ASSET PURCHASE AGREEMENT BY AND BETWEEN LIBERTY CAPITAL ASSET MANAGEMENT, INC. as Buyer, LAS VEGAS RAILWAY EXPRESS as Seller, DATED AS OF November 23, 2009
Exhibit 10.1
BY
AND BETWEEN
as
Buyer,
LAS
VEGAS RAILWAY EXPRESS
as
Seller,
DATED
AS OF November 23, 2009
THIS
ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as
of November 23, 2009, by and between Liberty Capital Asset Management, Inc., a
Delaware Corporation (the “Buyer”) and Las Vegas Railway
Express, a Nevada Corporation (the “Seller”). The Buyer
and the Seller are sometimes referred to as (the “Parties”).
WHEREAS,
the Seller is a business development company presently working to construct a
conventional rail passenger service between Las Vegas, Nevada and Los Angeles,
California. (Exhibit A);
WHEREAS,
the Buyer is an asset management company presently managing and servicing
mortgage loans in various states in the United States ( the “Business”);
WHEREAS,
the Seller desires to sell the Purchased Assets to the Buyer, and the Buyer
desires to purchase the Purchased Assets, all on and subject to the terms and
conditions set forth herein.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, intending to be legally bound hereby, the Parties
agree as follows:
ARTICLE
I
DEFINITIONS
1.1 Defined Terms. In this Agreement, the
following terms shall have the following respective meanings:
“Accounts Receivable” has the meaning set
forth in the definition of “Purchased Assets” herein.
“Affiliate” means, with respect to
any Person, any other Person that, directly or indirectly, controls, is
controlled by or is under common control with such first Person. For
purposes of this definition, “control” shall mean the possession, directly or
indirectly, of the power to (i) vote five percent (5%) or more of the capital
stock or other equity interest having ordinary voting power for the election of
directors or managers of such Person, or (ii) direct or cause the direction of
management and policies of a business, whether through the ownership of voting
securities, by contract or otherwise and either alone or in conjunction with
others or any group.
“Agreement” has the meaning set
forth in the preamble to this Agreement.
“Assignment and Assumption
Agreement” has the meaning set
forth in Section
7.1.
“Assumed Contract” has the meaning set
forth in the definition of “Purchased Assets” herein.
“Assumed Liabilities” means the following
Liabilities and obligations, without duplication:
(a) All
undischarged Liabilities of the Seller which relate to the conduct of the
Business prior to the Closing Date and (i) are reflected on the Closing Balance
Sheet (including the notes thereto) to the extent such Liabilities (A) are
properly recorded thereon in accordance with GAAP and on a basis consistent with
the Seller’s past practice and (B) are of the same type and nature as those
Liabilities of the Seller set forth on the Latest Balance Sheet of the Seller
included in the Financial Statements or (ii) have been incurred in the Ordinary
Course without violation of this Agreement; and
(b) All
obligations of the Seller under the Assumed Contracts, Leased Real Property and
Licenses if any to the extent included in the definition of Purchased Assets
arising and to be performed on or after the Closing Date; provided, that,
notwithstanding any provision of this Agreement to the contrary, Assumed
Liabilities shall not include any Excluded Liability. In the event of
any claim against the Buyer with respect to any of the Assumed Liabilities
hereunder, the Buyer shall have, and the Seller hereby assigns to the Buyer, any
defense, counterclaim, or right of setoff which would have been available to the
Seller if such claim had been asserted against such Seller.
“Basket Amount” has the meaning set
forth in Section
10.5.
“Benefit Plan” means any “employee
benefit plan” (as such term is defined in ERISA § 3(3)) and any other employee
benefit plan, program or arrangement of any kind.
“▇▇▇▇ of Sale” has the meaning
set forth in Section
7.1.
“Business” has the meaning set
forth in the recitals.
“Business Day” means a day, other than
a Saturday or Sunday, on which commercial banks in Las Vegas, Nevada are open
for the general transaction of business.
“Buyer” has the meaning set
forth in the preamble to this Agreement.
“Buyer Indemnified Persons” has
the meaning set forth in Section
10.2.
“Certifications” has the meaning set
forth in the definition of “Purchased Assets” herein.
“Closing” has the meaning set
forth in Section
3.1.
“Closing Balance Sheet” means the balance sheet
of the Seller as of the Closing Date, which shall be prepared in accordance with
GAAP and on a basis consistent with that applied by the Seller in the
preparation of the Latest Balance Sheet.
“Closing Date” has the meaning set
forth in Section
3.1.
“Closing Transactions” has the meaning set
forth in Section
3.2.
“Code” means the United States
Internal Revenue Code of 1986, as amended.
“Consent” means any consent,
order, approval, authorization or other action of, or any filing with or notice
to or other action with respect to, any Governmental Entity or any other Person
which is (a) required or necessary for any of (i) the execution, delivery or
performance of this Agreement or any other Transaction Document, (ii) the
consummation of any Closing Transaction or other transaction contemplated hereby
or thereby or (iii) the conduct of the Business by the Buyer after Closing in
the same manner as presently conducted by the Seller or the holding or use of
any Purchased Asset thereafter, whether such requirement or necessity arises
pursuant to any Legal Requirement, Contract, Lease, License, or Certification
(including any of the foregoing which is required in order to prevent a breach
of or a default under or a termination or modification of any Contract) and (b)
set forth on the attached Schedule
2.
“Contract” means any oral or
written agreement, instrument, document, lease, employee benefit or welfare plan
or other business or commercial arrangement (in each case, including any
extension, renewal, amendment or other modification thereof) to which the Seller
is a party or by which it is bound or to which it or any Purchased Asset is
subject or which pertains to the Business.
“Custodial Account” means all
funds held or directly controlled by the Seller.
“Damages” has the meaning set
forth in Section
10.2.
“Excluded Assets” means all of the
Seller’s rights in, to and under the following, in each case to the extent
existing as of the Closing Date:
(a) The
Non-Assumed Contracts;
(b) All
rights of the Seller pursuant to the Transaction Documents;
(c) Tax
returns and other Tax records including payroll, unemployment, real estate, and
other records relating to Tax.
“Excluded Liabilities” means all Liabilities
and obligations, without duplication:
(a) arising
with respect to any Benefit Plan which is a tax-qualified “defined contribution
plan” (as that term is defined in Section 3(34) of ERISA), whether or not
terminated, or any other Benefit Plan or material fringe benefit plans (unless
the Buyer expressly assumes any such plan);
(b) any
Liabilities (whether asserted before or after the Closing Date) for any breach
of a representation, warranty or covenant, or for any claim for indemnification,
contained in any Assumed Contract, Lease or License agreed to be performed
pursuant to this Agreement by the Buyer, to the extent that such breach or claim
arises out of or by virtue of the Seller’s performance or nonperformance
thereunder prior to the Closing Date, it being understood that, as between the
Parties hereto, this subsection shall apply notwithstanding any provision which
may be contained in any form of consent to the assignment of any such Assumed
Contract, Lease or License if any which by its terms, imposes such Liabilities
upon the Buyer and which assignment is accepted by the Buyer notwithstanding the
presence of such a provision, and that the Seller’s failure to discharge any
such Liability shall entitle the Buyer to indemnification in accordance with the
provisions of Article
X hereof;
(c) any
Liabilities of the Seller arising out of infringement of the Proprietary Rights
of any Person;
(d) any
Liabilities not disclosed on the Closing Balance Sheet including the notes
thereto;
(e) Liabilities
arising out of violations occurring prior to the Closing Date of any Legal
Requirement;
(f)
any Liability in respect of any claim, action, litigation, suit,
proceeding, hearing or investigation of the Seller or related to the Business or
any Purchased Asset arising prior to the Closing Date (whether asserted or
commenced before or after the Closing Date);
(g) any
Liabilities relating to the Excluded Assets;
(h) any
Liability for or on account of any Tax with respect to periods prior to the
Closing Date, to the extent not recorded on the Closing Date Balance
Sheet;
(i) without
limitation by the specific enumeration of the foregoing, any other obligation or
Liability not expressly included in the definition of Assumed
Liabilities.
“Filings” has the meaning set
forth in Section
4.20(b).
“Financial Statements” has the meaning set
forth in Section
4.5.
“GAAP” means United States
generally accepted accounting principles, as in effect on the date of the
subject financial statement.
“Governmental Entity” means any government,
agency, governmental department, commission, board, bureau, court, arbitration
panel or instrumentality of the United States of America or any state or other
political subdivision thereof (whether now or hereafter constituted and/or
existing) and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
“Indebtedness” means, without
duplication, (i) any indebtedness (including interest, fees and prepayment
premiums or penalties thereon) for borrowed money or issued in substitution for
or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced
by any note, bond, debenture or other debt security, (iii) any indebtedness for
the deferred purchase price of property or services with respect to which a
Person is liable, contingently or otherwise, as obligor or otherwise (other than
trade payables and other current liabilities incurred in the Ordinary Course
which are not more than six months past due), (iv) any commitment by which a
Person assures a creditor against loss (including contingent reimbursement
obligations with respect to letters of credit), (v) any indebtedness guaranteed
in any manner by a Person (including guarantees in the form of an agreement to
repurchase or reimburse), (vi) any obligations under capitalized leases with
respect to which a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations a Person assures a
creditor against loss, (vii) any indebtedness secured by a Lien on a Person’s
assets, and (viii) any unsatisfied obligation for “withdrawal liability” to a
“multi employer plan” as such terms are defined under ERISA.
“Indemnified Party” has the
meaning set forth in Section
10.4(a).
“Initial Purchase Price” has
the meaning set forth in Section
2.2.
“Insider” means any member,
officer or manager (or similar official) of the Seller, any Affiliate or natural
or adoptive member of the immediate family of any of the foregoing Persons, or
any Person in which any of the foregoing Persons directly or indirectly owns any
material beneficial interest. The “immediate family” of any
individual means such individual’s (and such individual’s present or former
spouse’s) grandparents, parents, spouse, siblings, children and
grandchildren.
“Investigating Parties” has the meaning set
forth in Section
6.3.
“Latest Balance Sheet” has the meaning set
forth in Section
4.5.
“Leases” means if any all leases,
subleases, licenses, concessions and other agreements (written or oral),
including all amendments, extensions, renewals, guaranties and other agreements
with respect thereto, pursuant to which the Seller holds any Leased Real
Property, including the right to all security deposits and other amounts and
instruments deposited by or on behalf of the Seller thereunder.
“Legal Requirement” means all federal, state
and local laws, statutes, codes, rules, regulations, ordinances, judgments,
orders, decrees and the like of any Governmental Entity, including common
law.
“Liability” means any liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for
Taxes.
“Licenses” has the meaning set
forth in the definition of “Purchased Assets” herein.
