PLAN AND AGREEMENT OF REORGANIZATION
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This Plan and Agreement of Reorganization (the "Agreement"), effective
as of May 28, 1999, is entered into by and among ▇▇▇▇▇▇▇▇▇.▇▇▇, Incorporated
("▇▇▇▇▇▇▇▇▇▇▇.▇▇▇"), a Nevada corporation having its principal executive offices
at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and the following named
shareholders of ▇▇▇▇▇▇▇▇ Publications, Inc. (collectively, the "Shareholders"):
Name of Shareholder Address Number of Shares Owned
------------------- ------- ----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
RECITALS
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A. Shareholders are the owners of record of all of the issued and
outstanding shares of the common stock of ▇▇▇▇▇▇▇▇ Publications, Inc. ("HPI"),
an Indiana corporation having its principal executive office at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
B. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ desires to purchase, and the Shareholders desire to
sell all of the issued and outstanding shares of the common stock of HPI on the
terms and subject to the conditions set forth in this Agreement.
TERMS OF THE AGREEMENT
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THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements herein contained and subject to the conditions and
other terms herein contained, the parties hereto agree as follows:
SECTION 1. EXCHANGE OF STOCK.
1.1 Obligations of the Shareholders. On the closing date, as fixed
below, the Shareholders shall deliver to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, indorsed certificates
representing all of the outstanding shares of the common stock of HPI.
1.2 Obligations of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. In exchange for those certificates,
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall deliver to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ at the closing a certificate
or certificates representing 75,436 shares of Common Stock of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
and shall deliver to ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ at the closing a certificate or
certificates representing an additional 75,436 shares of Common Stock of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
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SECTION 2. CLOSING. The closing of the exchange shall take place on or before
June 10, 1999, at 9:00 a.m., at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, subject to
change by mutual agreement of the parties (the "Closing Date").
SECTION 3. COVENANTS OF ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ represents,
covenants, and warrants to the Shareholders as follows:
3.1 Corporate Status. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
3.2 Corporate Power and Authority. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ has the corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ has taken all action necessary to authorize the execution and
delivery of this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby.
3.3 Enforceability. This Agreement has been duly executed and delivered
by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and constitutes a legal, valid and binding obligation of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, enforceable against ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in accordance with its
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
3.4 ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock. Upon consummation of the transactions
contemplated hereby and the issuance and delivery of certificates representing
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares as provided in this Agreement, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares
will be validly issued, fully paid and non-assessable. The issuance of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares will be entitled to the registration rights set forth in
Section 11 of this Agreement.
3.5 Capitalization. As of the date of this Agreement, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
is authorized to issue fifty million (50,000,000) shares of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Common Stock and five million (5,000,000) shares of Series A Convertible Stock.
As of December 31, 1998, seven million nine hundred twenty-four thousand three
hundred twenty-nine (7,924,329) shares of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock were
validly issued and outstanding and six hundred fifty-seven thousand (657,000)
shares of Series A Convertible Stock were issued and outstanding.
SECTION 4. WARRANTIES AND COVENANTS OF THE SHAREHOLDERS. The
Shareholders jointly and severally represent, warrant, and covenant to
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ that the statements contained in this Section are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section), except as
set forth in the specific disclosures delivered by the Shareholders to
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ on the date of this Agreement and included in an exhibit to this
Agreement. Nothing in any exhibit shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the
specific exhibit identifies the exception with particularity and describes the
relevant facts in detail.
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4.1 Ownership of Stock. Each of the Shareholders is the owner of
record, free and clear of any co-ownership interests, liens, pledges,
encumbrances, agreements, equities, options, claims, security, interests,
restrictions, or charges (except as required by this Agreement), of the number
of fully paid and nonassessable shares of the common stock of HPI, set forth
opposite his or her name in the Recital. Upon the exchange of stock at the
Closing, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ will acquire valid title to all of the issued and
outstanding shares of HPI, free and clear of any and all liens, pledges,
encumbrances, charges, security, interests, restrictions, agreements or claims.
4.2 Capital Structure. As of the date of this Agreement, HPI is
authorized to issue one thousand (1,000) common shares, of which one hundred
(100) are issued and outstanding. No options are currently outstanding for the
purchase of any shares of HPI's stock. The Shareholders have provided
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and its legal counsel with a complete and accurate list of (a)
all issuances of capital stock by HPI, (b) the names and addresses of all
holders of HPI capital stock, together with the number and type of shares held
by each holder. HPI is not under any obligation to register under the Securities
Act any of its presently outstanding securities or any securities that may
subsequently be issued. There are no agreements or understandings to which HPI
or any of the Shareholders is a party or, to the knowledge of the Shareholders,
any other agreements or understandings, with respect to the transfer or voting
of shares of the HPI capital stock. There are no dividends declared and unpaid
on any of the common shares of HPI.
4.3 Corporate Organization. HPI is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority and all
necessary governmental authorizations to own, lease and operate its properties
and to conduct its business as it is now being conducted. HPI is duly qualified
or licensed to do business and is in good standing as a foreign corporation in
each state or other jurisdiction in which the nature of its business or
operations or ownership of its property requires such qualification or
licensing, except where the failure to be so qualified or licensed would not,
individually or in the aggregate, materially and adversely affect the condition
(financial or other), business, properties, prospects (as currently
contemplated), net worth or results of operations of HPI taken as a whole
(collectively, "HPI's Business"). The minute books of HPI, as made available to
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, contain complete and accurate records of all corporate action
taken by HPI since its respective date of incorporation. The Shareholders have
delivered to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ complete and correct copies of the Articles of
Incorporation and Bylaws (or other organizational or charter documents) of HPI,
in each case as amended to the date hereof.
4.4 Subsidiaries. HPI does not own any shares of capital stock or other
interest or investment (whether equity or debt), direct or indirect, in any
company, partnership or other organizational enterprise. As used in this
Agreement, the term "Subsidiary" means a "subsidiary" as defined in Rule 1.01 in
Regulation S-X promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
4.5 Governmental Approvals and Filings. No approval, authorization,
consent, license, clearance or order of, declaration or notification to, or
filing, registration or compliance with, any governmental or regulatory
authority ("Governmental Entity") is required on the part of the Shareholders or
HPI in order (a) to permit the Shareholders to perform their obligations under
this
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Agreement or (b) to prevent the termination of any right, privilege, license or
agreement of HPI, or to prevent any loss to HPI's Business, by reason of the
transactions contemplated by this Agreement.
4.6 No Conflict. Except as respects HPI's obligations to Huntington
National Bank under a line of credit (the "HNB Line of Credit Obligations") and
except as respects HPI's obligations to Huntington National Bank and the United
States Small Business Administration under a term loan issued on September 20,
1998 (the "Term Loan Obligations"), neither the execution, delivery and
performance of this Agreement by the Shareholders nor the consummation by the
Shareholders of the transactions contemplated hereby will (a) conflict with, or
result in a breach of, any of the terms, conditions or provisions of HPI's
Articles of Incorporation or Bylaws (or other organizational or charter
documents), (b) conflict with, result in a breach or violation of, give rise to
a termination right or a default under, result in the acceleration of
performance under (whether or not after the giving of notice or lapse of time or
both), any mortgage, lien, lease, agreement, note, bond, indenture, guarantee or
instrument or any license or franchise granted by or to a third party, in each
case, that is material to HPI's Business, (c) conflict with, or result in a
violation of, any statute, regulation, law, ordinance, writ, injunction, order,
judgment or decree to which the Shareholders, HPI or any of its assets may be
subject, (d) give rise to a declaration or imposition of any lien, charge,
security interest or encumbrance of any nature whatsoever upon any of the assets
of HPI, (e) adversely affect any franchise, license, permit or other
governmental approval which is material to HPI's Business or is necessary to
enable HPI to carry on its business as presently conducted or is required of any
employee or agent of HPI to enable each of them to carry out such person's
duties on behalf of HPI or (f) require the consent of any third party.
4.7 Financial Statements; Absence of Undisclosed Liabilities.
(a) The Shareholders have furnished ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ with the
balance sheets of HPI as of December 31, 1994, 1995, 1996, 1997 and 1998, and
the related income statements for each of the years in the five-year period
ended December 31, 1998, together with the related reports of its independent
public accountants, and the unaudited balance sheet and related income statement
for the three month period ended March 31, 1999 (collectively, the "HPI
Financial Statements"). HPI Financial Statements (i) are in accordance with the
respective books of HPI; (ii) have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved; (iii) present fairly the consolidated financial position of HPI as of
the respective dates thereof and the results of operations of HPI for the
respective periods indicated therein; and (iv) do not reflect any material items
of nonrecurring income except as stated therein. During the three-year period
ended December 31, 1998, there has been no change in HPI's accounting
principles, methods or policies, except as described in the notes to HPI
Financial Statements and except that the unaudited interim financial statements
(A) are subject to normal year-end audit adjustments which are not expected to
be material in the aggregate and (B) do not include footnotes.
(b) Except for a claim for certain state sales and/or use tax
(the "Sales Tax Claim") by the Indiana Department of Revenue (the "Department"),
which is described in Exhibit 4.10, HPI has no liabilities of any nature,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due, which were not disclosed or provided for in HPI Financial Statements or the
notes thereto other than obligations not required to be disclosed or provided
for under
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generally accepted accounting principles and liabilities incurred since December
31, 1998, which are not individually or in the aggregate, material to HPI's
Business. Except as respects the Sales Tax Claim, all reserves set forth on HPI
Financial Statements or the notes thereto were adequate and there are no loss
contingencies (as such term is used in Statement of Financial Accounting
Standards No. 5) which were not adequately provided for in HPI Financial
Statements or reflected in the notes thereto.
(c) The accounts receivable of HPI shown on the HPI Financial
Statements at December 31, 1998 are collectible in the ordinary and usual course
of business, and are not subject to any defense or right of set-off that may be
asserted or any claim of set-off that may be made, other than as reflected in
the allowance for doubtful accounts shown on the balance sheet contained in the
HPI Financial Statements at December 31, 1998. The reserve for doubtful accounts
is adequate, and the values at which accounts receivable are carried on such
December 31, 1998 balance sheet reflect the policies of HPI consistent with
HPI's past practice and are in accordance with generally accepted accounting
principles applied on a consistent basis.
