EXHIBIT 1.1
Stock Purchase Agreement
Among
THE RESOURCING SOLUTIONS GROUP, INC.
&
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
DATED APRIL 25, 2003
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is executed on this 25th
day of April 2003, by and among The Resourcing Soltions Group, Inc., a Nevada
corporation, or Assigns (the "Buyer"); and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Seller"),
being the sole Shareholder of Woodstock Lumber Sales, Inc. (the "Company").
W I T N E S S E T H
WHEREAS, the Buyer wishes to purchase from the Seller, and the Seller
wishes to sell to the Buyer, securities of the Company owned by the Seller.
N O W T H E R E F O R E ,
In consideration of the foregoing and the mutual covenants, agreements and
warranties herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
The following terms shall have the following meanings for the purposes of
the Agreement:
"Affiliate" means, with respect to any specified Person,
(a) any other Person which, directly or indirectly, owns or controls, is
under common ownership or control with, or is owned or controlled by, such
specified Person;
(b) any other Person which is a director, officer or partner or is,
directly or indirectly, the beneficial owner of 10 percent or more of any class
of equity securities of the specified Person or a Person described in clause (a)
of this paragraph;
(c) another Person of which the specified Person is a director, officer or
partner or is, directly or indirectly, the beneficial owner of 10 percent or
more of any class of equity securities; or
(d) any relative or spouse of the specified Person or any of the foregoing
Persons.
"Accountants for The Resourcing Solutions Group, Inc." means ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ & Co., Certified Public Accountants, located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Telephone: (212) 697 - 6200, Facsimile: (212) 687
- 3333.
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"Accountants for Woodstock Lumber Sales, Inc." means ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
P.A., Certified Public Accountants, located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, Facsimile: (803)
327-2767.
"Business Day" means any day of the year other than
(a) any Saturday or Sunday, or
(b) any day which is a Legal Holiday as declared to be such by federal law.
"Buyer Confidential Information" means all confidential information
concerning the Buyer or its Affiliates that
(a) is not and has not become ascertainable or obtainable from public or
published information,
(b) is not received from a third party or is received from a third party
pursuant to the authorization of the Buyer,
(c) was not in the Company's or in the Seller's possession prior to
disclosure thereof to the Seller or the Company in connection with the
transactions contemplated herein, and
(d) was not independently developed by the Company or by the Seller.
"Closing" means the consummation(s) of the transactions contemplated
herein.
"Closing Date" means the date on which the Closing occurs.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Company Confidential Information" means all confidential information
concerning the Company or its Affiliates that
(a) is not and has not become ascertainable or obtainable from public or
published information,
(b) is not received from a third-party or is received from a third-party
pursuant to the authorization of the Company or the Seller in connection with
the Buyer's due diligence review of the Company,
(c) was not in the Buyer's possession prior to disclosure thereof to the
Buyer in connection with the transactions contemplated herein, and
(d) was not independently developed by the Buyer.
"Company Adverse Change or Effect" means a change (or circumstance
involving a prospective change) or effect that, individually or when taken
together with all other such changes or effects which have occurred prior to the
date of determination of the occurrence of the Material Adverse Effect, is or is
reasonably likely to be materially adverse to the business, operations, assets
(including intangible assets), liabilities, results of operations, cash flows,
condition (financial or otherwise) or prospects of the Company.
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"Contract" means any contract, lease, commitment, understanding, sales
order, purchase order, agreement, indenture, mortgage, note, bond, right,
warrant, instrument, plan, permit or license, whether written or oral.
"Dollars" or numbers preceded by the symbol "$" means amounts in United
States Dollars.
"EBITDA" means the earnings (or losses) of the Company before interest,
taxes, depreciation and amortization calculated in accordance with generally
accepted accounting principles applied in a manner consistent with the prior
practice of the Company and as reviewed by the Accountants for Pacel Corp,
subject to the provisions and adjustments set forth below.
"Environmental Law" means any law which relates to or otherwise imposes
liability or standards of conduct concerning mining or reclamation of mined
land, discharges, emissions, releases or threatened releases of noises, odors or
any pollutants, contaminants or hazardous or toxic wastes, substances or
materials, whether as matter or energy, into ambient air, water, or land, or
otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, or hazardous or toxic wastes, substances or materials, including,
but not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 and the Superfund Amendments and Reauthorization Act of
1986 (together, as amended, "CERCLA"), the Resource Conservation and Recovery
Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended,
the Federal Water Pollution Control Act Amendments of 1972, the Clean Water Act
of 1977, as amended, any so-called "Superlien" law, and any other similar
federal, state or local Law.
"Environmental Permit" means any permit, license, approval, consent or
other authorization required by or pursuant to any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Account" means the escrow account established pursuant to the terms
of the Escrow Agreement.
"Escrow Agent" means _______________, under the terms of the Escrow
Agreement, or any successor.
"Escrow Agreement" means the Escrow Agreement and Instructions dated as at
even date by and among the Buyer, the Seller and the Escrow Agent.
"Escrow Fund" means the funds paid into the Escrow Account by the Buyer
pursuant to the terms of the Escrow Agreement, plus interest accrued and income
earned thereon pursuant to the terms of the Escrow Agreement.
"Existing Borrowing" means all borrowing from lending institutions, vendors
or agencies of federal, state or local governments or their political
subdivisions, as set forth on the Financial Statements or in the books and
records of the Company.
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"Financial Statements of The Resourcing Solutions Group, Inc." means, and
includes, all of the following:
(a) the unaudited financial statements of The Resourcing Solutions Group,
Inc. as of December 31, 2002, (including all schedules and notes thereto),
consisting of the balance sheet at such date and the related statements of
income and expenses, retained earnings, changes in financial position and cash
flows as at the end of the period then ended, which shall be prepared in
accordance with GAAP; and, in addition
"Financial Statements of Woodstock Lumber Sales, Inc. " means, and
includes, all of the following:
(a) the unaudited financial statements of Woodstock Lumber Sales, Inc. as
at December 31, 2002, (including all schedules and notes thereto), consisting of
the balance sheet at such date and the related statements of income and
expenses, retained earnings, changes in financial position and cash flows for
the twelve-month period, which shall be prepared in accordance with GAAP; and,
in addition;
(b) any other financial statements issued by the Company.
"GAAP" means United States generally accepted accounting principles at the
time in effect.
"Governmental Authority" means the government of the United States or any
foreign country or any state or political subdivision thereof and any entity,
body or authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Group" shall collectively mean all affiliated groups of corporations of
which the Company is or has been a member that have filed any consolidated Tax
Returns for any period ending on or before the Closing Date for which the
statute of limitations has not yet expired.
"Hazardous Material" means any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material or substance within the meaning of any
applicable Law (including consent decrees and administrative orders) relating to
or imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, substance or material, all as now or at any time hereafter in
effect.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Indemnified Person" means the Buyer, and its Officers, Directors, and
Shareholders, or those other Persons entitled to, or claiming a right to,
indemnification.
"Indemnifying Person" means the Seller.
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"Intellectual Property" means any and all trademarks, trade names, service
marks, patents, copyrights (including any registrations, applications, licenses
or rights relating to any of the foregoing), technology, trade secrets,
inventions, know-how, designs, computer programs, processes, and all other
intangible assets, properties and rights. The "Company's Intellectual Property"
means any and all Intellectual Property used by the Company in the conduct of
its business.
"Latest Financial Statement of The Resourcing Soltions Group, Inc." means
the unaudited financial statements of The Resourcing Solutions Group, Inc. as at
December 31, 2002, (including all schedules and notes thereto), consisting of
the balance sheet at such date and the related statements of income and
expenses, retained earnings, which shall be prepared in accordance with GAAP.
"Latest Financial Statement of Woodstock Lumber Sales, Inc." means the
unaudited financial statements of Woodstock Lumber Sales, Inc. as at December
31, 2002, (including all schedules and notes thereto), consisting of the balance
sheet at such date and the related statements of income and expenses, retained
earnings, which shall be prepared in accordance with GAAP.
"Latest Financial Statement Date" means the date of a Latest Financial
Statement.
"Law" or "Laws" means any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed or imposed by any
Governmental Authority.
"Lien" means any mortgage, lien, charge, restriction, pledge, security
interest, option, lease or sublease, claim, right of any third party, easement,
encroachment or encumbrance.
"Loss" or "Losses" means any and all liabilities, losses, costs, claims,
damages (including consequential damages), penalties and expenses (including
attorneys' fees and expenses and costs of investigation and litigation).
["Losses" also include liabilities for taxes that have become due and payable or
which have accrued with respect to the Company that have not been paid prior to
the Closing Date or which have not been reserved on the Financial Statements.
(Any Taxes attributable to the operations of the Company payable as a result of
an audit of any Tax Return shall be deemed to have accrued in the period to
which such Taxes are attributable.)]
In the event any of the foregoing are indemnifiable hereunder, the terms
"Loss" and "Losses" shall include any and all attorneys' fees and expenses and
costs of investigation and litigation incurred by the Indemnified Person in
enforcing such indemnity. No Loss shall be reduced by reason of tax benefits
allegedly enjoyed as a result of such Loss by an Indemnified Party.
"Person" means any individual, corporation, proprietorship, firm,
partnership, limited partnership, trust, association or other entity, including
a government or government department, agency or instrumentality.
"Real Property Leases" has the meaning set forth in Section 3.9.
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"Related Agreement" means any Contract which is or is to be entered into at
the Closing or otherwise pursuant to this Agreement. The Related Agreements
executed by a specified Person shall be referred to as "such Person's Related
Agreements", "its Related Agreements" or another similar expression.
"Security" or "Securities" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral- trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security, certificate of deposit, or group
or index of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered into on a
national securities exchange relating to foreign currency, or, in general, any
interest or instrument commonly known as a "security", or any certificate of
interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to or purchase, any of the
foregoing.
"Security Agreement" means the Stock Pledge Agreement attached hereto and
made part hereof as Exhibit A.
"Shares" means the number of shares of the Issued and Outstanding Common
Stock, Par Value $1.00 per share, of the Company as is set forth opposite the
names of each of the Sellers on Exhibit 2.1.
"Subsidiaries" means any Person 50.1 % or more of the voting power of which
is controlled by another Person.
"Survival Date" has the meaning set forth in Section 10.1.
"Taxes" means all taxes, charges, fees, duties, levies or other
assessments, including income, gross receipts, net proceeds, ad valorem,
turnover, real and personal property (tangible and intangible), sales, use,
franchise, excise, value added, stamp, leasing, lease, user, transfer, fuel,
excess profits, occupational, interest equalization, windfall profits,
severance, employee's income withholding, other withholding, unemployment and
Social Security taxes, which are imposed by any Governmental Authority, and such
term shall include any interest, penalties or additions to tax attributable
thereto.
"Tax Return" means any report, return or other information required to be
supplied to a Governmental Authority in connection with any Taxes.
"Tax Statute of Limitations Date" means the close of business on the 30th
day after the expiration of the applicable statute of limitations with respect
to Taxes, including any extensions thereof (or if such date is not a Business
Day, the next Business Day).
"Tax Warranty" means a representation or warranty in Sections 3.19.
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"Territory" means the United States, Canada and all other countries in
which the Company has transacted business prior to the Ending Date as
contemplated by Section 5.8.
"Title and Authorization Warranty" means a representation or warranty in
Sections 3.2, 3.4, or 3.7.
"Two Times Prime Rate" means two times the weighted average prime rate (as
the prime rate as from time to time announced by Citibank, N.A. in New York
City).
ARTICLE II
SALE AND PURCHASE OF SHARES
2.1 Sale and Purchase of Shares.
Subject, of course, to the terms and conditions of this Agreement,
(a) Seller hereby agrees to sell to the Buyer that number of Shares set
forth on Exhibit 2.1 opposite his name, free and clear of all Liens, and
(b) the Buyer hereby agrees to purchase all such Shares.
2.2 The Purchase Price; Adjustment to the Purchase Price.
(a) The price (the "Base Purchase Price") for the Shares shall be the
$35,000.00 of debt being assumed.
(b) Accordingly, at Closing, the Buyer shall pay to the Seller the sum of
$1,000.00 with a Cashier's Check or by a Wire Transfer (the "Down payment") and
the Seller shall deliver (a) Certificate(s) representing all of the Shares to
the Buyer; provided, however, that if the Seller has not duly completed all the
Exhibits or Schedules which are a part of this Agreement, the Down payment shall
be held in the Escrow Account by the Escrow Agent until they are duly completed,
but the Certificates shall, nevertheless, be delivered to the Buyer and further
provided that all of the shares to be delivered by Seller shall be delivered to
the Escrow Agent and held in escrow until final payment for all of said shares
is made pursuant to the terms hereof.
Notwithstanding anything in subparagraph (b) to the contrary, if Buyer does
not serve written notice to Seller of any alleged failure by Seller to duly
complete all Exhibits or Schedules within thirty (30) days from the date of
Closing then it shall be conclusively presumed for purposes of this Contract
that Seller has duly completed all such Exhibits and Schedules and any funds
deposited with Escrow Agent shall be released to Seller.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND OF THE COMPANY
In order to induce the Buyer to enter into this Agreement, the Company and
the Seller, jointly and severally, represent and warrant to the Buyer, as at the
date of this Agreement and as at the Closing Date (as if such representations
and warranties were remade on the Closing Date), as follows:
3.1 Due Incorporation; No Subsidiaries.
(a) The Company is duly organized, validly existing and in good standing
under the laws of the State of Oklahoma with all requisite power and authority
to own, lease and operate its properties and to carry on its business as they
are now being owned, leased, operated and conducted.
