STOCK PURCHASE AGREEMENT ("Agreement"), effective as of March 1, 1996, by
and between Concord Energy Incorporated, a Delaware corporation with offices
located at 75 Claremont Road, Bernardsville, New Jersey 07924 (the "Company");
Jerry Swon, the Company's CEO; Integrated Petroleum Systems Corporation, a
Colorado corporation with offices located at 8480 East Orchard Road, Suite 4350,
Englewood, Colorado 80111 ("IPS"); Richard D. Barden, CEO of IPS; and the
existing Stockholders of IPS (the "Stockholders")
WHEREAS, the Company desires to acquire the business of IPS through the
acquisition of all outstanding shares of stock of IPS in accordance with the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants set forth herein, it is
agreed as follows:
ARTICLE I
THE EXCHANGE
1.1 Terms of Exchange. On the basis of the representations, warranties,
covenants and agreements contained herein, and subject to the terms and
conditions of this Agreement.
(i) The Stockholders shall sell, assign, transfer and convey to the Company
at the Closing Date (as hereinafter defined) or as soon thereafter as
practicable all of the outstanding shares of capital stock of IPS ("IPS
Shares"). The Stockholders shall deliver at the Closing Date certificates
representing the IPS Shares duly endorsed in blank or accompanied by stock
powers duly endorsed in blank, in each case in proper form for transfer,
with signatures guaranteed as reasonably requested by the Company and with
all stock transfer and other required documentary stamps affixed thereto.
(ii) In consideration for the IPS Shares, the Company shall deliver at the
Closing Date, certificates registered in such names and for such number of
shares of the Company's Common Stock as set forth on Schedule 1.1 annexed
hereto, ("Company Shares"). 10.175114 Shares of the Company's Common Stock
will be issued in exchange for each IPS Share presently outstanding. The
aggregate number of shares of the Company's Common Stock to be issued and
delivered to the Stockholders in exchange for the IPS Stock shall be
600,000 shares of the Company's Common Stock representing an aggregate of
14.1176% of the issued and outstanding common stock of the Company after
giving effect to the transactions described in this Agreement.
ARTICLE II
CLOSING
2.1 Closing. The Closing contemplated by Article 1 of this Agreement shall
be held at the offices of IPS within five days after the conditions set forth in
Articles 7.1(i) and 7.2(ii) of this Agreement have been satisfied, unless
another place or on such date as is agreed upon in writing by the parties (the
"Closing Date").
2.2 After the Closing Date and from time to time thereafter, the parties to
this Agreement shall execute such additional instruments and take such other
action as either party may reasonably request in order to effectuate the
transactions contemplated by this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and its CEO represent and warrant to IPS as follows:
3.1 Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power, qualification and authority, corporate or
otherwise, to own, lease and operate its properties and assets and carry on its
business as and in the places where such properties and assets are now owned,
leased or operated or such business is now being conducted. True, complete and
correct copies of the Company's certificate of incorporation (or other charter
document), by-laws and all amendments thereto, as presently in effect will be
delivered to IPS at the Closing.
3.2 Authorization. The Company has all requisite power and authority to
execute, deliver and perform this Agreement. All necessary corporate proceedings
of the Company have been duly taken to authorize the execution, delivery and
performance of this Agreement by the Company. This Agreement has been duly
authorized, executed and delivered by the Company, constitutes the legal valid
and binding obligation of the Company, and is enforceable in accordance with the
terms hereof.
3.3 No Further Action Needed. No consent, authorization, approval, order,
license, certificate, permit, declaration or filing with, any federal, state,
local or other governmental authority or any court or other tribunal is required
by the Company for the execution, delivery or performance of this Agreement by
the Company. No consent of any party to any contract, agreement, instrument,
lease, license, arrangement, or understanding to which the Company is a party,
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or to which it or any of its properties or assets are subject, is required for
the execution, delivery or performance of this Agreement. The execution,
delivery and performance of this Agreement will not violate, result in a breach
of, conflict with, or entitle any party to terminate or call a default under any
term of any contract, agreement, instrument, lease, license, arrangement, or
understanding whereby the Company is a party to, or violate or result in a
breach of any term of the Certificate of Incorporation (or other charter
document) or by-laws of the Company, or violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment, or decree binding on
the Company or to which any of its operations, business, properties or assets
are subject.
3.4 Capitalization. The authorized capital stock of the Company consists of
20,000,000 shares of $.0001 par value common stock ("Company Common Stock"), of
which 4,250,000 shares shall be issued and outstanding after completion of this
transaction. Each of such outstanding shares of Company Common Stock is validly
authorized, validly issued and fully paid and non-assessable, has not been
issued and is not owned or held in violation of any preemptive right of
stockholders. At the Closing Date the Company Shares, upon issuance to the
Stockholders, shall be validly issued, fully paid and non-assessable.
3.5 Lack of Commitment to Issue Securities. There is not presently
outstanding nor is there any commitment, plan, or arrangement to issue, any
options, warrants or other rights calling for the issuance of any shares of
stock of the Company or any security or other instrument convertible into,
exercisable for or exchangeable for stock of the Company, except as disclosed on
Schedule 3.5 attached hereto.
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3.6 Financial Condition. Annexed hereto as Schedule 3.6 are true and
correct copies of the following: (i) audited consolidated balance sheets of the
Company for its last three fiscal years ended June 30, 1995, 1994 and 1993; (ii)
the unaudited balance sheet of the Company as of December 31, 1995 (most recent
date available); (iii) audited consolidated statements of income, statements of
retained earnings, and statements of changes in financial position and/or cash
flow of the Company for the last three fiscal years ended June 30, 1995, 1994
and 1993; and (iv) the unaudited consolidated statements of income, consolidated
statements of retained earnings, and consolidated statements of changes in
financial position and/or cash flow of the Company for the three (3) months
ended December 31, 1995 (most recent available). Each such balance sheet
presents fairly the consolidated financial condition, assets, liabilities, and
stockholders' equity of the Company as of its date; each such statement of
income and statement of retained earnings presents fairly the consolidated
results of operations of the Company for the period indicated; and each such
statement of changes in financial position and/or cash flow presents fairly the
consolidated information purported to be shown therein. The financial statements
referred to in this Section 3.6 have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, are correct and complete, and are in accordance with the books and
records of the Company.
3.7 Lack of Material Changes. Since June 30, 1995 (the most recent audited
financial statement date) except as described on Schedule 3.7 annexed hereto,
(a) There has not been any material adverse change in the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company.
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(b) The Company has not authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its
capital stock or any direct or indirect redemption, purchase, or other
acquisition of any such stock.
(c) The operations and business of the Company have been conducted in all
respects only in the ordinary course.
(d) The Company has not mortgaged, pledged or subjected to lien or other
encumbrances any of its assets.
(e) The Company has not suffered an extraordinary loss (whether or not
covered by insurance) or waived any right of substantial value.
(f) The Company has not sold or transferred any of its assets having a
book value of $100,000 or more or canceled any debts or claims,
except, in each case, in the ordinary course of business.