(d) HPI makes and keeps accurate books and records reflecting
in all material respects its assets and maintains internal accounting controls
which provide reasonable assurance that (i) transactions are executed in
accordance with management's authorization, (ii) transactions are recorded to
permit preparation of HPI's financial statements and to maintain accountability
in all material respects for the assets of HPI, (iii) access to the assets of
HPI are permitted only in accordance with management's authorization, and (iv)
the recorded accountability of the assets of HPI is compared with existing
assets at reasonable intervals.
4.8 Absence of Changes. Except as respects the Sales Tax Claim, since
December 31, 1998 (a) there has been no material adverse change in HPI's
Business or any development known to the Shareholders that is reasonably
expected to cause a material adverse change in HPI's Business; (b) there has
been no damage, destruction or loss (whether or not covered by insurance)
materially and adversely affecting any assets material to HPI's Business; (c)
there has been no change by HPI in accounting principles or methods except
insofar as may be required by a change in generally accepted accounting
principles; (d) there has been no revaluation by HPI of any of its assets,
including, without limitation, writing down the value of inventory or writing
off notes or accounts receivable; (e) HPI has conducted its business only in the
ordinary course consistent with past practice; and (f) no event described in
Section 5.2 of this Agreement has occurred.
4.9 Contracts and Commitments.
(a) Exhibit 4.9 hereto describes all contracts and commitments
to which HPI is a party. Other than as disclosed, HPI is not a party or subject
to:
(i) Any employment contract or arrangement, written
or oral, providing for future compensation with any officer, consultant,
director or employee which is not terminable by it on thirty (30) days' notice
or less without penalty or obligation to make payments related to such
termination;
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(ii) Any plans, contracts or arrangements, written or
oral, which collectively require aggregate payments by HPI in excess of $10,000
for bonuses, pensions, deferred compensation, severance pay or benefits,
retirement payments, profit-sharing, or the like;
(iii) Any joint marketing, joint development or joint
venture contract or arrangement or any other agreement which has involved or is
expected to involve a sharing of profits with other persons;
(iv) Any existing OEM agreement, distribution
agreement, volume purchase agreement, or other similar agreement in which the
annual amount involved in 1998 exceeded, or is expected to exceed in 1999 or any
subsequent year, $10,000 or pursuant to which HPI has granted or received most
favored customer provisions or exclusive marketing rights related to any
product, group of products or territory;
(v) Any lease for real or personal property pursuant
to which the amount of payments which HPI is required to make on an annual basis
exceeds $10,000;
(vi) Any agreement, contract, mortgage, indenture,
lease, instrument, license, franchise, permit, concession, arrangement,
commitment or authorization which may be, by its terms, terminated or breached
by reason of the execution of this Agreement or the consummation of the
transactions contemplated hereby;
(vii) Any loan, sale of debt securities, purchase
money obligation, conditional sale, guarantee, indemnification or otherwise, in
excess of $10,000;
(viii) Any license agreement, either as licensor or
licensee;
(ix) Any contract containing covenants purporting to
limit HPI's freedom to compete in any line of business or in any geographic area
or with any third party;
(x) Any agreement, contract or commitment relating to
capital expenditures and involving future obligations in excess of $10,000; or
(xi) Any other agreement, contract or commitment
which is material to HPI's Business.
(b) Each agreement, contract, mortgage, indenture, plan,
lease, instrument, permit, concession, franchise, arrangement, license and
commitment to which HPI is a party is listed in Exhibit 4.9 and is valid and
binding on HPI and is in full force and effect, and neither HPI nor, to the
knowledge of HPI, any other party thereto, has breached any material provision
of, or is in default under the terms of, any such agreement, contract, mortgage,
indenture, plan, lease, instrument, permit, concession, franchise, arrangement,
license or commitment.
(c) None of the 20 largest customers of HPI during the twelve
months ended December 31, 1998 (determined on the basis of both revenues and
bookings during such period) has
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reduced or terminated, or has notified HPI in writing that it intends to reduce
or terminate, the amount of its business with HPI.
(d) There is no agreement, judgment, injunction, order or
decree binding upon HPI which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any material current business
practice of HPI, any acquisition of material property by HPI, or the conduct of
business by HPI as currently conducted or as proposed to be conducted by HPI.
4.10 Legal Proceedings. Except for the Sales Tax Claim which is
described in Exhibit 4.10, HPI is not in violation of, and has not received any
notice of any violation of (a) any applicable statute, law, regulation,
ordinance, writ, injunction, order, judgment or decree, the effect of which
violation could, individually or in the aggregate, be materially adverse to
HPI's Business, or (b) any provision of the Articles of Incorporation or Bylaws
(or other organizational or charter document) of HPI. Except for the Sales Tax
Claim, there is no order, writ, injunction, judgment or decree outstanding, and
no legal, administrative, arbitration or other proceeding, action, suit or
governmental investigation or inquiry against or relating to HPI or its assets
or business ("HPI Legal Proceedings") pending or, to the knowledge of HPI,
threatened and, to the knowledge of HPI, there are no claims (including
unasserted claims as to which there has been a manifestation by a potential
claimant of an awareness of such claim or it is considered probable that a claim
will be asserted and there is a reasonable possibility that the outcome will be
unfavorable, all as such terms are used in Statement of Financial Accounting
Standards No. 5), against or relating to HPI or its assets or business, which
pending or threatened HPI Legal Proceedings or claims would reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
HPI's Business. There is no HPI Legal Proceeding which in any manner challenges
or seeks to prevent, enjoin, alter or delay any of the transactions contemplated
hereby. There are no existing liabilities that require HPI to indemnify its
officers and directors for acts or omissions by such persons or existing
agreements to provide indemnification for such liabilities. Exhibit 4.10 sets
forth with respect to each HPI Legal Proceeding, to the extent that the
aggregate remedies or damages claimed for each such complaint are unspecified,
involve specific performance or injunctive relief or exceed $10,000, the forum,
the parties thereto, a brief description of the subject matter thereof and the
amount of damages claimed.
4.11 ERISA Matters.
(a) Exhibit 4.11 lists, with respect to HPI and any trade or
business (whether or not incorporated) which is treated as a single employer
with HPI (an "ERISA Affiliate") within the meaning of Section 414(b), (c), (m)
or (o) of the Code, (i) all material employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), (ii) each loan to a non-officer employee in excess of $5,000, loans
to officers and directors and any stock option, stock purchase, phantom stock,
stock appreciation right, supplemental retirement, severance, sabbatical,
medical, dental, vision care, disability, employee relocation, cafeteria benefit
(Code Section 125) or dependent care (Code Section 129), life insurance or
accident insurance plans, programs or arrangements, (iii) all bonus, pension,
profit sharing, savings, deferred compensation or incentive plans, programs or
arrangements, (iv) other fringe or employee benefit plans, programs or
arrangements that apply to senior management of HPI and that do not generally
apply to all employees, and (v) any current or former employment or executive
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compensation or severance agreements, written or otherwise, as to which
unsatisfied obligations of HPI of greater than $5,000 remain for the benefit of,
or relating to, any present or former employee, consultant or director of HPI
(together, the "HPI Employee Plans").
(b) The Shareholders have furnished to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ a copy
of each of the HPI Employee Plans and related plan documents (including trust
documents, insurance policies or contracts, employee booklets, summary plan
descriptions and other authorizing documents, and, to the extent still in its
possession, any material employee communications relating thereto) and has, with
respect to each HPI Employee Plan which is subject to ERISA reporting
requirements, provided copies of the Form 5500 reports filed for the last three
plan years. Any HPI Employee Plan intended to be qualified under Section 401(a)
of the Code has either obtained from the Internal Revenue Service a favorable
determination letter as to its qualified status under the Code, including all
amendments to the Code effected by the Tax Reform Act of 1986 and subsequent
legislation, or has applied to the Internal Revenue Service for such a
determination letter prior to the expiration of the requisite period under
applicable Treasury Regulations or Internal Revenue Service pronouncements in
which to apply for such determination letter and to make any amendments
necessary to obtain a favorable determination. The Shareholders have also
furnished ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ with the most recent Internal Revenue Service
determination letter issued with respect to each such HPI Employee Plan, and
nothing has occurred since the issuance of each such letter which could
reasonably be expected to cause the loss of the tax-qualified status of any HPI
Employee Plan subject to Code Section 401(a).
(c) (i) None of the HPI Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person; (ii) there has
been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any HPI Employee Plan, which
could reasonably be expected to have, in the aggregate, a Material Adverse
Effect; (iii) each HPI Employee Plan has been administered in accordance with
its terms and in compliance with the requirements prescribed by any and all
statutes, rules and regulations (including ERISA and the Code), except as would
not have, in the aggregate, a Material Adverse Effect, and HPI and each ERISA
Affiliate have performed all obligations required to be performed by them under,
are not in any material respect in default, under or violation of, and have no
knowledge of any material default or violation by any other party to, any of the
HPI Employee Plans; (iv) neither HPI nor any ERISA Affiliate is subject to any
liability or penalty under Sections 4976 through 4980 of the Code or Title I of
ERISA with respect to any of the HPI Employee Plans; (v) all material
contributions required to be made by HPI or any ERISA Affiliate to any HPI
Employee Plan have been made on or before their due dates and a reasonable
amount has been accrued for contributions to each HPI Employee Plan for the
current plan years; (vi) with respect to each HPI Employee Plan, no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the thirty (30) day notice requirement has been waived under the
regulations to Section 4043 of ERISA) nor any event described in Section 4062,
4063 or 4041 or ERISA has occurred; and (vii) no HPI Employee Plan is covered
by, and neither HPI nor any ERISA Affiliate has incurred or expects to incur any
liability under Title IV of ERISA or Section 412 of the Code. With respect to
each HPI Employee Plan subject to ERISA as either an employee pension plan
within the meaning of Section 3(2) of ERISA or an employee welfare benefit plan
within the meaning of Section 3(1) of ERISA, HPI has prepared in good faith and
timely filed all requisite governmental reports (which were true and correct as
of the date filed) and has properly and timely filed and distributed or posted
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all notices and reports to employees required to be filed, distributed or posted
with respect to each such HPI Employee Plan. No suit, administrative proceeding,
action or other litigation has been brought, or to the best knowledge of HPI is
threatened, against or with respect to any such HPI Employee Plan, including any
audit or inquiry by the IRS or United States Department of Labor. Neither HPI
nor any ERISA Affiliate is a party to, or has made any contribution to or
otherwise incurred any obligation under, any "multi employer plan" as defined in
Section 3(37) of ERISA.