(b) The Company is licensed or qualified to do business and is in good
standing (where the concept of "good standing" is applicable) as a foreign
corporation in each jurisdiction where the nature of the properties owned,
leased or operated by it and the business transacted by it require such
licensing or qualification.
(c) The jurisdictions in which the Company is incorporated and licensed or
qualified to do business as a foreign corporation are as follows: Oklahoma,
North Carolina, South Carolina and Arkansas.
(d) The Company has no direct or indirect Subsidiaries, either wholly or
partially owned, and the Company does not hold any direct or indirect economic,
voting or management interest in any Person or directly or indirectly own any
security issued by any Person.
(e) True, correct and complete copies of the Certificate of Incorporation
and By-laws, as amended, and all existing minutes of all meetings (or written
consents in lieu of meetings) of the Board of Directors (and all committees
thereof) and stockholders of the Company will be delivered to the Buyer upon
request.
(f) Except as set forth in Schedule 3.1, all action taken by the Board of
Directors (and all committees thereof) and stockholders of the Company is
reflected in such minutes and written consents.
3.2 Due Authorization.
(a) The Seller and the Company have full power and authority to enter into
this Agreement, and the Seller and the Company have full power and authority to
enter into their respective Related Agreements and to consummate the
transactions contemplated hereby and thereby.
(b) The Seller and the Company have duly and validly executed and delivered
this Agreement, and the Seller and the Company have duly and validly executed
and delivered (or prior to or at the Closing will duly and validly execute and
deliver) their respective Related Agreements.
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(c) The Seller and the Company expressly represent and warrant that the
approval of the shareholders of the Company is not required in order for the
Seller or for the Company to consummate the transactions contemplated herein or,
that, should such approval be requested by the Buyer, the Seller and the Company
shall obtain such approval prior to the Closing.
(d) The Seller and the Company expressly represent and warrant that, at all
material times, including as at the Closing Date,
(i) the Seller had, has, and will have, full and valid title and
control of the Shares;
(ii) there was, is, and will be no existing impediment or encumbrance
to the sale and transfer of such Shares to the Buyer, and on delivery to
the Buyer of the Shares,
(A) all of the Shares have been, are, and will be free and clear of all
taxes, liens, encumbrances, charges or assessments of any kind and
shall not be subject to preemptive rights, tag-along rights,
cumulative voting, or similar rights of any shareholder of the
Company,
(B) all of the Shares have been, are, and will be legally and validly
issued in compliance with all applicable Law, and
(C) all of the Shares have been, are, and will be fully paid and non-
assessable shares, and the Shares have all been, are, and will be
issued under duly authorized resolutions of the Board of Directors of
the Company.
(e) This Agreement constitutes legal, valid and binding obligations of the
Seller and the Company, and each respective Related Agreement upon execution and
delivery by the Seller or by the Company will constitute legal, valid and
binding obligations of such party, in each case, enforceable in accordance with
their respective terms.
3.3 Consents and Approvals.
(a) Except as set forth on Schedule 3.3, no consent, authorization or
approval of, filing or registration with, or cooperation from, any Governmental
Authority or any other Person not a party to this Agreement, is necessary in
connection with the execution, delivery and performance by the Seller or by the
Company of this Agreement, their respective Related Agreements or the
consummation of the transactions contemplated hereby, or thereby.
(b) Except as set forth on Schedule 3.3, the execution, delivery and
performance by the Seller and the Company of this Agreement and their respective
Related Agreements do not and will not, and the consummation of the transactions
contemplated hereby and thereby does not and will not,
(i) violate any provisions of the Articles of Incorporation, as
amended, or By- laws of the Company;
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(ii) violate any Law;
(iii) permit any Governmental Authority to impose any restrictions or
limitations of any nature on the Seller or the Company or the Buyer with
respect to the transactions contemplated hereby;
(iv) violate, conflict with, or result in the breach of any of the
terms of, result in a material modification of, or otherwise give any other
contracting party the right to terminate, or constitute a default under,
any contract or other agreement to which the Seller or the Company is a
party or by or to which it or they or any of their assets or properties may
be bound or subject;
(v) violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding
upon, the Seller or the Company to which any of their assets or properties
may be bound or subject;
(vi) result in the creation of any security interest, lien,
encumbrance, adverse claim, proscription or restriction on any property or
asset (whether real, personal, mixed, tangible or intangible), right,
contract, agreement or business of the Seller or the Company; or
(vii) violate, conflict with, modify or cause any default under or
acceleration of (or give any party any right to declare any default or
acceleration upon notice or passage of time or both), in whole or in part,
any charter, article of incorporation, bylaw, mortgage, lien, deed of
trust, indenture, lease, agreement, instrument, order, injunction, decree,
judgment, law or any other restriction of any kind to which either the
Seller or the Company are a party or by means of which either of them or
any of their properties may be bound or subject.
3.4 Capitalization.
(a) The Authorized Capitalization of the Company consists of:
(i) 100,000 shares of Common Stock, Par Value $1.00 per share (the
"Common Stock"), of which 100,000 shares are Authorized, and of which 500
shares are Issued and Outstanding and held, of record and beneficially, by
one person,
(A) with holder thereof being entitled to cast one vote for each share
held on all matters properly submitted to the Shareholder for vote;
and
(B) there being no pre-emptive rights or cumulative voting; and
(C) No shares of Preferred Stock.
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(ii) with the Board of Directors being authorized from time to time,
without shareholder action, to determine and state the designations and the
preferences, limitations, relative rights, and voting rights, if any, of
each such series by the adoption and filing in accordance with the Laws of
the State of Oklahoma, before the issuance of any shares of such series, of
a Certificate of Designations determining the terms and numbers of shares
of such series, which amendment need not be approved by the stockholders or
the holders of any class or series of shares except as provided by law;
(iii) no other class of stock; and of
(iv) no options to acquire any securities of the Company.
(b) Except as set forth on Schedule 3.4, no other Securities of the Company
are
(i) authorized; or
(ii) issued and outstanding;
(c) All of the issued and outstanding shares of the Securities of the
Company have been duly and validly issued in accordance and compliance with all
applicable Laws, rules and regulations and are fully paid and nonassessable;
(d) There are no outstanding options, warrants, convertible securities,
scrip, rights to subscribe for, puts, calls, rights of first refusal, tag-along
agreements, nor any other agreements, understandings, claims or other
commitments or rights of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for any Securities of the Company or
arrangements by which the Company is or may become bound to issue additional
Securities of the Company, nor are there any outstanding Securities granted or
issued by the Company that are convertible into any Securities of the Company,
and none is authorized;
(e) No Securities of the Company are subject to pre-emptive rights or
similar rights of the stockholders of the Company nor are any Securities subject
to any liens or encumbrances imposed through the actions or failure to act of
the Company, or otherwise;
(f) There are no anti-dilution or price adjustment provisions contained in
any Security authorized or issued by the Company (or in the Company's Articles
of Incorporation or By-laws or in any agreement providing rights to security
holders) that will be triggered by the transactions contemplated by this
Agreement;
(g) The Company is not obligated or committed to purchase, redeem or
otherwise acquire any of its Securities;
(h) There are no agreements or arrangements under which the Company is
obligated to register the sale of any of its Securities under the Securities
Act;
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(i) All presently exercisable voting rights in the Company are vested
exclusively in its outstanding shares of Common Stock, each share of which is
entitled to one vote on every matter to come before its shareholders;
(j) There are no voting trusts or other voting arrangements with respect to
any of the Company's securities; and
(k) The assignments, endorsements, stock powers and other instruments of
transfer delivered by the Seller to the Buyer at the Closing will be sufficient
to transfer the Seller's entire interest, legal and beneficial, in the Shares to
the Buyer.
3.5 Financial Statements; Undisclosed Liabilities.
(a) The Financial Statements of the Company and the Latest Financial
Statement of the Company present fairly the financial position, assets,
liabilities and retained earnings of the Company as at the dates thereof and the
revenues, expenses, results of operations, changes in financial position and
cash flows of Asmara for the periods covered thereby. The Financial Statements
and the Latest Financial Statement of the Company are in accordance with the
books and records of the Company, do not reflect any transactions which are not
bona fide transactions, and do not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
(b) Except as set forth in Exhibit 3.5 or in the Latest Financial
Statements of the Company, the Company has no liabilities, debts, claims or
obligations, whether accrued, absolute, contingent or otherwise, whether due or
to become due, other than trade payables and accrued expenses incurred in the
ordinary course of business since the date of the Latest Financial Statements.
(c) The Seller and the Company represent and warrant that there is no basis
for the assertion against the Company, as at the date of this Agreement, or as
at the Closing Date, of any liability of any nature or in any amount not fully
reflected or reserved against in the Financial Statements of the Company, and
there is no reason for Company or the Seller to believe otherwise, irrespective
of whether or not they believe the claim is valid or not.
3.6 No Adverse Effects or Changes.
Except as listed on Schedule 3.6, since the Latest Financial Statement
Date, the Company has not:
(a) suffered any Adverse Change or Effect;
(b) suffered any damage, destruction or Loss (as that term is defined
herein) to any of its assets or properties (whether or not covered by
insurance);
(c) incurred any obligation or entered into any Contract which requires a
payment by the Company in excess of $1,000.00 or entered into any Contract to
provide for the delivery of goods or the performance of services, or any
combination thereof, by the Company, having a value in excess of $1,000.00;
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(d) sold, transferred, conveyed, assigned, leased, encumbered or otherwise
disposed of any of its assets or properties;
(e) waived, released or canceled any claims against third parties or debts
owing to it, or any rights;
(f) made any changes in its accounting systems, policies, principles or
practices;
(g) entered into, authorized, or permitted any transaction with the Seller
or any Affiliate of the Seller;
(h) authorized for issuance, issued, sold, delivered or agreed or committed
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, convertible or exchangeable securities, commitments, subscriptions,
rights to purchase or otherwise), any of its Securities, or amended any of the
terms of any of its Securities;
(i) split, combined, or reclassified any shares of its Securities,
declared, set aside or paid any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its securities, or
redeemed or otherwise acquired any Securities of the Company or of any other
Person;
(j) except for Existing Borrowing, made any borrowing, incurred any debt,
or assumed, guaranteed, endorsed or otherwise become liable (whether directly,
contingently or otherwise) for the obligations of any other Person, or made any
payment or repayment in respect of any indebtedness;
(k) made any loans, advances or capital contributions to, or investments
in, any other Person;
(l) entered into, adopted, amended or terminated any bonus, profit sharing,
compensation, termination, stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreements, trusts, plans, funds or other
arrangements for the benefit or welfare of any director, officer or employee, or
increased in any manner the compensation or fringe benefits of any director or
officer;
(m) authorized or made any capital expenditure;
(n) made any Tax election or settled or compromised any federal, state,
local or foreign Tax liability, or waived or extended the statute of limitations
in respect of any such Taxes;
(o) paid any amount, performed any obligation or agreed to pay any amount
or perform any obligation, in settlement or compromise of any suits against the
Company or its Affiliates or any of its directors, officers, employees, agents,
or shareholders.
14
(p) paid any amount, performed any obligation or agreed to pay any amount
or perform any obligation, in settlement or compromise of any claims of
liability against the Company or its Affiliates or any of its directors,
officers, employees, agents, or shareholders; or
(q) terminated, modified, amended or otherwise altered or changed any of
the terms or provisions of any Contract, or paid any amount not required by Law
or by any Contract.
3.7 Title to Properties.
Except as disclosed on Exhibit 3.7, the Company has, and on the Closing
Date will have, good and marketable title to, and is, and on the Closing Date
will be, the lawful owner of, all of the tangible and intangible assets,
properties and rights used in connection with its business and all of the
tangible and intangible assets, properties and rights reflected in the Financial
Statements, other than assets leased under the leases set forth in Exhibits 3.9
or 3.10.
3.8 Condition and Sufficiency of Assets.
(a) Except as disclosed on Exhibit 3.8(a), all of the tangible assets and
properties of the Company, whether real or personal, owned or leased, have been
well maintained and are in good operating condition and repair (with the
exception of normal wear and tear), and are free from defects other than such
minor defects as do not interfere with the intended use thereof in the conduct
of normal operations or adversely affect the resale value thereof.
(b) Immediately after the Closing Date, the Company shall own or have a
permanent right to use all the assets, properties, rights, know-how, key
personnel, processes and ability which are required for or currently used in
connection with the operation of its business as it is presently conducted.
(c) Such assets, properties and rights were sufficient to produce the
income as shown on the Financial Statements.
(d) Except as set forth in Exhibit 3.8(d), the Company has no liabilities
not directly related to, and that did not arise directly out of, the business of
the Company.
3.9 Leased Real Property.
(a) Except as set forth in Exhibit 3.9(a), the Company does not hold legal
title to, or own any legal or beneficial interest in any real property.
