SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[ X ] Preliminary Information [ ] Confidential, For Use Of The
Statement Commission Only (As Permitted
By Rule 14c-5 (d)(2)
[ ] Definitive Information Statement
AVAILENT FINANCIAL INC.
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ X ] Fee computed on table below per Exchange Act Rules
14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
Redeemable convertible Preferred Stock
of C.E.C. Industries Corp.
(2) Aggregate number of securities to which transaction applies:
100,000 shares of Redeemable convertible
Preferred Stock of C.E.C. Industries Corp.
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated
and state how it was determined):
US$.01 (1 cent) per share of Redeemable
convertible Preferred Stock of
C.E.C. Industries Corp.
(4) Proposed maximum aggregate value of transaction:
US$1,000.00
(5) Total fee paid:
US$2.00
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, of the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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First mailed to stockholders on or about July ___, 2004.
AVAILENT FINANCIAL INC.
2720 Stemmons Freeway
South Tower, Suite 600
Dallas, TX 75207
PRELIMINARY INFORMATION STATEMENT
PURSUANT TO SECTION 14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
NOTICE OF WRITTEN CONSENT OF STOCKHOLDERS
IN LIEU OF SPECIAL MEETING OF STOCKHOLDERS
TO BE EFFECTIVE JULY 23, 2004.
TO OUR STOCKHOLDERS:
This Preliminary Information Statement and Notice of Action
Taken Without a Meeting (collectively, the "Information Statement)
is being furnished to stockholders of record on July 23, 2004
(the "Record Date"), of Availent Financial, Inc., a Delaware
corporation (the "Company" or "Availent"), in connection with
the following action taken by written consent of holders of a
majority of the outstanding shares of Availent's Common Stock
entitled to vote on the following proposal:
1. Approve the terms of a stock purchase agreement whereby
the stockholders of Availent, will sell to Availent Acquisition
Group, Inc., a wholly owned subsidiary of C.E.C. Industries Corp.
("CECC"), in exchange for a certain amount of shares of CECC
redeemable convertible preferred stock, all of the issued and
outstanding shares of Availent Mortgage, Inc. ("Mortgage"). A
copy of the stock purchase agreement is attached as Appendix A.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY
The Company's Board of Directors has fully reviewed and
unanimously approved the actions in connection with the above-
referenced stock purchase agreement and has determined that the
consideration to Availent's stockholders is fair in connection
with the acquisition of Mortgage by Availent Acquisition Group,
Inc.
The holders of 80.0% of the outstanding shares of our Common
Stock have executed a written consent in favor of the above
proposal. However, under federal law these proposals may not be
effected until at least 20 days after this Information Statement
has first been sent to our stockholders.
This Information Statement will serve as written Notice to
stockholders pursuant to Section 228 of the Delaware General
Corporation Law (the "DGCL").
THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO
STOCKHOLDER'S MEETING WILL BE HELD TO CONSIDER ANY MATTER
DESCRIBED HEREIN.
By order of the Board of Directors,
/s/ Patrick McGeeney
-----------------------------
Patrick McGeeney
Chairman of the Board
APPENDIX A
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STOCK PURCHASE AGREEMENT
by and among
CEC INDUSTRIES CORP.
a Nevada Corporation
and
AVAILENT ACQUISITION GROUP, INC.
a Nevada Corporation
and
AVAILENT FINANCIAL, INC.
a Delaware Corporation.
Dated July ___, 2004
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is made
and entered into this ____ day of July 2004, is by and among
C.E.C. Industries Corp. ("CECC"), a Nevada corporation, having
its principal place of business at 130 Arbor Way, Henderson, NV
89156; Availent Financial, Inc. ("Availent"), a Delaware
corporation, having its principal place of business at 2720
Stemmons Freeway, South Tower, Suite 600, Dallas, Texas 75207;
and Availent Acquisition Group, Inc. ("Acquisition Group"), a
Nevada corporation, having its principal place of business at c/o
C.E.C. Industries Corp., 130 Arbor Way, Henderson, NV
89156.Parties CECC, Availent and AAC are hereinafter sometimes
individually referred to as a "Party" and collectively as the
"Parties".