(d) With respect to each HPI Employee Plan, HPI has complied
with (i) the applicable health care continuation and notice provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the
proposed regulations thereunder and (ii) the applicable requirements of the
Family Leave Act of 1993 and the regulations thereunder, except to the extent
that such failure to comply would not, in the aggregate, have a Material Adverse
Effect.
(e) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or other service
provider of HPI or any ERISA Affiliate to severance benefits or any other
payment (including, without limitation, unemployment compensation, golden
parachute or bonus), except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting of any such benefits, or increase the
amount of compensation due any such employee or service provider.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by HPI or any ERISA Affiliate relating to,
or change in participation or coverage under, any HPI Employee Plan which would
materially increase the expense of maintaining such Plan above the level of
expense incurred with respect to that Plan for the most recent fiscal year
included in HPI's financial statements.
4.12 Taxes.
(a) For purposes of this section and other provisions of this
Agreement relating to Taxes, the following definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or other additions to tax that
may become payable in respect thereof, (A) imposed by any federal, territorial,
state, local or foreign government or any agency or political subdivision of any
such government, which taxes shall include, without limiting the generality of
the foregoing, all income or profits taxes (including but not limited to,
federal income taxes and state income taxes), payroll and employee withholding
taxes, unemployment insurance, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
are required to be paid, withheld or collected, (B) any liability for the
payment of amounts referred to in (A) as a result of being a member of any
affiliated, consolidated, combined or unitary group, or (c) any liability for
amounts referred to in (A) or (B) as a result of any obligation to indemnify
another person.
-9-
(ii) The term "Returns" shall mean all reports,
estimates, declarations of estimated tax, information statements and returns
relating to, or required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding and other
payments to third parties.
(iii) The term "Code" shall mean the Internal Revenue
Code of 1986, as amended.
(b) Except as respects Returns, Taxes and potential liability
of HPI relating to the Sales Tax Claim, the following provisions of this Section
4.12(b) are accurate and true.
All Returns required to be filed by or on behalf of
HPI have been duly filed on a timely basis and such Returns are true, complete
and correct. All Taxes shown to be payable on such Returns or on subsequent
assessments with respect thereto, and all payments of estimated Taxes required
to be made by or on behalf of HPI under Section 6655 of the Code or comparable
provisions of state, local or foreign law, have been paid in full on a timely
basis or have been accrued on the Financial Statements, and no other Taxes are
payable by HPI with respect to items or periods covered by such Returns (whether
or not shown on or reportable on such Returns) or with respect to any period
prior to the date of this Agreement. HPI has withheld and paid over all Taxes
required to have been withheld and paid over, and complied with all information
reporting and backup with holding requirements, including maintenance of
required records with respect thereto, in connection with amounts paid or owing
to any employee, creditor, independent contractor, or other third party. There
are no liens on any of the assets of HPI with respect to Taxes, other than liens
for Taxes not yet due and payable or for Taxes that HPI is contesting in good
faith through appropriate proceedings and for which appropriate reserves have
been established. HPI has not at any time been a member of any partnership or
joint venture for a period for which the statue of limitations for any Tax
potentially applicable as a result of such membership has not expired. The
amount of HPI's liability for unpaid Taxes (whether actual or contingent) for
all periods through the date of the Financial Statements does not, in the
aggregate, exceed the amount of the current liability accruals for Taxes
reflected on the Financial Statements, and the Financial Statements properly
accrue in accordance with GAAP all liabilities for Taxes payable after the date
of the Financial Statements attributable to transactions and events occurring
prior to such date. No liability for Taxes of HPI has been incurred (or prior to
Closing will be incurred) since the date of the Financial Statements other than
in the ordinary course of business.
(c) To the extent requested by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, the
Shareholders have made available to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ true and complete copies of
(i) relevant portions of income tax audit reports, statements of deficiencies,
closing or other agreements received by or on behalf of HPI relating to Taxes,
and (ii) all federal and state income or franchise tax Returns and state sales
and use tax Returns for or including HPI for all periods ending on and after
December 31, 1998. Exhibit 4.12(c) sets forth a list of all of the Returns
referred to in clause (ii). HPI does not do business in or derive income from
any state other than states for which Returns have been duly filed and made
available to Purchaser.
(d) Except as set forth on Exhibit 4.12(d), the Returns of or
including HPI have never been audited by a government or taxing authority, nor
is any such audit in process, threatened
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or, to HPI's knowledge, pending (either in writing or verbally, formally or
informally). Except as set forth on Exhibit 4.12(d), no deficiencies exist or
have been asserted (either in writing or verbally, formally or informally) or
are expected to be asserted with respect to Taxes of HPI, and HPI has not
received notice (either in writing or verbally, formally or informally) and does
not expect to receive notice that it has not filed a Return or paid Taxes
required to be filed or paid. Except as set forth on Exhibit 4.12(d), HPI is not
a party to any action or proceeding for assessment or collection of Taxes, and
such event has not been asserted or threatened (either in writing or verbally,
formally or informally) against HPI or any of its assets. No waiver or extension
of any statute of limitations is in effect with respect to Taxes or Returns of
HPI. HPI has disclosed on its federal and state income and franchise tax returns
all positions taken therein that could give rise to a substantial understatement
penalty within the meaning of Code Section 6662 or comparable provisions of
applicable state tax laws.
(e) HPI is not (and has not ever been) a party to any tax
sharing agreement.
(f) HPI is not, nor has it been, a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, and
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ is not required to withhold tax by reason of Section 1445 of the
Code. HPI is not a "consenting corporation" under Section 341(f) of the Code.
HPI has not entered into any compensatory agreements with respect to the
performance of services which payment thereunder would result in a nondeductible
expense to HPI pursuant to Section 280G of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code. HPI has not
agreed to, and is not required to make, any adjustment under Code Section 481(a)
by reason of, a change in accounting method, and HPI will not otherwise have any
income reportable for a period ending after the Closing Date attributable to a
transaction or other event (e.g., an installment sale) occurring prior to the
Closing Date. HPI is not, and has not been, a "reporting corporation" subject to
the information reporting and record maintenance requirements of Section 6038A
and the regulations thereunder. HPI is in compliance with the terms and
conditions of any applicable tax exemptions, agreements or orders of any foreign
government to which it may be subject or which it may have claimed, and the
transactions contemplated by this Agreement will not have any adverse effect on
such compliance.
(g) HPI has no net operating losses and credit carryovers or
other tax attributes that are currently subject to limitation under Sections
382, 383 or 384 of the Code (or comparable provisions of state tax law).
4.13 Intellectual Property.
(a) HPI owns or has the exclusive right to use, make, sell,
license, or sublicense and bring actions for infringement of all HPI Products
(as defined below) and Intellectual Property Rights (as defined below) developed
by or for HPI or that are used or currently proposed to be used in the business
of HPI as currently conducted or proposed to be conducted. All of the HPI
Products and HPI Intellectual Property Rights are owned by HPI free and clear of
any rights or claims of any former employees, consultants, officers and
directors of HPI and former employers of all current and former employees,
consultants, officers and directors of HPI. The methods of manufacture for the
HPI Products constitute trade secrets of HPI that are presently valid and
protectable, and are not part
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of the public knowledge or literature. All taxes and fees, including, without
limitation, patent and trademark registration and prosecution fees and all
professional fees in connection therewith pertaining to the HPI Intellectual
Property Rights, due and payable on or before the date hereof, have been paid by
HPI.
(b) HPI's current products and products under development are
listed on Exhibit 4.13 (collectively, "HPI's Products"). No person has a license
to make, use or distribute or the right to acquire such a license with respect
to any current or future version of any HPI Product or any HPI Product that is
under development, and no agreement to which HPI is a party will restrict
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ from charging customers for any such new version. No agreement
for the support or maintenance of HPI Products obligates HPI, or would obligate
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ after the Closing Date to provide any improvement, enhancement,
change in functionality or other alteration in the performance of the HPI
Products.
(c) No person has a right to receive a royalty or other
payment in respect of any HPI Product or HPI Intellectual Property Rights
whether or not pursuant to any contractual arrange ments entered into by HPI.
HPI has no licenses granted, sold or otherwise transferred by or to it nor other
agreements to which it is a party, relating in whole or in part to any HPI
Product or HPI Intellectual Property Rights.
(d) The execution, delivery and performance of this Agreement
and the consummation of the other transactions contemplated hereby (including
without limitation the continued conduct by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ after the exchange
of stock contemplated in this Agreement and the incorporation of any HPI Product
or HPI Intellectual Property Right in any product of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or HPI)
will not breach, violate or conflict with any instrument or agreement governing
any such HPI Product or HPI Intellectual Property Right necessary or required
for, or used in, the conduct of the business of HPI as presently conducted or as
proposed to be conducted and will not cause the forfeiture or termination or
give rise to a right of forfeiture or termination of any such HPI Product or HPI
Intellectual Property Right or in any way impair the right of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ to
use, sell, license or dispose of, either as part or all of an HPI Product or
subsequent to the Closing Date as part or all of a product of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or
HPI, or to bring any action for the infringement of, any such HPI Product or HPI
Intellectual Property Right or portion thereof.
(e) The development, manufacture, marketing, license, sale or
use of any HPI Product or HPI Intellectual Property Right does not and will not
violate any license or agreement to which HPI is a party or infringe any
Intellectual Property Right of any other party; there is no pending or, to the
knowledge of HPI, threatened claim or litigation contesting the validity,
ownership or right to use, sell, license or dispose of any Intellectual Property
Right necessary or required for, or used in, the conduct of the business of HPI
as presently conducted nor, to the knowledge of HPI, is there any basis for any
such claim, nor has HPI received any notice asserting that any such Intellectual
Property Right or the proposed use, sale, license or disposition thereof
conflicts or will conflict with the rights of any other party, nor, to the
knowledge of HPI, is there any basis for any such assertion. To HPI's knowledge,
there is no infringement on the part of any third party of HPI's Intellectual
Property Rights.