“Material Adverse Effect” means a material adverse
effect on the Business, the Purchased Assets or the business, operations,
financial condition or results of operations of the Seller, taken as a whole, or
on the ability of the Seller to perform its material obligations under this
Agreement or any other Transaction Document.
“Material Breach” has the meaning set
forth in Section
8.1(c).
“Non-Assumed Contracts” means all Contracts
described on Schedule
1.
“Non-Competition Period” has
the meaning set forth in Section
9.4(a).
“Notice” has the meaning set
forth in Section
11.2
“Ordinary Course” means, with respect to
any Person, in the ordinary course of that Person’s business consistent with
past practice, including as to the quantity, quality and frequency.
“Parties” has the meaning set
forth in the preamble to this Agreement.
“Permitted Liens” means:
(a) Liens
on Purchased Assets arising by operation of law and securing the payment of
Taxes which are not yet due and payable;
(b) the
lessors’ and sublessors’ rights under the Leases and leases of personal property
by the Seller as lessee which are part of the Purchased Assets; and
(c) mechanics’,
carriers’, workers’, repairers’, and similar non-consensual Liens arising by
operation of law and relating to obligations which are incurred in the Ordinary
Course and which secure only Assumed Liabilities which are not yet due and
payable on the Closing Date.
“Person” means an individual, a
partnership, a limited liability company, a corporation, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization, any
Governmental Entity or any similar entity.
“Pre-Closing Returns” has the
meaning set forth in Section
4.8.
“Principals” has the meaning
set forth in the preamble to this Agreement.
“Proprietary Rights” means all of the
following items owned by, issued to or licensed to, the Seller, along with all
income, royalties, damages and payments due or payable at the Closing or
thereafter, including damages and payments for past, present or future
infringements or misappropriations thereof, the right to ▇▇▇ and recover for
past infringements or misappropriations thereof and any and all corresponding
rights that, now or hereafter, may be secured throughout the world: patents,
patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice) and any reissue,
continuation, continuation-in-part, division, revision, extension or
reexamination thereof; trademarks, service marks, trade dress, logos, trade
names and corporate names together with all goodwill associated therewith,
copyrights registered or unregistered and copyrightable works; mask works; and
all registrations, applications and renewals for any of the foregoing; trade
secrets and confidential information (including ideas, formulae, compositions,
know-how, manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals,
technical data, financial, business and marketing plans, and customer and
supplier lists and related information); computer software and software systems
(including data, databases and related documentation); other proprietary rights;
licenses or other agreements to or from third parties regarding the foregoing;
and all copies and tangible embodiments of the foregoing (in whatever form or
medium), in each case set forth on Schedule
5.
“Purchase Price” has the meaning set
forth in Section
2.2.
“Purchase Price
Allocation” has the meaning set
forth in Section
2.4.
“Purchased Assets” means all of the
Seller’s rights, title and interest in, to and under all assets, rights and
properties of the Seller (whether real, personal or mixed, tangible and
intangible, and of every kind, character and description), which are used, or
held for use, in the Business (other than the Excluded Assets), including, but
not limited to, the Seller’s rights in, to and under the following, in each case
to the extent existing as of the Closing Date:
(a) The
Seller’s inventory, other than Excluded Assets.
(b) All
equipment, vehicles, furniture, fixtures, machines, office materials and
supplies, spare parts and other tangible personal property of every kind and
description owned, leased or subleased as of the date of this Agreement by the
Seller and used, or held for use, in the conduct of the Business, but excluding
all such property consumed, retired or disposed of by the Seller as permitted by
this Agreement;
(c) All
real property and all improvements thereon (the “Real Property”), whether owned
or Leased Real Property by the Seller and used, or held for use, in the
Business;
(d) All
Contracts (other than the Non-Assumed Contracts) relating to the Business to
which the Seller or one or more of its Affiliates is a party on the date of this
Agreement as described on Schedule 4 hereof,
and such other Contracts as are entered into prior to the Closing as permitted
under this Agreement (collectively, the “Assumed
Contracts”);
(e) All
trademarks, service marks, trade names, slogans, logotypes and other Proprietary
Rights, and all goodwill associated with the foregoing, used, or held for use,
in connection with the Business, existing on the date of this Agreement or
acquired by the Seller between the date of this Agreement and the Closing Date,
in each case to the extent existing on the Closing Date;
(f) All
licenses, permits, franchises, certificates, and other authorizations issued by
any Governmental Entity issued to or held by the Seller with respect to the
Business, including all applications therefor and all renewals, extensions, or
modifications thereof and additions thereto (collectively, the “Licenses”);
(g) All
files and other records of the Seller which relate to the Business, including
all related books, records, accounts, canceled checks, payment records, and all
other similar books and records of the Seller relating to the Business (the
“Transferred
Records”);
(h) All
of the Seller’s goodwill in, and going concern value of, the Business or
otherwise associated with any other Asset;
(i) All
prepaid expenses, excluding Taxes, relating to the Business;
(j) All
accounts and notes receivable relating to the Business or the other Purchased
Assets (the “Accounts
Receivable”);
(k) All
transferable telephone exchange numbers, the right to receive and retain mail
and other communications and collections, including the right to retain mail and
communications from distributors, agents and all others, and any websites in
each case relating to the Business;
(l)
All motor vehicles if any owned or leased by the Seller
and used or held for use in the conduct of the Business;
(m) All
security deposits deposited by or on behalf of the Seller as lessee or
sublessee, under the Leases or any leases or subleases of personal
property;
(n) Those
assets, properties and rights of the Seller reflected on the Financial
Statements or otherwise referred to in this Agreement or any Schedule hereto,
subject to changes in the Ordinary Course through the Closing Date;
(o) All
rights of the Seller under or pursuant to all warranties, representations and
guarantees made by suppliers, manufacturers and contractors in connection with
products if any sold to or services provided to the Seller for the Business, or
affecting the property, machinery or equipment used in the conduct of the
Business;
(p) All
claims, deposits, prepayments, warranties, guaranties, refunds, causes of
action, rights of recovery, rights of set-off and rights of recoupment of every
kind and nature, other than those relating to Taxes or primarily to any Excluded
Liability;
(q) All
lists and records pertaining to customers, suppliers, distributors, personnel
and agents (past or current) and all other files, documents, correspondence,
drawings and specifications, computer programs and business records of every
kind and nature, in each case whether evidenced in writing, electronically
(including by computer) or otherwise;
(r) All
certifications, ratings, listings and similar rights or benefits obtained from
any customer, product certification organization or Governmental Entity (“Certifications”);
(s) The
Seller’s rights to coverage under any liability insurance policy of the Seller
with respect to any occurrence or action relating to the Purchased Assets prior
to the Closing, including the Seller’s rights to receive proceeds thereunder to
the extent relating to the Purchased Assets; and
(t) All
other property owned by the Seller, or as to which the Seller has any right
(irrespective of title), and used by the Seller in the Business on the Closing
Date, other than the Excluded Assets.
“Real Property” has the meaning set
forth in the definition of “Purchased Assets” herein.
“Receivable” means (a) a right
to payment which is secured by a Lien on or other interest in real or personal
property, (b) any debt or equity security (including a participation
certificate) that represents an interest in (or represents an ownership interest
in, or a debt obligation of, a Person which owns, directly or indirectly) a pool
of instruments described in clause (a) above, or (c) an interest in servicing or
other rights, relating to clause (a) or (b) above.
“Relevant Group” means any affiliated,
combined, consolidated, unitary or other group for Tax purposes of which the
Seller is or was a member.
“Seller” has the meaning set
forth in the preamble to this Agreement.
“Seller Indemnified Persons”
has the meaning set forth in Section
10.3.
“Seller Subsidiaries” means any
and all related business which is operated by the Seller
“Tax” (and, with correlative
meaning, “Taxes,” “Taxable” and “Taxing”) means (i) any
federal, state, local or foreign income, gross receipts, franchise, estimated,
alternative minimum, add-on minimum, sales, use, transfer, registration, value
added, excise, natural resources, severance, stamp, occupation, premium,
windfall profits, environmental (including under Section 59A of the Code),
customs, duty, real property, real property gains, personal property, capital
stock, social security, unemployment, disability, payroll, license, employee or
other withholding or other tax assessment, fees, levy or other governmental
charge of any kind whatever, whether disputed or not, including any interest,
penalties or additions to tax or additional amounts in respect of the foregoing;
(ii) any liability for or in respect of the payment of any amount of a type
described in clause (i) of this definition arising as a result of being or
having been a member of any Relevant Group and (iii) any liability for or in
respect of the payment of any amount of a type described in clauses (i) or (ii)
of this definition as a transferee or successor or by contract.
“Tax Return” means any return,
declaration, report, claim for refund, information return or other document
(including any related or supporting schedules, statements or information) filed
or required to be filed in connection with the determination, assessment or
collection of Taxes or the administration of any Legal Requirement relating to
any Taxes.
“Taxing Authority” means any governmental
agency, board, bureau, body, department or authority of any United States
federal, state or local jurisdiction or any non-United States jurisdiction,
having or purporting to exercise jurisdiction with respect to any
Tax.
“Termination Date” has the meaning set
forth in Section
8.1(c).
“Third Party Claim” has the
meaning set forth in Section
10.4(b).
“Transaction Documents” means this Agreement,
the Assignment and Assumption Agreement and the ▇▇▇▇ of Sale.
“Transfer Taxes” means sales, use,
transfer, real property transfer, filing, recording, stock transfer, stamp,
stamp duty reserve, value added, documentary and other similar
Taxes.
“Transferred Employee” has the meaning set
forth in Section
9.7.
“Transferred Records” has the meaning set
forth in the definition of “Purchased Assets” herein.
“Treasury
regulations” means the regulations
promulgated or proposed by the United States Treasury Department under the
Code.
1.2 Interpretation. As used in this
Agreement, the terms “knowledge” or “aware” will include the actual knowledge
and awareness of the Person in question, and the knowledge and awareness that
such Person would have obtained after making reasonable inquiry and exercising
reasonable diligence with respect to the matter in question.
ARTICLE
II
PURCHASE
AND SALE OF PURCHASED ASSETS
2.1 Sale of Assets and Assumption of
Liabilities.
(a) At
the Closing, and on the terms and subject to the conditions in this Agreement,
the Seller shall sell, assign, transfer, deliver, and convey to the Buyer and/or
its nominees, and the Buyer and/or its nominees subject to
shareholder approval shall purchase and accept from the Seller, all of the
Seller’s right, title and interest in and to the Purchased Assets, as they exist
on the Closing Date, in each case free and clear of any Lien (other than
Permitted Liens) and restrictions on transfer.