Premises
A. This Agreement provides for the acquisition of all of
the issued and outstanding shares of Availent's wholly-owned
subsidiary, Availent Mortgage, Inc. ("Mortgage"), by CECC's
wholly owned subsidiary, Acquisition Group; and in connection
therewith, the issuance of __________ CECC Redeemable Convertible
Preferred Stock to the Availent's shareholders or their assignees
(the "Transaction").
B. The shareholders and boards of directors of Availent,
Acquisition Group and CECC have determined, subject to the terms
and conditions set forth in this Agreement, that the Transaction
is desirable and in the best interests of their stockholders,
respectively. This Agreement is being entered into for the
purpose of setting forth the terms and conditions of the
Transaction.
Agreement
NOW, THEREFORE, on the stated premises and for and in
consideration of the mutual covenants and agreements hereinafter
set forth and the mutual benefits to the Parties to be derived
here from, the Parties hereby covenant and agree as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
CECC AND ACQUISITION GROUP
As an inducement to and to obtain the reliance of Availent,
CECC and Acquisition Group represent and warrant as follows:
Section 1.1 ORGANIZATION. CECC is a corporation duly
organized, validly existing, and in good standing under the laws
of Nevada and has the corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own
all of its properties and assets and to carry on its business in
all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the
jurisdiction in which the character and location of the assets
owned by it or the nature of the business transacted by it
requires qualification. Included in the Schedules attached
hereto (hereinafter defined) are complete and correct copies of
the articles of incorporation, bylaws and amendments thereto as
in effect on the date hereof. The execution and delivery of
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this Agreement does not and the consummation of the transactions
contemplated by this Agreement in accordance with the terms
hereof will not violate any provision of CECC's articles of
incorporation or bylaws. CECC has full power, authority and
legal right and has taken all action required by law, its
articles of incorporation, its bylaws or otherwise to authorize
the execution and delivery of this Agreement. Acquisition Group
is a corporation duly organized, validly existing, and in good
standing under the laws of Nevada and has the corporate power and
is duly authorized, qualified, franchised and licensed under all
applicable laws, regulations, ordinances and orders of public
authorities to own all of its properties and assets and to carry
on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign
corporation in the jurisdiction in which the character and
location of the assets owned by it or the nature of the business
transacted by it requires qualification. Included in the
Schedules attached hereto (hereinafter defined) are complete and
correct copies of the articles of incorporation, bylaws and
amendments thereto as in effect on the date hereof. The
execution and delivery of this Agreement does not and the
consummation of the transactions contemplated by this Agreement
in accordance with the terms hereof will not violate any
provision of Acquisition Group's articles of incorporation or
bylaws. Acquisition Group has full power, authority and legal
right and has taken all action required by law, its articles of
incorporation, its bylaws or otherwise to authorize the execution
and delivery of this Agreement.
Section 1.2 SUBSIDIARIES. CECC has the following wholly
owned subsidiaries:
Paycard Unlimited, Inc., and
Availent Acquisition Group, Inc.
Section 1.3 TAX MATTERS: BOOKS AND RECORDS.
The books and records, financial and others, of CECC and
Acquisition Group are in all material respects complete and
correct and have been maintained in accordance with good business
accounting practices; and
CECC and Acquisition Group have no liabilities with respect
to the payment of any country, federal, state, county, or local
taxes (including any deficiencies, interest or penalties).
Section 1.4 LITIGATION AND PROCEEDINGS. There are no
actions, suits, proceedings or investigations pending or
threatened by or against or affecting CECC or Acquisition Group
or their properties, at law or in equity, before any court or
other governmental agency or instrumentality, domestic or foreign
or before any arbitrator of any kind that would have a material
adverse affect on the business, operations, financial condition
or income of CECC or Acquisition Group. CECC and Acquisition
Group are not in default with respect to any judgment, order,
writ, injunction, decree, award, rule or regulation of any court,
arbitrator or governmental agency or instrumentality or of any
circumstances which, after reasonable investigation, would result
in the discovery of such a default.