(g) There has not been any issuance of the Company's capital stock, bonds
or other corporate securities.
(h) There has not been any strike, lockout, labor trouble or any similar
event or condition of any character adversely affecting the business
of the Company.
(i) There has not been any increase in the compensation payable or to
become payable by the Company to any of its officers, employees or
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agents, or any known payment or arrangement made to or with any of
such persons, except as disclosed to Purchaser.
There is no fact known to the Company and/or its CEO which materially adversely
affects or in the future (as far as the Company or the CEO can foresee) may
materially adversely affect the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of the Company;
provided, however, that the Company and the CEO express no opinion as to
political or economic matters of general applicability.
3.8 Tax and Other Liabilities. (i) The Company has no liability or
obligation of any nature, accrued or contingent, including without limitation
liabilities for federal, state, local, or foreign taxes, liabilities to
customers or suppliers, direct or indirect, claims, losses, damages,
deficiencies (including deferred income tax and other net tax deficiencies),
costs, expenses, obligations, guarantees, or responsibilities, whether accrued,
absolute, or contingent, known or unknown, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, (hereinafter collectively referred to as
"Liabilities") other than the following:
(a) Liabilities for which full provision and/or disclosure has been made
on the audited balance sheet (the "Last Balance Sheet") as of June 30,
1995 (the "Last Balance Sheet Date") referred to in Section 3.6 of
this Agreement and
(b) Other liabilities arising since the Last Balance Sheet and prior to
the Closing Date in the ordinary course of business which are not
inconsistent with the representations and warranties of the Company or
the CEO or any other provision of this Agreement. To the extent that
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any other liabilities in excess of $50,000 have arisen since the Last
Balance Sheet, such other liabilities are described in Schedule 3.8
annexed hereto.
(ii) Without limiting the generality of the foregoing, the amounts set up as
provisions for taxes on the Last Balance Sheet are sufficient for all accrued
and unpaid federal, state, local and foreign taxes of the Company, whether or
not due and payable and whether or not disputed, under tax laws, as in effect on
the Last Balance Sheet Date or now in effect, for the period ended on such date
and for all fiscal years prior thereto. The Company has filed all federal tax
returns required to be filed by them. The Company has paid (or has established
on the Last Balance Sheet a reserve for) all taxes, assessments, and other
governmental charges payable or remittable by it or levied upon it or its
properties, assets, income, or franchises which are due and payable. The Company
has not received reports as to adjustments from any taxing authority during the
past five years and the Company and its CEO know of no governmental or other
proceeding (formal or informal), or investigation pending, threatened, or in
prospect with respect to any such report or the subject matter of any such
report.
3.9 Litigation and Claims. There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation pending,
threatened, or in process (or any basis therefore known to the Company or the
CEO) with respect to the Company, the CEO, or any of its or his business,
properties, or assets except as disclosed on Schedule 3.09 attached. The Company
is not affected by any present or threatened strike or other labor disturbance
nor to the knowledge of the Company, or the CEO, is any union attempting to
represent any employee of the Company as collective bargaining agent. The
Company is not in violation of, or in default with respect to, any law, rule,
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regulation, order, judgment, or decree; nor is the Company or the CEO required
to take any action in order to avoid such violation or default.
3.10 Assets. The financial statements annexed hereto as Schedule 3.6
contain a true and complete list of all real and other properties and material
assets (including but not limited to machinery, equipment, inventories, and
intangibles owned, leased, used in its business and/or licensed by the Company
(collectively the "Assets"). The Assets constitute all such properties and
assets which are necessary to conduct the business of the Company as presently
conducted and/or as the Company contemplates conducting.
3.11 Title to Assets. The Company has good and marketable titles to all of
the Assets (except real and other properties and assets as are held pursuant to
leases as referred to in Article 3.15 herein, free and clear of all liens,
mortgages, security interests, pledges, charges, conditional sales agreements
and security investments, and encumbrances (except as are listed in the
financial statements attached to the Agreement as Schedule 3.6).
3.12 Accounts and Notes Receivable. All accounts and notes receivable
reflected on the Last Balance Sheet, and those arising since the Last Balance
Sheet Date constitute valid and binding obligations, have been collected or are
and will be good and collectible, in each case at the aggregate recorded amounts
thereof without right of recourse, defense, deduction, return of goods,
counterclaim, offset, or set off on the part of the obligor, and, if not
collected, can reasonably be anticipated to be paid within 60 days of the date
incurred.
3.13 Lack of Restrictions. No real property owned, leased, licensed, or
used by the Company lies in an area which is, or to the knowledge of the Company
and/or the CEO, will be, subject to zoning, use, or building code restriction
which would prohibit, and no state of facts relating to the actions of another
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person or entity or its ownership, leasing, licensing, or use of any real or
personal property exists or will exist which would prevent, the continued
effective ownership, leasing, licensing, or use of such real property in the
business in which the Company is now engaged or the business in which it
contemplates engaging.
3.14 Contracts and Other Instruments. (i) Schedule 3.14 accurately and
completely details all contracts, licenses, instruments and agreements to which
the Company is a party, including but not limited to, all telephone agency
agreements, supply agreements, manufacturer agreements, price protection
agreements, distributorship agreements, OEM agreements, partnership agreements,
dealership agreements, fiduciary agreements, license agreements, marketing
agreements, commission agreements, sales agency agreements, other agency
agreements, bank credit agreements, factoring agreements, loan agreements,
indentures, promissory notes, guarantees, undertakings, other evidences of
indebtedness, letters of credit, joint venture agreements, operating agreements,
management agreements, agreements for the acquisition of merger or combination
with any other company, corporation or businesses signed within the last two
years, employment agreements, labor agreements, salesmen commission agreements,
independent contractor agreements, sales or purchase agreements for a term in
excess of one year which have an aggregate sale or purchase price in excess of
$50,000; contracts, agreements, arrangements, or understandings with any
stockholder, any director, officer, or employee, any relatives or affiliate of
any stockholder or of any such director, officer, or employee, or any other
corporation or enterprise in which any stockholder, any such director, officer,
or employee, or any such relative or affiliate then had or now has a 5% or
greater equity or voting or other substantial interest; government contracts,
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franchise agreements, management agreements, advisory agreements, consulting
agreements, advertising agreements, construction agreements, warehousing
agreements, engineering agreements, design agreements, major utility agreements
and any other agreements which involve the payment of in excess of $50,000 prior
to the date it can be terminated without penalty or premium (all of which
contracts, licenses, instruments, and agreements are hereinafter referred to
collectively as the "Contracts").
(ii) Neither the Company nor any other party to any such Contract, to the
best of the Company's and/or the CEO's knowledge, is now or expects in the
future to be in violation or breach of, or in default with respect to complying
with, any material provision thereof, and each such Contract, is in full force
and effect and is the legal, valid, and binding obligation of the parties
thereto and is enforceable as to them in accordance with their respective terms.