(b) At
the Closing, and on the terms and subject to the conditions in this Agreement,
the Seller shall assign to the Buyer and the Buyer and/or its nominees shall
assume and agree to pay, perform, fulfill, and discharge, as or when due from
and after the Closing, the Assumed Liabilities, as they exist on the Closing
Date. The Buyer will not assume or have any responsibility with
respect to any Liability not expressly included in the definition of Assumed
Liabilities.
2.2 Consideration. The
consideration for the Purchased Assets (the “Purchase Price”) shall consist
of (i) Twenty million (20,000,000) shares in Buyer’s common stock. In accordance
with Section
3.2, at the Closing, the Buyer shall deliver said shares to the Seller at
closing and certain amounts thereafter.
2.3 Closing Balance
Sheet. As promptly as practical, but in no event later than
seven (7) business days after the Closing Date, the Buyer shall prepare and
deliver the Closing Balance Sheet to the Seller.
2.4 Allocation of Purchase
Price. At the closing Buyer
shall deliver four million (4,000,000) shares of its common stock to Seller.
Said shares shall have a registration right and the Buyer will file for the
registration with the SEC as soon as practical subsequent to the closing. Buyer
shall deliver two million (2,000,000) shares to Seller upon Seller’s procurement
of an approval from Union Pacific Railroad to allow Seller to operate a
passenger train over Union Pacific trackage. Buyer shall deliver two million
(2,000,000) shares to Seller upon Seller’s procurement of an approval from BNSF
to allow Seller to operate a passenger train over BNSF trackage. Buyer shall
deliver four million (4,000,000) shares to Seller upon Seller’s procurement of a
train railset of passenger cars either under a lease or purchase by Seller to be
operated on the planned route. Buyer shall deliver four million (4,000,000)
shares to Seller upon Seller’s procurement of a train haulage agreement of
passenger cars by any approved haulage company such as Amtrak, ▇▇▇▇▇▇, Rail
America or any Class 1 railroad company. Buyer shall deliver four million
(4,000,000) shares to Seller upon Seller’s first actual operating run on the
planned route.
2.5 Non-Assignable
Assets. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement shall not constitute an agreement or an
attempted agreement to transfer or assign any Contract, or any claim or right of
any benefit arising thereunder or resulting therefrom, if any such attempted
transfer or assignment thereof would constitute a breach thereof or in any way
affect the rights of the Buyer thereunder. The Seller shall, if
requested by the Buyer, after the Closing, use their commercially reasonable
efforts to obtain the Consent of any party or parties to any such Contracts to
the transfer or assignment thereof to the Buyer hereunder in all cases in which
such consent is required for transfer or assignment. Until each Consent has been
obtained, (1) the Buyer and the Seller shall make such other arrangements,
including licenses, subcontracts, and sublicenses, as may be reasonably
practicable in order to obtain for the Buyer the benefits of such Contract as
contemplated by this Agreement and (2) the Seller shall hold any claims or
rights of any benefit under such Contract in trust for the benefit of the Buyer
and the Buyer shall be entitled to receive all such benefits and shall be
responsible for the obligations under such contract or agreement to the extent
relating to the benefits received.
ARTICLE
III
CLOSING
3.1 Closing Date. The
closing of the purchase and sale of the Purchased Assets described in Article II and the
assumption of the Assumed Liabilities pursuant to this Agreement (the “Closing”) will occur
immediately upon shareholder approval and no later than January 4, 2010 unless
the Buyer and the Seller otherwise agree. The Closing shall be held
at the offices of Buyer, unless the Buyer and the Seller otherwise
agree. The date on which the Closing actually occurs is referred to
herein as the “Closing
Date.” The Closing of the transactions contemplated herein shall be
effective as of 12:01 am on the Closing Date.
3.2 Closing
Transaction. Subject to the conditions set forth in Sections 7.1 and
7.2, the
Parties will consummate the following transactions (including the purchase and
sale of the Purchased Assets and the assumption of the Assumed Liabilities, the
“Closing Transactions”)
at the Closing:
(a) The
Seller will deliver to the Buyer such bills of sale and other instruments of
assignment as Buyer reasonably deems necessary in order to effect the transfer
of the Purchased Assets to the Buyer, including, without limitation, the ▇▇▇▇ of
Sale and the Assignment and Assumption Agreement;
(b) The
Buyer will deliver to the Seller one or more instruments as the Seller
reasonably deems necessary in order to give effect to the assumption of the
Assumed Contracts and the Assumed Liabilities by the Buyer, including, without
limitation, the Assignment and Assumption Agreement;
(c) There
will be delivered to the Buyer and the Seller, as applicable, the certificates
and other documents and instruments required to be delivered to such Parties
under Sections
7.1 and 7.2.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE SELLER
As a
material inducement to the Buyer to enter into this Agreement, the Seller hereby
makes the representations and warranties set forth in this Article IV as of the
date of this Agreement. The Seller further agrees that, if the
Closing occurs, then at the time of the Closing each representation and warranty
set forth in this Article IV will be
deemed to be remade by the Seller at and as of the time of the Closing as a
material inducement to the Buyer to consummate the Closing
Transactions.
4.1 Organization and
Power. The Seller is a Nevada corporation, validly existing
and in good standing (or having comparable active status) under the laws of its
jurisdiction of organization and is qualified to do business in every
jurisdiction where the failure to be so qualified would have a Material Adverse
Effect. The Seller has the full limited liability company power
necessary to own and operate its properties and carry on the Business as now
conducted.
4.2 Authorization of
Transactions. The Seller has all requisite power and authority
to enter into this Agreement, to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement by the
Seller and the consummation by the Seller of the transactions contemplated
hereby have been duly authorized by the company action on the part of the
Seller. The Seller’s execution and delivery of this Agreement or any other
Transaction Document to which the Seller is party or the performance of its
obligations hereunder or thereunder. This Agreement has been duly
executed and delivered by the Seller and, assuming the due authorization,
execution and delivery by the Buyer, constitutes the legal, valid and binding
obligation of the Seller, enforceable against them in accordance with its
terms. The board of Directors of the Seller has (i) duly and
validly approved this Agreement, (ii) determined and declared that this
Agreement and the Closing Transactions are advisable and in the best interests
of the Seller.
4.3 Absence of
Conflicts. Neither the execution, delivery and performance of
this Agreement or any other Transaction Document by the Seller nor the
consummation by the Seller of the transactions contemplated hereby or
thereby:
(a) does
or will (i) conflict with or result in any breach of any of the provisions of,
(ii) constitute a default under, (iii) result in a violation of, (iv) give any
third party the right to terminate or to accelerate any obligation under or (v)
result in the creation of any Lien upon any Purchased Assets, in each case under
the provisions of the articles of organization, operating agreement or similar
organizational document of the Seller or any indenture, mortgage, lease, loan
agreement if any or other agreement, instrument or Contract or any Legal
Requirement by which the Seller or any Purchased Asset is affected, or to which
the Seller or any Purchased Assets is subject, or
(b) without
limiting clause (a) above, requires any Consent of any Governmental Entity or
any other Person.
4.4 Financial
Statements.
(a) The
Seller has furnished to the Buyer the following financial statements (the “Financial
Statements”): September 30, 2009 quarter
(unaudited)
4.5 Certain
Developments. Except in the Ordinary Course, during the period
beginning on January 1, 2009 and ending on the Closing Date, the Seller has
not:
(a) suffered
any theft, damage, destruction or casualty loss to any Purchased Asset or any
portion of the Purchased Assets, or any substantial destruction of its books and
records (in each case whether or not covered by insurance);
(b) sold,
leased, assigned or transferred any Purchased Asset or any portion of the
Purchased Assets (other than dispositions of Purchased Assets disposed of in the
Ordinary Course and dispositions of Purchased Assets which have been replaced
with Purchased Assets of equal or greater value and utility);
(c) waived
any right of material value;
(d) accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses) involving
more than $25,000 (individually or in the aggregate) to which the Seller is a
party or by which it is bound;
(e) imposed
any Lien upon any of the Purchased Assets, tangible or intangible;
(f) made
any capital expenditure involving more than $10,000;
(g) made
any capital investment in, any acquisition of the securities or assets of, any
other Person other than in the Ordinary Course;
(h) issued
any note, bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation;
(i) delayed
or postponed the payment of accounts payable and other Liabilities outside the
Ordinary Course;
(j) entered
into any employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or
agreement;
(k) adopted,
amended, modified, or terminated any bonus, profit sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of any of its
managers, officers, and employees (or taken any such action with respect to any
other Benefit Plan);
(l) with
respect to any such election, accounting method, amendment, closing or similar
agreement, claim, assessment or position that would affect the Buyer after
Closing, made any Tax election, adopted or changed any accounting method for Tax
purposes, filed any amended Tax Return, consented to or entered into any closing
agreement or similar agreement with any Taxing Authority, consented to or
settled or compromised any Tax claim or assessment or taken any position
inconsistent with any past practice on any Tax
Return; or
(m) agreed
or committed to do any of the foregoing.
4.6 Real Property.
(a) The
Seller does not own any Real Property.
(b) The
Seller has delivered to the Buyer a true and complete copy of the Lease document
for the Real Property used in the Business by the Seller (including the date and
name of the parties to such Lease document and the address of such Leased Real
Property). With respect to the Lease: (i) such Lease is legal, valid,
binding, enforceable and in full force and effect; (ii) the transaction
contemplated by this Agreement does not require the consent of any other party
to such Lease, will not result in a breach of or default under such Lease, and
will not otherwise cause such Lease to cease to be legal, valid, binding,
enforceable and in full force and effect on substantially identical terms
following the Closing; (iii) the Seller’s possession and quiet enjoyment of the
Leased Real Property under such Lease has not been disturbed and there are no
disputes with respect to such Lease; (iv) neither the Seller nor any other party
to any Lease is in breach or default under such Lease, and no event has occurred
or circumstance exists which, with the delivery of notice, the passage of time
or both, would constitute such a breach or default, or permit the termination,
modification or acceleration of rent under such Lease; (v) no security deposit
or portion thereof deposited with respect to such Lease has been applied in
respect of a breach or default under such Lease which has not been redeposited
in full; (vi) the other party to such Lease is not an Affiliate of, and
otherwise does not have any economic interest in, the Seller; (vii) the Seller
has not subleased, licensed or otherwise granted any Person the right to use or
occupy such Leased Real Property or any portion thereof; and (viii) the Seller
has not agreed or committed to do any of the foregoing, as
applicable.
