL promptly shall advise Guardian orally and in writing
of any takeover proposal or any inquiry with respect to or which could lead to
any takeover proposal and the identity of the person making any such takeover
proposal or inquiry. RJL will keep Guardian fully informed of the status and
details of any such takeover proposal or inquiry.
(d) The provisions of this Section 7.7 shall not be construed
to prevent any investment banker, attorney or other advisor or representative of
RJL to engage in discussions with third parties in the ordinary course of
business with respect to transactions not involving the parties to this
Agreement.
33
SECTION 8: REPRESENTATIONS AND WARRANTIES OF GUARDIAN
As a material inducement to RJL to enter into this Agreement and with
the understanding and expectations that RJL will be relying thereon in
consummating the Exchange contemplated hereunder, Guardian and each of its
subsidiaries (hereinafter Guardian and its subsidiaries shall be referred to as
the "Corporation" unless the context otherwise requires for the purposes of this
Section 8 only) hereby represents and warrants as follows:
8.1 ORGANIZATION AND STANDING. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, and has all requisite corporate power and authority to own
its assets and properties and to carry on its business as it is now being
conducted.
8.2 SUBSIDIARIES, ETC. Except as set forth on Exhibit 8.2 hereto, the
Corporation does not have any direct or indirect Ownership Interest in any
corporation, partnership, joint venture, association or other business
enterprise.
8.3 QUALIFICATION. Except as set forth on Exhibit 8.3 and for any
jurisdiction where the failure to be qualified to engage in business as a
foreign corporation would not have a material adverse effect on the corporation,
the Corporation is not qualified to engage in business as a foreign corporation
in any state, and there is no other jurisdiction wherein the character of the
properties presently owned by the Corporation or the nature of the activities
presently conducted by the Corporation makes necessary the qualification,
licensing or domestication of the Corporation as a foreign corporation.
8.4 CORPORATE AUTHORITY. Except as set forth on Exhibit 8.4 hereto,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by Guardian with any on the
provisions hereof will:
(a) Conflict with or result in a breach of any provision of
its Articles of Incorporation or By-Laws or similar documents of any Subsidiary;
(b) Result in a default (or give rise to any right of
termination, cancellation, or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Corporation is a party, or by which
any of its properties or assets may be bound except for such default (or right
of termination, cancellation, or acceleration) as to which requisite waivers or
consents shall either have been obtained by the Corporation prior to the Closing
Date or the obtaining of which shall have been waived by RJL; or
(c) Violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to the
Corporation or any of its properties or assets. No consent or approval by any
Governmental Authority is required in connection with the execution and delivery
by the Corporation of this Agreement or the consummation by the Corporation of
the transactions contemplated hereby, except for possible notice under plant
closing laws.
34
8.5 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Common Stock of Guardian
is registered pursuant to Section 12(g) of the Exchange Act. RJL has had the
opportunity to obtain on RJL's behalf true and complete copies of the SEC
Documents (except for exhibits and incorporated documents). Guardian has not
provided to RJL any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by Guardian but which has not
been so disclosed, other than with respect to the transactions contemplated by
this Agreement.
As of their respective dates, all of Guardian's reports, statements and
other filings with the Commission (the "SEC Documents") complied in all material
respects with the requirements of the Act or the Exchange Act as the case may be
and the rules and regulations of the Commission promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Guardian included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
8.6 CAPITALIZATION OF THE CORPORATION. The authorized capital stock of
Guardian consists entirely of 15,000,000 shares of Common Stock having a par
value of $.001 per share, and 1,000,000 shares of Preferred Stock having a par
value of $.20 per share. As of March 31, 2003, there were a total of 1,755,583
shares of Common Stock issued and outstanding and no shares of Preferred Stock
issued and outstanding. As of the Closing Date, there will be no more than
2,150,000 shares of Common Stock and no shares of Preferred Stock issued and
outstanding. All outstanding shares of Guardian's capital stock have been
validly issued, are fully paid and non-assessable, and are not subject to
pre-emptive rights. The issuance of the shares of Guardian Common Stock and
Guardian Preferred Stock to be issued to the Shareholders on the Closing Date in
accordance with Sections 2.1 hereof have been duly approved by the Directors of
Guardian and will, upon their issuance, have been validly issued and will be
35
fully paid and non-assessable, free of any liens, encumbrances and claims of any
kind and nature except restrictions against transferability without compliance
with applicable federal and state securities laws. Except as described in
Guardian's SEC Documents, there are no equity securities of Guardian authorized,
issued or outstanding, and except as set forth in Schedule 8.6, there are no
authorized, issued or outstanding subscriptions, options, warrants, contracts,
calls, commitments or other purchase rights of any nature or character relating
to any of Guardian's capital stock, equity securities, debt or other securities
convertible into stock or equity securities of Guardian. As of the date of this
Agreement, there are no outstanding contractual obligations of Guardian to
repurchase, redeem or otherwise acquire any shares of capital stock of Guardian.
There are no voting trusts, stockholder agreements or other voting arrangements
to which the Corporation is a party or, to the Best Knowledge of Guardian, to
which any of the Guardian stockholders is a party or bound.
8.7 NO ACTIONS, PROCEEDINGS, ETC. Except as listed on the attached
Exhibit 8.7, there is no action or proceeding (whether or not purportedly on
behalf of the Corporation) pending or to its knowledge threatened by or against
the Corporation, which might result in any material adverse change in the
condition, financial or otherwise, of the Corporation's business or assets. No
order, writ or injunction or decree has been issued by, or requested of any
court or Governmental Agency which does nor may result in any material adverse
change in the Corporation's assets or properties or in the financial condition
or the business of the Corporation. The Corporation is not liable for damages to
any employee or former employee as a result of any violation of any state,
federal or foreign laws directly or indirectly relating to such employee or
former employee.
8.8 TAXES. Except as set forth in Exhibit 8.8:
(a) The Corporation has filed (or has obtained extensions for
filing) all income, excise, sales, corporate franchise, property, payroll and
other tax returns or reports required to be filed by it, as of the date hereof
by the United States of America, any state or other political subdivision
thereof or any foreign country and has paid all Taxes or assessments relating to
the time periods covered by such returns or reports; and
(b) The Corporation has paid all tax liabilities imposed or
assessed by any governmental authority for all periods prior to the Closing Date
for which such taxes have become due and payable and has received no notice from
any such governmental authority of any deficiency or delinquency with respect to
such obligation. The Corporation is not currently undergoing any audit conducted
by any taxing authority and has received no notice of audit covering any prior
period for which taxes have been paid or are or will be due and payable prior to
the Closing Date. There are no present disputes as to taxes of any nature
payable by the Corporation.
8.9 POST BALANCE SHEET CHANGES. Except as set forth on Exhibit 8.9 and
as contemplated by this Agreement, since the date of the latest financial
statements, the Corporation has not (a) issued, bought, redeemed or entered into
any agreements, commitments or obligations to sell, buy or redeem any shares of
its capital stock, including but not limited to any options or warrants to
36
purchase any securities of the Corporation or any securities convertible into
capital stock of the Corporation; (b) incurred any obligation or liability
(absolute or contingent), other than current liabilities incurred, and
obligations under contracts entered into, in the ordinary course of business;
(c) discharged or satisfied any lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current liabilities incurred in
the ordinary course of business; (d) mortgaged, pledged or subjected to lien
charges, or other encumbrance any of its assets, other than the lien of current
or real property taxes not yet due and payable; (e) waived any rights of
substantial value, whether or not in the ordinary course of business; (f)
suffered any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting its assets or its business; (g) made or
suffered any amendment or termination of any material contract or any agreement
which adversely affects its business; (h) received notice or had knowledge of
any labor trouble other than routine grievance matters, none of which is
material; (i) increased the salaries or other compensation of any of its
directors, officers or employees or made any increase in other benefits to which
employees may be entitled, other than employee salary increases made in the
ordinary course of business and reflected on an exhibit hereto; (j) sold,
transferred or otherwise disposed of any of its assets, other than in the
ordinary course of business; (k) declared or made any distribution or payments
to any of its shareholders, officers or employees, other than wages and salaries
made to employees in the ordinary course of business; (l) revalued any of its
assets; or (m) entered into any transactions not in the ordinary course of
business.