Neither the Company nor any other party to any such Contract has given notice of
termination or taken any action inconsistent with the continuance thereof. The
execution, delivery, and performance of this Agreement will not prejudice any
such Contract. The Company is not party to or bound by any other contract,
agreement, instrument, lease, license, arrangement, or understanding, or subject
to any charter or other restriction, which has had or may in the future have a
material adverse effect on the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of the Company.
3.15 Leases. Notes 6 and 7 to the Company's financial statements dated
December 31, 1995 which are included in Schedule 3.6 hereto, describe all of the
Company's leases and subleases to which the Company is a party ("Leases"). The
Company enjoys peaceful and undisturbed possession under all such leases. All
such Leases are legal, valid and binding agreements and the Company is a tenant
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or possessor in good standing thereunder, free of any default or breach
whatsoever and quietly enjoys the premises provided for therein. Each rental,
royalty or other payment due thereunder has been made; each act required to be
performed which, if not performed, would constitute a material breach thereof
has been duly performed; and no prohibited acts have been performed thereunder
which, if presented, would constitute a material breach thereof. Each of such
leases is in full force and effect and there is not under any such lease any
default or claim of default or event which, with or without notice of the lapse
of time or both would constitute a breach or default thereunder.
3.16 Capital Projects. As of the date of this Agreement, the Company has
not undertaken any capital projects the cost of completion of which would exceed
$100,000 except as listed in Schedule 3.16 attached hereto and made a part
hereof.
3.17 Environmental Laws. The Company is in material compliance with all
federal, state and local laws regarding environmental matters.
3.18 ERISA Matters. The Company does not have, nor does it contribute to,
any pension, profit sharing, option, other incentive plan, or any other type of
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974), or any obligation to or customary arrangement with
employees for bonuses, incentive compensation, or severance pay.
3.19 Insurance. Schedule 3.19 attached hereto and made a part hereof is a
complete and correct list of all insurance policies of any kind held by the
Company. Each such policy is valid and enforceable; all premiums and other
payments due from the Company on account of any such policy have been paid,
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there is no act or failure to act which has or might cause any such policy to be
canceled or terminated.
3.20 Labor Disputes. The Company is not a party to any union representation
or labor contract. The Company has not received any notice from any labor union
or group of employees that such union or group represents or believes or claims
it represents or intends to represent any of the employees of the Company; no
strike or work interruption by any of its employees is planned, under
consideration, threatened or imminent; and the Company has not made any loan or
given anything of value, directly or indirectly, to any officer, official, agent
or representative of any labor union or group of employees. The Company is not
delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed by
them to the date hereof or amounts required to be reimbursed to such employees.
In the event of termination of the employment of any of its employees, the
Company will not by reason of anything done prior to the Closing Date be liable
to any of said employees for "severance pay" or any other payments. The Company
is in compliance with all federal, state and local laws and regulations
respecting labor, employment and wages and hours; and there is no unfair labor
practice complaint against the Company pending before the National Labor
Relations Board or any comparable state or local agency.
3.21 Liens on Assets. Except as reflected on the Company's financial
statements (Schedule 3.6) the Company has good and marketable title to all of
its assets and such assets are not subject to any mortgages, pledges, liens,
conditional sales agreements, encumbrances and security interests or claims
except for minor imperfections in title and encumbrances, if any, which
singularly and in the aggregate are not substantial in amount and do not
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materially detract from the value of the property subject thereto or impair the
use thereof in the Company's business.
3.22 Condition of Tangible Assets. As of the Closing Date, all of the
Company's assets will be in normal, operating and useable condition, in a state
of good maintenance and repair, subject to ordinary wear and tear and scheduled
maintenance items, taking into consideration the age and utilization thereof,
and will conform to all applicable ordinances, regulations and other laws
(including those relating to building and zoning and environmental protection
and occupational safety and health).
3.23 Validity of Contemplated Transactions. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby (i) have been duly approved by the unanimous consent of the
Board of Directors of the Company; (ii) do not and will not contravene, violate
and/or result in a breach or default under any provision of the Certificate of
Incorporation or Bylaws of the Company as presently in effect; (c) do not
violate, are not in conflict with, and do not constitute a default under, or
cause the acceleration of any payments pursuant to, or otherwise impair the good
standing, validity, or effectiveness of any material agreement, contract,
license, indenture, instrument, lease, or mortgage, or subject the Company or
any of its assets to any indenture, mortgage, contract, commitment, or
agreement, other than this Agreement, to which the Company is a party or by
which the Company or any of its assets are bound; and (d) does not violate any
material provision of law, rule, regulation, order, permit, or license to which
the Company is subject.
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3.24 Subsidiaries. The Company owns no shares of capital stock or other
equity interest in any corporation, partnership, joint venture or other business
organization or enterprise, except as set forth in the financial statements
included in Schedule 3.6 annexed hereto.
3.25 Bank Accounts. Schedule 3.25 annexed hereto lists the names and
addresses of every bank and other financial institution in which the Company
maintains an account (whether checking, savings or otherwise), lock box or safe
deposit box, and the account numbers and names of persons having signing
authority or other access thereto.
3.26 Questionable Payments. Neither the Company, its CEO, any director,
officer, agent, employee, or other person associated with or acting on behalf of
the Company has, directly or indirectly: (i) used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful payment to
foreign or domestic governmental officials or employees or to foreign or
domestic governmental officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (ii) violated any provision of the
Foreign Corrupt Practices Act of 1977; (iii) established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; (iv) made any
false or fictitious entry on the books or records of the Company; (v) made any
bribe, rebate, payoff, influence payment, kickback, or other unlawful payment;
(vi) given any favor or gift which is not deductible for federal income tax
purposes; and/or (viii) made any bribe, kickback, or other payment of a similar
or comparable nature, whether lawful or not, to any person or entity, private or
public, regardless of form, whether in money, property, or services, to obtain
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favorable treatment in securing business or to obtain special concessions, or to
pay for favorable treatment for business secured or for special concessions
already obtained.
3.27 Directors and Officers. A true and complete list as of the date of
this Agreement indicating the Company's directors and officers, each of whom has
been duly elected is as follows:
NAME POSITION
---- --------
Jerry Swon President, Chief Executive and Chairman of the
Board of Directors
Bruce Deichl Vice President, Director
Todd Hesse Secretary - Director
Scott Kalish Treasurer - Director
Dr. Neil Glass Director
Charles Fallon Director
Paul Chernis Director
3.28 Liabilities. The financial statements annexed hereto as Schedule 3.6
reflect a true and complete list of all the Company bank loans, lines of credit,
financial institution indebtedness and other liabilities (including but not
limited to accounts payable and accrued expenses) outstanding as of the date of
this Agreement, which schedule includes the name of the creditor, amount
outstanding as of the date of this Agreement and essential repayment terms and
conditions.