4.7 Tax Matters. The
Seller has filed or will timely file (taking into account valid extensions of
the time for filing) all Tax Returns required to be filed by it or on its behalf
on or before the Closing Date with any Taxing Authority (collectively, the
“Pre-Closing
Returns”). The Pre-Closing Returns have been filed in
accordance, in all material respects, with all applicable laws and, as of the
time of filing, were correct and complete in all material respects regarding the
income, costs, business, assets, operations, activities and status of Seller and
any other items of information shown therein. The Seller has timely
paid or withheld all Taxes shown as due and payable in the Pre-Closing
Returns. The Seller is not delinquent in the payment of any Tax due
and payable as shown on any Pre-Closing Return, nor, except as set forth on
Schedule 4.8,
has the Seller requested an extension of time within which to file any
Pre-Closing Return which has not since been filed. Except as set
forth on Schedule
3, the Seller has not granted any extension or waiver of the limitation
period applicable to any Pre-Closing Returns to any Taxing
Authority. There is no claim, audit, action, suit, proceeding, or
investigation pending or, to the knowledge of the Seller, threatened, against or
with respect to the Seller in respect of any Tax except as set forth on Schedule
4.8. The Seller has no pending requests for rulings with any
Taxing Authority. There are no liens for Taxes upon the assets of the
Seller except liens for current Taxes not yet due. Since its
formation, the Seller has not been a member of an affiliated group filing any
return with any Taxing Authority, or filed or been included in a combined,
consolidated or unitary return. The Seller is not under any
contractual obligation to indemnify any other Person with respect to Taxes nor,
except as set forth on Schedule 3, is the
Seller a party to any material agreement providing for payments with respect to
Taxes, excluding (in each case) any lease or similar agreement under which the
Seller is a lessee or similar user of property.
4.8 Purchase
Commitments. The Seller is not a party to any mandatory
forward purchase commitments.
4.9 Contracts and
Commitments. Other than in the Ordinary Course, the Seller is
not a party to or bound by, and neither the Seller nor any Purchased Asset is
subject to, any Contract, whether written or oral, including any: (i) collective
bargaining agreement or contract with any labor union or any bonus, pension,
profit sharing, retirement or any other form of deferred compensation plan or
any hospitalization insurance or similar plan or practice; (ii) (A) contract for
the employment or engagement of any individual employee or other Person
(including as an independent contractor, part-time laborer or on a consulting
basis) other than at the will of the employing Person, (B) any agreement to
provide severance or similar benefits upon any termination of employment or
other engagement, or (C) any contract with any labor agency for the employment
of seasonal or part-time labor; (iii) agreement, indenture or other Contract
placing a Lien on any Purchased Asset; (iv) agreement with respect to the
lending or investing of funds by the Seller; (v) guaranty of any obligation of
any other Person, other than endorsements made for collection made in the
Ordinary Course; (vi) sales representation agreement; (vii) agreement (or group
of related agreements) for the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for the furnishing or receipt
of services, the performance of which will (A) extend over a period of more than
one year, (B) result in a material loss to the Seller, or (C) involve
consideration in excess of $10,000; (viii) agreement concerning confidentiality
or noncompetition; (ix) agreement involving any of the Seller or any Affiliate
of the Seller; (x) profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former manager, officers, and
employees; (xi) agreement under which it has advanced or loaned any amount to
any of its manager, officers, and employees outside the Ordinary Course; (xii)
lease or agreement under which the Seller is lessee of, or holds or operates,
any personal property owned by any other party calling for payments in excess of
$10,000 annually or entered into outside of the ordinary course of business, or
under which the Seller holds or occupies any real property or interest therein;
(xiii) lease or agreement under which the Seller is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by it; (xiv) agreement, contract or understanding pursuant to which
the Seller subcontracts work to a third party; (xv) contract to cap fees, share
fees or other payments, share expenses, waive fees or to reimburse or assume any
or all fees or expenses thereunder, in each case other than as required by
applicable law; (xvi) contract that provides for earn-outs or other similar
contingent obligations; (xvii) contract that contains (A) a “clawback” or
similar undertaking requiring the reimbursement or refund of any fees (whether
performance based or otherwise) paid to any member of Seller or (B) a “most
favored nation” or similar provision; (xviii) contract requiring Seller or any
Seller Subsidiary (A) to co-invest with any other Person, (B) to provide seed
capital or similar investment or (C) to invest in any investment
product.
4.10 Proprietary
Rights. The Seller owns and possesses all right,
title and interest in and to, or has a valid and enforceable right to use its
registered Proprietary Rights, free and clear of all Liens (other than Permitted
Liens), and no claim by any third party contesting the validity, enforceability,
use or ownership of any of the foregoing has been made, is currently outstanding
or, to the Seller’s knowledge, is threatened, (ii) no loss or expiration of any
material Proprietary Right of any such type or material group of such
Proprietary Rights is pending, reasonably foreseeable or, to the Seller’s
knowledge, threatened, (iii) the Seller has not received any notice of, nor is
the Seller aware of any fact which indicates a likelihood of any infringement or
misappropriation by, or any conflict with, any third party with respect to any
such Proprietary Right, including any demand or request that the Seller license
rights from a third party, and (iv) the Seller has not infringed,
misappropriated or otherwise conflicted with any rights of any third party and
the Seller is not aware of any infringement, misappropriation or conflict which
will occur as a result of the continued operation of the Business as currently
conducted or as proposed to be conducted by the Seller.
4.11 Litigation;
Proceedings. There are no actions, suits, proceedings, orders,
judgments, decrees or investigations pending (or, to the Seller’s knowledge,
threatened) against or affecting the Seller, the Business or any Purchased Asset
at law or in equity, or before or by any Governmental Entity
4.12 Employees. To the
Seller’s knowledge as of the date of this Agreement, no executive employee and
no group of employees or independent contractors of the Seller has any plans to
terminate his, her or its employment or relationship as an independent
contractor with the Seller. The Seller has complied in all material
respects with all applicable Legal Requirements relating to the employment of
personnel and labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other Taxes. The Seller has not experienced any strike, grievance,
unfair labor practice claim or other material employee or labor dispute, and the
Seller has not engaged in any unfair labor practice. To the Seller’s
knowledge, there is no organizational effort presently being made or threatened
by or on behalf of any labor union with respect to employees of the
Seller.
4.13 Employee Benefit
Plans. Except with respect to medical and dental plans
maintained by the Seller in the Ordinary Course, the Seller has no obligation to
contribute to (or any other liability, including current or potential withdrawal
liability, with respect to) (a) any “multi employer plan” (as that term is
defined in Section 3(37) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”)),
(b) any plan or arrangement, whether or not terminated, which provides medical,
health, life insurance or other welfare-type benefits for current or future
retired or terminated employees (except for limited continued medical benefit
coverage required to be provided under Section 4980B of the Code or as required
under applicable state law), (c) any employee plan which is a tax-qualified
“defined benefit plan” (as that term is defined in Section 3(35) of ERISA),
whether or not terminated, or (d) any employee plan which is a tax-qualified
“defined contribution plan” (as that term is defined in Section 3(34) of ERISA),
whether or not terminated.
4.14 Affiliate
Transactions. Other than as described on the Schedule 6, no
Insider (i) is or was a party to any agreement, contract, commitment or
transaction with the Seller or which pertains to the Business (other than in
such Insider’s capacity as an employee of the Seller, the compensation for which
is reflected on Schedule 6), or (ii)
has any interest in any Purchased Asset, other than indirectly, as a member of
the Seller.
4.15 Governmental Licenses and
Permits. Of the Licenses owned or possessed by the Seller or
used by the Seller in the conduct of the Business, no loss or expiration of any
License is pending or, to the Seller’s knowledge, threatened (including as a
result of the transactions contemplated by this Agreement and the Transaction
Documents) other than by reason of expiration in accordance with the terms
thereof.
4.16 Compliance with Law; Government
Regulation; Etc. Except in cases where the Seller is applying
or will apply for Licenses,
(a) No
director, trustee, managing director, officer, manager or employee of the Seller
is, or while working or performing services for the Seller has been, (i) subject
to any cease and desist, censure or other disciplinary or similar order issued
by, (ii) a party to any written agreement, consent agreement, memorandum of
understanding or disciplinary agreement with, (iii) a party to any commitment
letter or similar undertaking to, (iv) subject to any order or directive by or
(v) a recipient of any supervisory letter from, any Governmental
Authority.
(b) The
Seller has complied with and is in compliance in all material respects with all
applicable Legal Requirements which affect the Business or any Purchased Assets
and to which the Seller or any Purchased Asset is subject, Seller has filed all
material filings required to be filed by it with any Governmental Authority,
including all amendments or supplements thereto (the “Filings”). The
Filings complied in all material respects with the requirements of applicable
Legal Requirements. The Seller has made available to the Buyer, to
the extent in the Seller’s possession, complete and correct copies of (i)
all material Filings made within the past two years, (ii) all material audit or
inspection reports received by the Seller from any Governmental Entity and all
written responses thereto made by the Seller during the past two years, (iii)
all material inspection reports provided to the Seller by any Governmental
Entity, and (iv) all non-privileged material correspondence relating to any
investigation provided to the Seller by any Governmental Entity.
(c) Except
for normal examinations and audits conducted by any Governmental Entity in the
Ordinary Course, (i) no Governmental Entity has initiated any proceeding or, to
the knowledge of Seller, no such proceeding, investigation, examination, audit
or review into the business or operations of the Seller is threatened by any
Governmental Entity and (ii) none of Seller or any of its Affiliates has
received any notice or communication (A) of any unresolved violation or
exception by any Governmental Authority with respect to any report or statement
by any Governmental Entity relating to any examination of Seller, (B)
threatening to revoke or condition the continuation of any License or (C)
restricting or disqualifying its activities (except for restrictions generally
imposed by rule, regulation or administrative policy on similarly regulated
Persons generally).
4.17 Purchased
Assets. The Seller owns or leases all of the Purchased Assets
and has good and valid title to all such Purchased Assets free and clear of any
Liens (other than Permitted Liens) or restriction on transfer. The
Purchased Assets comprise all of the properties and assets necessary for the
conduct of the Business as presently conducted by the Seller. The
Purchased Assets, taken as a whole, are in good operating condition and repair
(reasonable wear and tear excepted) and are suitable for the purposes for which
they are presently used.
4.18 Undisclosed
Liabilities. The Seller has no Liability except for (i)
Liabilities set forth on the Latest Balance Sheet (including the notes thereto)
and (ii) Liabilities which have arisen after the Latest Balance Sheet in the
Ordinary Course (none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of contract, breach of warranty,
tort, environmental matter, infringement, or violation of law).
4.19 Insurance. The
Seller is a party, a named insured, or otherwise the beneficiary of coverage of
insurance policy (including policies providing property, casualty, liability,
and workers’ compensation coverage and bond and surety arrangements) in the
Ordinary Course. No insurance claims have been made by the Seller
since the date of its inception.