8.10 NO BREACHES. Except as set forth on Exhibit 8.10 , the Corporation
is not in violation of, and the consummation of the transactions contemplated
hereby do not and will not result in any material breach of, any of the terms or
conditions of any mortgage, bond, indenture, agreement, contract, license or
other instrument or obligation to which the Corporation is a party or by which
its assets are bound; nor will the consummation of the transactions contemplated
hereby cause Guardian or any Subsidiary to violate any statute, regulation,
judgment, writ, injunction or decree of any court, threatened or entered in a
proceeding or action in which the Corporation is, was or may be bound or to
which any of the Corporation's assets are subject.
8.11 CORPORATE ACTS AND PROCEEDINGS. This Agreement has been duly
authorized by all necessary corporate action on behalf of Guardian, has been
duly executed and delivered by authorized officers of Guardian, and is a valid
and binding Agreement on the part of Guardian that is enforceable against
Guardian in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, moratorium, fraudulent transfers,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to judicial limitations on the enforcement of the remedy of
specific performance and other equitable remedies. All corporate action
necessary to issue and deliver to the RJL Shareholders the Exchange Shares (each
as described in Sections 2.1 and 2.3) and to effect the spin-off of the Spin-off
Shares to the spin-off trust as contemplated by Section 4.2 (subject to the
subsequent registration of the spin-off under the Securities Act by Black
Mountain Holdings) has been taken by Guardian.
37
8.12 REGISTERED RIGHTS AND PROPRIETARY INFORMATION.
(a) Exhibit 8.12 hereto contains a true and complete list of
all patents, letters patent and patent applications, service marks, trademark
and service ▇▇▇▇ registrations and applications, copyright, copyright
registrations and applications, grants of licenses and rights to the Corporation
with respect to the foregoing, both domestic and foreign, claimed by the
Corporation or used or proposed to be used by the Corporation in the conduct of
its business (collectively herein, "Guardian Registered Rights"). Exhibit 8.12
hereto also contains a true and complete list of all and every trade secret,
know-how, process, formula, discovery, development, research, design, technique,
customer and supplier list, contracts, product development plans, product
development concepts, author contracts, marketing and purchasing strategy,
invention, and any other matter required for, incident to, or related to the
conduct of its business (hereafter collectively the "Guardian Proprietary
Information"). Except as described in Exhibit 8.12 hereto, the Corporation is
not obligated or under any liability whatever to make any payments by way of
royalties, fees or otherwise to any owner or licensor of, or other claimant to,
any Guardian Registered Right or Guardian Proprietary Information with respect
to the use thereof in the conduct of its business or otherwise.
(b) Except as described in Exhibit 8.12 hereto, to the
Corporation's Best Knowledge, the Corporation owns and has the unrestricted
right to use the Guardian Registered Rights and Guardian Proprietary Information
required for or incident to the design, development, manufacture, operation,
sale and use of all products and services sold or rendered or proposed to be
sold or rendered by the Corporation or relating to the conduct or proposed
conduct of its business free and clear of any right, title, interest, equity or
claim of others. As soon as practicable following the execution of this
Agreement and as part of the spin off contemplated by Section 4.2, and except as
described in Exhibit 8.12 hereto, the Corporation agrees to take all necessary
steps to assign or transfer all of the Guardian Registered Rights and Guardian
Proprietary Information (except any and all rights related to the name
"Guardian" and all variations thereof) to Black Mountain Holdings, except that
Guardian shall continue to have the right to use its corporate name "Guardian
Technologies International, Inc.," "Guardian" and all variations thereof
following the Closing. Black Mountain shall have no right to, and shall not, use
the name "Guardian," "Guardian Technologies International, Inc.," "Guardian
Holdings," or any variation thereof in connection with its business or the
business of any subsidiary thereof or for any other purpose, except for the
limited purpose of collecting receivables outstanding on the Closing Date during
the six month period following Closing, and shall, at the expiration of such
period, close all bank and other accounts bearing the "Guardian" name.
(c) Except as described in Exhibit 8.12 hereto and in
connection with the spin-off contemplated by Section 4.2, the Corporation has
not sold, transferred, assigned, licensed or subjected to any right, lien,
encumbrance or claim of others, any Guardian Proprietary Information, including
without limitation any Guardian Registered Right, or any interest therein,
38
related to or required for the design, development, manufacture, operation, sale
or use of any product or service currently under development or manufactured, or
proposed to be developed, sold or manufactured, by it. Exhibit 8.12 contains a
true and complete list and description of all licenses of Guardian Proprietary
Information granted to the Corporation by others or to others by the
Corporation. Except as described in Exhibit 8.12 hereto, there are no claims or
demands of any person pertaining to, or any proceedings that are pending or
threatened, which challenge the rights of the Corporation in respect of any
Guardian Proprietary Information used in the conduct of its business.
(d) Except as described in Exhibit 8.12 hereto, the
Corporation owns and on the Closing Date shall own, has and shall have, holds
and shall hold, exclusively all right, title and interest in the Guardian
Registered Rights, free and clear of all liens, encumbrances, restrictions,
claims and equities of any kind whatsoever, has and shall have the exclusive
right to use, sell, license or dispose of, and has and shall have the exclusive
right to bring action for the infringement of the Guardian Registered Rights and
the Guardian Proprietary Information. To the Best Knowledge of Corporation, the
marketing, promotion, distribution or sale by the Corporation of any products or
interests subject to the Guardian Registered Rights or making use of Guardian
Proprietary Information shall not constitute an infringement of any patent,
copyright, trademark, service ▇▇▇▇ or misappropriation or violation of any other
party's proprietary rights or a violation of any license or agreement by the
Corporation. Except as described in Exhibit 8.12 hereto, to the knowledge of the
Corporation after due inquiry no facts or circumstances exist that could result
in the invalidation of any of the Guardian Registered Rights.
8.13 NO LIENS OR ENCUMBRANCES. The Corporation has good and marketable
title to all of the property and assets, tangible and intangible, employed in
the operations of its business, free of any material mortgages, security
interests, pledges, easements or encumbrances of any kind whatsoever and except
for such property and assets as may be leased by Corporation.
8.14 EMPLOYEE MATTERS. Exhibit 8.14 attached hereto contains a true,
complete and accurate list of all employees of the Corporation and the
remuneration of each (including wages, salaries and fringe benefits). Each
employee listed in Exhibit 8.14 shall terminate his/her employment relationship
with the Corporation prior to the Closing Date, except as may be required by
this Agreement, and Guardian shall provide to RJL a release, in such form as is
reasonably acceptable to RJL, executed by each such employee releasing Guardian
from all claims and liabilities related to the termination of his or her
employment, his or her employment agreement, and ownership of any shares or
other securities of Guardian. Except as specifically described on Exhibit 8.14,
Guardian has no employee benefit plans (including, but not limited to, pension
plans and health or welfare plans), arrangements or understandings, whether
formal or informal. The Corporation does not now and has never contributed to a
"multi-employer plan" as defined in Section 400(a)(3) of the ERISA. The
Corporation has complied with all applicable provisions of ERISA and all rules
39
and regulations promulgated thereunder, and neither the Corporation nor any
trustee, administrator, fiduciary, agent or employee thereof has at any time
been involved in a transaction that would constitute a "prohibited transaction"
within the meaning of Section 406 of ERISA as to any covered plan of the
Corporation. The Corporation is not a party to any collective bargaining or
other union agreement. The Corporation has not, within the past five (5) years
had, or been threatened with, any union activities, work stoppages or other
labor trouble with respect to its employees which had a material adverse effect
on the Corporation, its business or assets. Except as set forth in Exhibit 8.14,
the Corporation has not made any commitment or agreements to increase the wages
or modify the conditions or terms of employment of any of the employees of the
Corporation used in connection with its business, and between the date of this
Agreement and the Closing Date, the Corporation will not make any agreement to
increase the wages or modify the conditions or terms of employment of any of the
employees of the Corporation used in the conduct of its business, without the
prior written consent of all parties hereto.