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3.29 Public Company. The common stock of the Company is traded on the
NASDAQ Small Cap Stock Exchange and the Company is registered with the United
States Securities and Exchange Commission ("Commission") pursuant to Section
12(g) of the Securities Exchange Act of 1934. The Company is current with
respect to its filing obligations to the Commission as a "reporting company." To
the best of the Company's knowledge and belief and that of its CEO, there are no
pending or foreseeable enforcement proceedings or investigations relative to the
Company commenced by either the Commission or any state securities bureau.
3.30 Veracity of Statements. Neither this Agreement nor the representations
and warranties by the Company and/or its CEO contained herein or in any
documents, instruments,certificates or schedules furnished pursuant hereto or in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements or facts contained herein and therein not misleading. There is no
fact which adversely affects, or in the future may adversely affect, the
business, operations, affairs, condition or prospects of the Company's assets
and/or business which has not been set forth in this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF IPS
IPS hereby represents and warrants to the Company as follows:
4.1 Organization and Standing. IPS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Colorado and has
all requisite power and authority, corporate or otherwise, to own, lease and
operate its properties and to carry on its businesses in the places where such
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properties are now owned, leased or operated or such business is now being
conducted, or contemplated to be conducted.
4.2 Authorization. Subject to approval by IPS's Board of Directors, IPS has
all requisite power and authority, corporate and otherwise, to enter into this
Agreement and to assume and perform its obligations hereunder. Upon approval of
IPS's Board, the execution and delivery of this Agreement and the performance by
IPS of its obligations hereunder will be duly authorized by all necessary
corporate action. No further action or approval, corporate or otherwise, will be
required in order to constitute this Agreement as a valid, binding and
enforceable obligation of IPS.
4.3 Legal Proceedings. IPS is not aware of any material lawsuits pending
against it, nor has the CEO of IPS received any notice or written information
that any such lawsuits been threatened.
4.4 No Covenant as to Tax Consequences. It is expressly understood and
agreed that neither IPS nor its officers or agents has made any warranty or
agreement, express or implied, as to the tax consequences of the transactions
contemplated by this Agreement or the tax consequences of any action pursuant to
or growing out of this Agreement.
4.5 No Further Action Needed. No consent, authorization, approval, order,
license, certificate, permit, declaration or filing with, any federal, state,
local or other governmental authority or any court or other tribunal is required
by IPS for the execution, delivery or performance of this Agreement by IPS. No
consent of any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which IPS is a party, or to which it or any of
its properties or assets are subject, is required for the execution, delivery or
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performance of this Agreement. The execution, delivery and performance of this
Agreement will not violate, result in a breach of, conflict with, or entitle any
party to terminate or call a default under any term of any contract, agreement,
instrument, lease, license, arrangement, or understanding whereby IPS is a party
to, or violate or result in a breach of any term of the Articles of
Incorporation (or other charter document) or by-laws of IPS, or violate, result
in a breach of, or conflict with any law, rule, regulation, order, judgment, or
decree binding on IPS or to which any of its operations, business, properties or
assets are subject.
4.6 Capitalization. The authorized capital stock of IPS consists of 100,000
shares of no par value common stock, of which 31,591 shares are currently issued
and outstanding, and 10,000 shares of preferred stock, of which 841 shares are
currently issued and outstanding. All of such outstanding shares have been duly
and validly issued, fully paid and non-assessable. No such shares are held in
violation of preemptive rights of any stockholder. At the Closing Date, the IPS
shares delivered to the Company shall be validly issued, fully paid and
non-assessable.
4.7 Financial Condition. Annexed hereto as Schedule 4.7 are true and
correct copies of IPS' balance sheets, income statements and statements of
retained earnings as of December 31, 1994 (audited) and September 30, 1995
(unaudited). These financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved and fairly reflect the financial position of IPS as of the
dates of the balance sheets and the results of operations for the periods
indicated.
4.8 Lack of Material Changes. Since September 30, 1995,
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(a) There has not been any material adverse change in the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company.
(b) The Company has not authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its
capital stock or any direct or indirect redemption, purchase, or other
acquisition of any such stock.
(c) The operations and business of the Company have been conducted in all
respects only in the ordinary course.
(d) The Company has not mortgaged, pledged or subjected to lien or other
encumbrances any of its assets.
(e) The Company has not suffered an extraordinary loss (whether or not
covered by insurance) or waived any right of substantial value.
(f) The Company has not sold or transferred any of its assets having a
book value of $5,000 or more or canceled any debts or claims, except,
in each case, in the ordinary course of business.
(g) There has not been any strike, lockout, labor trouble or any similar
event or condition of any character adversely affecting the business
of IPS.
(h) There has not been any increase in the compensation payable or to
become payable by IPS to any of its officers, employees or agents, or
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any known payment or arrangement made to or with any of such persons,
except as disclosed to Purchaser.
There is no fact known to IPS and/or its CEO which materially adversely affects
or in the future (as far as IPS or the CEO can foresee) may materially adversely
affect the financial condition, results of operations, business, properties,
assets, liabilities, or future prospects of IPS; provided, however, that IPS and
the CEO express no opinion as to political or economic matters of general
applicability.
4.9 Tax and Other Liabilities.
(i) IPS has no liability or obligation of any nature, accrued or contingent,
including without limitation liabilities for federal, state, local, or foreign
taxes, liabilities to customers or suppliers, direct or indirect, claims,
losses, damages, deficiencies (including deferred income tax and other net tax
deficiencies), costs, expenses, obligations, guarantees, or responsibilities,
whether accrued, absolute, or contingent, known or unknown, fixed or unfixed,
liquidated or unliquidated, secured or unsecured, (hereinafter collectively
referred to as "Liabilities") other than the following:
(a) Liabilities for which full provision and/or disclosure has been made
on the balance sheet dated September 30, 1995, and
(b) Other liabilities arising since the balance sheet as of September 30,
1995 and prior to the Closing Date in the ordinary course of business
which are not inconsistent with the representations and warranties of
IPS or its CEO or any other provision of this Agreement.
21
(ii) Without limiting the generality of the foregoing, the amounts set up as
provisions for taxes on the September 30, 1995 balance sheet are sufficient for
all accrued and unpaid federal, state, local and foreign taxes of the Company,
whether or not due and payable and whether or not disputed, under tax laws as in
effect on September 30, 1995 or now in effect, for the period ended on such date
and for all fiscal years prior thereto. The Company has filed all federal tax
returns required to be filed by them. The Company has paid (or has established
on the September 30, 1995 balance sheet) a reserve for all taxes, assessments,
and other governmental charges payable or remittable by it or levied upon it or
its properties, assets, income, or franchises which are due and payable. The
Company has not received reports as to adjustments from any taxing authority
during the past five years and the Company and its CEO know of no governmental
or other proceeding (formal or informal), or investigation pending, threatened,
or in prospect with respect to any such report or the subject matter of any such
report.
4.10 Adverse Claims Relative to Proprietary Products. There is no
litigation, arbitration, or adverse claim, known to IPS or its CEO with respect
to any of IPS' hardware or software products.