With
respect to each such insurance policy: (a) the policy is legal, valid, binding,
enforceable and in full force and effect; (b) neither the Seller nor, to the
Seller’s knowledge, any other party to the policy is in breach or default
thereunder (including with respect to the payment of premiums or the giving of
notices), and no event has occurred that, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification
or acceleration under the policy; and (c) no party to the policy has repudiated
any provision thereof.
4.20 Brokerage. There
are no claims for brokerage commissions, finders’ fees or similar compensation
in connection with the transactions contemplated by this Agreement and the
Transaction Documents based on any arrangement or agreement made by or on behalf
of the Seller.
4.21 Disclosure. With
respect to the Seller, the Business and the Purchased Assets, neither this
Agreement and the other Transaction Documents to which Seller is a party, nor
any of the schedules or Exhibits hereto or thereto, contains any untrue
statement of a material fact or, when considered as a whole, omits a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF THE BUYER
As a
material inducement to the Seller and the Principals to enter into this
Agreement, the Buyer hereby makes the representations and warranties set forth
in this Article
V as of the date of this Agreement. The Buyer agrees that, if
the Closing occurs, then as of the time of the Closing each representation and
warranty set forth in this Article V will be
deemed to be remade by the Buyer as a material inducement to the Seller to
consummate the Closing Transactions.
5.1 Organization and
Power. The Buyer is a corporation which is validly existing
and in good standing under the laws of the State of Delaware and is qualified to
do business in every jurisdiction in which the execution, delivery and
performance of its obligations under this Agreement requires it to be so
qualified. The Buyer has full limited liability company power and
authority to execute, deliver and perform its obligations under this Agreement
and the other Transaction Documents to which the Buyer is a party.
5.2 Authorization of
Transaction. The Buyer has all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement by the
Buyer and the consummation by the Buyer of the transactions contemplated hereby
have been duly authorized by all necessary limited liability company action on
the part of the Buyer. No other proceeding or action on the part of
the Buyer are necessary to approve and authorize the Buyer’s execution and
delivery of this Agreement or any other Transaction Document to which the Buyer
is party or the performance of its obligations hereunder or
thereunder. This Agreement has been duly executed and delivered by
the Buyer and, assuming the due authorization, execution and delivery by the
Seller and the Principals, constitutes the legal, valid and binding obligation
of the Buyer, enforceable against it in accordance with its terms.
5.3 Absence of
Conflicts. Assuming the accuracy of the representations and
warranties set forth in Section 4.4, neither
the execution, delivery and performance of this Agreement or any other
Transaction Document by the Buyer nor the consummation by the Buyer of the
transactions contemplated hereby or thereby does or will (i) conflict with or
result in a breach of any of the provisions of, (ii) constitute a default under,
(iii) result in the violation of, (iv) give any third party the right to
terminate or to accelerate any obligation under, or (v) require any consent,
order, approval, authorization or other action of, or any filing with or notice
to, any Governmental Entity or other Person, in each case under the provisions
of the certificate of formation, limited liability company agreement or similar
organizational document of the Buyer or any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which the Buyer is bound or by
which it or any of its assets are affected, or any Legal Requirement to which
the Buyer or any of its assets are subject.
5.4 Brokerage. There
are no claims for brokerage commissions, finders’ fees or similar compensation
in connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Buyer.
5.5 Litigation. There
are actions or proceedings pending (or, to the Buyer’s knowledge, threatened)
against or affecting the Buyer at law or in equity, or before or by a
Governmental Entity (Exhibit7).
5.6 Payment of Purchase
Price. The Buyer shall have on the Closing Date the equivalent
of common shares sufficient to pay the equivalent of the Purchase Price in
accordance with Section 3.2(c)
hereof.
ARTICLE
VI
COVENANTS
6.1 Exclusivity. Until
this Agreement is terminated by its terms, the Seller will not (and will not
cause or permit any Affiliate, manager, officer, employee, member or agent of
its to) directly or indirectly (a) solicit, initiate or encourage the submission
of any proposal or offer from any Person (including any of them) relating to any
(i) liquidation, dissolution or recapitalization of, (ii) merger or
consolidation with or into, (iii) acquisition or purchase of any material asset
(or any material portion of the assets) of, or any equity interest in, or (iv)
similar transaction or business combination involving, the Seller or any
Purchased Assets (other than, prior to the Closing Date only, dispositions in
the Ordinary Course of Purchased Assets or which have been replaced with
Purchased Assets of equal or greater value and utility); or (b) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any other Person to do or seek any of the foregoing. The
Seller further agrees to promptly notify the Buyer in the event that the Seller
receives any such inquiries of the type mentioned above from any other Person
indicating or suggesting an interest in acquiring all or any part of the
Business, Purchased Assets or Excluded Assets. Until this Agreement
is terminated in accordance with its terms, the Seller will notify the Buyer if
any Person makes any proposal or offer with respect to any of the
foregoing.
6.2 Operation and Maintenance of the
Business.
(a) Through the Closing
Date. From the date of this Agreement through the Closing
Date, unless the Buyer otherwise consents in writing, the Seller
will:
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(i)
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conduct
the Business only in the Ordinary
Course;
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(ii)
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not
terminate, modify, amend or enter into any material
Contract;
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(iii)
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not
incur any Indebtedness, or cause any of its Affiliates to incur any
Indebtedness, other than in the Ordinary
Course;
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(iv)
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not
hire, terminate or materially modify the terms of employment with respect
to, any senior executive;
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(v)
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not
sell or otherwise dispose of (by distribution or otherwise) any Purchased
Asset other than dispositions in the Ordinary
Course;
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(vi)
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not
take or fail to take any action which would cause any of the
representations set forth in Article IV
hereof to be untrue;
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(vii)
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cause
its current insurance (or reinsurance) policies not to be canceled or
terminated or any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage equal to or greater than the coverage under
the canceled, terminated or lapsed policies are in full force and
effect;
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(viii)
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use
commercially reasonable efforts to keep in full force and effect its
existence and all rights, franchises, Proprietary Rights and contractual
rights relating or pertaining to the
Business;
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(ix)
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use
commercially reasonable efforts to keep its present business organization,
including the present business operations, physical facilities, working
conditions and employees and its present relationships with lessors,
licensors, suppliers, customers, independent contractors and others having
business relations with it; and
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(x)
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maintain
its books, accounts and records in the Ordinary Course as used in the
preparation of the applicable Latest Balance Sheet and the accompanying
interim financial statements.
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6.3 Information and
Access. From time to time at the Buyer’s request upon
reasonable notice and at reasonable times through the Closing, and for the
purpose of completing the Buyer’s due diligence investigation of the Business,
the Seller and the Principals will provide to representatives of the Buyer and
its employees and accounting, tax, legal and other advisors (collectively, the
“Investigating
Parties”):
(a) access
to the Purchased Assets;
(b) access
to all accounts, insurance policies, Tax Returns and Tax records, Contracts, and
other books and records concerning the Purchased Assets, the Seller and the
Business and operations and such other relevant information and materials as may
be reasonably requested (including the ability to make copies and abstracts
thereof); and
(c) the
opportunity to discuss the affairs, finances and accounts of the Seller with
those managers (or equivalent officials), senior management employees, key sales
representatives and present and former independent accountants of the Seller, in
each case so long as such access does not unreasonably interfere with the
Business.
6.4 Consents.
(a) Between
the date hereof and the Closing, the Seller shall take, or cause to be taken by
others, all commercially reasonable steps to obtain and satisfy, at the earliest
practicable date, all Consents.
6.5 Further
Assurances.
(a) Each
Party will use commercially reasonable efforts to cause the conditions to the
Buyer’s and the Seller’s respective obligations to consummate the Closing
Transactions to be satisfied (including the preparation, execution and delivery
of all agreements and instruments contemplated hereunder to be executed and
delivered by such Party in connection with or prior to the
Closing).
(b) Promptly
after they obtain knowledge thereof, but in all events prior to the Closing, the
Buyer will inform the Seller of any fact or circumstance which, if it existed on
the Closing Date, would constitute a breach of any representation or warranty of
the Buyer set forth in this Agreement or any breach of any of its covenants or
agreements set forth in this Agreement, or any threatened or instituted
proceeding of a type described in Section 7.1(c) or
Section
7.2(c). Promptly after the Seller obtains knowledge thereof,
but in all events prior to the Closing, the Seller will inform the Buyer of any
fact or circumstance which, if it existed on the Closing Date, would constitute
a breach of any representation or warranty of the Seller set forth in this
Agreement or any breach of any covenant or agreement of the Seller set forth in
this Agreement, or any threatened or instituted proceeding of a type described
in Section
7.1(c) or Section
7.2(c). No such knowledge or notice will affect any Party’s
right to indemnification or other remedy provided for in this Agreement in
respect of any such matter of which it obtains knowledge or receives such
notice.
6.6 Without
limiting Section
6.5(b), the Seller will give prompt written notice to the Buyer if any
material portion of the Purchased Assets suffers damage, which is sufficient to
prevent or materially affect the Business in any material respect.