(b) Exhibit 3.9(b) lists all leases pursuant to which the Company holds,
occupies or uses any real property (the "Real Property Leases"), and Exhibit 3.9
includes complete and accurate legal descriptions of such leased real property.
15
(c) The Company does not hold, occupy or use any real property except for
the real property subject to the Real Property Leases (the "Leased Real
Property"). True and complete copies of the Real Property Leases have been
provided to the Buyer.
(d) The activities carried on in all buildings, plants, facilities,
installations, fixtures and other structures or improvements included as part
of, or located on or at, the Leased Real Property, and the buildings, plants,
facilities, installations, fixtures and other structures or improvements
themselves, are not in violation of, or in conflict with, any applicable zoning,
Environmental Law, health regulations or ordinance or any other similar Law.
(e) Except as set forth in Exhibit 3.9, no Hazardous Material have been
used in the construction or repair of, or any alterations or additions to, or
are otherwise located on, any portion of the Leased Real Property.
(f) No parcel of land included in the Leased Real Property relies on or
regularly makes use of access to the nearest public road or right-of-way over
land owned by others, except where such access is by means of one or more valid
recorded easements not subject to divestiture, the terms of which have been
disclosed in writing to the Buyer prior to the date hereof, and which easements
the Company is entitled to use under the terms of the documents creating such
easements and under the terms of the Real Property Leases. All covenants or
other restrictions (if any) to which any of the Leased Real Property is subject
are being in all respects properly performed and observed and, except for
covenants contained in the Real Property Leases, do not provide for forfeiture
or reversion of title if violated, and neither the Company nor the owners of any
of the Leased Real Property has received any notice of violation (or claimed
violation) thereof.
(g) The Company has delivered to the Buyer true and complete copies of the
most recent title insurance policies and surveys (if any) for the Leased Real
Property and copies of any recorded documents referred to in such policies or
surveys, together with copies of all reports (if any) of any engineers,
environmental consultants or other consultants in its possession relating to any
of the Leased Real Property.
(h) Each separate parcel included in the Leased Real Property and any
improvements located thereon are served by water, storm and sanitary sewer
facilities, telephone, gas and electricity, fire protection, drainage and other
public utilities, all of which are adequate for the present and continued use
thereof in the usual and normal conduct of the Company's business and
operations, and have adequate parking facilities that meet all requirements
imposed by applicable Laws.
(i) None of the Leased Real Property is subject to any recorded or
unrecorded Lien, easement, right-of-way, building or use restriction, exception,
variance, reservation or limitation as might in any material respect interfere
with or impair the present and continued use thereof in the usual and normal
conduct of the business and operations of the Company.
16
(j) Except as disclosed on Exhibit 3.9(j), there is no pending, or, to the
knowledge of any of the Seller or the Company, any threatened or proposed
proceeding or governmental action to modify the zoning classification of, or to
condemn or take by the power of eminent domain (or to purchase in lieu thereof),
or to classify as a landmark, or to impose special assessments on, or otherwise
to take or restrict in any way the right to use, develop or alter, all or any
part of the Leased Real Property.
(k) All the Real Property Leases are in full force and effect, valid and
enforceable in accordance with their respective terms, except as such enforce
ability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar Laws in effect which affect the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies.
(l) Except as set forth in Exhibit 3.9(l), none of the Real Property Leases
have been amended or modified and there are no agreements, written or oral,
between the Company and the owner of the Leased Real Property, other than the
Real Property Leases. the Company has not received any notice of any, and there
exists no, dispute, claim, event of default or event which constitutes or would
constitute (with notice or lapse of time or both) a default under any Real
Property Lease.
(m) All rent and other amounts due and payable with respect to the Real
Property Leases have been paid through the date of this Agreement, and all rent
and other amounts due and payable with respect to the Real Property Leases on or
prior to the Closing Date will have been paid prior to the Closing Date.
(n) All lessors under the Real Property Leases have consented or, prior to
the Closing Date will have consented (where such consent is necessary), to the
consummation of the transactions contemplated by this Agreement or the Related
Agreements without requiring modification in the rights or obligations of the
lessors thereunder.
3.10 Personal Property.
(a) Exhibit 3.10(a) sets forth a true and complete list of all of the
tangible personal property (other than inventories included in Exhibit 3.11)
used by the Company in its business having an original acquisition cost of
$1,000.00 or more.
(b) Exhibit 3.10(b) also sets forth all leases of personal property binding
upon the Company, or any of its assets or properties, and all items of personal
property covered thereby. All of such tangible personal property is presently
utilized by the Company in the ordinary course of its business.
(c) The Company has delivered to the Buyer true and complete copies of all
such personal property leases.
17
3.11 Inventories.
SECTION DOES NOT APPLY
3.12 Accounts Receivable and Advances.
(a) Exhibit 3.12 contains a true and accurate schedule of all accounts
receivable of the Company, all loans ("Loans") or advances ("Advances") from the
Company to all Persons, and all Loans or Advances to the Company from all
Persons.
(b) Except as disclosed on Exhibit 3.12,
(i) each account receivable of the Company (collectively, the
"Accounts Receivable") represents a sale made in the ordinary course of
business other than to Affiliates and which arose pursuant to an
enforceable written Contract for a bona fide sale of goods or for services
performed, and the Company has performed all of its obligations to produce
the goods or perform the services to which such Account Receivable relate;
and
(ii) to the best of the Seller's and the Company's knowledge, no
Account Receivable or Loan or Advance is subject to any claim for
reduction, counterclaim, set-off, recoupment or other claim for credit,
allowances or adjustments by the obligor thereof.
(c) Except as reserved against in the Financial Statements, all Accounts
Receivable and Advances are collectible in full within 90 days of their
origination.
3.13 Intellectual Property.
(a) Exhibit 3.13 contains copies of the following contracts list of all of
the trademarks, trade names, service marks, patents and copyrights (including
any registrations of or pending applications for any of the foregoing) used by
the Company in the conduct of its business.
(b) Except as disclosed on Exhibit 3.13,
(i) all of the Company's Intellectual Property is owned by the Company
free and clear of all Liens, and is not subject to any license, royalty or
other agreement, and the Company has not granted any license or agreed to
pay or receive any royalty in respect of any Intellectual Property,
(ii) none of the Company's Intellectual Property has been or is the
subject of any pending or threatened litigation or claim of infringement,
(iii) no license or royalty agreement to which the Company is a party
is in breach or default by any party thereto or the subject of any notice
of termination given or threatened,
18
(iv) the products manufactured or sold by the Company and any process,
method, part, design, material or other intellectual Property they employ,
and the marketing and use by the Company of any such product, service or
other intellectual Property, do not infringe any Intellectual Property or
confidential or proprietary rights of another, and the Company has not
received any notice contesting its right to use any intellectual Property,
and
(v) the Company owns or possesses adequate rights in perpetuity in and
to all Intellectual Property necessary to conduct its business as presently
conducted.
3.14 Contracts.
(a) Exhibit 3.14 contains true copies of the following contracts used by
the Company in the conduct of its business:
(i) any collective bargaining agreement and a summary of the
collective bargaining unit's position with respect to any such agreement
currently the subject of negotiations;
(ii) any Contract or arrangement of any kind with any employee,
officer or director of the Company or any of the respective Affiliates of
such individuals, or any Contract, or other arrangement of any kind with
either the Seller or any Affiliate of the Seller other than any such
Contract or arrangement described in Section 3.17 (a);
(iii) any Contract or arrangement with a sales representative,
manufacturer's representative, distributor, dealer, broker, sales agency,
advertising agency or other Person engaged in sales, distributing or
promotional activities, or any Contract to act as one of the foregoing on
behalf of any Person;
(iv) any Contract or arrangement of any nature which involves the
payment or receipt of cash or other property, an unperformed commitment, or
goods or services:
(A) having a value in excess of $5,000.00, if such Contract or arrangement
is not for the purchase by the Company of raw materials, or
(B) having a value in excess of $5,000.00, if such Contract or arrangement
is for the purchase by the Company of raw materials;
(v) any Contract or arrangement pursuant to which the Company has made
or will make loans or advances, or has or will have incurred debts or
become a guarantor or surety or pledged its credit on or otherwise become
responsible with respect to any undertaking of another (except for the
negotiation or collection of negotiable instruments in transactions in the
ordinary course of business);
19
(vi) any indenture, credit agreement, loan agreement, note, mortgage,
security agreement, lease of real property or personal property, loan
commitment or other Contract or arrangement relating to the borrowing of
funds, an extension of credit or financing;
(vii) any Contract or arrangement involving a partnership, joint
venture or other cooperative undertaking;
(viii) any Contract or arrangement involving any restrictions with
respect to the geographical area of operations or scope or type of business
of the Company;
(ix) any power of attorney or agency agreement or arrangement with any
Person pursuant to which such Person is granted the authority to act for or
on behalf of the Company, or the Company is granted the authority to act
for or on behalf of any Person;
(x) any Contract for which the full performance thereof may extend
beyond 60 days from the date of this Agreement;
(xi) any Contract not made in the ordinary course of business which is
to be performed in whole or in part at or after the date of this Agreement;
(xii) any Contract, whether or not fully performed, relating to any
acquisition or disposition of the Company or any predecessor in interest of
the Company, or any acquisition or disposition of any subsidiary, division,
line of business, or real property; and
(xiii) any Contract not specified above that is material to the
Company.
(b) The Seller has made available for inspection by the Buyer true and
complete copies of each document listed on Exhibit 3.14, and a written
description of each oral arrangement so listed.
(c) Except as disclosed on Exhibit 3.14(c),
(i) the Company has not breached any provision of, nor is in default
under, the terms of any Contract to which it is a party or under which it
has any rights or by which it is bound;
(ii) no other party to any such Contract has breached such Contract or
is in default thereunder;
(iii) neither the Company nor any other such party to such a Contract
has given notice to the other respecting a claimed breach or default;
(iv) there is no reason for the Company or the Seller to believe
otherwise, irrespective of whether or not they believe the claim is valid
or not; and
20
(v) no contract, if cancelled at any time by the other party, would
have a Company Adverse Change or Effect.
3.15 Permits.
(a) Exhibit 3.15 is a true and accurate list of all licenses, certificates,
permits, franchises, rights, code approvals and private product approvals
(collectively, "Permits") held by the Company.
(b) Except for the Permits listed on Exhibit 3.15, there are no Permits,
whether federal, state, local or foreign, which are necessary for the lawful
operation of the business of the Company.
3.16 Insurance; Claims.
(a) Exhibit 3.16(a) contains an accurate and complete list of all policies
of fire, liability, workers' compensation, title and other forms of insurance
owned, held by or applicable to the Company (or its assets or business), and the
Company has heretofore delivered to the Buyer a true and complete copy of all
such policies, including all occurrence-based policies applicable to the Company
(or its business) for all periods prior to the Closing Date. All such policies
are, and will be, in full force and effect, all premiums with respect thereto
covering all periods up to and including the Closing Date have been, and will
be, paid, and no notice of cancellation or termination has been, or will have
been, received with respect to any such policy.
(b) Such policies are sufficient for compliance with
(i) all requirements of Law, and
(ii) all policies to which the Company is a party are valid, in good
standing, and are enforceable by the Company.
(c) Such insurance policies provide types and amounts of insurance
customarily obtained by businesses similar to the business of the Company.
(d) Except as set forth in Exhibit 3.16(d), the Company has not been
refused any insurance with respect to its assets or operations, and its coverage
has not been limited by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance, during the last three (3)
years.
(e) Exhibit 3.16 (e) is a list, previously delivered by the Company to the
Buyer, which describes all claims which have been made by the Company in the
last three years under any workers' compensation, general liability, property or
other insurance policy applicable to the Company or any of its properties. Such
claim information includes the following information with respect to each
accident, loss, or other event:
(i) the identity of the claimant;
(ii) the nature of the claim;
(iii) the date of the occurrence;
(iv) the status as of the report date; and
21
(v) the amounts paid or expected to be paid or recovered.
(f) Except as set forth on Exhibit 3.16(f), there are no pending or
threatened claims under any insurance policy, no will there be any pending or
threatened claims prior to the Closing Dates.
3.17 Employee Benefits.
(a) Except as set forth on Exhibit 3.17, the Company is not a party to and
does not participate in or have any liability or contingent liability with
respect to:
(i) any "employee welfare benefit plan" or "employee pension benefit
plan" as those terms are respectively defined in the appropriate sections
of ERISA;
(ii) any retirement or deferred compensation plan, incentive
compensation plan, stock plan, unemployment compensation plan, vacation
pay, severance pay, bonus or benefit arrangement, insurance or
hospitalization program or any other fringe benefit arrangements for any
current or former employee, director, consultant or agent, whether pursuant
to contract, arrangement, custom or informal understanding, which does not
constitute an "employee benefit plan" (as defined in the appropriate
sections of ERISA) (referred to collectively hereinafter in this Section as
"arrangements"); or
(iii) any employment, consulting or agency agreement (referred to
collectively hereinafter in this Section as "Agreements").