4.11 Patents, Tradenames and Rights. To the best of its knowledge and that
of its CEO, IPS owns and holds all necessary patents, franchise rights,
trademarks, service marks, trade names, inventions, processes, know-how, trade
secrets, copyrights, licenses and other rights necessary to its business as now
conducted or proposed to be conducted. To the best of IPS' knowledge and that of
its CEO, IPS is not infringing upon or otherwise acting adversely to the right
or claimed right of any person with respect to any of the foregoing.
22
4.12 Assets. Attached hereto as Schedule 4.12 is a true and complete list
of all real and other properties and material assets (i.e. any asset having a
book value in excess of $10,000), including but not limited to machinery,
equipment, inventories, and intangibles owned, leased, used in its business
and/or licensed by IPS (collectively the "Assets"). The Assets constitute all
such properties and assets which are necessary to conduct the business of IPS as
presently conducted and/or as IPS contemplates conducting.
4.13 Title to Assets. The Company has good title to all of the Assets, free
and clear of all liens, mortgages, security interests, pledges, charges,
conditional sales agreements, security investments and encumbrances (except as
listed in Schedule 4.13 attached.)
4.14 Accounts and Notes Receivable. All accounts and notes receivable
reflected on the balance sheet as of September 30, 1995 constitute valid and
binding obligations, have been collected or are and will be good and
collectible, in each case at the aggregate recorded amounts thereof without
right of recourse, defense, deduction, return of goods, counterclaim, offset or
setoff on the part of the obligor and if not collected, can reasonably be
anticipated to be paid within 60 days of the date incurred.
4.15 Lack of Restrictions. No real property owned, leased, licensed, or
used by the IPS lies in an area which is, or to the knowledge of IPS and/or the
CEO, will be, subject to zoning, use, or building code restriction which would
prohibit, and no state of facts relating to the actions of another person or
entity or its ownership, leasing, licensing, or use of any real or personal
property exists or will exist which would prevent, the continued effective
ownership, leasing, licensing, or use of such real property in the business in
which IPS is now engaged or the business in which it contemplates engaging.
23
4.16 Contracts and Other Instruments. (i) Schedule 4.16 accurately and
completely details all contracts, licenses, instruments and agreements to which
IPS is a party, including but not limited to, all telephone agency agreements,
supply agreements, manufacturer agreements, price protection agreements,
distributorship agreements, OEM agreements, partnership agreements, dealership
agreements, fiduciary agreements, license agreements, marketing agreements,
commission agreements, sales agency agreements, other agency agreements, bank
credit agreements, factoring agreements, loan agreements, indentures, promissory
notes, guarantees, undertakings, other evidences of indebtedness, letters of
credit, joint venture agreements, operating agreements, management agreements,
agreements for the acquisition of merger or combination with any other company,
corporation or businesses signed within the last two years, employment
agreements, labor agreements, salesmen commission agreements, independent
contractor agreements, sales or purchase agreements for a term in excess of one
year which have an aggregate sale or purchase price in excess of $50,000;
contracts, agreements, arrangements, or understandings with any stockholder, any
director, officer, or employee, any relatives or affiliate of any stockholder or
of any such director, officer, or employee, or any other corporation or
enterprise in which any stockholder, any such director, officer, or employee, or
any such relative or affiliate then had or now has a 5% or greater equity or
voting or other substantial interest; government contracts, franchise
agreements, management agreements, advisory agreements, consulting agreements,
advertising agreements, construction agreements, warehousing agreements,
engineering agreements, design agreements, major utility agreements and any
other agreements which involve the payment of in excess of $50,000 prior to the
24
date it can be terminated without penalty or premium (all of which contracts,
licenses, instruments, and agreements are hereinafter referred to collectively
as the "Contracts").
(ii) Neither IPS nor any other party to any such Contract, to the best of
IPS's and/or the CEO's knowledge, is now or expects in the future to be in
violation or breach of, or in default with respect to complying with, any
material provision thereof, and each such Contract, is in full force and effect
and is the legal, valid, and binding obligation of the parties thereto and is
enforceable as to them in accordance with their respective terms. Neither IPS
nor any other party to any such Contract has given notice of termination or
taken any action inconsistent with the continuance thereof. The execution,
delivery, and performance of this Agreement will not prejudice any such
Contract. IPS is not party to or bound by any other contract, agreement,
instrument, lease, license, arrangement, or understanding, or subject to any
charter or other restriction, which has had or may in the future have a material
adverse effect on the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of IPS.
4.17 Leases. Attached hereto and made a part hereof as Schedule "4.17" are
complete and correct copies of all of IPS's leases and subleases to which IPS is
a party ("Leases"). IPS enjoys peaceful and undisturbed possession under all
such leases. All such Leases are legal, valid and binding agreements and IPS is
a tenant or possessor in good standing thereunder, free of any default or breach
whatsoever and quietly enjoys the premises provided for therein. Each rental,
royalty or other payment due thereunder has been made; each act required to be
performed which, if not performed, would constitute a material breach thereof
has been duly performed; and no prohibited acts have been performed thereunder
25
which, if presented, would constitute a material breach thereof. Each of such
leases is in full force and effect and there is not under any such lease any
default or claim of default or event which, with or without notice of the lapse
of time or both would constitute a breach or default thereunder.
4.18 Capital Projects. As of the date of this Agreement, IPS has not
undertaken any capital projects the cost of completion of which would exceed
$10,000 except as listed in Schedule 4.18 attached hereto and made a part
hereof.
4.19 ERISA Matters. IPS does not have, nor does it contribute to, any
pension, profit sharing, option, other incentive plan, or any other type of
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974), or any obligation to or customary arrangement with
employees for bonuses, incentive compensation, or severance pay.
4.20 Insurance. Schedule 4.20 attached hereto and made a part hereof is a
complete and correct list of all insurance policies of any kind held by IPS.
Each such policy is valid and enforceable; all premiums and other payments due
from IPS on account of any such policy have been paid, there is no act or
failure to act which has or might cause any such policy to be canceled or
terminated.
4.21 Labor Disputes. IPS is not a party to any union representation or
labor contract. IPS has not received any notice from any labor union or group of
employees that such union or group represents or believes or claims it
represents or intends to represent any of the employees of IPS; no strike or
work interruption by any of its employees is planned, under consideration,
threatened or imminent; and IPS has not made any loan or given anything of
value, directly or indirectly, to any officer, official, agent or representative
26
of any labor union or group of employees. IPS is not delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them to the date hereof or
amounts required to be reimbursed to such employees. In the event of termination
of the employment of any of its employees, IPS will not by reason of anything
done prior to the Closing Date be liable to any of said employees for "severance
pay" or any other payments. IPS is in compliance with all federal, state and
local laws and regulations respecting labor, employment and wages and hours; and
there is no unfair labor practice complaint against IPS pending before the
National Labor Relations Board or any comparable state or local agency.
4.22 Liens on Assets. Except as set forth on Schedule 4.13 attached hereto
IPS has good and marketable title to all of its assets and such assets are not
subject to any mortgages, pledges, liens, conditional sales agreements,
encumbrances and security interests or claims except for minor imperfections in
title and encumbrances, if any, which singularly and in the aggregate are not
substantial in amount and do not materially detract from the value of the
property subject thereto or impair the use thereof in IPS's business.