8.15 CONTRACT SCHEDULES. Attached as Exhibit 8.15 hereto is an accurate
list of the following:
(a) All contracts, leases, agreements, covenants, licenses,
instruments or commitments of Guardian pertaining to the business of Guardian
calling for the payment of Five Thousand Dollars ($5,000) or more or which is
otherwise material to the business of Guardian, including, without limitation,
the following:
(i) Licenses and contracts held in the ordinary
course of business;
(ii) Executory contracts for the purchase, sale
or lease of any assets;
(iii) Management or consulting contracts;
(iv) Patent, trademark and copyright
applications, registrations or licenses, and
know-how, intellectual property and trade
secret agreements or other licenses;
(v) Note agreements, loan agreements, indentures
and the like, other than those entered into
and executed in the ordinary course of
business;
(vi) All sales, agency, distributorship or
franchise agreements; and
(vii) Any other contracts not in the ordinary
course of business.
(b) All labor contracts, employment agreements and collective
bargaining agreements to which Guardian is a party.
40
(c) All instruments evidencing any liens or security interest
securing any indebtedness of Guardian covering any asset of Guardian.
(d) All profit sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plans, agreements, arrangements or commitments of any
nature whatsoever, whether or not legally binding, and all agreements with any
present or former officer, director or shareholder of the Corporation.
(e) Any and all documents, instruments and other writings not
listed in any other schedule hereto which are material to the business
operations of Guardian.
Except as set forth in Exhibit 8.15, all of such contracts,
agreements, leases, licenses, plans, arrangements and commitments and all other
such items set forth above are valid, binding and in full force and effect in
accordance with their terms and conditions, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, fraudulent transfer,
reorganization or other similar laws affecting the enforcement of contracts
generally, and there is no existing material default thereunder or breach
thereof by the Corporation, or to Guardian's knowledge by any party to such
contracts, or any conditions which, with the passage of time or the giving of
notice or both, might constitute such a default by the Corporation or by any
other party to the contracts. All of such contracts, agreements, leases,
licenses, plans, arrangements and commitments and all other items set forth
above shall be assigned or transferred to Black Mountain Holdings, in connection
with the spin-off contemplated by Section 4.2, and as a condition to Closing,
Guardian shall provide RJL with such agreements of assignment or transfer as RJL
or its counsel shall reasonably request to reflect such assignment or transfer.
8.16 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW. Except as set forth in
Exhibit 8.16, Guardian has not received notice of any legal, administrative,
arbitration or other proceeding or governmental investigation pending or
threatened (including those relating to the health, safety, employment of labor,
or protection of the environment) pertaining to Guardian which might result in
the aggregate in money damages payable by Guardian in excess of insurance
coverage or which might result in a permanent injunction against Guardian.
Except as set forth in such Exhibit 8.16, Guardian has substantially complied
with, and is not in default in any respect under any laws, ordinances,
requirements, regulations, or orders applicable to the business of Guardian, the
violation of which might materially and adversely affect it. Except as set forth
in such Exhibit 8.16, Guardian is not a party to any agreement or instrument,
nor is it subject to any charter or other corporate restriction or any judgment,
order, writ, injunction, decree, rule, regulation, code or ordinance which
materially and adversely affects, or might reasonably be expected materially and
adversely to affect the business, operations, prospects, property, assets or
condition, financial or otherwise, of Guardian.
41
8.17 INSURANCE. Guardian maintains in full force and effect insurance
coverage on its assets and business in such amounts and against such risks and
losses as set forth in Exhibit 8.17.
8.18 ENVIRONMENTAL. Except as disclosed on Exhibit 8.18, Guardian or
its subsidiaries have never owned or operated any real property except for
leased office space:
(a) To the Best Knowledge of Guardian, no real property (or
the subsurface soil and the ground water thereunder) now or previously leased by
Guardian(the "Leased Premises") either contains any Hazardous Substance (as
hereinafter defined) or has underneath it any underground fuel or liquid storage
tanks;
(b) To the Best Knowledge of Guardian, there has been no
generation, transportation, storage, treatment or disposal of any Hazardous
Substance on or beneath the Leased Premises, now or in the past;
(c) Guardian is not aware of any pending or threatened
litigation or proceedings before any court or administrative agency in which any
person alleges, or threatens to allege, the presence, release, threat of
release, placement on or in the Leased Premises, or the generation,
transportation, storage, treatment or disposal at the Leased Premises, of any
Hazardous Substance;
(d) Guardian has not received any written notice and has no
knowledge that any Governmental Authority or any employee or agent thereof has
determined or alleged, or is investigating the possibility, that there is or has
been any presence, release, threat of release, placement on or in the Leased
Premises, or any generation, transportation, storage, treatment or disposal at
the Leased Premises, of any Hazardous Substance;
(e) To the Best Knowledge of Guardian, there have been no
communications or agreements with any Governmental Authority or agency (federal,
state, or local) or any private person or entity (including, without limitation,
any prior owner of the Leased Premises and any present or former occupant or
tenant of the Leased Premises) relating in any way to the presence, release,
threat of release, placement on or in the Leased Premises, or any generation,
transportation, storage, treatment or disposal at the Leased Premises, of any
Hazardous Substance. RJL further agrees and covenants that Guardian will not
store or deposit on, otherwise release or bring onto or beneath, the Leased
Premises any Hazardous Substance prior to the Closing Date; and
(f) There is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, to Guardian's Best Knowledge,
threatened, against Guardian, and Guardian knows of no facts or circumstances
which might give rise to any future litigation, proceeding, citizen's suit or
governmental or other investigation, which relate to Guardian's compliance with
environmental laws, regulations, rules, guidelines and ordinances.
42
For purposes of this Section 8.18, "Hazardous Substance" shall
mean and include (i) a hazardous substance as defined in 42 U.S.C. Section
9601(14), the Regulations at 40 C.F.R. Part 302, (2) any substance regulated
under the Emergency Planning and Community Right to Know Act (including without
limitation any extremely hazardous substances listed at 40 C.F.R. Part 355 and
any toxic chemical listed at 40 C.F.R. Part 372), (iii) hazardous wastes and
hazardous substances as specified under any state or local Governmental
Requirement governing water pollution, groundwater protection, air pollution,
solid wastes, hazardous wastes, spills and other releases of toxic or hazardous
substances, transportation of hazardous substances, materials and wastes and
occupational or employee health and safety, and (iv) any other material, gas or
substance known or suspected to be toxic or hazardous (including, without
limitation, any radioactive substance, methane gas, volatile hydrocarbon,
industrial solvent, and asbestos) or which could cause a material detriment to,
or materially impair the beneficial use of, the Leased Premises, or constitute a
material health, safety or environmental risk to any person exposed thereto or
in contact therewith. For purposes of this Section 8.18, "Hazardous Substance"
shall not mean and shall not include the following, to the extent used normally
and required for everyday uses or normal housekeeping or maintenance: (a) fuel
oil and natural gas for heating, (b) lubricating, cleaning, coolant and other
compounds customarily used in building maintenance, (c) materials routinely used
in the day-to-day operations of an office, such as copier toner, (d) consumer
products, (e) material reasonably necessary and customarily used in construction
and repair of an office project, and (f) fertilizers, pesticides and herbicides
commonly used for routine office landscaping.