Section 1.5 MATERIAL CONTRACT DEFAULTS. CECC and
Acquisition Group are not in default in any material respect
under the terms of any outstanding contract, agreement, lease or
other commitment which is material to the business, operations,
properties, assets or condition of CECC or Acquisition Group, and
there is no event of default in any material respect under any
such contract, agreement, lease or other commitment in respect of
which CECC or Acquisition Group has not taken adequate steps to
prevent such a default from occurring.
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Section 1.6 INFORMATION. The information concerning CECC
and Acquisition Group as set forth in this Agreement and in the
attached Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the
statements made in light of the circumstances under which they
were made, not misleading. CECC `s filings with the SEC are
complete and accurate in all material respects and do not contain
any untrue statement of a material fact or omit to state a
material fact required to make the statements made in light of
the circumstances under which they were made, not misleading.
Section 1.7 TITLE AND RELATED MATTERS. Except as set
forth in its SEC filings, CECC and Acquisition Group have good
and marketable title to and are the sole and exclusive owner of
all of their properties, inventory, interest in properties and
assets, real and personal (collectively, the "Assets") free and
clear of all liens, pledges, charges or encumbrances. CECC and
Acquisition Group own free and clear of any liens, claims,
encumbrances, royalty interests or other restrictions or
limitations of any nature whatsoever and all procedures,
techniques, marketing plans, business plans, methods of
management or other information utilized in connection with
CECC's or Acquisition Group's business. No third party has any
right to, and CECC and Acquisition Group have not received any
notice of infringement of or conflict with asserted rights of
other with respect to any product, technology, data, trade
secrets, know-how, proprietary techniques, trademarks, service
marks, trade names or copyrights which, singly on in the
aggregate, if the subject of an unfavorable decision ruling or
finding, would have a materially adverse affect on the business,
operations, financial conditions or income of CECC or Acquisition
Group or any material portion of their properties, assets or
rights.
Section 1.8 COMPLIANCE WITH LAWS AND REGULATIONS. To the
best of CECC's knowledge and belief, CECC and Acquisition Group
have complied with all applicable statutes and regulations of any
federal, state or other governmental entity or agency thereof,
except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or
condition of CECC or Acquisition Group or would not result in
CECC or Acquisition Group incurring material liability. "Best
knowledge and belief " shall mean within the context of this
Agreement both what a Party knew as well as what the Party should
have known had the Party exercised reasonable diligence. When
used with respect to a Party other than a natural person, the
term "best knowledge and belief" shall include matters that are
known to the directors and officers of the Party.
Section 1.9 INSURANCE. All of the insurable properties
of CECC and Acquisition Group are insured for CECC's or
Acquisition Group's benefit under valid and enforceable policy or
policies containing substantially equivalent coverage and will be
outstanding and in full force at the Closing Date.
Section 1.10 APPROVAL OF AGREEMENT. The directors of CECC
and Acquisition Group have authorized the execution and delivery
of the Agreement, and all other documents and instruments related
thereto, by their duly authorized representatives, and have
approved the transactions contemplated hereby.
Section 1.11 MATERIAL TRANSACTIONS OR AFFILIATIONS. There
are no material contracts or agreements of arrangement between
CECC or Acquisition Group and any person, who was at the time of
such contract, agreement or arrangement an officer, director or
person owning of record, or known to
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beneficially own ten percent (10%) or more of the issued and
outstanding common shares of CECC or Acquisition Group and which
is to be performed in whole or in part after the date hereof.
CECC and Acquisition Group have no commitment, whether written or
oral, to lend any funds to, borrow any money from or enter into
material transactions with any such affiliated person.
Section 1.12 NO CONFLICT WITH OTHER INSTRUMENTS. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in
the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust or
other material contract, agreement or instrument to which CECC or
Acquisition Group is a party or to which any of its properties or
operations are subject.
Section 1.13 GOVERNMENTAL AUTHORIZATIONS. CECC and
Acquisition Group have all licenses, franchises, permits or other
governmental authorizations legally required to enable it to
conduct its business in all material respects as conducted on the
date hereof. Except for compliance with federal and state
securities and corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, or registration,
declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by CECC
and Acquisition Group of this Agreement and the consummation of
the transactions contemplated hereby.