-12-
(f) HPI has taken reasonable and practicable steps (including,
without limitation, entering into confidentiality and non-disclosure agreements
with all employees of HPI, other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, with access to or
knowledge of HPI's Intellectual Property Rights) to maintain the secrecy and
confidentiality of, and its proprietary rights in, all Intellectual Property
Rights necessary or required for, or used in, the conduct of HPI's Business. All
employees of HPI except for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ that have had access to any
material portion of the HPI Intellectual Property Rights are parties to a
written agreement under which each such person or entity is obligated to
maintain the confidentiality of proprietary information of HPI. To HPI's
knowledge, none of HPI's employees, consultants, officers or directors is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would conflict with their obligation to
use their best efforts to promote the interests of HPI in the HPI Business or
that would conflict with the HPI Business. It is currently not necessary nor
will it be necessary for HPI to utilize in the HPI Business nor will HPI utilize
in the HPI Business any inventions of any of such persons or entities (or people
it currently intends to hire) made or owned prior to their employment by or
affiliation with HPI, nor is it or will it be necessary to utilize any other
assets or rights of any such persons or entities (or people it currently intends
to hire) made or owned prior to their employment with or engagement by HPI, in
violation of any registered patents, trade names, trademarks or copyrights or
any other limitations or restrictions to which any such person or entity is a
party or to which any of such assets or rights may be subject, except to the
extent that such utilization would not have a material adverse effect on the HPI
Business. None of HPI's employees, consultants, officers, directors or
shareholders that has had knowledge or access to information relating to HPI's
Business has taken, removed or made use of any proprietary documentation,
manuals, products, materials, or any other tangible item from his previous
employer relating to the business as conducted of such previous employer which
has resulted in HPI's access to or use of such proprietary items in HPI's
Business, and HPI will not gain access to or make use of any such proprietary
items in HPI's Business, except to the extent that any such activities would not
have a material adverse effect on HPI's Business.
(g) Exhibit 4.13 sets forth a complete list of all licenses,
sublicenses and other agreements as to which HPI is a party and pursuant to
which HPI or any other person is authorized to use, license, sublicense, sell or
distribute any Intellectual Property Right and includes the identity of all
parties thereto, a description of the nature and subject matter thereof, the
applicable royalty and the term thereof. HPI is not in violation of any license,
sublicense or agreement described on such list except such violations as do not
materially impair HPI's rights under such license, sublicense or agreement.
Exhibit 4.13 separately identifies each exclusive arrangement between HPI and
any third party to use, license, sublicense, sell or distribute any HPI
Intellectual Property Right or any HPI Product.
(h) Exhibit 4.13 contains a complete and accurate list of all
applications, filings and other formal actions made or taken (including any
results thereof) pursuant to federal, state, local and foreign laws by HPI to
perfect or protect its interest in HPI Intellectual Property Rights, including,
without limitation, all patents, patent applications, trademarks, trademark
applications, service marks and copyright registrations. As used herein, the
term "Intellectual Property Rights" means all intellectual property rights,
including, without limitation, domestic and foreign patents, patent
applications, patent rights, trademarks, trademark registrations, trademark
applications, trade names, service marks, service ▇▇▇▇ applications, copyrights,
copyright applications, licenses, know-how, trade secrets, trade rights,
proprietary processes and formulae, inventions, development tools, designs,
plans, specifications, technical information and other proprietary rights,
whether or not registered, and all documentation and media relating to the
above, and the term "HPI Intellectual Property Right" shall mean Intellectual
Property Rights owned by or granted exclusively or nonexclusively to HPI.
4.14 Environmental Matters.
(a) The operations of HPI comply in all material respects with
all federal, state and local environmental, health and safety laws, statutes and
regulations.
(b) The operations of HPI are not the subject of any judicial
or administrative proceeding alleging the violation of any federal, state or
local environment, health or safety law, statute or regulation.
(c) The operations of HPI are not the subject of any federal
or state investigation pursuant to which HPI has been ordered to respond to a
release of any hazardous or toxic waste, substance or constituent or other
substance, into the environment in violation of law.
(d) HPI has not filed any notice under federal or state law
indicating past or present treatment, storage or disposal requiring a Part B
permit or designation of "interim status" as defined under 40 C.F.R. Parts
260-270 or any state equivalent of a hazardous or toxic waste as defined therein
or reporting a spill or release of a hazardous or toxic waste, substance or
constituent or other substance, into the environment except in accordance with
applicable law.
(e) HPI has not released, as defined in the Comprehensive
Environmental Response Compensation and Liability Act (42 U.S.C. Section 9601 et
seq.), any hazardous substance as defined therein into the environment.
(f) None of the operations of HPI involve the generation,
transportation, treatment or disposal as defined under 40 C.F.R. Parts 260-270
or any state equivalent of hazardous waste as defined therein requiring a Part B
permit or designation of "interim status".
(g) No underground storage tanks or surface impoundments are
on the premises of HPI.
(h) No lien in favor of any governmental authority for (i) any
liability under federal or state environmental laws or regulations, or (ii)
damages arising from or costs incurred by such governmental authority in
response to a release of a hazardous or toxic waste, substance or constituent or
other substance, into the environment has been filed or attached to the premises
currently owned by HPI.
(i) All material permits necessary for the continued conduct
of the business of HPI or the transportation, transfer, recycling, storage, use,
treatment, manufacture, investigation or removal of any hazardous or toxic
waste, substance or constituent or other substance have been obtained by HPI.
All such permits are valid and in full force and effect and will survive the
Closing
-13-
without modification. HPI has complied in all material respects with all
covenants and conditions of any permits and no circumstances exist which could
cause any permit to be revoked, modified or rendered non-renewable upon the
payment of the permit fee or which could impose upon ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or HPI the
obligation to obtain any additional permits.
(j) HPI has not exposed any persons in a material manner to,
nor received notice of any claim of injury due to exposure of any person to,
hazardous materials manufactured, stored, used, distributed, disposed of,
released or controlled by HPI.
(k) No hazardous materials are present on any property which
has been owned, leased or occupied by HPI, for the conduct of its business in
violation of any federal, state or local law and which could result in a
material financial liability to HPI.
(l) No claim, complaint, or administrative proceeding has been
brought or is currently pending against HPI relating to any liability of HPI
existing or threatened with respect to hazardous or toxic waste, substances or
constituents or other substances or as to the investigation or remediation of
hazardous or toxic waste, substances or constituents or other substances.
As used herein the phrase "federal, state and local environmental,
health and safety laws, statutes or regulations" means any and all laws, rules,
regulations, orders, treaties, statutes and codes promulgated by any local,
state, federal or international governmental authority or agency which has
jurisdiction over any portion of the current operations of HPI, which prohibits,
regulates or controls any hazardous material or the transportation, storage,
transfer, recycling, use, treatment, manufacture, investigation, removal,
remediation, release, exposure of others to, sale or distribution of hazardous
materials including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean
Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C. Section 2601 et seq.), and the Occupational Safety and Health
Act (29 U.S.C. Section 651 et seq.), as these laws have been amended or
supplemented to date and any analogous state or local statutes and the
regulations promulgated to date pursuant thereto.
As used herein, "hazardous or toxic waste, substance or constituent or
other substance" means those substances which are regulated by or form the basis
of liability under any federal, state and local environmental, health and safety
laws, statutes or regulations because they are radioactive, toxic, hazardous or
otherwise a danger to health, reproduction or the environment, including,
without limitation: (a) asbestos, (b) oil and petroleum products, (c)
explosives, (d) radioactive substances, pollutants or wastes, (e) urea
formaldehyde-containing building materials, (f) polychlorinated biphenyls, (g)
radon gas, and (h) ultra-hazardous or toxic substances, pollutants or wastes.
4.15 Certain Agreements. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any director
or employee of HPI, under any Plan or otherwise, (b) increase any
-14-
benefits otherwise payable under any Plan, or (c) result in the acceleration of
the time of payment or vesting of any such benefits.
4.16 Interests of Officers and Directors. No officer or director of HPI
or any "affiliate" or "associate" (as those terms are defined in Rule 405
promulgated under the Securities Act) of any such person has had, either
directly or indirectly, a material interest in: (a) any person or entity which
purchases from or sells, licenses or furnishes to HPI any goods, property,
technology or intellectual or other property rights or services; (b) any
contract or agreement to which HPI is a party or by which it may be bound or
affected; or (c) any property, real or personal, tangible or intangible, used in
or pertaining to HPI's Business, including any interest in the HPI Intellectual
Property Rights.
4.17 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or decree binding upon HPI which has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of HPI, any acquisition of property by HPI or
the conduct of business by HPI as currently conducted or as currently proposed
to be conducted by HPI.
4.18 Title to Properties; Absence of Liens and Encumbrances;
Condition of Equipment.
(a) Exhibit 4.18 lists all facilities occupied by HPI since
HPI's incorporation, and indicates the nature of HPI's interest in such
facilities. Except as described in Exhibit 4.18 hereof, HPI has good and valid
title to, or, in the case of leased properties and assets, valid leasehold
interests in, all of their tangible properties and assets, real, personal and
mixed, used in their business, free and clear of any liens, charges, pledges,
security interests or other encumbrances, except as reflected in the HPI
Financial Statements or except for such imperfections of title and encumbrances,
if any, which are not substantial in character, amount or extent, and which do
not materially detract from the value, or interfere with the present use, of the
property subject thereto or affected thereby.
(b) The equipment owned or leased by HPI is, taken as a whole,
(i) adequate for the conduct of the business of HPI consistent with their past
practice, (ii) suitable for the uses to which it is currently employed, (iii) in
good operating condition, (iv) regularly and properly maintained, (v) not
obsolete, dangerous or in need of renewal or replacement, except for renewal or
replacement in the ordinary course of business, and (vi) free from any defects,
except, with respect to clauses (ii) through (vi) above, as would not have been
a material adverse effect on HPI's Business.
4.19 Regulatory Matters; Governmental Licenses; Compliance with
Laws.