8.19 DISCLOSURE OF INFORMATION. Guardian represents and warrants that
all statements, data and other written information provided by it to any party
hereto as well as their respective consultants and representatives have been
accurate copies or true originals. Guardian represents and warrants that, to its
Best Knowledge, (i) there exists no material information concerning Guardian
which has been requested but not been disclosed to or made available to the
other parties and their representatives or consultants and which would be
material to a decision to consummate the transactions provided for in this
Agreement and (ii) in the aggregate, such information does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made in them, in light of the circumstances
under which they are made, not misleading.
8.20 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in this Agreement shall be true on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date. Such representations and warranties shall
survive the Closing Date and shall remain operative in full force and effect for
a period of three years from the date of Closing regardless of any investigation
at any time made by or on behalf of RJL and shall not be deemed merged in any
document or instruction so executed and/or delivered by Guardian.
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8.21 ABSENCE OF QUESTIONABLE PAYMENTS. To the Best Knowledge of the
Corporation, neither the Corporation, nor any director, officer, agent, employee
or other person acting on any its behalf has (i) used any corporate or other
funds for unlawful contributions, payments, gifts or entertainment, or made any
unlawful expenditures relating to political activity to government officials or
others or established or maintained any unlawful or unrecorded funds in
violation of Section 30A of the Exchange Act or any other applicable foreign,
federal or state law; or (ii) accepted or received any unlawful contributions,
payments, expenditures or gifts.
SECTION 9: COVENANTS OF GUARDIAN
9.1 PRESERVATION OF BUSINESS. Until Closing, except as provided for in
this Agreement, Guardian shall use its best efforts to:
(a) Preserve intact the present business organization of the
Corporation;
(b) Maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) Preserve and protect the goodwill and advantageous
relationships of the Corporation with its customers and all other persons having
business dealings with the Corporation;
(d) Preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade secrets,
service marks, copyrights, bonds and other similar rights of the Corporation;
and
(e) Comply with all laws applicable to the conduct of its
business.
9.2 ORDINARY COURSE. Until Closing, except as provided for in this
Agreement, Guardian shall not, without the prior written consent of RJL:
(a) Sell, mortgage, pledge or encumber or agree to sell,
mortgage, pledge or encumber, any of the property or assets of Guardian or the
Subsidiaries; and
(b) Incur any obligation (contingent or otherwise) or
purchase, acquire, transfer, or convey, any material assets or property or enter
into any contract or commitment.
9.3 NEGATIVE COVENANTS. Until Closing, except as contemplated by this
Agreement or as disclosed in Exhibits to this Agreement, from the date hereof
until the Closing Date, unless and until RJL otherwise consents in writing,
Guardian and the Subsidiaries will not (a) change or alter the physical contents
or character of the inventories of its business, so as to materially affect the
44
nature of the Corporation's business or materially and adversely change the
total dollar valuation of such inventories from that reflected on the financial
statements referred to in Section 8.5 other than in the ordinary course of
business; (b) incur any obligations or liabilities (absolute or contingent)
other than current liabilities incurred and obligations under contracts entered
into in the ordinary course of business; (c) mortgage, pledge or voluntarily
subject to lien, charge or other encumbrance any assets, tangible or intangible,
other than the lien of current property taxes not due and payable; (d) sell,
assign or transfer any of its assets or cancel any debts or claims, other than
in the ordinary course of business; (e) waive any right of any substantial
value; (f) declare or make any payment or distribution to Shareholders or issue,
purchase or redeem any shares of its capital stock or other equity securities or
issue or sell any rights to acquire the same or effect any stock split,
recapitalization, combination, or reclassification of its capital stock, or
reorganization; (g) grant any increase in the salary or other compensation of
any of its directors, officers, or employees or make any increase in any
benefits to which such employees might be entitled or enter into any employment
agreement or consulting agreement; (h) institute any bonus, benefit, profit
sharing, stock option, pension, retirement plan or similar arrangement, or make
any changes in any such plans or arrangements presently existing; (i) enter into
any transactions or series of transactions other than in the ordinary course of
business; (j) amend or propose to amend its Articles of Incorporation or
By-Laws; (j) make any change in accounting methods, principles or practices; (k)
authorize capital expenditures or make any acquisition of, or investment in,
assets or stock of any other Person; (l) enter into or amend any material
contract or agreement other than in the ordinary course of business; (m) make
any tax election or settle or compromise any material federal, state, local or
foreign income tax liability; (n) permit any material insurance policy to be
canceled or terminated, except in the ordinary course of business; (o) assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any person or make any loans or advances; (p) maintain its
real and personal properties in as good a state of operating condition and
repair as they are on the date of this Agreement, except for ordinary wear and
tear or insured casualty in amounts less than $5,000; (q) terminate or modify
any material leases, contracts, licenses, and permits or other authorizations or
agreements affecting its business or its real and/or personal property, or the
operation thereof, or enter into any additional lease or contract requiring
expenditure by it of any amount affecting such properties or the operation
thereof; or (r) discharge, satisfy or pay any liens, encumbrances, obligations
or liabilities relating to it, whether absolute or contingent (including
litigation claims), other than liabilities shown on Guardian's Financial
Statements and liabilities incurred after the date thereof in the ordinary
course of business, and no such discharge, satisfaction or payment shall be
effected other than in accordance with the ordinary payment terms relating to
the liability discharged, satisfied or paid.
9.4 ADDITIONAL COVENANTS.
(a) Guardian will promptly pay and discharge, or cause to be
paid and discharged, when due and payable, all lawful taxes, assessments, and
governmental charges or levies imposed upon the income, profits, property or
business of Guardian or any subsidiary; provided, however, that any such tax,
assessment, charge or levy need not be paid if the validity thereof shall
45
currently be contested in good faith by appropriate proceedings and if Guardian
shall have set aside on its books adequate reserves therefor and deposited at
Closing into an escrow account an amount to cover any such tax, assessment,
charge or levy; and provided, further, that Guardian will pay all such taxes,
assessments, charges or levies forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor. Guardian will
promptly pay or cause to be paid when due, or in conformance with customary
trade terms, all other indebtedness incident to the operations of Guardian;
(b) Guardian will keep its properties and those of its
subsidiaries in good repair, working order and condition, reasonable wear and
tear excepted, and from time to time make all needful and proper repairs,
renewals, replacements, additions and improvements thereto; and Guardian will at
all times comply with the provisions of all material leases to which any of them
is a party or under which any of them occupies property so as to prevent any
loss or forfeiture thereof or thereunder;
(c) Guardian will keep its assets that are of an insurable
character insured by financially sound and reputable insurers against loss or
damage by fire, extended coverage and explosion insurance in amounts customary
for companies in similar businesses similarly situated; and Guardian will
maintain, with financially sound and reputable insurers, insurance against other
hazards, risks and liabilities to persons and property to the extent and in the
manner customary for companies in similar businesses similarly situated;
(d) Guardian will keep true records and books of account in
which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs in accordance with its past
practices consistently applied;
(e) Guardian will comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority, a
breach of which could have a material adverse effect on its business or credit;
(f) Guardian shall maintain in full force and effect its
corporate existence, rights and franchises and all licenses and other rights to
use patents, processes, licenses, trademarks, trade names or copyrights owned or
possessed by it or any subsidiary and deemed by Guardian to be necessary to the
conduct of its business;
(g) Guardian will, consistent with its practices in the
ordinary course of business, endeavor to retain its business relationships with
its customers and suppliers that it believes to be advantageous; and
(h) Guardian shall deliver to RJL copies of its statements of
operation and financial condition and similar statements as and when prepared
(if at all) in the ordinary course of its business.