Section 1.14 EXCHANGE ACT REGISTRATION. As of the date
hereof, (a) the CECC common stock is registered under Section
12(g) of the Exchange Act, and (b) CECC is in full compliance
with all reporting requirements of the Exchange Act.
Section 1.15 SEC DOCUMENTS AND FINANCIAL STATEMENTS. CECC
has filed on a timely basis all documents required to be filed by
it with the SEC. Complete and correct copies of the CECC SEC
Documents have been made available to Availent. As of their
respective dates, or if amended as of the date of the last such
amendment, the CECC SEC Documents complied in all material
respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and none of the CECC SEC
Documents as of the date thereof contained any untrue statement
of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading. Complete and accurate copies of the unaudited
consolidated balance sheet, consolidated statements of
operations, consolidated statements of stockholders' equity and
consolidated statements of cash flows (together with any
supplementary information thereto) of CECC have been provided to
Availent. The CECC Financial Statements fairly present, in all
material respects, the consolidated financial position of CECC,
as of and for the respective dates thereof, and the consolidated
results of its operations and its consolidated cash flows for the
respective periods then ended (subject, in the case of the CECC
Interim Financial Information, to normal year-end audit
adjustments and to any other adjustments described therein) in
conformity with GAAP during the periods involved (except as may
be indicated therein or in the notes thereto and the CECC Interim
Financial Information do not contain the footnotes required by
GAAP). CECC has not made any change in the accounting practices
or policies applied in the preparation of its financial
statements, except as may be required by GAAP.
Section 1.16 FILINGS. CECC covenants that it will file a
registration statement within sixty (60) days after the closing
date of this transaction that shall include the shares underlying
the preferred stock to be
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issued on conversion for the acquisition of Mortgage. CECC shall
use its best efforts to have the registration statement declared
effective at the earliest possible time and to maintain such
effectiveness. CECC shall bear any and all expenses associated
with the filing of the registration statement.
Section 1.17 RESTRICTIVE LEGEND. Certificates
representing the shares of CECC convertible preferred stock
issued in connection with the Transaction shall be "restricted
securities" under the Securities Act and shall bear the following
restrictive legend:
The shares represented by this certificate
have not been registered under the Securities
Act of 1933 ("the Act") and are "restricted
securities" as that term is defined in Rule
144 under the Act. The shares may not be
offered for sale, sold or otherwise
transferred except pursuant to an effective
registration statement under the Act, or
pursuant to an exemption from registration
under the Act, the availability of which is
to be established to the satisfaction of the
Company.
Section 1.18 DISSENTER RIGHTS. At all times, and as
applicable, CECC and Availent shall comply with applicable Legal
Requirements including, without limitation, the payment of cash
for dissenting shares related to the "Legal Requirements" means
applicable common law and any applicable statute, ordinance,
code or other laws, rule, regulation, order, technical or
other standard, requirement, judgment, or procedure enacted,
adopted, promulgated, applied or followed by any Governmental
Authority, including, without limitation, any order, decree,
award, verdict, findings of fact, conclusions of law, decision or
judgment, whether or not final or appealable, of any court,
arbitrator, arbitration board or administrative agency.
"Governmental Authority "shall mean any and all applicable
foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any
nature whatsoever, and any subdivisions or instrumentalities
thereof, including, but not limited to, departments, boards,
bureaus, commissions, agencies, courts, administrations and
panels, and any division or instrumentalities thereof, whether
permanent or ad hoc and whether now or hereafter constituted or
existing.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF AVAILENT FINANCIAL, INC.
As an inducement to, and to obtain the reliance of CECC and
Acquisition Group, Availent represents and warrants as follows:
Section 2.1 ORGANIZATION. Availent is a corporation duly
organized, validly existing and in good standing under the laws
of Delaware and has the corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own
all of its properties and assets and to carry on its business in
all material respects as it is now being conducted, including
qualification to do business as a foreign entity in the country
or states in which the character and location of the assets owned
by it or the nature of the business transacted by it requires
qualification. Included in the Attached Schedules (as
hereinafter defined) are complete and correct copies of the
articles of incorporation, bylaws and amendments thereto as in
effect on the date hereof. The execution and delivery of this
Agreement does not and the consummation of the transactions
contemplated by this Agreement in accordance with the terms
hereof will not, violate any provision of Availent's certificate
of incorporation or bylaws. Availent has full power, authority
and legal right and has taken all
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action required by law, its articles of incorporation, bylaws or
otherwise to authorize the execution and delivery of this
Agreement.