4.23 Condition of Tangible Assets. As of the Closing Date, all of IPS's
assets will be in normal, operating and useable condition, in a state of good
maintenance and repair, subject to ordinary wear and tear and scheduled
maintenance items, taking into consideration the age and utilization thereof,
and will conform to all applicable ordinances, regulations and other laws
(including those relating to building and zoning and environmental protection
and occupational safety and health).
4.24 Validity of Contemplated Transactions. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby (i) have been duly approved by the Consent of a majority of
27
the Shareholders of IPS and the unanimous consent of the Board of Directors of
the Company; (ii) do not and will not contravene, violate and/or result in a
breach or default under any provision of the Certificate of Incorporation or
Bylaws of IPS as presently in effect; (c) do not violate, are not in conflict
with, and do not constitute a default under, or cause the acceleration of any
payments pursuant to, or otherwise impair the good standing, validity, or
effectiveness of any material agreement, contract, license, indenture,
instrument, lease, or mortgage, or subject IPS or any of its assets to any
indenture, mortgage, contract, commitment, or agreement, other than this
Agreement, to which IPS is a party or by which IPS or any of its assets are
bound; and (d) does not violate any material provision of law, rule, regulation,
order, permit, or license to which IPS is subject.
4.25 No Subsidiaries. IPS owns no shares of capital stock or any other
equity interest in any corporation, partnership, joint venture or other business
organization.
4.26 Bank Accounts. Schedule 4.26 annexed hereto lists the names and
addresses of every bank and other financial institution in which IPS maintains
an account (whether checking, savings or otherwise), lock box or safe deposit
box, and the account numbers and names of persons having signing authority or
other access thereto.
4.27 Questionable Payments. Neither IPS, its CEO, any director, officer,
agent, employee, or other person associated with or acting on behalf of IPS has,
directly or indirectly: (i) used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful payment to foreign or domestic
governmental officials or employees or to foreign or domestic governmental
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds; (ii) violated any provision of the Foreign Corrupt
Practices Act of 1977; (iii) established or maintained any unlawful or
28
unrecorded fund of corporate monies or other assets; (iv) made any false or
fictitious entry on the books or records of IPS; (v) made any bribe, rebate,
payoff, influence payment, kickback, or other unlawful payment; (vi) given any
favor or gift which is not deductible for federal income tax purposes; and/or
(viii) made any bribe, kickback, or other payment of a similar or comparable
nature, whether lawful or not, to any person or entity, private or public,
regardless of form, whether in money, property, or services, to obtain favorable
treatment in securing business or to obtain special concessions, or to pay for
favorable treatment for business secured or for special concessions already
obtained.
4.28 Directors and Officers. A true and complete list as of the date of
this Agreement indicating IPS's directors and officers, each of whom has been
duly elected is as follows:
NAME POSITION
---- --------
Richard D. Barden President, Treasurer, Director
Mark T. Shipley Secretary, Director
Scott Kramer Director
4.29 Liabilities. Schedule 4.29 annexed hereto is a true and complete list
of all the IPS bank loans, lines of credit, financial institution indebtedness
and other liabilities (including but not limited to accounts payable and accrued
expenses) outstanding as of the date of this Agreement, which schedule includes
the name of the creditor, amount outstanding as of the date of this Agreement
and essential repayment terms and conditions.
4.30 Accuracy of All Statements Made by IPS. No representation or warranty
by IPS in this Agreement, nor any statement, certificate, schedule or exhibit
29
hereto furnished or to be furnished by IPS pursuant to this Agreement, nor any
document or certificate delivered to the Company pursuant to this Agreement or
in connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statement contained therein not misleading.
ARTICLE 5
COVENANTS OF THE COMPANY AND CEO
5. Covenants of the Company and CEO. The Company and CEO, jointly and
severally covenant as follows:
5.1 The representations and warranties of the Company and CEO contained in
this Agreement and in the schedules hereto shall be true and correct in all
respects as of the Closing Date. The Company and the CEO shall give IPS prompt
notice of any change in any of the information contained in the representations
and warranties of either The Company or the CEO hereunder, the schedules hereto
or the documents furnished by the Company or the CEO in connection herewith
which occurs prior to the Closing Date. Upon the happening of any occurrence or
event prior to the Closing Date, which shall have a material adverse effect upon
the business or assets of the Company, IPS shall have the right to terminate
this Agreement by written notice to the Company and upon such termination, no
party shall have any further liability or obligation under this Agreement.
30
5.2 The Company shall, prior to the Closing Date, deliver to IPS the
unanimous consent of its Board of Directors, which consent evidences the
approval of this Agreement and the transactions contemplated hereby.
5.3 The Company will, prior to the Closing Date, comply with all laws
affecting operation of its business, will not operate the said business other
than in the ordinary course, and will give notice to IPS of any event or
circumstance not in the ordinary course which materially affect the Company's
business or the Assets.
5.4 The Company and the CEO shall use their best efforts to take or cause
to be taken all action and do or cause to be done all things necessary, proper
or advisable to consummate the transactions contemplated by this Agreement,
including, without limitation, to obtain all consents, approvals and
authorizations of third parties, to make all filings with and give all notices
to third parties which may be necessary or required in order to effectuate the
transactions contemplated hereby and to provide all information necessary to
enable the Company to meet its disclosure responsibilities to the Securities and
Exchange Commission, NASD and the investment community.
5.5 The Company and the CEO will cause themselves to, conduct their
respective affairs so that at the Closing Date no representation or warranty of
the Company and/or the CEO, will be inaccurate, no covenant or agreement of the
Company and/or the CEO will be breached, and no condition in this Agreement will
remain unfulfilled by reason of the actions or omissions of the Company and/or
the CEO. Except as otherwise requested by IPS in writing, the Company and the
CEO will, use their best efforts to preserve the business operation of the
Company intact, to keep available the services of their present personnel, to
preserve in full force and effect the Contracts, and Leases of the Company, and
31
to preserve the goodwill of the Company's suppliers, customers, and others
having business relations with the Company. Unless this Agreement is rightfully
terminated, the CEO and the Company will cause the Company to conduct its
business and operation in all respects only in the ordinary course.
5.6 The Company will provide IPS with $800,000 of operating capital in
calendar year 1996, of which $250,000 shall be in the form of retirement of IPS
debt as reflected in Schedule 5.6 attached, and the balance shall be provided in
accordance with the following schedule:
$100,000 --- prior to Closing
250,000 --- on or before March 30, 1996
200,000 --- on or before July 31, 1996
The Company will have provided $100,000 of the aforementioned $800,000 prior to
the Closing Date.