46
9.5 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC. From the date of this
Agreement through the Closing Date, Guardian will grant RJL and its authorized
representatives reasonable access to its and the Subsidiaries' books and
records, premises, products, employees and customers and other parties with whom
it has contractual relations during reasonable business hours for purposes of
enabling RJL to fully investigate the business of Guardian and the Subsidiaries.
Guardian will also deliver copies of the monthly statements of operations and
financial condition for the period subsequent to the latest financial statements
to RJL within a reasonable time of such statements becoming available.
9.6 COMPENSATION. Except as contemplated by this Agreement, Guardian
shall not enter into or agree to enter into any employment contract or agreement
for consulting, professional, or other services which will adversely and
materially affect the operation of Guardian prior to the Closing Date.
9.7 NO SOLICITATION.
(a) Except in connection with the transactions contemplated by
this Agreement, Guardian shall not, nor shall it permit any of its subsidiaries
to, nor shall it authorize or permit any officer, director or employee of or any
investment banker, attorney or other advisor or representative of, Guardian or
any of its subsidiaries to, (i) solicit, initiate or encourage the submission
of, any takeover proposal, (ii) enter into any agreement with respect to any
takeover proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any takeover proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any executive officer of
Guardian or any of its subsidiaries or any investment banker, attorney or other
advisor or representatives of Guardian or any of its subsidiaries or otherwise,
shall be deemed to be a breach of this Section by Guardian. For purposes of this
Agreement, "takeover proposal" means any proposal for a merger, consolidation or
reorganization or other business combination involving Guardian or any of its
subsidiaries or any proposal or offer to acquire in any manner, directly or
indirectly, an equity interest in, any voting securities of, or options, rights,
warrants or other interests convertible or exercisable for or into such voting
securities, or a substantial or material portion of the assets or business of
Guardian or any of its subsidiaries, other than the transactions contemplated by
this Agreement.
(b) Except upon a material breach of this Agreement by RJL or
following termination hereof and except for action permitted or contemplated by
this Agreement, including a party's right to terminate this Agreement under
certain circumstances, neither the Board of Directors of Guardian nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to RJL, the approval or recommendation by such Board
of Directors of any such committee of this Agreement or the Exchange or (ii)
approve or recommend, or propose to approve or recommend, any takeover proposal.
47
(c) Guardian promptly shall advise RJL orally and in writing
of any takeover proposal or any inquiry with respect to or which could lead to
any takeover proposal and the identity of the person making any such takeover
proposal or inquiry. Guardian will keep RJL fully informed of the status and
details of any such takeover proposal or inquiry.
(d) The provisions of this Section 9.7 shall not be construed
to prevent any investment banker, attorney or other advisor or representative of
Guardian to engage in discussions with third parties in the ordinary course of
business with respect to transactions not involving the parties to this
Agreement.
9.8 DELIVERY OF ADDITIONAL FILINGS; ADDITIONAL ACCESS. Following the
execution of this Agreement and until the Closing Date, Guardian shall provide
RJL with copies of any and all reports, filings, notices or other information
which Guardian may prepare and file with or receive from the Commission, Nasdaq
or any other regulatory authority, (and shall give RJL an opportunity to review
and comment on any such filings) as well as copies of any pleadings, notices or
other filings made in connection with any pending litigation, arbitration,
investigation or proceeding in which Guardian or any Subsidiary is party or
otherwise involved. Moreover, following the Closing, J. ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Black
Mountain Holdings and its subsidiaries shall assist and make themselves
available in connection with the preparation of Guardian's Form 10-QSB for the
period ended March 31, 2003, and shall provide access to RJL, Guardian and their
respective representatives and auditors to the books and records of Black
Mountain Holdings and its subsidiaries as may be reasonably required in
connection in the preparation of such report and the conduct of any subsequent
audit required with regard to the financial statements of Guardian.
SECTION 10: REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders severally represent and warrant to Guardian that, as of
the date of this Agreement, and as of the date of Closing, the following are
true and accurate:
10.1 SHARE OWNERSHIP. Each Shareholder owns the number of shares of the
common stock of RJL, a Delaware corporation, set forth in Exhibit 6.7 hereto
which shares are fully paid, non-assessable and will be transferred and assigned
to Guardian free and clear of any claims, liens, and encumbrances or other
restrictions which would in any way impair their right to effectively sell or
transfer such shares. Shareholders represent and warrant that except as set
forth on Exhibit 6.7, there are no other Shareholders of RJL and no other
persons or entities that have or claim or right to receive shares of equity
securities of RJL or that have or claim a right to receive any Exchange Shares
in the Exchange provided for in this Agreement.
48
10.2 RIGHTS OWNERSHIP. Each Shareholder is the beneficial owner of the
equity rights, including, but not limited to, options, warrants, puts and the
like, in RJL, as are set forth on Exhibit 6.7 hereto. The rights set forth on
Exhibit 6.7 are owned by Shareholders and will be assigned to Guardian free and
clear of any claims, liens, and encumbrances or other restrictions which would
in any way impair the entitlements represented thereby.
10.3 RESTRICTION ON FUTURE TRANSFER. There are no restrictions on the
transferability of the shares of RJL common stock being transferred to Guardian
imposed by or pursuant to the company's Articles of Incorporation, Bylaws or by
any other agreements to which Shareholders or RJL are a party, except for
restrictions imposed by or on account of federal and state securities laws.
10.4 UNREGISTERED STOCK. Shareholders represent that they understand
that the Guardian Common Stock and Guardian Preferred Stock (including the
common stock issuable upon conversion of the Guardian Preferred Stock) has not
been registered for sale under federal or state securities laws and that said
securities are being issued to Shareholders pursuant to a claimed exemption from
the registration requirements of such laws. Shareholders understand that in
order to maintain such exemption they must be acquiring the stock with no view
to making a public distribution of said securities; and that they understand
that they must bear the economic risk of their investment in the Guardian Common
Stock and Guardian Preferred Stock (including the common stock issuable upon
conversion of the Guardian Preferred Stock) for a substantial period of time,
because the Guardian Common Stock has not been registered under the federal or
state securities laws, and, cannot be sold unless subsequently registered under
such laws or unless an exemption from such registration is available.
10.5 STOCK ACQUIRED FOR INVESTMENT; LIMITATIONS ON DISPOSITIONS. Each
Shareholder severally represents that he is acquiring the Guardian Common Stock
and the Guardian Preferred Stock (including the Guardian common stock issuable
upon conversion of the Guardian Preferred Stock) for its own account and for
investment and not with a view to, or for sale in connection with, any
distribution thereof in violation of the Securities Act of 1933, as amended.
Shareholders agree that the stock will not be offered for sale, sold or
otherwise transferred for value and that no transfer thereof will be made by it
unless (i) a registration statement with respect thereto has become effective
under the Securities Act of 1933, as amended, or (i) there is presented to
Guardian an opinion of counsel for Shareholders reasonably satisfactory to
Guardian that such registration is not required, or (iii) there is presented to
Guardian a letter from the Securities and Exchange Commission (said Commission
having been informed of all relevant circumstances) to the effect that in the
event the stock is transferred by Shareholders without such registration, the
Commission or the staff will not recommend any action. Shareholders further
agrees that the stock will not be offered for sale, sold or otherwise
transferred unless, in the opinion of legal counsel for Guardian, such sale or
disposition does not, and will not, violate any provisions of any other federal
or state securities law or regulation. Shareholders consents that any transfer
agent of Guardian may be instructed not to transfer any of the stock unless it
receives satisfactory evidence of compliance with the foregoing provisions and
that there may be endorsed upon any certificates (or instruments issued in
substitution therefor), Guardian's regular legend regarding the sale of
restricted securities.