Section 2.2 SUBSIDIARIES. Availent has the following
wholly owned subsidiaries:
Availent Mortgage, Inc.
Section 2.3 TAX MATTERS; BOOKS & RECORDS.
The books and records, financial and others, of Availent are
in all material respects complete and correct and have been
maintained in accordance with good business accounting practices;
and
Except as set forth in Schedule 2.3 (b) hereof, Availent has
no liabilities with respect to the payment of any country,
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties).
Availent shall remain responsible for all debts incurred
prior to the closing.
Section 2.4 INFORMATION. The information concerning
Availent as set forth in this Agreement and in the attached
Schedules is complete and accurate in all material respects and
does not contain any untrue statement of a material fact or omit
to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not
misleading.
Section 2.5 TITLE AND RELATED MATTERS. Except as set
forth on Schedule 2.5, Availent has good and marketable title to
and is the sole and exclusive owner of all of its properties,
inventory, interests in properties and assets, real and personal
(collectively, the "Assets") free and clear of all liens,
pledges, charges or encumbrances. Except as set forth in the
Schedules attached hereto, Availent owns free and clear of any
liens, claims, encumbrances, royalty interests or other
restrictions or limitations of any nature whatsoever and all
procedures, techniques, marketing plans, business plans, methods
of management or other information utilized in connection with
its business. Except as set forth in the attached Schedules, no
third party has any right to, and Availent has not received any
notice of infringement of or conflict with asserted rights of
others with respect to any product, technology, data, trade
secrets, know-how, proprietary techniques, trademarks, service
marks, trade names or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse affect on the business,
operations, financial conditions or income of Availent or any
material portion of its properties, assets or rights.
Section 2.6 LITIGATION AND PROCEEDINGS. Except as set
forth on Schedule 2.6, there are no actions, suits or proceedings
pending or threatened by or against or affecting Availent, at law
or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign or before any arbitrator of
any kind that would have a material adverse effect on its
business, operations, financial condition, income or business
prospects. Availent does not have any knowledge of any default
on its part with respect to any judgment, order, writ,
injunction, decree, award, rule or regulation of any court,
arbitrator or governmental agency or instrumentality.
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Section 2.7 CONTRACTS. On the Closing Date:
Except as set forth on Schedule 2.7(a) hereof, there are no
material contracts, agreements, franchises, license agreements,
or other commitments to which Availent is a party or by which it
or any of its properties are bound;
Except as set forth on Schedule 2.7(b) hereof, Availent is
not a party to any contract, agreement, commitment or instrument
or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which
materially and adversely affects, or in the future may (as far as
Availent can now foresee) materially and adversely affect, the
business, operations, properties, assets or conditions of
Availent; and
Except as set forth on Schedule 2.7(c) hereof, Availent is
not a party to any material oral or written: (i) contract for
the employment of any officer or employee; (ii) profit sharing,
bonus, deferred compensation, stock option, severance pay,
pension, benefit or retirement plan, agreement or arrangement
covered by Title IV of the Employee Retirement Income Security
Act, as amended; (iii) agreement, contract or indenture relating
to the borrowing of money; (iv) guaranty of any obligation for
the borrowing of money or otherwise, excluding endorsements made
for collection and other guaranties of obligations, which, in the
aggregate exceeds $1,000; (v) consulting or other contract with
an unexpired term of more than one year or providing for payments
in excess of $10,000 in the aggregate; (vi) collective
bargaining agreement; (vii) contract, agreement, or other
commitment involving payments by it for more than $10,000 in the
aggregate.
Section 2.8 NO CONFLICT WITH OTHER INSTRUMENTS. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in
the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust or
other material contract, agreement or instrument to which
Availent is a party or to which any of its properties or
operations are subject.