(b) A true and correct copy of each of the plans, arrangements, and
agreements listed on Exhibit 3.17, and all contracts relating thereto, or to the
funding thereof, including, without limitation, all trust agreements, insurance
contracts, administration contracts, investment management agreements,
subscription and participation agreements, and record keeping agreements, each
as in effect on the date hereof, has been supplied to the Buyer. In the case of
any plan, arrangement, or agreement which is not in written form, the Buyer has
been supplied with an accurate description of such plan, arrangement, or
agreement as in effect on the date hereof. A true and correct copy of the most
recent annual report, actuarial report, accountant's opinion of the plan's
financial statements, summary plan description, and Internal Revenue Service
determination letter with respect to each such plan or arrangement, to the
extent applicable, and a current schedule of assets (and the fair market value
thereof assuming liquidation of any asset which is not readily tradable) held
with respect to any funded plan, arrangement, or agreement has been supplied to
the Buyer, and there have been no material changes in the financial condition of
the respective plans from that stated in the annual reports and actuarial
reports supplied.
(c) As to all plans, arrangements, and agreements listed on Exhibit 3.17,
(i) all plans and arrangements comply and have been administered in
form and in operation in all material respects with all requirements of Law
applicable thereto, and there has been no notice issued by any Governmental
Authority questioning or challenging such compliance;
22
(ii) plans that are employee pension benefit plans (as are defined in
the appropriate sections of ERISA) comply in form and in operation with all
applicable requirements of sections 401 (a) and 501 (a) of the Code; there
have been no amendments to such plans except amendments (A) which are the
subject of a determination letter issued with respect thereto by the
Internal Revenue Service or (B) with respect to which the remedial
amendment period (within the meaning of Treas. Reg. ss. 1.401(b)-1) has not
expired; and no event has occurred which will or could give rise to
disqualification of any such plan under such sections or to a tax under
section 511 of the Code;
(iii) none of the assets of any plan is invested in employer
securities or employer real property;
(iv) there have been no "prohibited transactions" (as are defined in
the appropriate sections of ERISA or section 4975 of the Code) with respect
to any plan and the Company has not otherwise engaged in any prohibited
transaction;
(v) there has been no act or omission which has given rise to or may
give rise to fines, penalties, taxes, or related charges for which the
Company may be liable;
(vi) none of the payments contemplated by the plans, arrangements or
agreements would, in the aggregate, constitute excess parachute payments as
defined in section 280 G of the Code [without regard to subsection (b)(4)
thereof];
(vii) there are no actions, suits, or claims (other than routine
claims for benefits) pending or threatened involving such plans,
arrangements or agreements or the assets thereof, and no facts exist which
could give rise to any such actions, suits, or claims (other than routine
claims for benefits);
(viii) no plan is subject to Title IV of ERISA;
(ix) each plan which constitutes a "group health plan" (as defined in
the appropriate sections of ERISA) or section 498013(g) (2) of the Code),
including any plans of current and former affiliates which must be taken
into account under section 4980B and 414 (t) of the Code or the appropriate
sections of ERISA, has been operated in compliance with applicable Law,
including the group health plan continuation coverage extent such
requirements are applicable;
(x) actuarially adequate accruals for all obligations under the plans,
arrangements and agreements are reflected in the Financial Statements and
such obligations include a pro rata amount of the contributions and PBGC
premiums which would otherwise have been made in accordance with past
practices and applicable Law for the plan years which include the date of
Closing;
23
(xi) the Company has no liability or contingent liability under any
plan, arrangement or agreement for providing post-retirement medical or
life insurance benefits, other than statutory liability for providing group
health plan continuation coverage under the appropriate sections of ERISA
and section 4980B (or any predecessor section thereto) of the Code; and
(xii) there has been no act or omission that would impair the right or
ability of the Company to unilaterally amend or terminate any plan,
arrangement or agreement; and
(d) Each employee pension benefit plan which is a multi-employer plan with
respect to which the Company may have any liability (including any liability
attributable to a current or former member of the Company's "controlled group"
as defined in the appropriate sections of ERISA) and the maximum amount of such
liability (determined as if a complete withdrawal occurred with respect to each
of such plans immediately after the Closing Date) is listed on Schedule 3.17;
(e) With respect to such plans, except as further listed on Schedule 3.17,
(i) all contributions have been made as required by the terms of the
plans, the terms of any collective bargaining agreements, and applicable
Law;
(ii) the Company has not withdrawn, partially withdrawn, or received
any notice of any claim or demand for withdrawal liability or partial
withdrawal liability; and
(iii) the Company has not received any notice that any such plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of any excise tax, that any
such plan is or has been funded at a rate less than that required under
section 412 of the Code, or that any such plan is or may become insolvent.
3.18 Employment and Labor Matters.
The following representations shall be interpreted as pertaining to
employees of the Company directly employed by the Company in the direct
performance of it's business, and not "employees" employed on behalf of clients
of the Company.
(a) Exhibit 3.18 contains a true, complete and accurate list of the names,
titles, annual compensation (including all bonuses and similar payments made
with respect to each such individual for the current and preceding fiscal years)
of all directors, officers and employees of the Company.
(b) The Company has and currently is conducting its business in full
compliance with all Laws relating to employment and employment practices, terms
and conditions of employment, wages and hours, affirmative action, and
nondiscrimination in employment.
24
(c) Except as disclosed on Exhibit 3.18, the relationships of the Company
with its employees are good. There is, and during the past five years there has
been, no labor strike, dispute, slow-down, work stoppage or other labor
difficulty actually pending or threatened against or involving the Company, and
no attempt is currently being made or during the past three years has been made
to organize any employees of the Company to form or enter a labor union or
similar organization.
(d) Exhibit 3.18 contains a list of all grievances by employees during the
past three years which have resulted in a significant change in work practices
or contract interpretation or terms or resulted in arbitration.
3.19 Taxes.
(a) The amounts provided as a liability on the Financial Statements of the
Company for all Taxes are, and will be, adequate to cover all unpaid liabilities
for all Taxes, whether or not disputed, that have accrued with respect to or are
applicable to the periods ended on and including the Closing Date or to any
years and periods prior thereto and for which the Company may be directly or
contingently liable in its own right or as a transferee of the assets of, or
successor to, any Person.
(b) The Company has not incurred any Tax liabilities for any taxable year
for which the applicable statute of limitations has not expired.
(c) There are no Tax Liens (other than Liens for current Taxes not yet due
and payable) upon the properties or assets of the Company.
(d) Except as set forth on Exhibit 3.19, the Company has not granted or
been requested to grant any waiver of any statutes of limitations applicable to
any claim for Taxes.
(e) As at the date of this Agreement, and prior to the Closing Date, all
federal, state, local and foreign income, corporation and other Tax Returns have
been, and will be, filed for the Company, and all other filings in respect of
Taxes have been, and will be, made for the Company, for all periods as required
by Law.
(f) As at the date of this Agreement, and prior to the Closing Date, all
Information Returns required to be filed by the Company have been, or will be,
filed, and all statements required to be furnished to payees by the Company have
been, or will be, furnished to such payees, and the information set forth on
such Information Returns and statements is, and will be, true, complete and
correct.
(g) As at the date of this Agreement, and prior to the Closing Date, all
Taxes shown as due on all Tax Returns and other filings have been, and will be,
paid.
25
(h) As at the date of this Agreement, and prior to the Closing Date, all
Taxes which the Company is required by Law to withhold or collect, including
without limitation, sales and use taxes, and amounts required to be withheld for
Taxes of employees and other withholding taxes, have been, and will be, withheld
or collected and, to the extent required, have been, or will be, paid over to
the proper Governmental Authorities or are held in separate bank accounts for
such purpose.
(i) As at the date of this Agreement, and prior to the Closing Date, each
Tax Return and filing is, and will be, true and correct, and the Company does
not nor will have any additional liability for Taxes with respect to any Tax
Return or other filing heretofore filed or which was required by Law to be
filed, other than as reflected as liabilities on the Financial Statements.
(j) Except as set forth in Exhibit 3.19, none of the Tax Returns or other
filings that include the operations of the Company has ever been audited or
investigated by any Governmental Authority, and no facts exist which would
constitute grounds for the assessment of any additional Taxes by any
Governmental Authority with respect to the taxable years covered in such Tax
Returns and filings.
(k) Except as set forth in Exhibit 3.19 no material issues have been raised
in any examination by any Governmental Authority with respect to the business
and operations of the Company which, by application of similar principles,
reasonably could be expected to result in a proposed adjustment to the liability
for Taxes for any other period not so examined.
(l) As at the date of this Agreement, and prior to the Closing Date, the
Seller is not, nor will be, a "foreign person" as defined in the Code.
(m) Except as set forth in Exhibit 3.19, the Company is not, nor will be, a
party to or is, or will be, otherwise subject to any arrangement having the
effect of or giving rise to the recognition of a deduction or loss in a taxable
period ending on or before the Closing Date, and a corresponding recognition of
taxable income or gain in a taxable period ending after the Closing Date, or any
other arrangement that would have the effect of or give rise to the recognition
of taxable income or gain in a taxable period ending after the Closing Date
without the receipt of or entitlement to a corresponding amount of cash.
(n) Except as set forth in Exhibit 3.19, the Company is not subject to any
joint venture, partnership or other arrangement or contract which is treated as
a partnership for federal income tax purposes. Except for any tax-sharing
agreement which is attached to Exhibit 3.20 as an exhibit, the Company is not a
party to any tax-sharing agreement.
(o) Except as set forth on Exhibit 3.19, none of the assets of the Company
constitutes tax-exempt bond financed property or tax-exempt use property within
the meaning of Section 168 of the Code, and none of the assets reflected on the
Financial Statements is subject to a lease, safe harbor lease or other
arrangement as a result of which the Company is not treated as the owner for
federal income tax purposes.
26
(p) The Company has not made or become obligated to make, and will not as a
result of any event connected with any transaction contemplated herein become
obligated to make, any "excess parachute payment" as defined in section 280 G of
the code [without regard to subsection (b)(4) thereof].
(q) As at the date of this Agreement, and prior to the Closing Date, the
basis of all depreciable or amortizable assets, and the methods used in
determining allowable depreciation or amortization (including cost recovery)
deductions of the Company, are, and will be, correct and in compliance with the
Code and the regulations thereunder.
3.20 Environmental Matters.
Except as disclosed in Exhibit 3.20,
(a) the business, operations and facilities (whether owned or leased) of
the Company, and all existing uses of and activities on or at any of the
properties or facilities (whether owned or leased) of the Company, are in
material compliance with all Environmental Laws in effect as of the date hereof,
and no condition exists or event has occurred which, with or without notice or
the passage of time or both, would constitute a violation of or give rise to any
Lien under any Environmental Law, and there is no reason for Company or the
Seller to believe otherwise, irrespective of whether or not they believe the
claim is valid or not;
(b) the Company is in possession of all Environmental Permits necessary or
desirable for the conduct or operation of its business (or any part thereof),
and is in material compliance with all of the requirements, conditions and
limitations included in such Environmental Permits, and there is no reason for
Company or the Seller to believe otherwise, irrespective of whether or not they
believe the claim is valid or not;
(c) there is no, and the Company has not used or stored any, Hazardous
Material in, on, or at any of the properties or facilities now or previously
owned or leased by the Company except for inventories of substances listed on
Exhibit 3.20 which are used or are to be used in the ordinary course of business
(which inventories have been stored, used and disposed of in accordance with all
applicable Environmental Laws and Environmental Permits, including all so-called
"Right To Know Laws"), and there is no reason for Company or the Seller to
believe otherwise, irrespective of whether or not they believe the claim is
valid or not;
(d) the Company has not received any notice from any Governmental Authority
or any other Person that any past or present aspect of the business, operations
or facilities (whether owned or leased) of the Company is in violation of any
Environmental Law or Environmental Permit, or that the Company is responsible or
liable (or potentially responsible or liable) for the investigation, clean up or
remediation of any Hazardous Materials at any location, and there is no reason
for the Company or the Seller to believe that such a notice may be sent or that
the Company may be responsible for an investigation, clean up, or remediation;
27
(e) the Company has not at any time deposited or incorporated any Hazardous
Material into, on, beneath, or adjacent to any property, and there is no reason
for the Company or the Seller to believe otherwise, irrespective of whether or
not they believe the claim is valid or not;
(f) the Company is not the subject of any litigation or proceedings in any
forum, judicial or administrative, involving a demand for damages, injunctive
relief, penalties, or other potential liability with respect to violations of or
liability under any Environmental Law, and there is no reason for the Company or
the Seller to believe that any such proceedings are threatened, irrespective of
whether or not they believe the litigation or proceeding is valid or not.;
(g) the Company has timely filed all reports and notifications required to
be filed with respect to all of its operations, properties and facilities
(whether owned or leased) and has generated and maintained all required records
and data under all applicable Environmental Laws;
(h) neither the Company nor any predecessor thereof has transported or
arranged for the transportation of any Hazardous Material to any location which
is listed or proposed for listing on the National Priorities List pursuant to
CERCLA or on any similar state list; and
(i) no condition exists or has existed or event has occurred with
respect to
(i) any property that was at any time owned or leased, or any direct
or indirect subsidiary that was at any time owned, by the Company, any
predecessor to the Company or any Person that is or was an Affiliate of the
Company, which property or subsidiary has been sold, transferred or
disposed or for which any lease has terminated, and there is no reason for
the Company or the Seller to believe otherwise, irrespective of whether or
not they believe the condition is valid or not; or
(ii) any predecessor to the Company, that could [in the case of either
of the foregoing clauses (i) or (ii)], with or without notice, passage of
time or both, give rise to any present or future liability of the Company
pursuant to any Environmental Law, and there is no reason for the Company
or the Seller to believe otherwise, irrespective of whether or not they
believe the condition is valid or not.