5.7 The Company Shares to be issued to the IPS Stockholders shall bear a
restrictive legend and may not be resold unless first registered with the
Securities and Exchange Commission, in the absence of an available exemption
from registration, such as would be applicable to a transaction not involving a
public offering. The Company shall be free, in its absolute discretion, to cause
the Company Shares held by any IPS Stockholder to be registered. Any shares of
stock in the Company which are used to satisfy IPS' indebtedness as referred to
in paragraph 6.4 hereunder will entitle the recipient thereof to registration
rights consisting of inclusion in a registration statement to be filed with the
Commission during March, 1996.
32
ARTICLE 6
COVENANTS OF IPS
IPS covenants as follows:
6.1 The representations and warranties of IPS contained in this Agreement
shall be true and correct in all material respects as of the Closing Date, and
IPS shall give the Company prompt notice of any change in any of the information
contained in the representations and warranties of IPS hereunder or the
documents furnished by IPS in connection herewith which occurs prior to the
Closing Date.
6.2 IPS will use its best efforts to, prior to the Closing Date, comply
with all laws affecting the operation of its business.
6.3 IPS shall use its best efforts to take or cause to be taken all action
and do or cause to be done all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement, including, without
limitation, to obtain all consents, approvals and authorizations of third
parties and to make all filings with and give all notices to third parties which
may be necessary or required in order to effectuate the transactions
contemplated hereby.
6.4 IPS will cause approximately $100,500, but in no event less than
$88,000 of its indebtedness as listed in Schedule 6.4 to be converted to an
equity interest in the Company's shares, subject to registration rights as
described in paragraph 5.7 hereinabove.
6.5 IPS will operate, following the Closing, as a subsidiary under the
general direction of the Company's Board of Directors, but will continue to
function autonomously from a management standpoint. IPS' CEO, Richard Barden,
will continue to work under his existing employment and compensation agreements,
as amended, and will be responsible for management of IPS' day to day
33
operations. Following the Closing of this transaction, the Company will exercise
its best efforts to cause a reserve to be established for use by its IPS
subsidiary, such reserve consisting of a minimum of 25% of net pre-tax earnings
generated by such subsidiary.
34
ARTICLE 7
CONDITIONS OF CLOSING
7.1 The obligation of IPS to close hereunder shall be subject to the
fulfillment and satisfaction, by the Company, prior to or at the Closing Date,
of the following conditions or the written waiver thereof by IPS:
(i) Board Meeting. IPS's Board of Directors shall have approved all of the
transactions described in this Agreement by either a vote or written
consent of the majority of Board members, and a majority of IPS's
stockholders shall have executed consents approving the transactions
contemplated by this Agreement.
(ii) Representations and Warranties. The representation and warranties of
the Company in this Agreement shall be true and correct in all material
respects when made and shall be true and correct in all material respects
on and as of the Closing Date.
(iii) Delivery of Officers' Certificate. A certificate signed by the
Company's CEO shall be delivered to IPS certifying that each of the
warranties and representations set forth in this Agreement are true and
accurate as of the date of the Closing Date and that no event or occurrence
has transpired as of the Closing Date which has or will have a material
adverse effect upon the business or assets being acquired.
(iv) Compliance with Agreement. The Company and the CEO shall have
performed and complied with all of their covenants and obligations under
this Agreement and the Letter of Intent dated December 26, 1995, a copy of
35
which is annexed hereto as Exhibit 7.1., and the Company and the CEO
further specifically agree to make all cash contributions to IPS, issue all
shares of stock, to pay all debts and liabilities in a timely manner, and
to perform and comply with all other covenants and obligations which are to
be discharged after the effective date hereof as set forth hereunder.
(v) Absence of Suit. No action, suit or proceedings before any court or any
governmental or regulatory authority shall have been commenced or
threatened and, no investigation by any governmental or regulatory
authority shall have been commenced, against the Company or the CEO,
seeking to restrain, prevent or change the transactions contemplated
hereby, or questioning the validity or legality of any such transactions,
or seeking damages in connection with any of such transactions.
(vi) Receipt of Approvals, Etc. All approvals, consents and/or waivers for
the Company and the CEO that are necessary to effect the transactions
contemplated hereby shall have been received.
(vii) Accuracy of Financial Statements. All balance sheets, statements of
income, statements of changes in financial position and/or cash flows and
other financial statements of the Company furnished to the CEO pursuant to
this Agreement shall be true, accurate and prepared in accordance with
generally accepted accounting principles.
(viii) Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
36
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as IPS may reasonably request shall
have been delivered to IPS.
7.2 The obligation of the Company to close hereunder shall be subject to
the fulfillment and satisfaction, prior to or at the Closing Date, of the
following conditions by IPS or the written waiver thereof by the Company:
(i) Representatives and Warranties. The representation and warranties of
IPS in this Agreement shall be true and correct in all material respects
when made and shall be true and correct in all material respects on and as
of the Closing Date.
(ii) Delivery of Officers' Certificate. IPS shall deliver to the Company a
certificate signed by its CEO, certifying that each of the warranties and
representations of IPS set forth in this Agreement is true and accurate as
of the date of the Closing Date and that no event or occurrence has
transpired as of the Closing Date which has or will have a material adverse
effect upon the business or assets being acquired.
(iii) Compliance with Agreement. IPS and the Stockholders shall have
performed and complied with materially all of their obligations and
delivered all securities required to be delivered under this Agreement and
the Letter of Intent dated December 26, 1995.
(iv) Absence of Suit. No action or lawsuit shall have been commenced
against IPS, seeking to restrain, prevent or change the transactions
37
contemplated hereby, or questioning the validity or legality of any such
transactions, or seeking damages in connection with any of such
transactions.
(v) Receipt of Approvals, Etc. All approvals, consents and/or waivers for
IPS that are necessary to effect the transactions contemplated hereby shall
have been received.
(vi) Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as the Company may reasonably
request shall have been delivered to the Company.
ARTICLE 8
INDEMNIFICATION
8.1 By IPS. IPS shall defend and promptly indemnify and save the Company
and the CEO harmless from, against, for and in respect of and shall pay any and
all damages, losses, obligations, liabilities, claims, encumbrances,
deficiencies, costs and expenses, including, without limitation, reasonable
attorneys' fees and other costs and expenses incident to any action,
investigation, claim or proceeding (all hereinafter collectively referred to as
"Losses") suffered, sustained, incurred or required to be paid by the Company
and the CEO by reason of IPS's breach of any warranty, representation or
covenant hereunder.
8.2 By the Company and CEO. The Company and the CEO, jointly and severally,
shall defend and promptly indemnify IPS, and its officers and directors, and
save and hold them harmless from, against, for and in respect of and shall pay
38
any and all damages, losses, obligations, liabilities, claims, encumbrances,
deficiencies, costs and expenses, including without limitation, reasonable
attorneys' fees and other costs and expenses incident to any suit, action,
investigation, claim or proceeding (all hereinafter collectively referred to as
"Losses") suffered, sustained, incurred or required to be paid by IPS by reason
of (i) the existence of any and all obligations and/or liabilities of the
Company which were not disclosed to IPS in this Agreement; (ii) any breach or
failure of observance or performance of any representation, warranty, covenant,
agreement or commitment made by the Company and/or the CEO hereunder or relating
hereto or as a result of any such representation, warranty, covenant, agreement
or commitment being untrue or incorrect in any respect, or (iii) any and all
actions, suits, investigations, proceedings, demands, assessments, audits,
judgments and claims arising out of any of the foregoing or from any
misrepresentation or omission from any schedule to this Agreement, certificates,
financial statements or from any document furnished or required to be furnished
hereunder.