Section 2.9 MATERIAL CONTRACT DEFAULTs. Except as set
forth on Schedule 2.9, to the best of Availent's knowledge and
belief, Availent is not in default in any material respect under
the terms of any outstanding contract, agreement, lease or other
commitment which is material to the business, operations,
properties, assets or condition of Availent, and there is no
event of default in any material respect under any such contract,
agreement, lease or other commitment in respect of which Availent
has not taken adequate steps to prevent such a default from
occurring.
Section 2.10 GOVERNMENTAL AUTHORIZATIONS. To the best of
Availent's knowledge, Availent has all licenses, franchises,
permits and other governmental authorizations that are legally
required to enable it to conduct its business operations in all
material respects as conducted on the date hereof. Except for
compliance with federal and state securities or corporation laws,
no authorization, approval, consent or order of, or registration,
declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by
Availent of the transactions contemplated hereby.
Section 2.11 COMPLIANCE WITH LAWS AND REGULATIONS. To the
best of Availent's knowledge and belief, Availent has complied
with all applicable statutes and regulations of any federal,
state or other governmental entity or agency thereof, except to
the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets or condition
of Availent or would not result in Availent's incurring any
material liability.
Section 2.12 INSURANCE. All of the insurable properties
of Availent are insured for Availent's benefit under valid and
enforceable policy or policies containing substantially
equivalent coverage and will be outstanding and in full force at
the Closing Date.
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Section 2.13 APPROVAL OF AGREEMENT. The directors of
Availent have authorized the execution and delivery of the
Agreement and have approved the transactions contemplated hereby.
Section 2.14 MATERIAL TRANSACTIONS OR AFFILIATIONS.
Except as set forth on Schedule 2.14, as of the Closing Date,
there will exist no material contract, agreement or arrangement
between Availent and any person who was at the time of such
contract, agreement or arrangement an officer or director which
is to be performed in whole or in part after the date hereof.
Availent has no commitment, whether written or oral, to lend any
funds to, borrow any money from or enter into any other material
transactions with, any such affiliated person.
ARTICLE III
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF AVAILENT MORTGAGE
As an inducement to, and to obtain the reliance of CECC,
Mortgage represents and warrants as follows:
Section 3.1 ORGANIZATION. Mortgage is a corporation duly
organized, validly existing and in good standing under the laws
of Texas and has the corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own
all of its properties and assets and to carry on its business in
all material respects as it is now being conducted, including
qualification to do business as a foreign entity in the country
or states in which the character and location of the assets owned
by it or the nature of the business transacted by it requires
qualification. Included in the Attached Schedules (as
hereinafter defined) are complete and correct copies of the
articles of incorporation, bylaws and amendments thereto as in
effect on the date hereof. The execution and delivery of this
Agreement does not and the consummation of the transactions
contemplated by this Agreement in accordance with the terms
hereof will not, violate any provision of Mortgage's certificate
of incorporation or bylaws. Mortgage has full power, authority
and legal right and has taken all action required by law, its
articles of incorporation, bylaws or otherwise to authorize the
execution and delivery of this Agreement.
Section 3.2 SUBSIDIARIES. None.
Section 3.3 TAX MATTERS; BOOKS & RECORDS.
(a) The books and records, financial and others, of Mortgage
are in all material respects complete and correct and have been
maintained in accordance with good business accounting practices;
and
(b) Except as set forth in Schedule 3.3 (b) hereof, Mortgage
has no liabilities with respect to the payment of any country,
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties).
(c) Except as set forth in Schedule 3.3 (c) hereof, Mortgage
shall remain responsible for all debts incurred prior to the
closing.
Section 3.4 INFORMATION. The information concerning
Mortgage as set forth in this Agreement and in the attached
Schedules is complete and accurate in all material respects and
does not contain any untrue statement of a material fact or omit
to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not
misleading.
Section 3.5 TITLE AND RELATED MATTERS. Except as set
forth on Schedule 3.5, Mortgage has good and marketable title to
and is the sole and exclusive owner of all of Mortgage's
properties, inventory, interests in properties and assets, real
and personal (collectively, the "Assets") free and clear of all
liens, pledges, charges or encumbrances. Except as set forth in
the Schedules attached hereto, Mortgage owns free and clear of
any liens, claims, encumbrances, royalty interests or other
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restrictions or limitations of any nature whatsoever and all
procedures, techniques, marketing plans, business plans, methods
of management or other information utilized in connection with
Mortgage's business. Except as set forth in the attached
Schedules, no third party has any right to, and Mortgage has not
received any notice of infringement of or conflict with asserted
rights of others with respect to any product, technology, data,
trade secrets, know-how, proprietary techniques, trademarks,
service marks, trade names or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse affect on the business,
operations, financial conditions or income of Mortgage or any
material portion of its properties, assets or rights.