(a) HPI has obtained all consents, approvals, registrations,
certifications, authorizations, permits and licenses of, and has made all
filings with, or notifications to, all Governmental Entities pursuant to
applicable requirements of all federal, state or local and, to HPI's knowledge,
foreign, laws, ordinances, governmental rules or regulations applicable to HPI
and its business, including but not limited to, all such laws, ordinances,
governmental rules or regulations
-15-
relating to registration of HPI's products (including proposed products) and
certification of its facilities. Except possibly as respects the Sales Tax
Claim, HPI is in compliance with all federal, state or local and, to HPI's
knowledge, foreign, laws, ordinances, governmental rules or regulations relating
to its business and has no reason to believe that any of its consents,
approvals, authorizations, registrations, certifications, permits, filings or
notifications that it has received or made to operate its business are invalid
or have been or are being suspended, canceled, revoked or questioned. There is
no investigation or inquiry to which HPI is a party or, to HPI's knowledge,
pending or threatened relating to the operation of HPI's business and its
compliance with applicable federal, state, local or foreign laws, ordinances,
governmental rules or regulations, except respecting the Sales Tax Claim.
(b) Except possibly as respects the Sales Tax Claim, HPI is
not in default with respect to any order of any court, governmental authority or
arbitration board or tribunal to which HPI is a party or is subject.
4.20 Labor Matters.
(a) HPI is in compliance in all material respects with all
currently applicable laws and regulations respecting employment, discrimination
in employment, terms and conditions of employment and wages and hours and
occupational safety and health and employment practices, and is not engaged in
any unfair labor practice. HPI has complied in all material aspects with all
applicable provisions of COBRA and has no material obligations with respect to
any former employees or qualifying beneficiaries thereunder. HPI has not
received any notice from any Governmental Entity, and there has not been
asserted before any Governmental Entity, any claim, action or proceeding to
which HPI is a party or involving HPI, and there is neither pending nor, to
HPI's knowledge, threatened any investigation or hearing concerning HPI arising
out of or based upon any such laws, regulations or practices. Except as is not
material to HPI's Business, HPI has not given to or received from, and does not
anticipate giving to or receiving from, any employee of HPI notice of
termination of employment. No amounts will be payable (whether currently or in
the future) to current or former officers, directors, or employees of HPI as a
result of or in connection with the Agreement except as may be agreed to in
writing by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in this Agreement or in an employment contract for
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
(b) HPI is not a party to any labor agreement with respect to
its employees with any labor organization, union, group or association and there
are no employee unions (nor any other similar labor or employee organizations)
under local statutes, custom or practice. HPI has not experienced any attempt by
organized labor or its representatives to make HPI conform to demands of
organized labor relating to its employees or to enter into a binding agreement
with organized labor that would cover the employees of HPI. To the knowledge of
HPI and the Shareholders, there is no labor strike or labor disturbance pending
or threatened against HPI nor is any grievance currently being asserted. HPI has
not experienced a work stoppage or other labor difficulty.
4.21 Questionable Payments. Neither HPI nor, to the Shareholders'
knowledge, any director, officer, agent or other employee of HPI, has: (a) made
any payments or provided services or other favors in the United States of
America or in any foreign country in order to obtain preferential treatment or
consideration by any Governmental Entity with respect to any aspect of the
-16-
business of HPI; or (b) made any political contributions which would be lawful
under the laws of the United States or the foreign country in which such
payments were made. Neither HPI nor, to the Shareholders' knowledge, any
director, officer, agent or other employee of HPI, has been the subject of any
inquiry or investigation by any Governmental Entity in connection with payments
or benefits or other favors to or for the benefit of any governmental or armed
services official, agent, representative or employee with respect to any aspect
of the business of HPI or with respect to any political contribution.
4.22 Insurance. Exhibit 4.22 contains a complete and accurate list of
all policies or binders of fire, liability, title, worker's compensation,
product liability and other forms of insurance maintained by HPI. HPI is not in
default under any of such policies or binders, and HPI has not failed to give
any notice or to present any claim under any such policy or binder in a due and
timely fashion. There are no facts known to HPI or the Shareholders upon which
an insurer might be justified in reducing coverage or increasing premiums on
existing policies or binders. There are no outstanding unpaid claims under any
such policies or binders. All policies and binders provide sufficient coverage
for the risks insured against, are in full force and effect on the date hereof
and shall be kept in full force and effect through the Closing Date.
4.23 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement. In the event that the preceding
sentence is in any way inaccurate, the Shareholders agree to indemnify and hold
harmless ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ from any liability for any commission or compensation
in the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or any of its
directors, officers, partners, employees or representatives is responsible.
4.24 Investment Representations. Each Shareholder hereby separately
represents and warrants to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ that:
(a) Such Shareholder has acquired sufficient information about
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇'s business affairs and financial condition
to reach an informed and knowledgeable decision to acquire the ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Shares. The Shareholder is acquiring the ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares for his or her
own account for investment purposes only and not with a view to, or for the
resale in connection with, any "distribution" thereof for purposes of the
Securities Act.
(b) The Shareholder understands that the ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Shares have not been registered under the Securities Act or in any state in
reliance upon specific exemptions therefrom, which exemptions depend upon, among
other things, the bona fide nature of the Shareholder's investment intent as
expressed herein.
(c) By reason of the Shareholder's business or financial
experience or the business or financial experience of his or her professional
advisors who are unaffiliated with ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, the Shareholder has the
capacity to protect his or her own interests in the acquisition of the
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares.
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(d) The Shareholder understands that the ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Shares will constitute "restricted securities" under Rule 144 promulgated under
the Securities Act, and that the Shareholder's ability to resell the
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares (subject to the Shareholders rights under Section 11 of
this Agreement) will be limited accordingly.
4.25 Disclosure. No representation or warranty made by the Shareholders
in this Agreement, nor any document, written information, statement, financial
statement, certificate, or exhibit prepared and furnished or to be prepared and
furnished by the Shareholders or their representatives pursuant hereto or in
connection with the transactions contemplated hereby, 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 or facts contained herein or
therein not misleading in light of the circumstances under which they were
furnished. To the knowledge of the Shareholders after reasonable inquiry, there
is no event, fact or condition that has resulted in, or could reasonably be
expected to result in, a material adverse effect on HPI's Business that has not
been set forth in this Agreement or in the exhibits hereto. The Shareholders
have provided copies to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ of all documents and information
requested by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ pursuant to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇'s diligence requests.
SECTION 5. INTERIM OPERATIONS; ADDITIONAL COVENANTS OF
SHAREHOLDERS.
5.1 Regular Course of Business. Except as otherwise consented to in
writing by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, prior to the Closing Date, the Shareholders
represent, warrant, and covenant that HPI will conduct its business in the
ordinary and usual course consistent with past practice and shall use reasonable
efforts to maintain and preserve intact their business organizations, keep
available the services of their officers and employees and maintain positive
relations with licensors, licensees, suppliers, contractors, distributors,
customers and others having business relationships with them.
The Shareholders shall promptly notify ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ of any event or
occurrence not in the ordinary course of business and will not enter into or
amend any agreement or take any action which reasonably could be expected to
have a material adverse effect on HPI's Business.
5.2 Restricted Activities and Transactions. The Shareholders represent,
warrant, and covenant that HPI will not enter into any transactions, prior to
the Closing Date, other than in the ordinary course of business, and that the
Shareholders will take such action as is necessary to insure that HPI will not
enter into any such transactions, and in particular will not, without the prior
written consent of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇:
(a) create or incur any indebtedness other than unsecured
current liabilities incurred in the ordinary course of business;
(b) grant or permit to arise any mortgage, deed of trust,
security interest, lien, or encumbrance of any kind;
(c) sell, lease, or otherwise dispose of any of its assets
other than merchandise inventories sold in the ordinary course of business;
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(d) declare or pay any dividends other than consistent with
past practice to declare and pay dividends to the current shareholders, or
repurchase or redeem any of its shares, or establish a sinking fund or other
reserve for such purpose;
(e) issue, sell, or grant options for the sale of any of its
shares, whether or not previously authorized or issued;
(f) expend any funds for capital additions or improvements
other than ordinary expenditures for maintenance, repairs, and replacements;
(g) acquire an interest in any other business enterprise,
whether for cash or in exchange for the stock or other securities of HPI;
(h) increase the compensation paid to any of its officers or
directors above the level paid on the date of this Agreement as set forth in
Exhibit 5.2 or agree to pay to any of its officers or employees any bonus,
severance pay, or pension, whether under an existing compensation or deferred
compensation plan, or otherwise;
(i) propose, adopt or permit an amendment of HPI's Articles of
Incorporation or HPI's Bylaws;
(j) make or permit any material amendments or termination of
any material contract, agreement, license or other right to which it is a party;
(k) pay, discharge or satisfy any claims, liabilities or
obligations (whether absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction of in the ordinary course of business
consistent with past practice of liabilities reflected or reserved against in
the HPI Financial Statements;
(l) except in the ordinary course of business, enter into or
agree to enter into any transaction material to HPI's Business;
(m) transfer or license to any person or entity, or otherwise
extend, amend or modify, any rights to the HPI Intellectual Property Rights;
(n) change the accounting methods or practices followed by
HPI, including any change in any assumption underlying, or method of
calculating, any bad debt, contingency or other reserve, except as may be
required by changes in generally accepted accounting principles, make or change
any material Tax election, adopt or change any Tax accounting method, file any
material Return or any amendment to a material Return, and except as respects
the Sales Tax Claim, enter into any material closing agreement, settle any
material Tax claim or assessment, or consent to any extension or waiver of the
limitation period applicable to any material Tax claim or assessment, without
the prior consent of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, which consent will not be unreasonably
withheld (for purposes of this covenant a "material" Tax Return, closing
agreement, Tax claim or assessment shall mean such an item reflecting a Tax
Liability in excess of $10,000); or
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(o) take any action that would result in any of the
representations and warranties of HPI set forth in this Agreement becoming
untrue;
5.3 No Default or Violation. Except as otherwise consented to in
writing by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, prior to the Closing Date, the Shareholders
represent, warrant, and covenant that HPI will use its best efforts not to (a)
violate, or commit a breach of or a default under, any contract, agreement,
lease, license, mortgage or commitment to which it is a party or to which any of
its assets may be subject or (b) violate any statute, regulation, ordinance,
writ, injunction, order, judgment or decree, or any other requirement of any
governmental body or court, applicable to its assets or business, the effect of
which in any such case in clauses (a) or (b) would be materially adverse to
HPI's Business.