49
SECTION 11: TERMINATION
11.1 TERMINATION. This Agreement may be terminated and abandoned solely
as follows:
(a) At any time until the Closing Date by the mutual agreement
of Guardian and RJL.
(b) By any party hereto, if for any reason the parties have
failed to close this Agreement on or before June 30, 2003, provided that the
party requesting termination is not then in default thereunder.
(c) By any party hereof, if the other party shall have
breached any representation, warranty or covenant contained in this Agreement
and shall have failed to cure such breach within ten (10) days following written
notice thereof by the party seeking termination.
In the event of any termination pursuant to this Section
11.1(b), (c) or (d), written notice setting forth the reasons therefor shall
forthwith be given by the terminating party to all of the other parties hereto.
11.2 EFFECT OF TERMINATION. If the Exchange is terminated and abandoned
as provided for in this Section 11, this Agreement shall forthwith become wholly
void and of no effect without liability to any party to this Agreement;
provided, however, that no such termination shall terminate or limit the rights
of any such terminating party to enforce any remedy otherwise available for any
breach hereof.
11.3 TERMINATION FEE. In the event this Agreement is terminated due to
the failure of RJL to (i) deliver the RJL Financial Statements required by
Section 4.1 or (ii) complete the RJL Private Placement pursuant to the
provisions of Section 4.3 or (iii) consummate the Diagnos Distributor Agreement
pursuant to Section 4.4, then and in such event RJL shall pay to Guardian a
termination fee equal to $25,000. In the event this Agreement is terminated due
to (i) the failure of Guardian to effect the spin-off contemplated by Section
4.2 prior to Closing (subject to the subsequent registration of the Spin-off
Shares under the Securities Act) or (ii) deliver the lock up agreements pursuant
to Section 5.5(c)(viii), then and in such event Guardian shall pay to RJL a
termination fee equal to $25,000. Such termination fee shall be payable with ten
(10) calendar days following the date of termination. The payment of the
termination fee pursuant to this Section 11.3 shall the sole and exclusive
remedy of the terminating party with respect to the occurrences giving rise to
such payment; provided, however, that this limitation shall not apply in the
event of a material breach of this Agreement by a party.
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SECTION 12: INDEMNIFICATION
12.1 INDEMNIFICATION COVENANTS OF GUARDIAN. Subject to the limitations
set forth in this Section 12, Guardian shall defend, indemnify, save and keep
harmless the RJL and its affiliates, directors, officers, agents, attorneys,
accountants, or representatives and their respective successors and permitted
assigns (the "RJL Indemnitees"), against and from all liability, demands,
claims, actions or causes of action, assessments, losses, fines, penalties,
costs, damages and expenses, including reasonable attorneys' fees (collectively,
the "Damages") sustained or incurred by any of the RJL Indemnitees as a result
of or arising out of or relating to:
(a) Any inaccuracy in a representation or breach of a warranty
made by the Guardian and in this Agreement or in any document or instrument
delivered to RJL in connection with this Agreement; or
(b) The failure of the Guardian to comply with, or the breach
by the Guardian of, any of the covenants contained in this Agreement or in any
document or instrument delivered to RJL in connection with this Agreement, to be
performed by the Guardian; or
(c) Any Guardian Liability except to the extent that any such
liability is expressly assumed by RJL pursuant to this Agreement.
12.2 INDEMNIFICATION COVENANTS OF RJL. Subject to the limitations set
forth in this ▇▇▇▇▇▇▇ ▇▇, ▇▇▇ shall defend, indemnify, save and keep harmless
Guardian and its affiliates, managers, officers, members, agents, attorneys,
accountants or representatives and their respective successors and permitted
assigns (the "Guardian Indemnitees"), against and from all Damages sustained or
incurred by any of the Guardian Indemnitees as a result of or arising out of or
relating to:
(a) Any inaccuracy in a representation or breach of a warranty
made by RJL in this Agreement or in any document or instrument delivered to the
Guardian in connection with this Agreement; or
(b) The failure of RJL to comply with, or the breach by RJL
of, any of the covenants contained in this Agreement or in any document or
instrument delivered to the Guardian in connection with this Agreement, to be
performed by RJL.
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12.3 INDEMNIFICATION COVENANTS OF BLACK MOUNTAIN HOLDINGS. Subject to
the limitations set forth in this Section 12, Black Mountain Holdings shall
defend, indemnify, save and keep harmless Guardian, RJL and their respective
affiliates, directors, officers, agents, attorneys, accountants, or
representatives and their respective successors and permitted assigns (the
"Guardian/RJL Indemnitees"), against and from all liability, demands, claims,
actions or causes of action, assessments, losses, fines, penalties, costs,
damages and expenses, including reasonable attorneys' fees (collectively, the
"Damages") sustained or incurred by any of the Guardian/RJL Indemnitees as a
result of or arising out of or relating to:
(a) The management or operation of Guardian or any subsidiary
thereof prior to Closing; or
(b) The spin-off of the shares of Black Mountain Holdings to
the spin-off trust as contemplated by Section 4.2 hereinabove; or
(c) The registration of the Spin-off Shares under the
Securities Act, including but not limited to any untrue statement or alleged
untrue statement of a material fact contained in the registration statement or
prospectus contained therein covering the registration of the Spin-Off Shares or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or
(d) Any failure by Black Mountain Holdings to effect the
spin-off in accordance with applicable provisions of the Securities Act or
applicable state securities laws, or the spin-off trust documents.
12.4 LIMITATION ON CLAIMS AND LIABILITY.
Notwithstanding any provision of this Agreement to the contrary, no
party shall have liability to indemnify the other and neither party may assert a
claim for indemnification for damages suffered by it until and unless the
party's claims for damages for which the other party is entitled to
indemnification equal or exceed, in the aggregate, the sum of $10,000 (the
"Damages Threshold"). Upon a party's cumulative claims for indemnification
equaling the Damages Threshold, a party may assert claims for indemnification
pursuant to Section 12.45 below for the full amount of such party's damages for
which it is entitled to indemnification hereunder.
12.5 METHOD OF ASSERTING CLAIMS. For purposes of this Section 12.4, the
following terms shall be defined as follows:
(a) "Claims" shall mean all claims asserted pursuant to this
Section 12, whether or not arising as a result of a Third Party Claim.
52
(b) "Indemnified Person" shall mean any RJL Indemnitee, any
Guardian Indemnitee or Guardian/RJL Indemnitees, as the context requires.
(c) "Indemnifying Person" shall mean any person obligated to
indemnify an Indemnified Person pursuant to this Section 12, as the context
requires.
(d) "Third Party Claims" shall mean any Claim asserted by any
person not a party to this Agreement (including without limitation any
Governmental Authority), asserting that an Indemnified Person is liable for
monetary or other obligations which may constitute or result in Damages for
which such Indemnified Person may be entitled to indemnification pursuant to
this Section 12.
(e) All Claims shall be made in writing and shall set forth
with reasonable specificity the facts and circumstances of the Claim, as well as
the basis upon which indemnification pursuant to this Section 12 is sought.
Notwithstanding the foregoing, no delay or failure by any Indemnified Person to
provide notification of any Claim shall preclude any Indemnified Person from
recovering for Damages pursuant to this Section 12, except to the extent that
such delay or failure materially compromises the rights of any Indemnifying
Person under this Section 12.