Section 3.6 LITIGATION AND PROCEEDINGS. Except as set
forth on Schedule 3.6, there are no actions, suits or proceedings
pending or threatened by or against or affecting Mortgage, at law
or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign or before any arbitrator of
any kind that would have a material adverse effect on the
business, operations, financial condition, income or business
prospects of Mortgage. Mortgage does not have any knowledge of
any default on its part with respect to any judgment, order,
writ, injunction, decree, award, rule or regulation of any court,
arbitrator or governmental agency or instrumentality.
Section 3.7 CONTRACTS. On the Closing Date:
(a) Except as set forth on Schedule 3.7(a) hereof, there are no
material contracts, agreements, franchises, license agreements,
or other commitments to which Mortgage is a party or by which it
or any of its properties are bound;
(b) Except as set forth on Schedule 3.7(b) hereof, Mortgage is
not a party to any contract, agreement, commitment or instrument
or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which
materially and adversely affects, or in the future may (as far as
Mortgage can now foresee) materially and adversely affect, the
business, operations, properties, assets or conditions of
Mortgage; and
(c) Except as set forth on Schedule 3.7(c) hereof, Mortgage is
not a party to any material oral or written: (i) contract for
the employment of any officer or employee; (ii) profit sharing,
bonus, deferred compensation, stock option, severance pay,
pension, benefit or retirement plan, agreement or arrangement
covered by Title IV of the Employee Retirement Income Security
Act, as amended; (iii) agreement, contract or indenture relating
to the borrowing of money; (iv) guaranty of any obligation for
the borrowing of money or otherwise, excluding endorsements made
for collection and other guaranties of obligations, which, in the
aggregate exceeds $1,000; (v) consulting or other contract with
an unexpired term of more than one year or providing for payments
in excess of $10,000 in the aggregate; (vi) collective
bargaining agreement; (vii) contract, agreement, or other
commitment involving payments by it for more than $10,000 in the
aggregate.
Section 3.8 NO CONFLICT WITH OTHER INSTRUMENTS. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in
the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust or
other material contract, agreement or instrument to which
Mortgage is a party or to which any of its properties or
operations are subject.
Section 3.9 MATERIAL CONTRACT DEFAULTS. Except as set
forth on Schedule 3.9, to the best of Mortgage's knowledge and
belief, Mortgage is not in default in any material respect under
the terms of any outstanding contract, agreement, lease or other
commitment which is material to the business, operations,
properties, assets or condition of Mortgage, and there is no
event of default in any material respect under any such contract,
agreement, lease or other commitment in respect of which Mortgage
has not taken adequate steps to prevent such a default from
occurring.
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Section 3.10 GOVERNMENTAL AUTHORIZATIONS. To the best of
Mortgage's knowledge, Mortgage has all licenses, franchises,
permits and other governmental authorizations that are legally
required to enable it to conduct its business operations in all
material respects as conducted on the date hereof. Except for
compliance with federal and state securities or corporation laws,
no authorization, approval, consent or order of, or registration,
declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by
Mortgage of the transactions contemplated hereby.
Section 3.11 COMPLIANCE WITH LAWS AND REGULATIONS. To the
best of Mortgage's knowledge and belief, Mortgage has complied
with all applicable statutes and regulations of any federal,
state or other governmental entity or agency thereof, except to
the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets or condition
of Mortgage or would not result in Mortgage's incurring any
material liability.
Section 3.12 INSURANCE. All of the insurable properties
of Mortgage are insured for Mortgage's benefit under valid and
enforceable policy or policies containing substantially
equivalent coverage and will be outstanding and in full force at
the Closing Date.
Section 3.13 APPROVAL OF AGREEMENT. The directors of
Mortgage have authorized the execution and delivery of the
Agreement and have approved the transactions contemplated hereby.