5.4 Taxes; Consent. The Shareholders represent, warrant, and covenant
that HPI will prepare and timely file all Returns and amendments thereto
required to be filed by it on or before the Closing Date. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall
have a reasonable opportunity to review all Returns and amendments thereto and
to approve such Returns (which approval shall not be unreasonably withheld). HPI
shall pay and discharge all Taxes, assessments and governmental charges upon or
against it or any of its properties or assets, and all liabilities at any time
existing, before the same shall become delinquent and before penalties accrue
thereon, except to the extent and as long as the same are being contested in
good faith and by appropriate proceedings pursued diligently and in such a
manner as not to cause any material adverse effect upon the condition (financial
or otherwise) or operations of HPI. Between the date of this Agreement and the
Closing Date, HPI shall give ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and its authorized representatives
full access to all properties, books, records and Returns of or relating to HPI,
whether in possession of HPI or third-party professional advisors or
representatives in order that ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ may have full opportunity to make
such investigations as it shall desire to make of the affairs of HPI. HPI shall
ensure that all third-party advisors and representatives of HPI, including
without limitation accountants and attorneys, fully cooperate and be available
to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in connection with such investigation. HPI shall, as of the
Closing Date, terminate all tax allocation agreements or tax sharing agreements
with respect to HPI and shall ensure that any such agreements are of no further
force or effect as to HPI on and after the Closing Date.
5.5 Advice of Changes. The Shareholders will promptly advise
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in writing of (a) any event occurring subsequent to the date of
this Agreement which would render any representation or warranty of HPI
contained in this Agreement, if made on or as of the date of such event or the
date of the Closing, untrue or inaccurate or (b) any material adverse change in
HPI's Business.
5.6 Consents, Approvals and Filings. The Shareholders will use their
best efforts to comply as promptly as practicable with any necessary
governmental requirements and to obtain on or before the Closing all necessary
approvals, authorizations, consents, licenses, clearances or orders of
Governmental Entities.
5.7 Due Diligence; Access to Records and Properties. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
may, prior to the Closing Date, through its employees, agents and
representatives, continue to conduct or cause to be conducted a detailed review
of the business, financial condition, properties, assets, books and
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records of HPI. The Shareholders agree to assist ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in conducting
such review and investigation and will provide, and will cause its independent
public accountants to provide (subject to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇'s agreement to any
hold-harmless or indemnity reasonably required by such independent public
accountants), ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and its employees, agents and representatives full
access to, and complete information concerning all aspects of the business of
HPI, including its books, records (including Returns filed or in preparation),
personnel and premises, the audit work papers and other records relating to HPI
of its independent public accountants. If the results of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇'s due
diligence review are not satisfactory to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in its sole discretion,
then ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ may elect not to close the transactions contemplated by
this Agreement. Neither any investigation by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ nor the receipt by
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ of any data or information from HPI, its independent public
accountants and other representatives or advisors will affect the right of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ to rely on the representations, warranties or covenants of the
Shareholders or the right of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ to terminate this Agreement as
provided in Section 13.1 hereof.
5.8 Reorganization. From and after the date hereof and until the
Closing Date, The Shareholders represent, warrant, and covenant that HPI will
not, and HPI will use its reasonable best efforts to cause the HPI Affiliates
not to, knowingly take any action, that would jeopardize qualification of the
exchange of stock contemplated in this Agreement as a reorganization within the
meaning of Section 368 of the Code. From and after the date hereof and until the
Closing Date, the Shareholders represent, warrant and covenant that neither HPI
nor any HPI affiliate will knowingly fail to take any action which is reasonable
and not materially burdensome to HPI or its shareholders if such failure would
jeopardize qualification of the exchange of stock contemplated in this Agreement
as a reorganization within the meaning of Section 368 of the Code.
SECTION 6. CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES.
6.1 Further Assurances. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby and to
satisfy the conditions set forth in Sections 9 and 10 of this Agreement. The
Shareholders shall cause HPI to comply with all of the covenants of HPI under
this Agreement.
6.2 Investment Intent. Each of the Shareholders represents that the
shares of common stock of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ being acquired by him or her under
this Agreement are being acquired for investment purposes only, and not with a
view to reselling the same or dividing participation in those shares with
others. Each Shareholder represents that he or she has no present intent to
resell or otherwise dispose of all or any part of the shares. The shares will
not be held for any minimum period of time to take advantage of the long term
capital gains provisions of the Code or any other applicable tax law, or to
avoid registration requirements under the Securities Act of 1933 or any other
applicable securities laws.
6.3 Tax and Accounting Treatment. The parties hereto acknowledge and
agree that while they desire that the exchange of stock contemplated hereby be
treated for accounting purposes as a purchase and (at least with respect to the
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock acquired
-21-
hereunder) for tax purposes as a tax-free reorganization under Section 368 of
the Code, each person shall be solely responsible for the tax and accounting
consequences of this Agreement to such party.
6.4 Confidentiality; Publicity. The Shareholders and HPI shall not
disclose the terms of this transaction to any third party nor make any public
announcement related to this Agreement or the transactions contemplated hereby
without the prior written approval of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
6.5 No Other Discussions. The Shareholders, HPI and their respective
Affiliates, employees, agents and representatives will not (i) initiate,
encourage the initiation by others of discussions or negotiations with third
parties or respond to solicitations by third persons relating to any merger,
sale or other disposition of any substantial part of the assets, the Business or
the properties of HPI (whether by merger, consolidation, sale of stock, sale of
assets, or otherwise), or (ii) enter into any agreement or commitment (whether
or not binding) with respect to any of the foregoing transactions. The
Shareholders will immediately notify ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ if any third party attempts
to initiate any solicitation, discussion or negotiation with respect to any of
the foregoing transactions.
6.6 Covenant not to Compete. Each Shareholder agrees that for the
period of two and one half years immediately following the termination of the
Employment Agreement to which Paragraph 6.11 of this Agreement refers, the
Shareholder shall not, directly or indirectly:
(a) alone or as a partner, joint venturer, officer, director,
employee, consultant, agent, independent contractor, or security holder, of any
Person, engage in any business activity in any jurisdiction in the United States
of America or any other country in the world the ("Restricted Territory") that
directly or indirectly competes with ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and/or HPI, as their
businesses are constituted on the Closing Date; provided, however, that the
beneficial ownership of less than one percent (1%) of any class of securities of
any entity having a class of equity securities actively traded on a national
securities exchange or the Nasdaq Stock Market shall not be deemed, in and of
itself, to violate the prohibitions of this Section;
(b) call upon any person who is, at that time, an employee of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or their Affiliates in a management capacity for the purpose or
with the intent of enticing such employee away from or out of the employ of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or their Affiliates;
(c) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or their Affiliates for the purpose of soliciting or selling
products or services directly competitive with any business in which HPI,
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or their Affiliates was engaged on the Closing Date;
(d) call upon any prospective acquisition candidate, on the
Shareholders' own behalf or on behalf of any competitor in any business in which
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and/or HPI is engaged on the Closing Date, which candidate was
either called upon by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or any of its Affiliates, or for which
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or any of its Affiliates made an acquisition analysis, for the
purpose of acquiring such entity; or
-22-
(e) disclose customers, whether in existence or proposed, of
HPI to any person, firm, partnership, corporation or business for any reason or
purpose whatsoever.
The Shareholders agree and acknowledge that the restrictions contained in this
Section are reasonable in scope and duration, and are necessary to protect
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and HPI. The parties intend that the covenants contained in this
Section shall be construed as a series of separate covenants, (a) one for each
country, county, city and state (or comparable political subdivision) in the
Restricted Territory, and, within such territorial divisions, (b) one for each
month to which the Shareholder is bound by such covenants. Except for geographic
coverage, each such separate covenant shall be deemed identical in terms to the
covenant contained in the preceding paragraphs. If, in any judicial proceeding,
a court shall refuse to enforce any of the separate covenants (or any part
thereof) deemed included in such paragraphs, then such unenforceable covenant
(or such part) shall be deemed eliminated from this Agreement for the purpose of
those proceedings to the extent necessary to permit the remaining separate
covenants (or portions thereof) to be enforced by such court. It is the intent
of the parties that the covenants set forth herein be enforced to the maximum
degree permitted by applicable law. In the event that the provisions of this
Section should ever be deemed to exceed the scope, time or geographic
limitations of applicable law regarding covenants not to compete, then such
provisions shall be reformed to the maximum scope, time or geographic
limitations, as the case may be, permitted by applicable laws. The Shareholders
further agree and acknowledge that any breach of this Section will cause
irreparable injury to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and HPI and upon any breach or threatened
breach of any provision of this Section, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and HPI shall be
entitled to injunctive relief, specific performance or other equitable relief,
without the necessity of posting bond; provided, however, that this shall in no
way limit any other remedies which ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or HPI may have as a result
of such breach, including the right to seek monetary damages.
6.7 Termination of Bonus Arrangements. All existing bonus plans or
incentive compensation arrangements between HPI and its employees shall have
been canceled prior to the Closing.
6.8 Trading in ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock. Except as otherwise
expressly consented to by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, from the date of this Agreement until
the Closing Date, neither the Shareholders nor any of its Affiliates will
directly or indirectly purchase or sell (including short sales) any shares of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock in any transactions effected on Nasdaq or
otherwise. The Shareholders agree that for a period of one hundred eighty (180)
days after the Closing Date, the Shareholders will not directly or indirectly
sell or purchase or enter into any agreement, contract or arrangement to sell or
purchase any put or call options or other derivative securities (including
shorts sales) with respect to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock (including, without
limitation, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares) or enter into any other agreements,
contracts or arrangements providing for the alteration of the Shareholder's
investment risk with respect to any shares of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock;
provided that nothing in this paragraph will be deemed to limit or prohibit the
Shareholders from exercising their rights under Section 11 o f this Agreement.