(f) Within ten (10) days after receipt by an Indemnifying
Person of any notification of a Claim, the Indemnifying Person may, upon written
notice thereof to the Indemnified Person, assume (at the Indemnifying Person's
expense) control of the defense of such action, suit or proceeding with counsel
reasonably satisfactory to the Indemnified Person, provided the Indemnifying
Person acknowledges in writing to the Indemnified Person that any Damages that
may be assessed against the Indemnified Person in connection with such action,
suit or proceeding constitute Damages for which the Indemnified Person shall be
entitled to indemnification pursuant to this Section 12. If the Indemnifying
Person does not so assume control of such defense, the Indemnified Person shall
control such defense, but in so doing shall not waive or limit its right to
recover under this Section 12 for any Damages that may be assessed against the
Indemnified Person in connection with such action, suit or proceeding. The party
not controlling such defense may participate therein at its own expense;
provided that if the Indemnifying Person assumes control of such defense, and
the Indemnified Person has been advised in writing by outside legal counsel that
under the applicable standards of professional conduct, the Indemnifying Person
and the Indemnified Person may not be represented by the same counsel with
respect to such action, suit or proceeding, the reasonable fees and expenses of
one law firm for the Indemnified Person shall be paid by the Indemnifying
Person. The party controlling such defense shall keep the other party advised of
the status of such action, suit or proceeding and the defense thereof and shall
consider in good faith recommendations made by the other party with respect
thereto. The Indemnified Person shall not agree to any settlement of such
action, suit or proceeding without the prior written consent of the Indemnifying
Person, which (with respect to an action, suit or proceeding as to which the
Indemnifying Person has not elected to assume control of the defense) shall not
53
be unreasonably withheld, conditioned or delayed. The Indemnifying Person shall
not agree to any settlement of such action, suit or proceeding without the prior
written consent of the Indemnified Person, which shall not be unreasonably
withheld, conditioned or delayed so long as the settlement includes a complete
release of the Indemnified Person from all liability and does not contain or
contemplate any payment by, or injunctive or other equitable relief binding
upon, the Indemnified Person.
SECTION 13: NONDISCLOSURE OF CONFIDENTIAL INFORMATION
13.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Each of the parties
hereto recognizes and acknowledges that it has and will have access to certain
nonpublic information of the others which shall be deemed the confidential
information of the other party (including, but not limited to, business plans,
costs, trade secrets, licenses, research projects, profits, markets, sales,
customer lists, strategies, plans for future development, financial information
and any other information of a similar nature) that after the consummation of
the transactions contemplated hereby will be valuable, special and unique
property of the Companies. Information received by the other party or its
representatives shall not be deemed Confidential Information and afforded the
protections of this Section 13.1 if, on the Closing Date, such information has
been (i) developed by the receiving party independently of the disclosing party,
(ii) rightfully obtained without restriction by the receiving party from a third
party, provided that the third party had full legal authority to possess and
disclose such information, (iii) publicly available other than through the fault
or negligence of the receiving party, (iv) released without restriction by the
disclosing party to anyone, including the United States government, (v) properly
and lawfully known to the receiving party at the time of its disclosure, as
evidenced by written documentation conclusively established to have been in the
possession of the receiving party on the date of such disclosure, or (vi) in the
opinion of counsel to the party, required to be disclosed under applicable
Federal or state securities laws, or the rules of any national securities
exchange, Nasdaq, or any over the counter market upon which the securities of
the party are then traded. Each of the parties hereto agrees that it shall not
disclose, and that it shall use its best efforts to prevent disclosure by any
other Person of, any such confidential information to any Person for any purpose
or reason whatsoever, except to authorized representatives of the Companies who
agree to be bound by this confidentiality agreement. Notwithstanding, a party
may use and disclose any such confidential information to the extent that a
party may become compelled by Legal Requirements to disclose any such
information; provided, however, that such party shall use all reasonable efforts
and shall have afforded the other party the opportunity to obtain an appropriate
protective order or other satisfactory assurance of confidential treatment for
any such information compelled to be disclosed. In the event of termination of
this Agreement, each party shall use all reasonable efforts to cause to be
delivered to the other parties, and to retain no copies of, any documents, work
papers and other materials obtained by such party or on such party's behalf
during the conduct of the matters provided for in this Agreement, whether so
obtained before or after the execution hereof. Each of the parties recognizes
and agrees that violation of any of the agreements contained in this Section
13.1 will cause irreparable damage or injury to the parties, the exact amount of
which may be impossible to ascertain, and that, for such reason, among others,
54
the parties shall be entitled to an injunction, without the necessity of posting
bond therefor, restraining any further violation of such agreements. Such rights
to any injunction shall be in addition to, and not in limitation of, any other
rights and remedies the parties may have against each other. The provisions of
this Section 13.1 shall survive any termination of this Agreement.
13.2 NO PUBLICITY. Until the Closing or the termination of this
Agreement in accordance with its terms, neither Guardian nor RJL shall, directly
or indirectly, issue any press release, or make any public statement, concerning
the transactions contemplated by this Agreement without the prior written
consent of Guardian (in the case of such a release or statement by RJL) or of
RJL (in the case of such a release or statement by Guardian). This Section 13.2
shall not, however, preclude any party from making any disclosure required by
applicable law, and in the event any party, or any officer, director, employee,
agent or representative of a party, believes that any press release, public
statement or other disclosure is so required, such party will notify and consult
with the other parties with respect thereto as promptly as is practicable under
the circumstances.
SECTION 14: EXPENSES
Each of the parties will pay all costs and expenses of its performance
and compliance with this Agreement and the transactions contemplated hereby. In
no event will any party to this Agreement be liable to any other party for
incidental damages, lost profits, income tax consequences, lost savings or any
other consequential damages, even if such party has been advised of the
possibility of such damages, or for punitive damages, resulting from the breach
of any obligation under this Agreement. The provisions of this Section 14 shall
survive any termination hereof.
SECTION 15: MISCELLANEOUS
15.1 ATTORNEY'S FEES. In any action at law or in equity or in any
arbitration proceeding, for declaratory relief or to enforce any of the
provisions or rights or obligations under this Agreement, the unsuccessful party
to such proceeding, shall pay the successful party or parties all statutorily
recoverable costs, expenses and reasonable attorneys' fees incurred by the
successful party or parties including without limitation costs, expenses, and
fees on any appeals and the enforcement of any award, judgment or settlement
obtained, such costs, expenses and attorneys' fees shall be included as part of
the judgment. The successful party shall be that party who obtained
substantially the relief or remedy sought, whether by judgment, compromise,
settlement or otherwise.
15.2 NO BROKERS. Guardian represents and warrants to RJL and RJL
represents and warrants to Guardian, that, except as set forth on Schedule 15.2,
neither it nor any party acting on its behalf has incurred any liability, either
express or implied, to any "broker," "finder," financial advisor, employee or
similar person in respect of any of the transactions contemplated hereby.
Guardian agrees to indemnify RJL against, and hold it harmless from, and RJL
55
agrees to indemnify Guardian against, and hold it harmless from, any liability,
cost or expense (including, but not limited to, fees and disbursements of
counsel) resulting from any agreement, arrangement or understanding made by such
party with any third party, including employees of RJL, for brokerage, finders'
or financial advisory fees or other commissions in connection with this
Agreement or the transactions contemplated hereby. The provisions of this
Section 15.2 shall survive any termination of this Agreement.