3.21 Litigation.
(a) Except as disclosed in Exhibit 3.21,
(i) there are no actions, suits, arbitrations, regulatory proceedings
or other litigation, proceedings or governmental investigations pending or
threatened against or affecting the Company or any of its officers,
directors, employees, agents or stockholders thereof in their capacity as
such, or any of the Company's properties or businesses, and there is no
28
reason for the Company or the Seller to believe otherwise, irrespective of
whether or not they believe the actions, suits, arbitrations, regulatory
proceedings or other litigation, proceedings or governmental investigations
are valid or not;
(ii) all of the proceedings pending or threatened against the Company
or the Seller are fully covered by insurance policies (or other
indemnification agreements with third parties) and are being defended by
the insurers (or such third parties), subject to such deductibles as are
set forth in such Schedule 3.21; and there is no reason for the Company or
the Seller to believe otherwise, irrespective of whether or not they
believe the proceedings are valid or not; and
(iii) neither the Company nor the Seller is subject to any order,
judgment, decree, injunction, stipulation or consent order of or with any
court or other Governmental Authority, and neither the Company nor the
Seller have entered into any agreement to settle or compromise any
proceeding pending or threatened against it or them which has involved any
obligation other than the payment of money or for which the Company or the
Seller have any continuing obligation, and there is no reason for the
Company or the Seller to believe otherwise, irrespective of whether or not
they believe the order, judgment, decree, injunction, stipulation or
consent order is valid or not.
(b) There are no claims, actions, suits, proceedings or investigations
pending or threatened by or against the Company or the Seller with respect to
this Agreement or the Related Agreements, or in connection with the transactions
contemplated hereby or thereby, and no Person has objected or threatened to
object thereto, and there is no reason for the Company or the Seller to believe
otherwise, irrespective of whether or not they believe the claims, actions,
suits, proceedings or investigations are valid or not.
3.22 No Conflict of Interest.
Except as disclosed on Exhibit 3.22,
(a) neither the Seller nor any of his Affiliates have or claim to have any
direct or indirect interest in any tangible or intangible property used in the
business of the Company, except as a holder of Shares;
(b) neither the Seller nor any of his Affiliates have any direct or
indirect interest in any other Person which conducts a business similar to, has
any Contract or arrangement with, or does business or is involved in any way
with, the Company, except for the ownership of less than 2% of any class of
securities of any publicly held corporation; and
(c) Exhibit 3.22 contains a complete and accurate description of all such
Persons, interests, arrangements and other matters.
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3.23 Bank Accounts; Holders of Powers of Attorney.
Exhibit 3.23 sets forth the names locations, and account numbers of each
bank or other financial institution at which the Company has an account or safe
deposit box , the names of all Persons authorized to draw thereon or have access
thereto, and the names of all Persons, if any, now holding powers of attorney or
comparable delegation of authority from the Company, together with a summary
statement thereof.
3.24 Customers, Suppliers, Etc.
(a) Schedule 3.24 sets forth a list of the ten largest customers of the
Company in terms of revenue during each of
(i) the three month period ended March 31, 2003, and
(ii) the calendar year ended December 31, 2002 (collectively, the
"Major Customers"), showing the total revenue received in each such period
from each such customer.
(b) Except to the extent set forth in Exhibit 3.24, there has not been any
adverse change in the business relationship, and there has been no material
dispute, between the Company and any Major Customer or major supplier, agent or
sales representative, and there are no indications that any Major Customer
intends to reduce its purchases from the Company.
3.25 Claims Against the Seller, Officers and Directors of the Company, and other
Persons
Except as set forth on Exhibit 3.25, there are no pending or threatened
claims against any Person which could give rise to any claim for indemnification
against the Company, and there is no reason for the Company or the Seller to
believe otherwise, irrespective of whether or not they believe the claim is
valid or not.
3.26 Improper and Other Payments.
Except as set forth on Exhibit 3.26,
(a) neither the Company nor the Seller, nor any director, officer,
employee, agent or representative of the Company, nor any Affiliate of them, nor
any Person acting on behalf of any of them, has made, paid, or received any
bribes, kickbacks or other similar payments to or from any Person, whether
lawful or unlawful;
(b) no contributions have been made, directly or indirectly, to a domestic
or foreign political party or candidate; and
(c) no improper foreign payment (as defined in the Foreign Corrupt
Practices Act) has been made by any of said persons or entities.
30
3.27 Due Diligence Materials.
Except as provided in Exhibit 3.27, the Company and the Seller have
provided to the Buyer or its representatives, in accordance with the terms of
Section 5.2, all documents of the character and type requested by the Buyer in
connection with its "due diligence" investigation of the Company and the Seller,
and there are no documents in the possession of the Seller, of the Company or
any of their Affiliates or respective agents or representatives of a character
or type described in such requests which have not been so provided to the Buyer
or its representatives.
3.28 No Defaults or Violations.
Except as disclosed on Exhibit 3.28,
(a) the Company and the Seller are, and at the Closing will be, in
compliance with, and no violation exists, nor will exist, under any and all Laws
applicable to the Company and to the Seller (insofar as such non-compliance or
violation or Laws may effect ability of any one of them to sell and convey the
Shares to the Buyer and to otherwise consummate the transactions contemplated
hereby), and there is no reason for the Company or the Seller to believe
otherwise, irrespective of whether or not they believe the violation is valid or
not; and
(b) no notice from any Governmental Authority has been received by the
Company claiming any violation of any Law (including any building, zoning or
other ordinance) or requiring any work, construction, or expenditure, or
asserting any Tax, assessment or penalty, and there is no reason for the Company
or the Seller to believe that any such notice may be sent, that any work,
construction, or expenditure will be required, or that any Tax, assessment, or
penalty may be asserted or assessed, irrespective of whether or not they believe
the claim is valid or not.
3.29 Accuracy of Statements.
(a) No representation or warranty by the Company or by the Seller contained
in this Agreement or the Related Agreements or in any other written statement,
information, material or certificate furnished or to be furnished to the Buyer
pursuant hereto or in connection with the transactions contemplated hereby by
the Company or by the Seller contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained therein or herein not misleading, when all are taken
together as a whole, and it is agreed that, in the event of any inconsistency
between this Agreement and any other writings, this Agreement shall control.
(b) The Seller and the Company know of no information or fact which has or
would have an adverse effect on the financial condition, business, or business
prospects of the Company, or on the ability of the Seller to sell and convey the
Shares to the Buyer, which has not been disclosed to the Buyer, and there is no
reason for Company or the Seller to believe otherwise, irrespective of whether
or not they believe the claim is valid or not.
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3.30 Investigation.
It shall be no defense to an action for breach of this Agreement or any
Related Agreement that:
(a) the Buyer or its agents have (or have not) made investigations into the
affairs of the Company, or
(b) that the Company or the Seller (or any one of them) could not have
known of the misrepresentation or breach of warranty.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
In order to induce the Seller to enter into this Agreement, the Buyer
represents and warrants to the Seller, as at the date of this Agreement and as
at the Closing Date (as if such representations and warranties were remade on
the Closing Date), as follows:
4.1 Due Incorporation.
The Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada with all requisite power and
authority to own, lease and operate its properties and to carry on its business
as they are now being owned, leased, operated and conducted.
4.2 Due Authorization.
(a) The Buyer has full power and authority to enter into this Agreement and
the Related Agreements and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by the Buyer of this
Agreement and Related Agreements have been duly and validly approved by the
board of directors of the Buyer and no other actions or proceedings on the part
of the Buyer are necessary to authorize this Agreement, the Related Agreements
and the transactions contemplated hereby and thereby.
(b) The Buyer has duly and validly executed and delivered this Agreement
and has duly and validly executed and delivered (or prior to or at the Closing
Date will duly and validly execute and deliver) the Related Agreements.
(c) This Agreement and the Related Agreements constitute legal, valid and
binding obligations of the Buyer, in each case enforceable in accordance with
their respective terms, except as such enforce ability may be limited by
applicable. bankruptcy, insolvency, moratorium, reorganization or similar Laws
in effect which affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
32
4.3 Consents and Approvals; Authority Relative to this Agreement.
(a) Except as set forth on Schedule 4.3, no consent, authorization or
approval of, filing or registration with, or cooperation from, any Governmental
Authority or any other Person not a party to this Agreement is necessary in
connection with the execution, delivery and performance by the Buyer of this
Agreement, its respective Related Agreements or the consummation of the
transactions contemplated hereby, or thereby.
(b) Except as set forth on Schedule 4.3, the execution, delivery and
performance by the Buyer of this Agreement and its respective Related Agreements
does not and will not, and the consummation of the transactions contemplated
hereby and thereby does not and will not,
(i) violate any Law;
(ii) violate or conflict with, result in a breach or termination of,
constitute a default or give any third party any additional right
(including a termination right) under, permit cancellation of, result in
the creation of any Lien upon any of the assets or properties of the Buyer
under, or result in or constitute a circumstance which, with or without
notice or lapse of time or both, would constitute any of the foregoing
under any Contract to which the Buyer is a party or by which the Buyer or
any of its assets or properties are bound;
(iii) permit the acceleration of the maturity of any indebtedness of
the Buyer or indebtedness secured by its respective assets or properties;
or
(iv) violate or conflict with any provision of any of the certificate
of incorporation, charter, bylaws or similar organizational instruments of
the Buyer.
ARTICLE V
COVENANTS
5.1 Implementing Agreement.
Subject to the terms and conditions hereof,
(a) each Party hereto shall use its reasonable best efforts to take all
action required of it to fulfill its obligations under the terms of this
Agreement and to facilitate the consummation of the transactions contemplated
hereby; and
(b) The Seller agrees that unless this Agreement is terminated in
accordance with the provisions of Section 9.1, the Seller will not encumber the
Shares, will not sell the Shares to any Person other than the Buyer (or an
Affiliate of the Buyer), and will not take any other action which would have the
effect of preventing or disabling the Seller's respective performance of his
obligations under this Agreement.
33
5.2. Access to Information and Facilities.
(a) From and after the date of this Agreement or such earlier time as the
Buyer and the Seller shall have mutually agreed, the Seller shall, and shall
cause the Company to give the Buyer and the Buyer's representatives unrestricted
access during normal business hours to all of the facilities, properties, books,
contracts, commitments and records of the Company, and the Seller shall make the
officers and employees of the Company available to the Buyer and its
representatives as the Buyer and its representatives shall from time to time
request. The Buyer and its representatives will be furnished with any and all
information concerning the Company which the Buyer or its representatives
reasonably request.
(b) Except as may be reasonably necessary to carry out this Agreement and
the transactions contemplated hereby, the Buyer will not, will cause its
Affiliates not to, and will instruct its and its Affiliates' agents and
financing sources not to disclose the Company Confidential Information to any
Person other than the Buyer's employees, agents and financing sources on a "need
to know" basis without the prior consent of the Company, unless compelled to
disclose any such the Company Confidential Information by judicial or
administrative process or, in the opinion of the Buyer's counsel, by other
requirements of Law.
(c) Except as may be reasonably necessary to carry out this Agreement and
the transactions contemplated hereby, the Seller will not, will cause their
Affiliates not to, and will instruct their, and their Affiliates' agents and
financing sources to not disclose any the Buyer Confidential Information to any
Person other than Seller or the Company's employees, agents and financing
sources without the prior consent of the Buyer, unless compelled to disclose any
such the Buyer Confidential information by judicial or administrative process
or, in the opinion of the Seller's counsel, by other requirements of Law.
5.3 Preservation of Business.
(a) From the date of this Agreement until the Closing Date, the Seller
shall cause the Company to operate only in the ordinary and usual course of
business and consistent with past practice, and the Seller and the Company shall
use their best efforts to:
(i) maintain the assets of the Company in substantially their current
state of repair, excepting normal wear and tear, and preserve intact the
present business organization and personnel of the Company;
(ii) preserve the goodwill and advantageous relationships of the
Company with customers, suppliers, independent contractors, employees and
other Persons material to the operation of its business; and
(iii) not permit any action or omission which would cause any of the
representations or warranties of the Seller or the Company contained herein
to become inaccurate or any of the covenants of the Seller to be breached.