ARTICLE
VII
CONDITIONS
TO CERTAIN OBLIGATIONS
7.1 The Buyer’s Closing
Conditions. The obligation of the Buyer to consummate the
Closing Transactions is subject to the satisfaction (or waiver by the Buyer in
writing) of the following conditions as of the time of the Closing:
(a) The
representations and warranties set forth in Article IV will be
true and correct in all material respects at and as of the time of the Closing
as though then made;
(b) The
Seller will have, in all material respects, performed and complied with all of
the covenants and agreements required to be performed by the Seller hereunder
and under any of the Transaction Documents at or prior to the
Closing;
(c) No
action or proceeding before any Governmental Entity will be pending or
threatened wherein an unfavorable judgment, decree, injunction or order could
prevent or adversely affect the consummation of the Closing Transactions, or
result in the Closing Transactions being declared unlawful or rescinded, and no
such judgment, decree, injunction or order will be in effect;
(d) All
Consents to include shareholder approval will have been obtained and be in full
force and effect, including, without limitation, the Member
Consent;
(e) There
shall not have occurred any Material Adverse Effect;
(f) The
Buyer shall be satisfied, in its sole discretion, with the results of its due
diligence review of the Seller and the Principals, including, without
limitation, (i) criminal, credit and educational background checks with respect
to all of the Seller’s senior management and (ii) a review of the licensing
regime of the Seller and its Affiliates with respect to the operation of the
Business;
(g) On
or prior to the Closing Date, the Seller will have delivered to the Buyer all of
the following (dated as of the Closing Date, except as otherwise
indicated):
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(i)
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A
release and termination of each Lien on any Purchased Asset which is not a
Permitted Lien;
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(ii)
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A
certificate, dated not earlier than the tenth (10th) Business Day prior to
the Closing Date, of the Secretary of State of the state under the laws of
which the Seller is organized and each state in which the Seller is
required to be qualified to do business stating that the Seller is in good
standing or has comparable active status in such
state;
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(iii)
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A
copy of the Seller’s organizational documents certified as of a recent
date by the Secretary of State of the state under the laws of which the
Seller is organized;
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(iv)
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A
certificate of the secretary of the Seller, dated as of the Closing Date,
in a form and substance reasonably satisfactory to the Buyer, as to (A)
the lack of amendments to the certificate of formation of the Seller; (B)
the resolutions of the board of managers of the Seller authorizing the
execution and performance of this Agreement and the consummation of the
Closing Transactions; (D) the incumbency and signatures of the officers of
the Seller executing this
Agreement;
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(v)
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A
certificate by the chief executive officer of the Seller certifying that
each of the conditions set forth in Sections
7.1(a), 7.1(b) and
7.1(d)
has been and is satisfied as of the time of the
Closing;
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(vi)
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A
▇▇▇▇ of sale executed by the Seller in the form attached hereto as Exhibit B (the
“▇▇▇▇ of
Sale”);
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(vii)
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An
assignment and assumption agreement executed by the Seller in the form
attached hereto as Exhibit C (the
“Assignment and
Assumption Agreement”);
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(viii)
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An
employment agreement with each of the Principals, in form and substance
satisfactory to the Buyer;
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(ix)
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With
respect to each Lease, estoppel certificates, in a form reasonably
satisfactory to the Buyer, from the
landlord;
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(x)
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The
affidavit dated as of the Closing Date stating that the Seller is not a
foreign person pursuant to Section 1.1445-2(b) of the Treasury
regulations; and
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(xi)
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Such
other documents or instruments as the Buyer reasonably requests and are
reasonably necessary to effect the transactions contemplated by this
Agreement.
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(h) All
proceedings to be taken by the Seller in connection with the consummation of the
Closing Transactions and the other transactions contemplated by this Agreement
and the other Transaction Documents and all certificates, opinions, instruments
and other documents required to be delivered to the Buyer to effect the
transactions contemplated by this Agreement and the other Transaction Documents
will be reasonably satisfactory in form and substance to the Buyer.
7.2 The Seller’s Closing
Conditions. The obligation of the Seller to consummate the
Closing Transactions is subject to the satisfaction (or waiver by the Seller, in
writing) of the following conditions as of the Closing Date:
(a) The
representations and warranties set forth in Article V will be
true and correct in all material respects at and as of the time of the Closing
as though then made;
(b) The
Buyer will have, in all material respects, performed and complied with all of
the covenants and agreements required to be performed by the Buyer under the
Transaction Documents at or prior to the Closing;
(c) No
action or proceeding before any Governmental Entity will be pending or
threatened against the Buyer wherein an unfavorable judgment, decree, injunction
or order could prevent or adversely affect the consummation of the Closing
Transactions, or result in the Closing Transactions being declared unlawful or
rescinded and no such judgment decree, injunction or order will be in
effect;
(d) On
or prior to the Closing Date, the Buyer will have delivered to the Seller all of
the following (dated as of the Closing Date, except as otherwise
indicated):
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(i)
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the
Assignment and Assumption Agreement;
and
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(ii)
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such
other documents or instruments as the Seller reasonably requests and are
reasonably necessary to effect the transactions contemplated by this
Agreement; and
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(iii)
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such
other documents or instruments as the Seller reasonably requests and are
reasonably necessary to effect the transactions contemplated by this
Agreement; and
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(e) All
proceedings to be taken by the Buyer in connection with the consummation of the
Closing Transactions and the other transactions contemplated by this Agreement
and all certificates, opinions, instruments and other documents required to be
delivered to the Seller to effect the transactions contemplated by this
Agreement will be reasonably satisfactory in form and substance to the
Seller.
ARTICLE
VIII
TERMINATION
8.1 Termination. This
Agreement may be terminated at any time prior to the Closing:
(a) at
any time, by mutual written agreement of the Seller and the Buyer;
(b) before
the Termination Date (as defined below):
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(i)
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by
the Seller, by written notice to the Buyer, on any date determined for the
Closing in accordance with Section 3.1 if
each condition set forth in Section 7.1 or
7.2 has
been satisfied (or will be satisfied by the delivery of documents by the
Parties prior to or at the Closing) or waived in writing on such date and
the Buyer has nonetheless refused to consummate the Closing
Transactions;
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(ii)
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by
the Buyer, by written notice to the Seller, on any date determined for the
Closing in accordance with Section 3.1 if
each condition set forth in Section 7.1 or
7.2 has
been satisfied (or will be satisfied by the delivery of documents by the
Parties prior to or at the Closing) or waived in writing on such date and
the Seller and the Principals have nonetheless refused to consummate the
Closing Transactions;
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(c) on
or after the Termination Date, if the Closing has not occurred, (i) by the
Buyer, by written notice to the Seller, (A) at any time when the Seller, but not
the Buyer, is in breach of this Agreement in any material respect (“Material Breach”); (B) at any
time when both the Buyer and the Seller are in Material Breach; or (C) at any
time when neither the Seller nor the Buyer are in Material Breach; or (ii) by
the Seller, by written notice to the Buyer, (A) at any time when the Buyer, but
not the Seller, is in Material Breach; (B) at any time when both the Buyer and
the Seller are in Material Breach; or (C) at any time when neither the Buyer nor
the Seller are in Material Breach. The “Termination Date” will be
January 5, 2010. The Buyer may not rely on the failure of any
condition precedent set forth in Section 7.1 to be
satisfied if such failure was caused by the Buyer’s failure to act in good faith
or a breach of or failure to perform any of its representations, warranties,
covenants or other obligations in accordance with the terms of this Agreement,
and the Seller and the Principals may not rely on the failure of any condition
precedent set forth in Section 7.2 to be
satisfied if such failure was caused by the Seller’s and/or the Principal’s
failure to act in good faith or a breach of or failure to perform any of the
Seller’s representations, warranties, covenants or other obligations in
accordance with the terms of this Agreement.
8.2 Effect of
Termination. If this Agreement is terminated as provided in
Section 8.1,
then this Agreement will forthwith become void and there will be no Liability on
the part of any Party to any other Party or any other Person in respect thereof;
provided that:
(a) the
obligations of the Parties described in this Section 8.2, Section 9.2, Section 9.4(e), Section 11.9 and
Section 11.11
will survive any such termination; and
8.3 no
such termination will relieve any Party from Liability for any misrepresentation
or breach of any representation, warranty, covenant or agreement set forth in
this Agreement prior to such termination.
ARTICLE
IX
OTHER
COVENANTS
9.1 Retention of Retained Records;
Continuing Assistance.
(a) The
Seller shall provide the Buyer and the Buyer’s counsel, accountants and other
representatives, with reasonable access during normal business hours to the
books, records, property, personnel, contracts, commitments and documents
relating to the Business in its possession pertaining to transactions occurring
prior to the Closing Date when requested; provided, that such access does not
unreasonably interfere with the Seller or the Business.
(b) Each
Party shall, and shall cause its Affiliates to, provide to each of the other
Parties such cooperation and information as any of them reasonably may request
in filing any Tax Return, amended Tax Return or claim for refund, determining a
liability for Taxes or a right to refund of Taxes or in conducting any audit or
other proceeding in respect of Taxes. Such cooperation and
information shall include providing copies of all relevant portions of relevant
Tax Returns, together with relevant accompanying schedules and relevant work
papers, relevant documents relating to rulings or other determinations by Taxing
Authorities and relevant records concerning the ownership and Tax basis of
property, which any such party may possess. Each party will retain
all Tax Returns, schedules and work papers, and all material records and other
documents relating to Tax matters of the Seller for its Tax period first ending
after the Closing Date and for all prior Tax periods until the later of (i) the
expiration of the statute of limitations for the Tax periods to which the Tax
Returns and other documents relate and (ii) eight years following the due date
(without extension) for such Tax Returns. Thereafter, the party
holding such Tax Returns or other documents may dispose of them; provided that
such party shall give to the other party notice and an opportunity to take
custody thereof prior to doing so. Each party shall make its
employees reasonably available on a mutually convenient basis at its cost to
provide explanation of any documents or information so provided.
(c) In
the event of any claim or counterclaim relating to the Business or the Purchased
Assets, the Seller covenants and agrees to fully cooperate with the Buyer in
connection with the prosecution or defense, as the case may be, of any such
claim or counterclaim.
9.2 Press Releases and
Announcements. Except for any public disclosure which either
Party in good faith believes is required by any Legal Requirement (in which
case, if practicable, the disclosing Party will give the other Parties an
opportunity to review and comment upon such disclosure before it is
made):
(a) prior
to the Closing, no press releases related to this Agreement or any Closing
Transaction or other announcements generally to the employees, customers or
other Persons having business relationships with the Seller (it being understood
that the Buyer will have the right to contact such Persons in connection with
its investigation of the Business of the Seller as provided in Section 6.3 and as
the Seller may otherwise consent (which consent the Seller will not unreasonably
withhold)) will be issued or made without the mutual approval of the Seller and
the Buyer; and
(b) after
the Closing, the Seller will not make any press release or other public
announcement of or with respect to the Business, this Agreement or any Closing
Transaction without the Buyer’s consent and the Buyer will not make any press
release or other public announcement of or with respect to this Agreement or any
Closing Transaction without the Seller’s consent.
9.3 Further
Transfers. Each Party will execute and deliver such further
instruments of conveyance and transfer and take such additional actions as any
other Party may reasonably request to effect, consummate, confirm or evidence
the transfer to the Buyer of the Purchased Assets, the assumption by the Buyer
of the Assumed Liabilities and the other transactions contemplated
hereby.
9.4 Non-Competition; Non-Solicitation and
Confidentiality.
(a) In
consideration of the transactions contemplated hereby and the payment of the
Purchase Price and the assumption of the Assumed Liabilities, during the period
beginning on the date of this Agreement and ending on the third anniversary of
the Closing Date (the “Non-Competition Period”), the
Seller will not directly or indirectly engage or invest in any investment or
business opportunity or activity that is competitive with the Business;
provided, however, that the forgoing shall not apply to any investment in up to
5% of the voting securities of any issuer traded on a national stock market or
national stock exchange even if such issuer's activities are competitive with
the Business.
(b) In
consideration of the transactions contemplated hereby and the payment of the
Purchase Price and the assumption of the Assumed Liabilities, during the
Non-Competition Period, the Seller will not directly or indirectly contact,
approach or solicit for the purpose of offering employment to or hiring (whether
as an employee, consultant, agent, independent contractor or otherwise) or
actually hire any person who is employed in the operation of the Business on the
date hereof or on the Closing Date, or induce or attempt to induce any customer
or other business relation of the Seller into any business relationship which
might harm the Buyer or the Business.