15.3 SURVIVAL AND INCORPORATION OF REPRESENTATIONS. The
representations, warranties, covenants and agreements made herein or in any
certificates or documents executed in connection herewith shall survive the
execution and delivery thereof for a period of three years from the Closing, and
all statements contained in any certificate or other document delivered by any
party hereunder or in connection herewith shall be deemed to constitute
representations and warranties made by that party to this Agreement.
15.4 INCORPORATION BY REFERENCE. All Exhibits to this Agreement and all
documents delivered pursuant to or referred to in this Agreement are herein
incorporated by reference and made a part hereof.
15.5 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to, or shall, confer any rights or remedies under, or by
reason of, this Agreement, on any person other than the parties hereto and their
respective and proper successors and assigns and indemnitees. Nothing in this
Agreement shall act to relieve or discharge the obligation or liability of any
third persons to any party to this Agreement.
15.6 AMENDMENTS AND WAIVERS. This Agreement may not be amended, nor may
compliance with any term, covenant, agreement, condition or provision set forth
herein be waived (either generally or in a particular instance and either
retroactively or prospectively) unless such amendment or waiver is agreed to in
writing by all parties hereto.
15.7 WAIVER. No waiver of any breach of any one of the agreements,
terms, conditions, or covenants of this Agreement by the parties shall be deemed
to imply or constitute a waiver of any other agreement, term, condition, or
covenant of this Agreement. The failure of any party to insist on strict
performance of any agreement, term, condition, or covenant, herein set forth,
shall not constitute or be construed as a waiver of the rights of either or the
other thereafter to enforce any other default of such agreement, term,
condition, or covenant; neither shall such failure to insist upon strict
performance be deemed sufficient grounds to enable either party hereto to forego
or subvert or otherwise disregard any other agreement, term, condition, or
covenants of this Agreement.
15.8 GOVERNING LAW - CONSTRUCTION. This Agreement, and the rights and
obligations of the respective parties, shall be governed by and construed in
accordance with the laws of the State of Delaware. Notwithstanding the preceding
sentence, it is acknowledged that each party hereto is being represented by, or
has waived the right to be represented by, independent counsel. Accordingly, the
parties expressly agree that no provision of this Agreement shall be construed
against any party on the ground that the party or its counsel drafted the
provision. Nor may any provision of this Agreement be construed against any
party on the grounds that party caused the provision to be present.
56
15.9 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Sections 6 and 8 of this Agreement shall survive the Closing Date
and shall remain operative in full force and effect for three years from the
date of Closing regardless of any investigation at any time made by or on behalf
of either Guardian or RJL and shall not be deemed merged in any document or
instrument so executed or delivered by either Guardian or RJL.
15.10 NOTICES. Any notice, communication, offer, acceptance, request,
consent, reply, or advice (herein severally and collectively, for convenience,
called "Notice"), in this Agreement provided or permitted to be given, served,
made, or accepted by any party or person to any other party or parties, person
or persons, hereunder must be in writing, addressed to the party to be notified
at the address set forth below, or such other address as to which one party
notifies the other in writing pursuant to the terms of this Section 15.10, and
must be served by (i) telefax or other similar electronic method, or (i)
depositing the same in the United States mail, certified, return receipt
requested and postage paid to the party or parties, person or persons to be
notified or entitled to receive same, or (iii) delivering the same in person to
such party.
Notice shall be deemed to have been given immediately when sent by
telefax and confirmed received or other electronic method and seventy-two hours
after being deposited in the United States mail, or when personally delivered in
the manner herein above described. Notice provided in any manner not specified
above shall be effective only if and when received by the party or parties,
person or persons to be, or provided to be notified.
All notices, requests, demands and other communications required or
permitted under this Agreement shall be addressed as set forth below:
If Guardian, to: GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
57
If RJL or Shareholders, to: RJL MARKETING SERVICES, INC.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
With copy to: ▇▇▇▇ R. E. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇, Vangellow & ▇▇▇▇, P.C.
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
Any party receiving a facsimile transmission shall be entitled to rely
upon a facsimile transmission to the same extent as if it were an original. Any
party may alter the address to which communications or copies are to be sent by
giving notice of such change of address in conformity with the provisions of
this Section 15.10 for the giving of notice.
15.11 FAX/COUNTERPARTS. This Agreement may be executed by telex,
telecopy or other facsimile transmission, and such facsimile transmission shall
be valid and binding to the same extent as if it were an original. Further, this
Agreement may be signed in one or more counterparts, all of which when taken
together shall constitute the same documents. For all evidentiary purposes, any
one complete counter set of this Agreement shall be considered an original.
15.12 CAPTIONS. The caption and heading of various sections and
paragraphs of this Agreement are for convenience only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
15.13 SEVERABILITY. Wherever there is any conflict between any
provision of this Agreement and any Governmental Requirement or judicial
precedent, the latter shall prevail, but in such event the provisions of this
Agreement thus affected shall be curtailed and limited only to the extent
necessary to bring it within the requirement of the law. In the event that any
part, section, paragraph or clause of this Agreement shall be held by a court of
proper jurisdiction to be invalid or unenforceable, the entire Agreement shall
not fail on account thereof, but the balance of the Agreement shall continue in
full force and effect unless such construction would clearly be contrary to the
intention of the parties or would result in unconscionable injustice.
15.14 GOOD FAITH COOPERATION AND ADDITIONAL DOCUMENTS. The parties
shall use their best good faith efforts to fulfill all of the conditions set
forth in this Agreement over which it has control or influence. Each party
covenants and agrees to cooperate in good faith and to enter into and deliver
such other documents and papers as the other party reasonably shall require in
order to consummate the transactions contemplated hereby, provided in each
instance, any such document is in form and substance approved by the parties and
their respective legal counsel.
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15.15 SPECIFIC PERFORMANCE. The obligations of the parties under
Sections 2 and 3 are unique. If either party should default in its obligations
under said Section, the parties each acknowledge that it would be extremely
difficult and impracticable to measure the resulting damages; accordingly, the
non-defaulting party, in addition to any other available rights and remedies,
may ▇▇▇ in equity for injunction (mandatory or prohibitive) or specific
performance (all without the need to post a bond or undertaking of any nature),
and the parties each expressly waive the defense that a remedy at law in damages
is adequate.
15.16 ASSIGNMENT. Neither party may directly or indirectly assign or
delegate, by operation of law or otherwise, all or any portion of its/their/his
rights, obligations or liabilities under this Agreement without the prior
written consent of all other parties, which consent may be withheld in their
respective sole and absolute discretion. Any purported assignment or delegation
without such consent shall be null and void.
For purposes of this Section, the term "Agreement" shall include this
Agreement and the Exhibits and other documents attached hereto or described in
this Section 15.16. This Agreement, and other documents delivered pursuant to
this Agreement, contain all of the terms and conditions agreed upon by the
parties relating to the subject matter of this Agreement and supersede all prior
and contemporaneous agreements, letters of intent, representations, warranties,
disclosures, negotiations, correspondence, undertakings and communications of
the parties, oral or written, respecting that subject matter, including but not
limited to the Original Agreement and Plan of Reorganization and the Amendment
Agreements entered into by the parties.
15.17 TIME. Time is of the essence of this Agreement and each of its
provisions.
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IN WITNESS WHEREOF, the parties have signed the Agreement the date and
year first above written.
GUARDIAN: GUARDIAN TECHNOLOGIES
INTERNATIONAL, INC., A DELAWARE
CORPORATION
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇, President and CEO
RJL: RJL MARKETING SERVICES, INC.,
A DELAWARE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Its: President
BLACK MOUNTAIN HOLDINGS: Solely with regard to Sections 4.8, 9.8
and 12 of this Agreement:
BLACK MOUNTAIN HOLDINGS, INC., A
DELAWARE CORPORATION
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Its:President
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
60