34
(b) From the date of this Agreement until the Closing Date, and without
limiting the generality of the foregoing, the Company will not, without the
prior written consent of the Buyer,
(i) incur any obligation or enter into any Contract which requires a
payment by the Company in excess of $1,000.00 or enter into any Contract to
provide for the delivery of goods or the performance of services, or any
combination thereof, by the Company, having a value in excess of $1,000.00;
(ii) sell, transfer, convey, lease, assign or otherwise dispose of any
of its assets or properties;
(iii) waive, release or cancel any claims against third parties or
debts owing to it, or any rights which have value;
(iv) make any changes in its accounting systems, policies, principles
or practices;
(v) enter into, authorize, or permit any transaction with the Seller
or any Affiliate of the Seller;
(vi) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, convertible or exchangeable securities, commitments,
subscriptions, rights to purchase or otherwise), any of its Securities, or
amend any of the terms of any of its Securities;
(vii) split, combine, or reclassify any shares of its Securities,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
securities, or redeem or otherwise acquire any Securities of the Company or
of any other Person;
(viii) make any borrowing, incur any debt, or assume, guarantee,
endorse or otherwise become liable (whether directly, contingently or
otherwise) for the obligations of any other Person, or make any payment or
repayment in respect of any indebtedness;
(ix) make any loans, advances or capital contributions to, or
investments in, any other Person;
(x) enter into, adopt, amend or terminate any bonus, profit sharing,
compensation, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
any director, officer or employee, or increase in any manner the
compensation or fringe benefits of any director or officer;
(xi) lease or encumber any assets;
(xii) authorize or make any capital expenditure;
35
(xiii) make any Tax election or settle or compromise any federal,
state, local or foreign Tax liability, or waive or extend the statute of
limitations in respect of any such Taxes;
(xiv) pay any amount, perform any obligation or agree to pay any
amount or perform any obligation, in settlement or compromise of any suits
or claims of liability against the Company or its Affiliates or any of its
directors, officers, employees, agents, or shareholders;
(xv) settle or compromise any suits or claims the Company may have
against any Person, including its Affiliates or any of its directors,
officers, employees, agents, or shareholders; or
(xvi) terminate, modify, amend or otherwise alter or change any of the
terms or provisions of any contract, or pay any amount not required by Law
or by any contract.
5.4 Consents and Approvals.
(a) The Seller shall use their best efforts, and shall cause the Company to
use its best efforts, to obtain all consents, approvals, certificates and other
documents required in connection with the performance by any such parties of
this Agreement and their respective Related Agreements and the consummation of
the transactions contemplated hereby and thereby, including all consents and
approvals by each party to any of the Contracts referred to in Exhibit 3.3;
provided, however, that no contact will be made by the Seller or the Company (or
any representative of any of such Parties) with any third party to obtain any
such consent or approval except in accordance with a plan previously agreed to
by the Buyer.
(b) The Seller shall, and shall cause the Company to, make all filings,
applications, statements and reports to all Governmental Authorities and other
Persons which are required to be made prior to the Closing Date by or on behalf
of the Seller, the Company or any of their respective Affiliates pursuant to any
applicable Law or contract in connection with this Agreement or any of their
respective Related Agreements and the transactions contemplated hereby and
thereby, including prompt filings under the HSR Act, if applicable, and
expedited submission of all materials required by any Governmental Authority in
connection with such filings.
(c) The Buyer shall make all filings, applications, statements and reports
to all Governmental Authorities and other Persons which are required to be made
prior to the Closing Date by or on behalf of the Buyer or any of its Affiliates
pursuant to any applicable Law or contract in connection with this Agreement or
any Related Agreement and the transactions contemplated hereby and thereby,
including prompt filings under the HSR Act, if applicable and expedited
submission of all materials required by any Governmental Authority in connection
with such filings.
36
5.5 Maintenance of Insurance.
The Seller shall cause the Company to continue to carry its existing
insurance through the Closing Date, and shall not allow any breach, default,
termination or cancellation of such insurance policies or agreements to occur or
exist.
5.6 Resignation of Certain Officers and Directors; Employment Agreements.
At the Closing , the Company shall deliver to the Buyer the written
resignations of the following officers and directors of the Company, effective
as at the Closing: ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
5.7 Bank Accounts.
Subsequent to the day of the Closing, the Seller will arrange:
(a) for the Company's then current bank account to be closed;
(b) for all funds from said bank account to be transferred into a bank
account to be selected by the Buyer; and
(c) for the delivery of all bank account statements and records pertaining
to the Company's (former) bank account to the Buyer.
5.8 Supplemental Information.
(a) From time to time prior to the Closing Date, the Seller and the Company
will promptly disclose in writing to the Buyer any matter hereafter arising
which, if existing, occurring or known at the date of this Agreement would have
been required to be disclosed to the Buyer or which would render inaccurate any
of the representations, warranties or statements set forth herein.
(b) From time to time prior to the Closing Date, the Buyer will promptly
disclose in writing to the Seller any matter hereafter arising which, if
existing, occurring or known at the date of this Agreement would have been
required to be disclosed to the Seller or which would render inaccurate any of
the representations, warranties or statements set forth in Article IV hereof.
(c) No information provided to a Party pursuant to this Section shall be
deemed to cure any breach of any representation, warranty or covenant made in
this Agreement or the Related Agreements.
5.9 Non-competition.
The Seller agrees that the following provisions of this Section are
intimately linked to the other transactions contemplated by this Agreement, and
the Seller acknowledges that the Buyer would not enter into this Agreement
without the Seller agreeing to be bound by the following provisions from the
date hereof until the "Ending Date", as hereinafter defined. Further, the Buyer
37
agrees that the provisions of this Agreement providing for payment of the
purchase price to Seller are intimately linked to the other transactions
contemplated by this Agreement, and the Buyer acknowledges that the Seller would
not enter into this Agreement without the Buyer agreeing to be bound by and
performing the provisions of this Agreement pertaining to payment of the
purchase price, that Sellers obligations under this Section are specifically
conditioned upon Buyers performance of its obligations under this Agreement, and
that the provisions of this Section shall not be enforceable during any time
that Buyer is in breach of any of its obligations under this Agreement.
(a) Except as expressly approved (which approval shall not be unreasonably
withheld) by the Buyer, the Seller agrees that until April 25, 2005 (the "Ending
Date") that he shall not, directly or indirectly,
(i) except as an officer or employee of the Company (or any successor
corporation into which it may be merged or consolidated), engage in,
control, advise, manage, serve as a director, officer, or employee of, act
as a consultant to, provide any funds for, receive any economic benefit
from, have any financial interest in (except investment in not more than 2%
of any class of securities of any publicly traded Company) or exert any
influence upon (whether by guarantee, loan or otherwise), any business
which conducts activities in the Territory (as hereinafter defined) similar
to those conducted by the Company provided that this restriction shall not
apply to any activity in connection with a business that does not actually
or potentially compete with the activities of the Company;
(ii) except in connection with any duties as an officer or employee of
the Company, solicit, divert or attempt to solicit or divert any party who
is or was a customer or supplier of the Company, provided that this
restriction shall not apply to any activity on behalf of a business that
does not actually or potentially compete with the activities of the
Company;
(iii) employ, solicit for employment or encourage to leave their
employment, in each case, either as an employee, agent or representative,
any person who was during the two-year period prior to such employment,
solicitation or encouragement or is an officer, employee, agent or
representative of the Company;
(iv) disturb, or attempt to disturb, any business relationship between
any third party and the Company; or
(v) make any statement to any third party, including the press or
media, likely to result in adverse publicity for the Company.
(b) In the event of actual or threatened breach of the provisions of this
Section, the Buyer, in addition to any other remedies available to it for such
breach or threatened breach, including the recovery of damages, shall be
entitled to an injunction restraining the Seller, as appropriate, from such
conduct.
(c) If at any time any of the provisions of this Section shall be
determined to be invalid or unenforceable by reason of being vague or
unreasonable as to duration, area, scope of activity or otherwise, then this
38
Section shall be considered divisible (with the other provisions to remain in
full force and effect) and the invalid or unenforceable provisions shall become
and be deemed to be immediately amended to include only such time, area, scope
of activity and other restrictions, as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter, and
the Seller expressly agrees that this Agreement, as so amended, shall be valid
and binding as though any invalid or unenforceable provision had not been
included herein.
(d) The provisions of this Section shall be in addition to, and not in
limitation of, any other provisions contained in any other agreement restricting
competition by the Seller.
(e) The Seller shall not, directly or indirectly,
(i) disclose, or
(ii) use for their own benefit, or for the benefit of any other Person
(other than, in the case of (A) below, the Company or an Affiliate of the
Company),
(A) any secret or confidential information, customer lists, supplier
information, or any other data of or pertaining to the Company or to
any Affiliate of the Company, their respective businesses or financial
affairs, or their products which are not a matter of public knowledge,
or
(B) any Buyer Confidential Information (collectively, the "Confidential
Information").
(f) The Seller agrees that upon the request of the Company on or after the
Closing Date, he will immediately deliver to the Company all original papers,
books, manuals, lists, correspondence and documents containing or relating to
the Confidential Information, together with all copies thereof, except that the
Seller may keep copies of such materials as shall be necessary to permit the
Seller to prepare his tax returns or to comply with any other legal
requirements.
5.10 Exclusivity.
(a) Neither the Seller, nor the Company, nor any of their respective
directors, officers, employees, representatives, agents or Affiliates shall,
directly or indirectly, solicit, initiate, encourage, respond favorably to,
permit or condone inquiries or proposals from, or provide any Confidential
Information to, or participate in any discussions or negotiations with, any
Person (other than the Buyer, and the respective directors, officers, employees,
representatives and agents) concerning:
(i) any merger, sale of assets not in the ordinary course of business,
acquisition, business combination, change of control or other similar
transaction involving the Company, or
(ii) any purchase or other acquisition by any Person of the Shares, or
39
(iii) any sale, or issuance by the Company of any shares of its
Securities.
(b) The Seller will promptly advise the Buyer of, and communicate to the
Buyer, the terms and conditions of (and the identity of the Person making), any
such inquiry or proposal received.
5.11 Use of Name.
From and after the Closing Date, neither the Seller nor any of his
Affiliates will directly or indirectly use in any manner any trade name,
trademark, service ▇▇▇▇ or logo used by the Company or any word or logo that is
similar in sound or appearance.
5.12 Tax Indemnity.
The Sellers, and each of them, agree to jointly and severally indemnify the
Buyer against, and agree to hold it harmless from, any and all liabilities for
Taxes that have become due and payable or which have accrued with respect to the
Company that have not been paid prior to the Closing Date or which have not been
reserved on the Financial Statements. (Any Taxes attributable to the operations
of the Company payable as a result of an audit of any Tax Return shall be deemed
to have accrued in the period to which such Taxes are attributable.)
5.13 Termination of Certain Agreements.
The Seller shall, and the Seller agrees that he shall cause his Affiliates
and the Company to, and that his Affiliates and the Company shall, effective as
of the Closing Date, without any cost to the Company, terminate, rescind, cancel
and render void and of no effect all of the Contracts between the Company, on
the one hand, and the Seller or any of his Affiliates, as the case may be (other
than the Company), on the other hand, except for those Contracts listed in
Exhibit 5.13 and those Contracts entered into pursuant to this Agreement.
5.14 Seller not to Inhibit.
Neither the Seller nor the Company will take any action (nor omit to take
any action) which would adversely affect the ability of the Seller to sell and
convey the Shares to the Buyer or adversely affect the business or business
prospects of the Company.
5.15 Litigation Support.
If and for so long as any Party actively is contesting or defending against
any action, suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand in connection with (i) any matter set forth in Exhibit 3.22 or (ii)
any transaction contemplated under this Agreement or (iii) any fact, situation,
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circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the Seller and the Company shall cooperate with
Buyer and its counsel in the defense or contest, make available their personnel,
and provide such testimony and access to their books and records as shall be
necessary in connection with the defense or contest, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefor under this Agreement).
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under Article II of this Agreement are subject
to the satisfaction of, or waiver by, the Buyer of the following conditions
precedent on or before the Closing Date, unless otherwise specified:
6.1 Warranties True as of Both Present Date and Closing Date.
The representations and warranties of the Seller and the Company contained
herein shall have been accurate, true and correct on and as of the date of this
Agreement, and shall also be accurate, true and correct on and as at the Closing
Date with the same force and effect as though made by the Seller and the Company
on the Closing Date.
6.2 Compliance with Agreements and Covenants.
The Seller and the Company shall have performed and complied with all of
their respective covenants, obligations and agreements contained in this
Agreement to be performed and complied with by them on or prior to the Closing
Date.
6.3 Documents.
The Buyer shall have received all of the agreements, documents and items
specified in Section 8.2.
6.4 Opinion of Counsel.
SECTION WAIVED BY BUYER
6.5 Accountant's Letter.
SECTION WAIVED BY BUYER
6.6 Delivery of Exhibits.
SECTION WAIVED BY BUYER
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6.7 No Adverse Change.
No Company Adverse Change or Effect shall have occurred, and no event shall
have occurred which, in the judgment of the Buyer, is reasonably likely to have
a Company Adverse Change or Effect.
6.8 Actions or Proceedings.
Except as set forth in Exhibit 3.21, no action or proceeding by any
Governmental Authority or other Person shall have been instituted or threatened
which:
(a) might have a Company Adverse Effect or Change, or
(b) could enjoin, restrain or prohibit, or could result in substantial
damages in respect of, any provision of this Agreement or any of the Related
Agreements or the consummation of the transactions contemplated hereby or
thereby or any integration of any operations of the Company with those of the
Buyer and its Affiliates.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
The obligations of Seller under Article II of this Agreement are subject to
the satisfaction of, or waiver by, the Seller of the following conditions
precedent on or before the Closing Date:
7.1 Warranties True as of Both Present Date and Closing Date.
The representations and warranties of the Buyer contained herein shall have
been accurate, true and correct on and as of the date of this Agreement, and
shall also be accurate, true and correct on and as at the Closing Date with the
same force and effect as though made by the Buyer on the Closing Date.