(c) If
the final judgment of a court of competent jurisdiction declares that any term
or provision of Section 9.4(a) or
Section 9.4(b)
is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability will have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement will be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
(d) Following
the Closing, the Seller will treat and hold as confidential all information
concerning the Business and affairs of the Seller which is of a type that in
accordance with the Seller’s past practices has been treated as confidential or
proprietary (“Confidential
Information”), refrain from using any Confidential Information except in
connection with this Agreement and deliver promptly to the Buyer or destroy, at
the request and option of the Buyer, all tangible embodiments (and all copies)
of Confidential Information which are in their possession or under their
control. If the Seller is requested or required (by oral question or
request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, then it will notify the Buyer promptly of the request
or requirement so that the Buyer may seek an appropriate protective order or
waive compliance with the provisions of this Section
9.4(d). If, in the absence of a protective order or the
receipt of a waiver hereunder, the Seller is, on the advice of counsel,
compelled to disclose any Confidential Information in connection with any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process, then it may disclose such Confidential Information in connection
therewith; provided, that it will use its commercially reasonable efforts to
obtain, at the request and expense of the Buyer, an order or other assurance
that confidential treatment will be accorded to such portion of such
Confidential Information as the Buyer may designate.
(e) Prior
to the Closing, the Buyer will treat and hold as confidential all Confidential
Information, refrain from using any such Confidential Information except as
contemplated by Section 6.3 or
otherwise in connection with this Agreement, and, after any termination of this
Agreement pursuant to Section 8.1, deliver
promptly to the Seller or destroy, at the request and option of the Seller, all
tangible embodiments (and all copies) of any such Confidential Information which
are in the Buyer’s possession or under the Buyer’s control. If the
Buyer is requested or required prior to the Closing (by oral question or request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any such
Confidential Information, the Buyer will notify the Seller promptly of the
request or requirement so that the Seller may seek an appropriate protective
order or waive compliance with the provisions of this Section
9.4(e). If, in the absence of a protective order or the
receipt of a waiver hereunder, the Buyer is, on the advice of counsel, compelled
to disclose any such Confidential Information in connection with any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process, then the Buyer may disclose such Confidential Information in connection
therewith; provided, that the Buyer will use its commercially reasonable efforts
to obtain, at the request and expense of the Seller, an order or other assurance
that confidential treatment will be accorded to such portion of such
Confidential Information as the Seller may designate.
(f) The
Seller acknowledges and agrees that in the event of a breach by it of any of the
provisions of this Section 9.4, monetary
damages may be inadequate and the Buyer may have no adequate remedy at
law. Accordingly, in the event of any such breach, the Buyer and/or
its successors or assigns may, in addition to any other rights and remedies
existing in their favor, enforce their rights and the Seller’s obligations
hereunder by an action or actions for specific performance, injunctive and/or
other relief, without any requirement of posting a bond or proving actual
damages or posting any bond or other security.
(g) The
Buyer acknowledges and agrees that in the event of a breach by the Buyer of any
of the provisions of this Section 9.4, monetary
damages may be inadequate and the Seller may have no adequate remedy at
law. Accordingly, in the event of any such breach, the Seller and/or
its successors or assigns may, in addition to any other rights and remedies
existing in their favor, enforce their rights and the Buyer’s obligations
hereunder by an action or actions for specific performance, injunctive and/or
other relief, without any requirement of posting a bond or proving actual
damages or posting any bond or other security.
9.5 Name Change. Within
five (10) days after the Closing Date, the Seller shall deliver written
confirmation, reasonably acceptable to the Buyer and its counsel, that the
corporate name of the Seller has been changed to Las Vegas Railway
Express.
9.6 Post-Closing Use of Assets; Mail and
Communications. Subsequent to the Closing, the Seller will not
use any of the Purchased Assets for its own benefit or that of anyone else nor
make any effort to receive, collect, enforce or ▇▇▇ for any of the Purchased
Assets, other than for the benefit of the Buyer. If any proceeds of
any of the Purchased Assets or any payments thereon are for any reason received
by the Seller subsequent to the Closing, the Seller will hold the same, or cause
the same to be held, in trust for the Buyer, in all respects subject to the
Buyer’s direction and control, and immediately following receipt will remit or
assign the same, or cause the same to be remitted or assigned, in the form in
which received, to the Buyer together with any necessary assignments and
endorsements. In addition, the Seller shall promptly forward to the
Buyer any mail or other communications relating to the Purchased Assets or the
Business, which are received by the Seller from and after the
Closing. If any remittances of amounts payable in connection with the
operation of the Business (whether pre- or post-Closing) are made directly to
the Seller from and after the Closing, the Seller shall hold the same in trust
as the property of the Buyer and once each calendar week deliver to the Buyer
the identical check, monies or other form of payment received. The
Buyer shall have the right to endorse the name of the Seller upon any and all
such remittances made payable to the Seller and upon the payment of any account
receivable constituting a Purchased Asset hereunder, and to collect such
remittances and payments.
9.7 Hiring
Employees. The Buyer may offer employment at such rates of
compensation to those of Seller’s employees that Buyer shall choose following
the Closing and will credit all years of service with and recognized by the
Seller for such employees (i) for purposes of determining eligibility and
vesting with respect to any employee benefit plans of the Buyer under Section
3(3) of ERISA, (ii) for purposes of determining eligibility and the amount of
any benefit with respect to any severance or vacation plan or program and any
similar employee welfare plan of the Buyer under Section 3(1) of ERISA, and
(iii) for purposes of determining eligibility with respect to any medical plan
of the Buyer. Effective as of the Closing Date, the Seller shall
encourage all employees offered employment to accept employment with the
Buyer. Any employee accepting an offer of employment with the Buyer
shall become an employee of the Buyer on the first date that such employee is
credited with an hour of service (referred to as a “Transferred
Employee”). A Transferred Employee’s employment with the Buyer
shall be as an “at will” employee. The Seller shall make available to
the Buyer on and after the Closing Date any and all records with respect to the
Transferred Employees as the Buyer shall reasonably request. Other
than with respect to any COBRA obligations imposed by applicable law, the Buyer
does not assume and shall not have any liability or obligations with respect to
any employees of the Seller who are not Transferred Employees, including
liability for any severance payments.
9.8 Payroll Matters. If
the Closing Date falls within a payroll period, based on the customary payroll
practices of the Seller, the Buyer shall, to the extent such obligations
relating to periods of pre-Closing service are properly reflected as a current
liability on the Closing Date Balance Sheet, assume responsibility for making
payroll payments to the Transferred Employees for that payroll period, such that
the payroll payment received by the Transferred Employee reflects the period of
pre-Closing service with the Seller and post-Closing service with the Buyer that
relate to such payroll period. Any such payroll payments shall be
subject to applicable income tax withholdings and customary payroll deductions
for each such Transferred Employee. The Closing Date Balance Sheet
shall reflect the accrual of all payroll related obligations for periods through
the Closing Date.
ARTICLE
X
INDEMNIFICATION
AND RELATED MATTERS
10.1 Survival; Absence of Other
Representations. The representations, warranties and, except
as otherwise provided herein, the covenants and other agreements of the Buyer
and the Seller contained herein shall survive the Closing and shall terminate
upon the termination of the contemplated transsaction. The Buyer’s
obligation to pay, perform or discharge the Assumed Liabilities shall survive
until such Assumed Liabilities have been paid, performed or discharged in
full. No Party has made or will make in connection with this
Agreement any representation or warranty, express or implied, other than as set
forth in this Agreement, the Schedules hereto, and the certificates delivered
pursuant hereto.
10.2 Seller Indemnity. The
Seller, for itself and its successors will indemnify the Buyer and its officers,
managers, employees, agents, representatives, successors, Affiliates and
permissible assigns (the “Buyer
Indemnified Persons”) and hold them harmless from and against any and all
damages, claims, liabilities, losses or expenses (including judgments,
assessments, interest, penalties, and attorneys’ fees and expenses)
(collectively, “Damages”) incurred, suffered
or paid, directly or indirectly, as a result of, arising out of, or relating
to: (i) the failure of the Seller to transfer to the Buyer good and
valid title to all of the Purchased Assets, free and clear of all Liens (other
than Permitted Liens); (ii) any misrepresentation in, or breach or failure of,
any of the representations and warranties made by the Seller in this Agreement;
(iii) any failure by the Seller to perform any of its covenants or agreements
contained in this Agreement; (iv) any action, suit, litigation, proceeding at
law or in equity, arbitration or governmental investigation brought or
threatened against any Buyer Indemnified Person relating to any act or omission
of the Seller and relating to the operation of the Business or the Purchased
Assets prior to the Closing Date; or (v) non-compliance with any so-called bulk
sales law of any state applicable to the transactions contemplated hereby;
except, in each such case, to the extent any Damages arise out of any breach of
the Buyer’s representations, warranties (regardless of whether such
representation or warranty has expired), covenants or other agreements set forth
in this Agreement.
10.3 Buyer
Indemnity. The Buyer, for itself and its successors, will
indemnify the Principals and Seller and its officers, managers, employees,
agents, representatives, successors, Affiliates and permissible assigns (“Seller Indemnified Persons”)
and hold them harmless from and against any and all Damages incurred, suffered
or paid, directly or indirectly, as a result of, arising out of, or relating
to: (a) any misrepresentation in, or breach or failure of, any of the
representations or warranties made by the Buyer in this Agreement or in any
certificate or document delivered to the Seller pursuant hereto; (b) any
failure by the Buyer to perform any of its covenants or agreements contained in
this Agreement; (c) any action, suit, litigation, proceeding at law or in
equity, arbitration or governmental investigation brought or threatened against
any Seller Indemnified Person relating to the operation of the Business or the
Purchased Assets on and after the Closing Date; or (d) any failure by the Buyer
to discharge its obligations with respect to the Assumed Liabilities; except, in
each such case, to the extent any Damages arise out of any breach of any
representation, warranty (regardless of whether such representation or warranty
has expired), covenant or agreement made by the Seller set forth in this
Agreement.
10.4 Indemnification
Claims.
(a) All
claims for indemnification hereunder (whether or not arising as a result of a
claim asserted by any Person not a party to this Agreement) shall be made in
writing on or prior to December 15, 2009, to the Person obligated to provide
indemnification under this Agreement (the “Indemnifying Party”) by the
Person entitled to indemnification hereunder (the “Indemnified Party”) and shall
set forth the facts and circumstances of the claim, as well as the basis upon
which indemnification pursuant to this Article X is
sought. Notwithstanding the foregoing, no delay or failure by any
Indemnified Party to provide notification of any claim shall preclude any
Indemnified Party from recovering for Damages pursuant to this Article X, except to
the extent that such delay or failure compromises the rights of any Indemnifying
Party under this Article
X.