ARTICLE 9
EXPENSES
9.1 Expenses. The parties agree to bear their expenses individually, each
in respect of all expenses of any character incurred by it in connection with
this Agreement or the transactions contemplated hereby.
39
ARTICLE 10
SECURITIES ACT PROVISIONS
10.1 Restrictions on Disposition of Shares. The Stockholders covenant and
warrant that the Shares to be received from the Company pursuant to this
Agreement are acquired for their own account and not with the present view
towards the distribution thereof without compliance with securities laws and
they will not dispose of the Shares except (i) pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or (ii) in
any other transaction which, in the opinion of the Company's counsel, is exempt
from registration under the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission ("SEC") thereunder. In
order to effectuate the covenants of this subsection 10.1 an appropriate legend
will be placed upon each of the certificates of stock at the time of
distribution of the Shares by the Company pursuant to this Agreement, and stop
transfer instructions shall be placed with the transfer agent for the Shares.
10.2 Evidence of Compliance with Private Offering Exemption. The
Stockholders agree to supply the Company with such evidence as counsel for the
Company may require in order to evidence the private offering character of the
distribution of shares made pursuant to this Agreement.
10.3 Notice of Limitation Upon Disposition. IPS and the Stockholders are
aware that the Shares distributed pursuant to this Agreement will not have been
registered pursuant to the Securities Act of 1933, as amended; and, therefore,
under current interpretations and applicable rules, the Shares can not be
publicly sold for a period of at least two years, and at the expiration of such
two year period, sales of the Shares may be confined to brokerage transactions
40
of limited amounts requiring certain notification filings with the SEC and such
disposition may be available only if the Company is current in its filings with
the SEC under the Securities Act of 1933, as amended, or other public disclosure
requirements, and the other limitations imposed thereby on the disposition of
Shares of the Company.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Entire Agreement. This Agreement and the Letter of Intent dated
December 26, 1995 constitutes the entire agreement of the parties with respect
to the subject matter hereof.The representations, warranties, covenants and
agreements set forth in this Agreement and in any financial statements,
schedules or exhibits delivered pursuant hereto constitute all the
representations, warranties, covenants and agreements of the parties hereto and
upon which the parties have relied and except as may be specifically provided
herein. No change, modification, amendment, addition or termination of this
Agreement or any part thereof shall be valid unless in writing and signed by or
on behalf of the party to be charged therewith.
11.2 Survival of Covenants, etc. All warranties, representations and
covenants set forth herein shall survive the Closing Date of this Agreement.
11.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be given or made pursuant to any of the provisions of
this Agreement shall be deemed to have been duly given or made for all purposes
if sent by Federal Express delivery or by certified or registered mail, return
receipt requested and postage prepaid or hand delivered as follows:
41
For IPS:
Integrated Petroleum Systems Corporation
8480 East Orchard Road
Suite 4350
Englewood, Colorado 80111
For the Company:
Concord Energy Incorporation
75 Claremont Road
Bernardsville, New Jersey 07924
Copy to:
Silverman, Collura & Chernis. P.C
381 Park Avenue Suite, Suite 1601
New York, New York 10016
11.4 Waiver. No waiver of the provisions hereof shall be effective unless
in writing and signed by the party to be charged with such waiver. No waiver
shall be deemed a continuing waiver or waiver in respect of any subsequent
breach or default, either of a similar or different nature, unless expressly so
stated in writing.
11.5 Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of New Jersey applicable to
contracts to be performed entirely within that State. Any dispute in any way
related to the subject matter of this Agreement shall be litigated exclusively
within the State of New Jersey and all parties hereto, including shareholders of
the Company consent to the jurisdiction of the State and/or United States
District Courts of New Jersey. Should any clause, section or part of this
Agreement be held or declared to be void or illegal for any reason, all other
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clauses, sections or parts of this Agreement which can be affected without such
illegal clause, section or part shall nevertheless continue in full force and
effect.
11.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
or heirs and personal representatives; provided, however, that no party may
assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the other parties hereto.
11.7 Captions. The headings, captions or titles of paragraphs under
sections or subsections of this Agreement are for convenience and reference only
and do not in any way modify, interpret or construe the intent of the parties or
effect any of the provisions of this Agreement.
11.8 Time Periods. Any time period provided for herein which shall end or
expire on a Saturday, Sunday, or legal holiday shall be deemed extended to the
next full business day thereafter.
11.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement. The Stockholders shall execute this
agreement by the delivery of written consents approving the exchange of all
outstanding shares of common stock of IPS for an aggregate of 600,000 of the
outstanding shares of common stock of the Company.
11.10 Confidentiality. Neither this Agreement nor any memorandum of this
Agreement shall be recorded in the Public Records of any State or County. The
parties hereto agree to keep this Agreement confidential, as well as any
information or document obtained by either party in connection with this
transaction, except to the extent disclosure is required to or by any government
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agency or regulatory or quasi-regulatory body. The Company will not release any
information by press release or otherwise regarding this transaction without the
prior consent of IPS.
11.11 Joint Draftsmanship. The preparation of this Agreement has been a
joint effort of the parties and this Agreement shall not, solely as a matter of
judicial construction, be construed more severely against one of the parties
than the other.
11.12 Brokers. No broker, finder or investment banker other than Wiley
Capital is entitled to any brokerage, finders or other fee or commission in
connection with the transactions contemplated by this Agreement. IPS has made
arrangements for the compensation of Wiley Capital, and such compensation shall
be accounted for on the records of the Company and IPS as an IPS expense except
as may be otherwise agreed to by the Company. The Company agrees to indemnify,
hold harmless and defend IPS from and against any claims by other brokers,
finders or investment bankers claiming to have been retained by the Company.
11.13 Schedule Update. Not later than the second business day prior to the
anticipated date of Closing, the Company shall deliver to IPS any revisions to
the Company Schedules necessary to make such Company Schedules and the
representations and warranties contained in this Agreement true and correct as
of the Closing Date (the "Updated Company Schedules"). As used in this
Agreement, the term "Company Schedules" shall include the Updated Company
Schedules, if delivered.
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Not later than the second business day prior to the anticipated date of
Closing, IPS shall deliver to the Company any revisions to the IPS schedules
necessary to make such IPS schedules and the representations and warranties
contained in this Agreement true and correct as of the Closing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed on the date and year first above written.
INTEGRATED PETROLEUM SYSTEMS CORPORATION
By:_____________________________________
Richard D. Barden, CEO
CONCORD ENERGY INCORPORATED
By:_____________________________________
Jerry Swon, CEO
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