7.2 Compliance with Agreements and Covenants.
The Buyer shall have performed and complied with all of its respective
covenants, obligations and agreements contained in this Agreement to be
performed and complied with by it on or prior to the Closing Date.
7.43 Documents.
The Seller shall have received all of the agreements, documents and items
specified in Section 8.3.
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7.4 Actions or Proceedings.
No action or proceeding by any Governmental Authority or other Person shall
have been instituted or threatened which could enjoin, restrain or prohibit, or
could result in substantial damages in respect of, any provision of this
Agreement or any of the Related Agreements or the consummation of the
transactions contemplated hereby or thereby or any integration of any operations
of the Company with those of the Buyer and its Affiliates.
7.5 Consents and Approvals.
The Seller shall have received written evidence satisfactory to the Seller
that all consents and approvals required for the consummation of the
transactions contemplated hereby have been obtained, and all required filings
have been made, including those set forth in Exhibit 4.3.
ARTICLE VIII
THE CLOSING
8.1 The Closing.
(a) The Closing shall be scheduled to occur at 1:00 pm at the offices of
the Buyer on the later of:
(i) April 30, 2003, or
(ii) on such earlier or later date as the Parties hereto shall
mutually agree.
(b) The Closing, and all transactions to occur at the Closing, shall be
deemed to take place at, and shall be effective as at, the close of business on
the Closing Date.
8.2 Deliveries by the Seller.
At the Closing, in addition to any other documents or agreements required
under this Agreement, the Seller shall deliver to the Buyer the following:
(a) Certificates evidencing all of the Shares, which certificates shall be
duly endorsed in blank or accompanied by stock powers executed in blank, with
all signatures medallion guaranteed and with all necessary transfer taxes and
other revenue stamps affixed and acquired at the Seller's expense, together with
such other duly executed instruments or documents as may be reasonably requested
by the Buyer in order to consummate the transactions contemplated by this
Agreement provided that reasonable written notice of request for such other duly
executed instruments or documents is first given to Seller not less than seven
(7) business days prior to closing, including a letter, in the form set forth in
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Exhibit 8.2(a), from the Company's Transfer Agent to the Seller acknowledging
the existence of this transaction and agreeing that it, the Transfer Agent,
will, upon presentation of the Certificates representing the Shares, re-issue
these Certificates in the name of, or pursuant to, the instructions of the
Buyer.
(b) The written resignations of the persons listed in Exhibit 8.2(b) as
directors and officers of the Company;
(c) Evidence, in form satisfactory to the Buyer, that all consents and
approvals referred to in Exhibit 3.3 have been obtained;
(d) Except for those Liens specified on Exhibit 8.2(d) attached hereto, a
written statement from each Person holding a Lien upon any of the assets of the
Company, or upon any Shares, confirming the repayment of the indebtedness
secured thereby and the release as of the Closing Date of:
(i) such Lien, and
(ii) all obligations under any and all Contracts relating thereto;
(e) A certificate dated as at the Closing Date of the Seller certifying as
to the compliance by the Seller and the Company as the case may be, with
Sections 6.1 and 6.2;
(f) The Certificates of Incorporation or similar instruments of the Company
certified by the Secretary of State or equivalent Person of the jurisdiction of
incorporation of the Company, and Bylaws or similar instruments of the Company,
certified by the Secretary of the Company;
(g) Certificates of Good Standing for the Company from the State of
Oklahome;
(h) SECTION WAIVED BY BUYER
(i) SECTION WAIVED BY BUYER
(j) SECTION WAIVED BY BUYER; and
(k) A certificate of the Company's Secretary certifying Resolutions of the
Board of Directors of the Company approving this Agreement, the Company's
Related Agreements, and the transactions contemplated hereby and thereby,
together with an Incumbency and Signature Certificate regarding the officer(s)
signing on behalf of the Company.
8.3 Deliveries by the Buyer.
At the Closing, the Buyer shall deliver to the Sellers the following:
(a) the sum of $1,000.00, by U.S. Bank check or Wire Transfer, payable to
the order of each of the Sellers in the amount set forth opposite his and its
names as set forth in Exhibit 2.1.
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(c) A certificate, dated at the Closing Date, of an executive officer of
the Buyer, certifying as to compliance by the Buyer as the case may be, with
Sections 7.1 and 7.2;
(d) Certificates of the Buyer's Secretary certifying Resolutions of the
Board of Directors approving this Agreement, the Buyer's Related Agreements, and
the transactions contemplated hereby and thereby, together with an Incumbency
and Signature Certificate regarding the officer(s) signing on behalf of the
Buyer;
(e) Evidence, in form satisfactory to the Seller, that all consents and
approvals referred to in Exhibit 4.3 have been obtained.
ARTICLE IX
TERMINATION
9.1 Termination.
This Agreement may be terminated at any time on or prior to the Closing
Date:
(a) By the mutual consent of the Seller and the Buyer;
(b) By the Buyer or the Seller if the Closing shall not have taken place on
or before April 30, 2003; provided however, that the right to terminate this
Agreement under this Section 9.1 (b) shall not be available to any Party whose
wilful failure to fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Closing to occur on or before such date;
(c) By the Buyer, if there shall have been a breach of any covenant,
representation or warranty or other agreement of the Seller or of the Company
hereunder, and such breach shall not have been remedied within ten Business Days
after receipt by the Seller of a notice in writing from the Buyer specifying the
breach and requesting such be remedied; or
(d) By the Seller, if there shall have been a breach of any covenant,
representation or warranty or other agreement of the Buyer hereunder, and such
breach shall not have been remedied within ten Business Days after receipt by
the Buyer of notice in writing from the Seller specifying the breach and
requesting such be remedied.
9.2 Effect of Termination.
If this Agreement is terminated pursuant to Section 9.1, all obligations of
the Parties hereunder shall terminate, except for the obligations set forth in
Sections 5.2(b) and (c), 11.1, 11.11 and 11.12, the provisions of which shall
survive the termination of this Agreement, and except that no such termination
shall relieve any party from liability for any prior wilful breach of this
Agreement.
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ARTICLE X
INDEMNIFICATION
10.1 Survival.
Except as otherwise specified, the representations and warranties of the
Seller contained herein shall survive the Closing for a period expiring at the
close of business on the date that is 730 days after the Closing Date upon which
the final payment to Seller is to have been made under the terms of this
Agreement, whether such payment is or is not made (the "Survival Date") except
that:
(a) Tax Warranties shall survive until the Tax Statute of Limitations Date;
and
(b) Title and Authorization Warranties shall survive forever.
10.2 Indemnification by the Seller.
(a) Upon receipt of notice thereof, the Seller shall, jointly and
severally, indemnify, defend, and hold harmless the Buyer from any and all
claims, demands, liabilities, damages, deficiencies, losses, obligations, costs
and expenses, including attorney fees and any costs of investigation that the
Buyer shall incur or suffer that arise, result from, or relate to:
(i) any misrepresentation, breach of warranty, or any inaccuracy in
any representation or warranty made by the Seller or the Company in this
Agreement or in any document, certificate, or affidavit delivered by the
Seller or the Company pursuant to the provisions of this Agreement or the
Related Agreements; or
(ii) any breach of or failure by the Seller or the Company to perform
any covenant or obligation of such party set out or contemplated in this
Agreement or any Related Agreement or any document delivered at the
Closing; or
(iii) any liability, obligation, or commitment of any nature
(absolute, accrued, contingent, or other) (y) of the Company; or (z) of the
Seller (insofar as it effects his rights and duties with respect to his
ownership of, and the sale and conveyance of the Shares, or with respect to
his operation of the business of the Company) with respect to occurrences,
events, or matters occurring, taking place, or accruing prior to the
Closing Date; or
(iv) any Environmental Expenses, any Environmental claims, any
Environmental Conditions, or any violation of Environmental Requirements;
or
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(v) any regulatory proceeding, action or suit [including any
investigation(s) in connection therewith] brought with respect to
occurrences, events, or matters occurring, taking place, or accruing prior
to the Closing Date; and
(vi) exposure of the Company and/or the Seller to liability arising in
connection with the litigation described in Exhibit 3.21.
10.3 Indemnification by the Buyer.
(a) Upon receipt of notice thereof, the Buyer shall, jointly and severally,
indemnify, defend, and hold harmless the Seller from any and all claims,
demands, liabilities, damages, deficiencies, losses, obligations, costs and
expenses, including attorney fees and any costs of investigation that the Seller
shall incur or suffer that arise, result from, or relate to:
(i) any misrepresentation, breach of warranty, or any inaccuracy in
any representation or warranty made by the Buyer in this Agreement or in
any document, certificate, or affidavit delivered by the Buyer pursuant to
the provisions of this Agreement or the Related Agreements; or
(ii) any breach of or failure by the Buyer to perform any covenant or
obligation of such party set out or contemplated in this Agreement or any
Related Agreement or any document delivered at the Closing.
10.4 Treatment of Claims.
(a) Promptly (and in any event within 5 days after the service of any
citation or summons) after becoming aware of a claim for indemnification under
this Agreement, the Indemnified Person shall give notice to the Indemnifying
Person of such claim and the amount the Indemnified Person will be entitled to
receive hereunder from the Indemnifying Person.
(b) If the Indemnifying Person does not object in writing to such claim
within 20 days of receiving notice thereof, the Indemnified Person shall be
entitled to recover, on the 25th day after such notice was given, from the
Indemnifying Person the amount of such claim, and no later objection by the
Indemnifying Person shall be permitted.
(c) If the Indemnifying Person agrees that he has an indemnification
obligation but states that he is obligated to pay only a lesser amount, the
Indemnified Person shall nevertheless be entitled to recover, on the 25th day
after such notice was given, from the Indemnifying Person the lesser amount,
without prejudice to the Indemnified Person's claim for the difference.
(d) In addition to the amounts recoverable by the Indemnified Person from
the Indemnifying Person pursuant to the foregoing provisions, the Indemnified
Person shall also be entitled to recover from the Indemnifying Person interest
47
on such amounts at the rate of Two Times Prime from, and including, the 25th day
after such notice of an indemnification claim is given to, but not including,
the date such recovery is actually made by the Indemnified Person.
10.5 Notice of Third-Party Claims; Assumption of Defense.
(a) Promptly (and in any event within 5 days after the service of any
citation or summons) after becoming aware of any claim or the commencement of
any suit, action or proceeding made or brought by any Person not a party hereto,
in respect of which indemnity may be sought under this Agreement, the
Indemnified Party shall give notice thereof to the Indemnifying Party.
(b) The Indemnifying Person may, at its own expense,
(i) participate in the defense of any claim, suit, action or
proceeding, and
(ii) upon notice to the Indemnified Person and the delivery by the
Indemnifying Person to the Indemnified Person of a written agreement that
the Indemnified Person is entitled to indemnification for all Losses
arising out of such claim, suit, action or proceeding and that the
Indemnifying Person shall be liable for the entire amount of any Loss, at
any time during the course of any such claim, suit, action or proceeding,
assume the defense thereof, provided that:
(A) the Indemnifying Person's counsel is reasonably satisfactory to the
Indemnified Person; and
(B) the Indemnifying Person shall thereafter consult with the Indemnified
Person upon the Indemnified Person's reasonable request for such
consultation from time to time with respect to such claim, suit,
action or proceeding.
(c) If the Indemnifying Person assumes such defense, the Indemnified Person
shall have the right (but not the duty) to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed by
the Indemnifying Person.
(d) If, however, the Indemnified Person reasonably determines in its
judgment that representation by the Indemnifying Person's counsel of both the
Indemnifying Person and the Indemnified Person would present such counsel with a
conflict of interest, then such Indemnified Person may employ separate counsel
to represent or defend it in any such claim, action, suit or proceeding, and the
Indemnifying Person shall pay the fees and disbursements of such separate
counsel.
(e) Whether or not the Indemnifying Person chooses to defend or prosecute
any such claim, suit, action or proceeding, all of the Parties hereto shall
cooperate in the defense or prosecution thereof.
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10.6 Settlement or Compromise.
(a) Any settlement or compromise made or caused to be made by the
Indemnified Person or the Indemnifying Person, as the case may be, of any claim,
suit, action or proceeding shall also be binding upon the Indemnifying Person or
the Indemnified Person, as the case may be, in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction in the
amount of such settlement or compromise; provided, however, that no obligation,
restriction or Loss shall be imposed on the Indemnified Person as a result of
such settlement without its prior written consent.
(b) The Indemnified Person will give the Indemnifying Person at least 30
days' notice of any proposed settlement or compromise of any claim, suit, action
or proceeding it is defending, during which time the Indemnifying Person may
reject such proposed settlement or compromise; provided, however, that from and
after such rejection, the Indemnifying Person shall be obligated to assume the
defense of and full and complete liability and responsibility for such claim,
suit, action or proceeding and any and all Losses in connection therewith in
excess of the amount of un-indemnifiable Losses which the Indemnified Person
would have been obligated to pay under the proposed settlement or compromise.