(b) Within
thirty (30) days after receipt by an Indemnifying Party of any notification of a
claim by a third party (“Third
Party Claim”), the Indemnifying Party may, upon written notice thereof to
the Indemnified Party, assume (at the Indemnifying Party’s expense) control of
the defense of such Third Party Claim with counsel reasonably satisfactory to
the Indemnified Party, provided the Indemnifying Party acknowledges in writing
to the Indemnified Party that any Damages that may be assessed against the
Indemnified Party in connection with such Third Party Claim constitute Damages
for which the Indemnified Party shall be entitled to indemnification pursuant to
this Article
X. If the Indemnifying Party does not so assume control of
such defense, the Indemnified Party shall control such defense, but in so doing
shall not waive or limit its right to recover under this Article X for any
Damages that may be assessed against the Indemnified Party in connection with
such Third Party Claim. The party not controlling such defense may
participate therein at its own expense; provided that if the Indemnifying Party
assumes control of such defense, and the Indemnified Party has been advised in
writing by outside legal counsel that under the applicable standards of
professional conduct, the Indemnifying Party and the Indemnified Party may not
be represented by the same counsel with respect to such action, suit or
proceeding, the reasonable fees and expenses of separate counsel for the
Indemnified Party shall be paid by the Indemnifying Party. The party
controlling such defense shall keep the other party advised of the status of
such Third Party Claim and the defense thereof and shall consider in good faith
recommendations made by the other party with respect thereto. The
Indemnifying Party shall not agree to any settlement of such action, suit or
proceeding without the prior written consent of the Indemnified Party, which
shall not be unreasonably withheld so long as the settlement is confidential and
includes a complete release of the Indemnified Party from all liability and does
not contain or contemplate any payment by, or injunctive or other equitable
relief binding upon, the Indemnified Party.
(c) Amounts
payable under this Article X shall be
payable by the Indemnifying Party as incurred by the Indemnified Party,
provided, however, that the Buyer may set off any amounts owed by the Seller or
either Principal to the Buyer against the Escrow (in which event the Seller
shall, at the request of the Buyer, promptly deliver a written instruction to
the Escrow Agent at such time authorizing the disbursement of any such amount to
the Buyer) or any amounts then due from the Buyer to the Seller under this
Agreement.
10.5 Limitation on
Indemnities.
Limitation on Liability of
the Seller. Other than with respect to fraud or intentional or
willful misconduct (i) no claim may be made for indemnification pursuant to
Section 10.2 by
a Buyer Indemnified Party against the Seller until the aggregate dollar amount
of all Damages indemnifiable pursuant to such section exceeds $25,000 (the
“Basket Amount”), after
which a claim may be made for all Damages including the Basket Amount, and (ii)
to the extent any Buyer Indemnified Person is entitled to indemnification
pursuant to Section
10.2 against the Seller, the aggregate amount of all Damages for which
the Seller shall be liable pursuant to Section 10.4 shall
not exceed the Escrow (the “Seller Cap
Amount”).
10.6 Treatment of Indemnification
Payments. Each Party will treat all payments made pursuant to
Section 10.2 as
adjustments of the Purchase Price for all purposes.
ARTICLE
XI
MISCELLANEOUS
11.1 Amendment and
Waiver. This Agreement may be amended and any provision of
this Agreement may be waived; provided, that any such amendment or waiver (a)
will be binding upon the Seller and the Principals only if such amendment or
waiver is set forth in a writing executed by the Seller and the Principals and
(b) will be binding upon the Buyer only if such amendment or waiver is set forth
in a writing executed by the Buyer. No course of dealing between or
among any Persons having any interest in this Agreement will be deemed effective
to modify, amend or discharge any part of this Agreement or any rights or
obligations of any Party under or by reason of this Agreement. No
failure by any Party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon a breach thereof will constitute a waiver of any such
breach or any other covenant, duty, agreement or condition.
11.2 Notices. All
notices, consents, approvals and requests required or permitted hereunder or
under any other Transaction Document (a “Notice”) shall be given
in writing and shall be effective for all purposes if either hand delivered with
receipt acknowledged, or by a nationally recognized overnight delivery service
(such as Federal Express), or by certified or registered United States mail,
return receipt requested, postage prepaid, or by facsimile and confirmed by
facsimile answer back and with a copy of such Notice being sent the same day as
such facsimile transmission by one of the other methods provided herein for
delivery, in each case addressed as follows (or to such other address or Person
as a party shall designate from time to time by notice to the other
party):
To the
Seller:
LAS VEGAS
RAILWAY EXPRESS
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
To the
Buyer:
LIBERTY
CAPITAL ASSET MANAGEMENT , INC.
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▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
A Notice
shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; in the case of
overnight delivery, upon the first attempted delivery on a Business Day; or in
the case of facsimile, upon the confirmation of such facsimile transmission,
provided that such Notice has also been sent by one of the other methods
provided herein for the delivery of Notice.
11.3 Binding Agreement;
Assignment. This Agreement and all of the provisions hereof
will be binding upon and inure to the benefit of the Parties and their
respective successors and assigns; provided that neither this Agreement nor any
of the rights, interests or obligations hereunder may be assigned by the Seller
or the Principals without the prior written consent of the Buyer. Any
such assignment made by the Seller or the Principals without the Buyer’s prior
written consent shall be null and void. Without limiting but subject
to the foregoing, at or prior to the Closing, the Buyer may assign its rights
under this Agreement, in whole or in part, (i) to one or more other Persons who,
together with the Buyer, will purchase all or part of the Purchased Assets, so
long as any such Person or the Buyer assumes at the Closing all related Assumed
Liabilities, and/or the Buyer may direct that some or all of the Purchased
Assets be transferred to a Person other than the Buyer, and (ii) to or for the
benefit of any lender as collateral, which lender shall be permitted to exercise
any or all of such rights and transfer and assign all such rights to any
purchaser, upon foreclosure or other exercise of remedies as to such
collateral. With respect to any rights assigned to any assignee of
the Buyer (and any matter related thereto under this Agreement), such assignee
will be deemed to be “the Buyer” for purposes of this Agreement.
11.4 Severability. Whenever
possible, each provision of this Agreement will be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
11.5 No Strict
Construction. The language used in this Agreement will be
deemed to be the language chosen by the Parties to express their mutual
intent. In the event an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by
the Parties, and no presumption or burden of proof will arise favoring or
disfavoring any Person by virtue of the authorship of any of the provisions of
this Agreement.
11.6 Captions. The
captions used in this Agreement are for convenience of reference only and do not
constitute a part of this Agreement and will not be deemed to limit,
characterize or in any way affect any provision of this Agreement, and all
provisions of this Agreement will be enforced and construed as if no caption had
been used in this Agreement.
11.7 Entire
Agreement. This Agreement and the documents referred to herein
contain the entire agreement between the Parties and supersede any prior
understandings, agreements or representations by or between the Parties, written
or oral, which may have related to the subject matter hereof in any
way.
11.8 Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original but all of which taken together will constitute one and the
same instrument.
11.9 Governing Law;
Jurisdiction. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and construed
in accordance with the internal laws of the State of Nevada, without giving
effect to any choice of law or conflict of law provision that would cause the
application of the laws of any jurisdiction other than the State of
Nevada. The Parties agree that any action in law or equity brought by
any Party arising from or in connection with this Agreement or arising from or
in connection with the performance by any Party of its obligations hereunder
shall be brought only in a federal or state court sitting in Las Vegas, Nevada,
and the Parties consent to the exclusive jurisdiction and venue of such courts
and hereby waive the doctrine of forum non conveniens and
similar objections thereto.
11.10 Specific
Performance. The Seller acknowledges that the Business and
operations are unique, and recognizes and affirms that in the event of a breach
of this Agreement by the Seller, monetary damages may be inadequate and the
Buyer may have no adequate remedy at law. Accordingly, in the event
of any such breach, the Buyer and/or successors or assigns may, in addition to
any other rights and remedies existing in their favor, enforce their rights and
the Seller’s obligations hereunder by an action or actions for specific
performance, injunctive and/or other relief, without any requirement of proving
actual damages or posting any bond or other security.
11.11 Expenses. Except as
otherwise expressly provided herein, if the Closing does not occur, the Seller,
the Principals and the Buyer each will pay all of their own fees, costs and
expenses (including fees, costs and expenses of legal counsel, investment
bankers, accountants, brokers or other representatives and consultants and
appraisal fees, costs and expenses). Except as otherwise expressly
provided herein, if the Closing does occur, the Buyer shall pay all of its own
fees, costs and expenses and any Transfer Taxes incurred in connection herewith,
which Transfer Taxes shall be documented in reasonable detail and provided to
the Buyer within thirty (30) days after the Closing Date. The Seller
shall be responsible for any of its fees, costs and expenses and any Transfer
Taxes for which the Seller does not have sufficient
documentation. The Seller will prepare and file, on or before the due
dates thereof, any required Tax Returns or Tax forms with respect to any
Transfer Taxes imposed by any Taxing jurisdiction by reason of the transactions
contemplated by this Agreement. The Buyer agrees to cooperate with
the Seller in connection with the preparation and filing thereof and to provide
any certificates of the Buyer that may be necessary to claim exemption from or a
reduction of any Transfer Tax. If valuations of any property or
leases are required to determine the amount of any Transfer Taxes, the Seller
and the Buyer will reasonably determine such valuations, and the Parties agree
that they will not take (or cause to be taken) any position inconsistent with
such valuations in connection with any Tax Return or otherwise.
11.12 Parties in
Interest. Nothing in this Agreement, express or implied, is
intended to confer on any Person other than the Parties and their respective
successors and permitted assigns any rights or remedies under or by virtue of
this Agreement.
11.13 Generally Accepted Accounting
Principles. Where any accounting determination or calculation
is required to be made under this Agreement, such determination or calculation
(unless otherwise provided) will be made in accordance with GAAP and, to the
extent consistent therewith, the accounting policies employed by the Seller in
the preparation of the Latest Balance Sheets.
11.14 Waiver of Jury
Trial. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE
PARTIES TO ENTER INTO THIS AGREEMENT (EACH PARTY HAVING HAD OPPORTUNITY TO
CONSULT COUNSEL), EACH PARTY EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREIN.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Parties have executed this Asset Purchase Agreement as of
the date first written above.
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By:/s/▇▇▇▇▇▇▇ ▇.
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Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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Title:
CEO
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LAS
VEGAS RAILWAY EXPRESS
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By:
/s/ ▇▇▇▇
Ziliken_____________________
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Name: ▇▇▇▇
Ziliken
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Title:
President
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