6.9 Indebtedness to Huntington National Bank, the Law Firm of
Hall, Render, Killian, Health & ▇▇▇▇▇, P.S.C., and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. The
Shareholders covenant and agree that, on the Closing Date, (a) the indebtedness
of HPI to Huntington National Bank ("HNB")
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respecting a loan guaranteed in part (75%) by the Small Business Administration
the ("SBA") shall not exceed $329,206; (b) the indebtedness of HPI to HNB
respecting the line of credit shall not exceed $70,000; (c) the indebtedness of
HPI to Hall, Render, Killian, Health & ▇▇▇▇▇, P.S.C. (the "Law Firm") shall not
exceed $62,000; and (d) the indebtedness of HPI to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall not
exceed $26,000. It is agreed that the indebtedness of HPI to HNB respecting the
loan guaranteed in part by the Small Business Administration, the indebtedness
of HPI to HNB respecting the line of credit, the indebtedness of HPI to the Law
Firm, and the indebtedness of HPI to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, are all bona fide,
legitimate debts of HPI and of each of which HPI is, and at the time of Closing
will be, the obligator. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ will ensure that HPI pays both the
aforementioned indebtedness of HPI to the Law Firm and the aforementioned
indebtedness of HPI to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ at or shortly after the closing
If on the closing Date, the indebtedness of HPI to HNB on the loan
guaranteed in part by the SBA exceeds $329,206.12; the indebtedness of HPI to
HNB respecting the line of credit exceeds $70,000; the indebtedness of HPI to
the Law Firm exceeds $62,000; or the indebtedness of HPI to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
exceeds $26,000, then ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall be entitled to indemnifiable damages
in any such excess amount or if such excess amount is known on the Closing Date,
to reduce the amount of consideration payable for the shares, as described in
Section 1.2 hereof, by the amount of such excess amount and tender to the
Shareholders a number of shares of common stock of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ reduced
appropriately to reflect such excess amount, with each such share of common
stock of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ to be valued for this purpose at $6.62813.
6.10 Indebtedness. The Shareholders covenant and agree that the
indebtedness of HPI for borrowed money including trade payables, (excluding the
indebtedness of HPI to HNB the Law Firm and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇), whether to a
bank or to another Person, including without limitation the current portion of
long term debt of HPI, shall not exceed One Hundred Fifty-Six Thousand Dollars
($156,000) on the Closing Date. If the indebtedness of HPI on the Closing Date
exceeds One Hundred Fifty-Six Thousand Dollars ($156,000) (excluding the
indebtedness of HPI to HNB, the Law Firm and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇), then
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall be entitled to indemnifiable damages in any such excess
amount, or if such excess amount is known on the closing Date, to reduce the
amount of consideration payable for the shares as described in Section 1.2
hereof, by the amount of such excess amount and tender to the Shareholders a
number of shares of common stock of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ reduced appropriately to
reflect such excess amount, with each such share of common stock of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ to be valued for this purpose at $6.62813.
6.11 Employment Agreement. Prior to or at the Closing, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall execute an employment agreement in the form
attached as Exhibit 6.11 hereto.
SECTION 7. INDEMNIFICATION.
7.1(a) Agreement by Shareholders to Indemnify. Each of the Shareholders
agrees to jointly and severally indemnify and hold harmless ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and
its Affiliates, officers, directors, and agents thereof (collectively, the
"Indemnified Parties") against any and all loss, damage, cost, and expense
(including, without limitation, attorneys' fees) that the Indemnified Parties
may sustain as a result of (i) any inaccurate representation or the breach of
any warranty or covenant made by the shareholders in this Agreement; (ii) any
inaccuracy in any certificate delivered
-24-
by the Shareholders pursuant to this Agreement, or (iii) any excess amount of
indebtedness described in Sections 6.9 and 6.10 of this Agreement. If it is
determined, as provided, that any of the Indemnified Parties is entitled to
indemnification, each of the Shareholders shall be jointly and severally liable
to indemnify the Indemnified Parties.
7.1(b) Agreement Respecting Responsibility for Sales Tax Claim. After
the Closing Date, the Shareholders shall indemnify ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and its
Affiliates for all amounts which are determined to be owing and payable, by
reason of settlement or judgment, to the Department with respect to the Sales
Tax Claim. After the Closing Date, the Shareholder, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, shall be
permitted to control the negotiations and any litigation between HPI and the
Department and no settlement shall be made with the Department and no payment
shall be made to the Department without the prior written consent of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ or, if he is legally incompetent or deceased, then either his successor
(guardian, power of attorney or executor as the case may be) or ▇▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, or if each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ is legally
incompetent and/or deceased, then by the oldest living child of ▇▇▇▇▇▇ ▇. and
▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
All attorney fees, accountants fees and other out-of-pocket expenses
related to the negotiations or litigation of any dispute relating to the Sales
Tax Claim shall be paid by the Shareholders. The Shareholders shall be entitled
to select all attorneys and accountants which are to be engaged by HPI to
represent HPI in connection with any such dispute.
7.2 Survival of Representations and Warranties. Each of the
representations and warranties made by the Shareholders in this Agreement or
pursuant hereto shall survive the Closing of the transactions contemplated
hereby. Notwithstanding any knowledge of facts determined or determinable by any
party by investigation, each party shall have the right to fully rely on the
representations, warranties, covenants and agreements of the other parties
contained in this Agreement or in any other documents or papers delivered in
connection herewith. Each representation, warranty, covenant and agreement of
the parties contained in this Agreement is independent of each other
representation, warranty, covenant and agreement.
SECTION 8. INTENTIONALLY LEFT BLANK.
SECTION 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. The obligations of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ are subject
to the following conditions:
9.1 Tender of Stock. There shall be tendered for exchange by the
Shareholders, on or before the Closing Date, certificates representing all of
the issued and outstanding shares of the common stock of HPI in a form approved
by counsel for ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
9.2 Accuracy of Representations and Warranties. The representations and
warranties of the Shareholders contained in this Agreement shall be true as of
the Closing Date with the same force and effect as though made at that time, and
the Shareholders shall execute and deliver to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ a certificate to
that effect in form and substance satisfactory to counsel for ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
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9.3 Compliance with Obligations. The Shareholders shall have performed
and complied with all of their obligations required by this Agreement to be
performed or complied with at or prior to the Closing Date, and the Shareholders
shall execute and deliver to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ a certificate to that effect in
form and substance satisfactory to counsel for ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
9.4 Resignations. All directors and officers of HPI requested by
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in writing to do so at least 10 days prior to the Closing Date
shall have tendered their resignations effective as of the Closing Date.
9.5 No Material Adverse Change or Destruction of Property. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change of HPI or the Business, (ii) there shall have been no adverse federal,
state or local legislative or regulatory change affecting in any material
respect the service, or products of HPI or the Business, and (iii) none of the
Assets shall have been damaged by fire, flood, casualty, riot or other cause
(regardless of insurance coverage for such damage), and there shall have been
delivered to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ a certificate to that effect, dated as of the
Closing Date and signed by HPI and the Shareholders.
9.6 Corporate Certificate. The Shareholders shall have delivered to
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ (i) copies of the HPI Articles of Incorporation, Bylaws, and any
other Charter Documents as in effect immediately prior to the Closing Date, (ii)
copies of resolutions adopted by its Board of Directors and Shareholders
authorizing the transactions contemplated by this Agreement, (iii) a certificate
of good standing issued by the Secretary of State of the State of Indiana as of
a date not more than ten (10) days prior to the Closing Date, certified in the
case of subsections (i) and (ii) as of the Closing Date by the Secretary of HPI
as being true, correct and complete; and (iv) the stock books, stock ledgers,
minute books, and corporate records and seals of HPI.
9.7 Consents. The Shareholders shall have received and delivered to
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ any consents to the transactions contemplated hereby and waivers
of rights to terminate or modify any material rights or obligations of HPI and
the Shareholders from any person from whom such consent or waiver is required
under any Contract to which the Shareholders, HPI or the Assets are bound as of
a date not more than ten (10) days prior to the Closing Date, or who, as a
result of the transactions contemplated hereby, would have such rights to
terminate or modify such contracts, either by the terms thereof or as a matter
of law; provided, however, Shareholders shall not be required to obtain and
deliver any consent or waiver of rights from HNB.
9.8 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the judgment of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, makes it inadvisable to proceed with the transactions
contemplated hereby.
9.9 Due Diligence Review. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall have completed its due
diligence review of HPI, the Assets and the business pursuant to Section 6.6,
and shall be satisfied with the results of such review and assessment.
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9.10 Employment Agreement. ▇▇. ▇▇▇▇▇▇▇▇ shall have delivered to
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ the executed Employment Agreements in the form set forth in
Exhibit 6.11.
9.11 Lien Releases. All Liens encumbering or otherwise affecting the
Business or the Assets shall have been released in form and substance acceptable
to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or shall remain in existence with the express written
approval of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. All liens of HNB affecting the Business or the
Assets and all liens, security interests and encumbrances listed on Exhibit 4.18
may remain in existence; this provision of this Section 9.11 constitutes the
written approval of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ as to such liens, security interests and
encumbrances described herein.
9.12 Opinion of Counsel. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall have received an opinion
dated as of the Closing Date, from counsel to the Shareholders in form set forth
in Exhibit 9.12.
9.13 Releases. At the Closing, Shareholders and such of their
Affiliates as may be designated by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall deliver to
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ a release in such form as is reasonably satisfactory to
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, releasing all claims against ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and HPI up to and
including the Closing Date, other than with respect to obligations of
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ under this Agreement.
9.14 Securities Laws. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall have received all necessary
consents and otherwise complied with any securities laws applicable to the
issuance of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares in connection with the transactions
contemplated hereby.
SECTION 10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SHAREHOLDERS.
The obligations of the Shareholders are subject to the following conditions:
10.1 Tender of Stock. There shall be tendered for exchange by
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ on or before the Closing Date, certificates representing the
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares specified in Section 1.2 of this Agreement.
10.2 Accuracy of Representations and Warranties. The representations
and warranties of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ contained in this Agreement shall be true as
of the Closing Date with the same force and effect as though made at that time,
and ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall execute and deliver to the Shareholders a certificate
to that effect in form and substance satisfactory to counsel for the
Shareholders.