10.7 Failure of Indemnifying Person to Act.
In the event that the Indemnifying Person does not elect to assume the
defense of any claim, suit, action or proceeding, then any failure of the
Indemnified Person to defend or to participate in the defense of any such claim,
suit, action or proceeding or to cause the same to be done, shall not relieve
the Indemnifying Person of its obligations hereunder.
10.8 Claims Against Escrow.
(a) As set forth in the Escrow Agreement, funds deposited into Escrow shall
be deposited therein, and be available only, for the sole purpose of satisfying
(whether in whole or in part) exposure of the Company and/or the Seller to
liability arising in connection with the litigation described in Exhibit 3.21.
(b) The Buyer may, but shall not be obligated to, direct that the Escrow
Agent, pursuant to the Escrow Agreement, pay to the Buyer, from time to time,
any amount that (i) may be payable by the Seller to the Buyer under this
Agreement or (ii) any judgments awarded against, or settlements made by the
Company, and the Seller, promptly upon being requested to do so by the Buyer,
shall join in any written direction to the Escrow Agent pursuant to the Escrow
Agreement.
(c) The rights of the Buyer to look to the Escrow Agreement for
satisfaction of part or all of any claims or Losses that it may have against the
Seller under this Agreement are supplementary to, and not a limitation upon, its
rights and remedies to proceed directly against the Seller in respect of such
claims or Losses; provided, however, that any claim or Loss satisfied in part or
in whole by a distribution to the Buyer of funds from the Escrow Agreement
shall, to that extent, reduce the claim of the Buyer against the Seller under
this Agreement.
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ARTICLE XI
MISCELLANEOUS
11.1 Expenses.
(a) The Seller shall pay all expenses of the Seller and the Company
(including attorneys' fees and expenses), and the Buyer shall pay all expenses
of the Buyer (including attorneys' fees and expenses), in each case incurred in
connection with this Agreement and the transactions contemplated hereby.
(b) The Seller shall pay all sales, use, stamp, transfer, service,
recording, real estate and like taxes or fees, if any, imposed by any
Governmental Authority in connection with the transfer and assignment of the
Shares.
11.2 Amendment.
This Agreement may be amended, modified or supplemented but only in writing
signed by each of the Parties hereto.
11.3 Notices.
(a) Any notice, request, instruction or other document required by the
terms of this Agreement to be given to any other Party hereto shall be in
writing and shall be given either
(i) by telephonic facsimile, in which case notice shall be
presumptively deemed to have been given at the date and time displayed on
the sender's transmission confirmation receipt showing the successful
receipt thereof by the recipient;
(ii) by hand delivery or Federal Express or other method in which the
date of delivery is recorded by the delivery service, in which case notice
shall be presumptively deemed to have been given at the time that records
of the delivery service indicate the writing was delivered to the
addressee;
(iii) by prepaid telegram, in which case notice shall be presumptively
deemed to have been given at the time that the records of the telegraphic
agency indicate that the telegram was telephoned or delivered to the
recipient or addressee, as the case may be; or
(iv) by U.S. mail to be sent by registered or certified mail, postage
prepaid, with return receipt requested, in which case notice shall be
presumptively deemed to have been given forty-eight (48) hours after the
letter was deposited with the United States Postal Service.
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(b) Notice shall be sent:
(i) If to the Buyer, to:
The Resourcing Solutions Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: David, Calkins, President
Telephone Number (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Telephone Number (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Number ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to the Company, to:
Woodstock Lumber Sales, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to the Sellers, to:
▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) or to such other address as a Party may have specified in writing
to the other Parties using the procedures specified above in this Section.
11.4 Effect of Investigation.
(a) Any due diligence review, audit or other investigation or inquiry
undertaken or performed by or on behalf of the Buyer shall not limit, qualify,
51
modify or amend the representations, warranties or covenants of, or indemnities
by, the Seller or the Company made or undertaken pursuant to this Agreement,
irrespective of the knowledge and information received (or which should have
been received) therefrom by the Buyer, unless due diligence is waived by Buyer.
(b) Any due diligence review, audit or other investigation or inquiry
undertaken or performed by or on behalf of the Seller or the Company shall not
limit, qualify, modify or amend the representations, warranties and covenants
of, or indemnities by, the Buyer made or undertaken pursuant to this Agreement,
irrespective of the knowledge and information received (or which should have
been received) therefrom by the Seller or the Company.
11.5 Waivers.
(a) The failure of a Party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same.
(b) No waiver by a Party of any condition or of any breach of any term,
covenant, representation or warranty contained in this Agreement shall be
effective unless in writing, and no waiver in any one or more instances shall be
deemed to be a further or continuing waiver of any such condition or breach in
other instances or a waiver of any other condition or breach of any other term,
covenant, representation or warranty.
11.6 Counterparts.
This Agreement may be executed in one or more counterparts, and by
different Parties hereto in separate counterparts, each of which when so
executed shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.7 Interpretation.
(a) The headings preceding the text of Articles and Sections included in
this Agreement and the headings to Exhibits attached to this Agreement are for
convenience only and shall not be deemed part of this Agreement or be given any
effect in interpreting this Agreement.
(b) The use of the masculine, feminine or neuter gender herein shall not
limit any provision of this Agreement. The use of the terms "including" or
"include" shall in all cases herein mean "including, without limitation" or
"include, without limitation", respectively.
(c) Underscored Articles, Sections, Subsections or Exhibits shall refer to
those portions of this Agreement to which they refer.
(d) Consummation of the transactions contemplated herein shall not be
deemed a waiver of a breach of or inaccuracy in any representation, warranty or
covenant or of any party's rights and remedies with regard thereto.
52
(e) No specific representation, warranty or covenant contained herein shall
limit the generality or applicability of a more general representation, warranty
or covenant contained herein.
(f) A breach of or inaccuracy in any representation, warranty or covenant
shall not be affected by the fact that any more general or less general
representation, warranty or covenant was not also breached or inaccurate.
11.8 Assignment.
(a) This Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective estates, heirs, legal representatives,
successors and assigns.
(b) No assignment of any rights or obligations hereunder may be made by the
Seller or by the Company without the prior written consent of the Buyer.
(c) The Buyer may freely assign its rights and obligations hereunder
without the consent of the Seller or of the Company, and upon such assignment,
the rights and obligations of the Buyer under this Agreement shall be binding
upon and inure to the benefit of the Buyer's Assignee or its Successor in
interest, as the case may be.
11.9 No Third-Party Beneficiaries.
This Agreement is solely for the benefit of the Parties hereto and, to the
extent provided herein, their respective estates, heirs, successors, Affiliates,
directors, officers, employees, agents and representatives, and no provision of
this Agreement shall be deemed to confer upon other third parties any remedy,
claim, liability, reimbursement, cause of action or other right.
11.10 Publicity.
Prior to the Closing Date, except as required by Law or the rules of any
stock exchange, no public announcement or other publicity regarding the
transactions referred to herein shall be made by the Buyer, the Seller, the
Company or any of their respective Affiliates, officers, directors, employees,
representatives or agents, without the prior written agreement of the Buyer and
the Seller, in any case, as to form, content, timing and manner of distribution
or publication; provided, however, that nothing in this Section shall prevent
such parties from discussing such transactions with those Persons whose
approval, agreement or opinion, as the case may be, is required for consummation
of such particular transaction or transactions.
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11.11 Liquidated Damages.
(a) If, prior to the Closing, the Buyer materially fails to meet its
obligations under this Agreement or fails to close on the transactions
contemplated hereby, unless the Buyer is not required to close pursuant to the
terms hereof, the Seller may lawfully terminate this Agreement in accordance
with the notice and lapse of time requirements of Section 9.1(d), and if this
Agreement is so terminated, an aggregate of $1,000.00 shall be payable by the
Buyer to the Seller, all as liquidated damages to Seller, and such payment shall
be the sole remedy of the Seller and the Company against the Buyer with respect
to any rights or obligations arising between them as a result of the
relationship created between by this Agreement, or created otherwisethe Seller
shall have the right to pursue all remedies available at law or in equity.
(b) Notwithstanding the foregoing, in addition to the right to seek and
obtain any damages which the Buyer may have against the Sellers or the Company
with respect to any rights arising between them as a result of this Agreement,
or otherwise, the Buyer shall have the right to seek specific performance
against the Sellers (or the Company) compel either, or both, to perform any act
required of them under the terms of this Agreement or the Related Agreements.
11.12 Further Assurances.
Upon the reasonable request of the Buyer, the Seller will on and after the
Closing Date execute and deliver to the Buyer such other documents, releases,
assignments and other instruments as may be required to effectuate completely
the transfer and assignment to the Buyer of, and to vest fully in the Buyer
title to, the Shares, and to otherwise carry out the purposes of this Agreement.
11.13 Severability.
If any provision of this Agreement shall be held invalid, illegal or
unenforceable, the validity, legality or enforce ability of the other provisions
hereof shall not be affected thereby, and there shall be deemed substituted for
the provision at issue a valid, legal and enforceable provision as similar as
possible to the provision at issue.
11.14 Remedies Cumulative.
Unless otherwise specified, the remedies provided in this, Agreement shall
be cumulative and shall not preclude the assertion or exercise of any other
rights or remedies available by law, in equity or otherwise.
11.15 Entire Understanding.
This Agreement and the Related Agreements constitute the entire agreement
and understanding between the Parties hereto and thereto in respect of the
subject matter contained herein and therein, and there are no restrictions,
promises, representations, warranties, covenants, or understandings with respect
to the subject matter hereof or thereof, other than those expressly set forth or
referred to herein or therein; provided, however, that all Schedules and
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Exhibits herein or therein are hereby incorporated herein or therein by
reference. This Agreement and the Related Agreements supersede all prior
agreements and understandings between the Parties hereto and thereto with
respect to the subject matter hereof and thereof. No statement, representation,
warranty, covenant or agreement of any kind not expressly set forth in this
Agreement or the Related Agreements shall effect, or be used, to interpret,
change or restrict, the express terms of this Agreement or the Related
Agreements.
11.16 Brokers.
The Buyer shall be solely responsible for paying any brokerage or finder's
fees due and payable in connection with his Agreement or the transactions
contemplated hereby, and the Buyer agrees to indemnify and hold the Seller
harmless from and against any claim by any other broker or finder who alleges
that it acted on any Party's behalf for any fee, commission or payment resulting
from, or arising out of, the negotiation or execution of this Agreement or the
consummation of the transactions contemplated hereby.
11.17 Applicable Law; Resolution of Disputes; Venue.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Nevada, without giving effect
to the principles of conflicts of Law thereof.
(b) The Parties hereto irrevocably agree and consent that all disputes
concerning this Agreement and the Related Agreements or any claim or issue of
any nature whatsoever (whether brought by the Parties hereto or by any other
person) arising from or relating to this Agreement or to the corporate steps
taken to enter into it (including, without limitation, claims for alleged fraud,
breach of fiduciary duty, breach of contract, tort, etc.) which cannot be
resolved within reasonable time through discussions between the opposing
entities, shall be resolved solely and exclusively by means of arbitration to be
conducted in Manassas, Prince ▇▇▇▇▇▇▇ County, Virginia which arbitration will
proceed in accordance with the rules of the American Arbitration Association (or
any successor organization thereto) then in force for resolution of commercial
disputes.
(c) The Arbitrators themselves shall have the right to determine and to
arbitrate the threshold issue of arbitrability itself, the decision of the
Arbitrators shall be non-binding upon the opposing entities.
(d) Each entity or Party involved in litigation or arbitration shall be
responsible for its own costs and expenses of any litigation or arbitration
proceeding, including its own attorney's fees (for any litigation, arbitration,
and any appeals).
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11.18 Jurisdiction of Disputes; Waiver of Jury Trial.
In the event any party to this Agreement commences any litigation,
proceeding or other legal action in connection with or relating to this
Agreement, any Related Agreement or any matters described or contemplated herein
or therein, with respect to any of the matters described or contemplated herein
or therein, the Parties to this Agreement hereby:
(a) agree as an alternative method of service to service of process in any
legal proceeding by mailing of copies thereof to such party at its address set
forth here in for communications to such party;
(b) agree that any service made as provided herein shall be effective and
binding service in every respect; and
(c) agree that nothing herein shall affect the rights of any party to
effect service of process in any other manner permitted by Law; and
(d) EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN
CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY
MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, AND AGREES TO TAKE ANY AND
ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.
SIGNATURES BEGIN ON THE FOLLOWING PAGE.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
THE BUYER:
The Resourcing Solutions Group, Inc.
APRIL 25, 2003 By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, President
APRIL 25, 2003 By: /s/F. ▇▇▇ ▇▇▇▇▇▇▇
F. ▇▇▇ ▇▇▇▇▇▇▇, Secretary
THE COMPANY:
Woodstock Lumber Sales, Inc.
APRIL 25, 2003 By: /s/▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
APRIL 25, 2003 By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
THE SELLERS:
▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ 25, 2003 By: /s/▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Individually
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