10.3 Compliance with Obligations. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall have performed
and complied with all of its obligations required by this Agreement to be
performed or complied with at or prior to the Closing Date, and ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
shall execute and deliver to the Shareholders a certificate to that effect in
form and substance satisfactory to counsel for the Shareholders.
10.4 Employment Agreement. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall have delivered to the
Shareholders an executed Employment Agreement between ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇.
▇▇▇▇▇▇▇▇ in the forms set forth in Exhibit 6.11.
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10.5 Certified Resolutions. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall have delivered to the
Shareholders certified resolutions of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇'s Board of Directors
authorizing the execution and performance of this Agreement and all actions to
be taken by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ under this Agreement.
10.6 Opinion of Counsel. The Shareholders shall have received an
opinion dated as of the Closing Date, from counsel to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in form
set forth in Exhibit 10.6.
SECTION 11. SECURITIES LAW MATTERS.
11.1 Registration. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall effect, within 135 days of the
Closing Date, the registration under the Securities Act of 1933 of all shares
issued by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ pursuant to this Agreement.
11.2 Expenses of Registration. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall pay all expenses
incurred by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in connection with the registration, qualification
and/or exemption of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares, including any SEC and state
securities law registration and filing fees, printing expenses, fees and
disbursements of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ 's counsel and accountants, transfer agents'
and registrars' fees, fees and disbursements of experts used by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
in connection with such registration, qualification and/or exemption, and
expenses incidental to any amendment or supplement to the Registration Statement
or prospectuses contained therein. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall not, however, be liable
for any sales, broker's or underwriting commissions upon sale by any Shareholder
of any of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares or any fees or expenses of counsel to the
Shareholders.
11.3 Furnishing of Documents. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall furnish to the
Shareholders such reasonable number of copies of the registration statement,
such prospectuses as are contained in the registration statement and such other
documents as the Shareholders may reasonably request in order to facilitate the
offering of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares.
11.4 Amendments and Supplements. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall prepare and
promptly file with the SEC, and promptly notify the Shareholders of the filing
of, such amendments or supplements to the registration statement or prospectus
contained therein as may be necessary to correct any statements or omissions in
the registration statement or such Prospectus, if, at any time when a prospectus
relating to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares is required to be delivered under the
Securities Act, any event shall have occurred as a result of which any such
registration statement or prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall be entitled to delay any such filing if
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ determines that such filing would impede, delay or interfere
with any significant financing, acquisition or other transaction involving
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or require disclosure of material information which
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ has a bona fide business purpose for preserving as confidential
and the Shareholders agree to discontinue use of the prospectus until such
filings have been made. ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall also advise the Shareholders
promptly after it shall receive notice or obtain knowledge of the issuance of
any stop order by the SEC suspending the effectiveness of the
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registration statement or the initiation or threatening of any proceeding for
that purpose and promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued.
11.5 Furnishing of Information. Each Shareholder shall furnish, as a
condition to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇'s obligations hereunder to such Shareholder, to
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ such information regarding himself or herself as ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
may reasonably request and shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
11.6 Disposition of Shares. The Shareholders agree not to sell,
transfer or otherwise dispose of any ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares, except pursuant to
(a) an exemption from the registration requirements under the Securities Act,
which does not require the filing by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ with the SEC of any
registration statement, offering circular or other document, in which case, each
such selling or transferring Shareholder shall first supply to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
an opinion of counsel (which counsel and opinions shall be reasonably
satisfactory to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇) that such exemption is available, or (b) an
effective registration statement filed by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ with the SEC under the
Securities Act.
11.7 Legends. The certificates representing ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Shares
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE SHAREHOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO,
OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
SECTION 12. DEFINITIONS.
12.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
(a) "Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, as in effect on the date hereof.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
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(c) "Contract" means any indenture, lease, sublease, license,
loan agreement, mortgage, note, indenture, restriction, will, trust, commitment,
obligation or other contract, agreement or instrument, whether written or oral.
(d) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(e) "Governmental Authority" means any nation or government,
any state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
(f) "Lien" means any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including, but not limited
to, any conditional sale or other title retention agreement, any lease in the
nature thereof, and the filing of or agreement to give any financing statement
under the Uniform Commercial Code or comparable law or any jurisdiction in
connection with such mortgage, pledge, security interest, encumbrance, lien or
charge).
(g) "Material Adverse Change (or Effect)"means a change (or
effect), in the condition (financial or otherwise), properties, assets,
liabilities, rights, obligations, operations, business or prospects of HPI which
change (or effect) individually or in the aggregate, is materially adverse to
such condition, properties, assets, liabilities, rights, obligations,
operations, business or prospects.
(h) "Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature.
(i) "Register", "registered" and "registration" refer to a
registration of the offering and sale of securities effected by preparing and
filing a registration statement in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration statement.
(j) "SEC" means the Securities and Exchange Commission.
(k) "Securities Act" means the Securities Act of 1933, as
amended.
(l) "Shareholder Transaction Fees"means all legal, accounting,
tax, consulting, appraisal and financial advisory and other fees and expenses,
including any transfer taxes, fees and expenses and the cost of title insurance
and surveys, incurred, paid, or payable by the Shareholders in connection with
the transactions contemplated hereby.
(m) "Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to any Taxes;
and
(n) "Taxes" means all taxes, fees or other assessments,
including, but not limited to, income, excise, property, sales, franchise,
intangible, withholding, social security and unemployment taxes imposed by any
federal, state, local or foreign governmental agency, and any interest or
penalties related thereto.
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12.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with
this Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
SECTION 13. TERMINATION.
13.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of all of the parties hereto at
any time prior to the Closing;
(b) by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in the event of a material breach by
the Shareholders of any provision of this Agreement; or
(c) by the Shareholders in the event of a material breach by
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ of any provision of this Agreement; or
(d) by ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or the Shareholders if the closing
shall not have occurred by June 10, 1999.
13.2 Effect of Termination. Except as provided in Section 7 and except
for the provisions of Section 6.4, in the event of termination of this Agreement
pursuant to Section 13.1, this Agreement shall forthwith become void; provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
SECTION 14. GENERAL PROVISIONS.
14.1 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered (and shall
be deemed delivered) by certified or registered mail (first class postage
pre-paid), guaranteed overnight delivery, or facsimile transmission if such
transmission is confirmed to the following addresses and telecopy numbers (or to
such other addresses or telecopy numbers which such party shall designate in
writing to the other party):
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(a) if to ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇:
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Chairman/CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Shareholders:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Hall, Render, Killian, Health & ▇▇▇▇▇, P.S.C.
Suite 2000, Box 82064, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
14.2 Entire Agreement. This Agreement (including the exhibits attached
hereto) and other documents delivered at the Closing pursuant hereto, contains
the entire understanding of the parties in respect of its subject matter and
supersedes all prior agreements and understandings (oral or written) between or
among the parties with respect to such subject matter. The exhibits constitute a
part hereof as though set forth in full above.
14.3 Expenses. Except as otherwise provided herein, the parties shall
pay their own fees and expenses, including their own counsel fees, incurred in
connection with this Agreement or any transaction contemplated hereby. The
Shareholders hereby agree to pay any and all taxes, including sales and/or use
taxes, which may become due and owing as a result of the completion of the
transactions contemplated hereby.
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14.4 Waiver. This Agreement may not be modified, amended, supplemented,
canceled or discharged, except by written instrument executed by all parties.
The failure of any party to enforce any of the provisions of this Agreement
shall not be deemed a waiver of any provisions or of the right of the party
thereafter to enforce any provisions.
14.5 Assignment. The rights and obligations of this Agreement shall
bind and inure to the benefit of the parties and their respective successors and
assigns. Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by the Shareholders without the prior written
consent of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
14.6 Counterparts; Telefacsimile. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument. Executed copies of
this Agreement may be delivered by telefacsimile, and delivery of executed
telefacsimile copies to the parties and their counsel shall be deemed to be a
delivery of a duplicate original and sufficient delivery to result in entry to
this Agreement by the transmitting party; provided, however, that within ten
(10) days thereafter a signed duplicate original shall be forwarded to the party
to whom a telefacsimile copy was forwarded.
14.7 Governing Law, Jurisdiction and Waiver of Venue. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Nevada regardless of the fact that any of the parties hereto may be or may
become a resident of a different country, state, or jurisdiction. Any suit,
action or proceeding arising out of, or with respect to, this Agreement shall be
filed in a court of competent jurisdiction within the County of ▇▇▇▇▇▇▇, State
of Nevada or in the U.S. District Court for the District of Nevada, Northern
Division. The parties hereby consent to the personal jurisdiction of such courts
within the County of ▇▇▇▇▇▇▇, State of Nevada and the U.S. District Court for
the District of Nevada, Northern Division. The parties hereby waive any
objections to venue in such courts within ▇▇▇▇▇▇▇ County, State of Nevada and
the U.S. District Court for the District of Nevada, Northern Division.
14.8 Representation by Counsel. Each party hereto represents and agrees
with the other that it has been represented by independent counsel of its own
choosing; it has had the full right and opportunity to consult with its
respective attorneys and other advisors and has availed itself of this right and
opportunity; its authorized officers have carefully read and fully understand
this Agreement in its entirety and have had it fully explained to them by such
party's counsel; it is fully aware of the contents hereof and the meaning,
intent and legal effect thereof; and its authorized officer is competent to
execute this Agreement and has executed this Agreement free from coercion,
duress or undue influence. Each party and its counsel cooperated in the drafting
and preparation of this Agreement and the documents referred to herein.
Accordingly, any rule of law or any legal decision that would require
interpretation of any ambiguities in this Agreement against the party that
drafted it is of no application and is hereby expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to effect the
intentions of the parties.
14.9 Attorneys' Fees. In the event of any dispute between the parties
arising out of this Agreement, the prevailing party shall be entitled, in
addition to any other rights and remedies it may have, to recover its reasonable
attorney fees and costs.
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14.10 Severability. In case any provision of this Agreement shall, for
any reason, be held to be invalid, unenforceable, or illegal, such provision
shall be severed from this Agreement, and such invalidity, unenforceability or
illegality shall not affect any other provisions of this Agreement.
14.11 Headings. Headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define, limit the scope, extent or intent of this Agreement or any provision
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED, a
Nevada corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Vice Chairman
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SHAREHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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