Section 3.14 MATERIAL TRANSACTIONS OR AFFILIATIONS. As of
the Closing Date, there will exist no material contract,
agreement or arrangement between Mortgage and any person who was
at the time of such contract, agreement or arrangement an officer
or director which is to be performed in whole or in part after
the date hereof. Mortgage has no commitment, whether written or
oral, to lend any funds to, borrow any money from or enter into
any other material transactions with, any such affiliated person.
ARTICLE IV
ACQUISITION PROCEDURE AND CONSIDERATION
Section 4.1 ACQUISITION. CECC shall establish
Acquisition Group as a wholly owned subsidiaryof CECC. At the
closing of the transaction herein described, Acquisition Group
shall acquire all of the issued and outstanding shares of
Mortgage, subject to the terms and conditions herein. Upon the
closing of the acquisition as herein described, CECC will give
the following consideration:
A. CECC shall issue to the shareholders of Availent ______
shares of CECC Redeemable Convertible Preferred Stock. This stock
shall be convertible into CECC common stock beginning nine (9)
months from the date hereof, on a quarterly basis for five
consecutive quarters, pro-rata (20% per quarter), at a rate equal
to three times the previous quarter's, pre-tax earnings of
Acquisition Group.
B. CECC shall cause a SB-2 registration statement to be filed
with the SEC with respect to said shares underlying the preferred
stock to be issued on conversion within sixty (60) days after the
closing date of this transaction. CECC shall use its best
efforts to have the registration statement declared effective at
the earliest possible time and to maintain such effectiveness.
CECC shall bear any and all expenses associated with the filing
of the registration statement.
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C. CECC shall infuse $1,500,000 in equity capital into
Acquisition Group in the form of redeemable preferred stock in
Mortgage with a ten (10%) percent dividend and redeemable upon
spin out of Acquisition as set forth in Section 7.12. A mutually
agreed upon use of proceeds shall be attached to the closing
documents.
D. CECC shall have the right to elect three of the five members
of the Board of Directors of Mortgage. In accordance with the
terms and provisions of the McGeeney Employment Agreement (herein
so called), Patrick McGeeney, the current Chairman and CEO of
Availent, will be appointed as the Chairman of the Board of
Directors and Chief Executive Officer of Mortgage The Board of
Directors of Mortgage shall hire a President and Chief Operating
Officer of Mortgage with, among other personal attributes and
qualifications, mortgage banking experience.
E. CECC shall have the right to approve any bridge financing
undertaken by Acquisition Group and the secured and unsecured
noteholders of CEC have the right to approve of the sale of
Mortgage.
Section 4.2 LEAK OUT AGREEMENT. All of the Redeemable,
Convertible Preferred shares issued to the Availent shareholders
under this agreement shall be subject to a leak out agreement
which prohibits Availent shareholders from converting the
Preferred shares into common shares of CECC in a total amount
equal to or greater than 10% of the fully issued and outstanding
common shares of CECC at that time.
Section 4.3 EVENTS PRIOR TO CLOSING. Upon execution
hereof or as soon thereafter as practical, management of CECC and
Availent shall execute, acknowledge and deliver (or shall cause
to be executed, acknowledged and delivered) any and all
certificates, opinions, financial statements, schedules,
agreements, resolutions rulings or other instruments required by
this Agreement to be so delivered, together with such other items
as may be reasonably requested by the Parties hereto and their
respective legal counsel in order to effectuate or evidence the
transactions contemplated hereby, subject only to the conditions
to Closing referenced herein below.
Section 4.4 CLOSING. The closing ("Closing") of the
transactions contemplated by this Agreement shall be on or about
July , 2004 ("Closing Date").
Section 4.5 TERMINATION.
(a) This Agreement may be terminated by the board of directors
or majority interest of Shareholders of either CECC or Availent,
respectively, at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before any
court or any governmental body which shall seek to
restrain, prohibit or invalidate the transactions
contemplated by this Agreement and which, in the
judgment of such board of directors, made in good faith
and based on the advice of its legal counsel, makes it
inadvisable to proceed with the exchange contemplated
by this Agreement; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval
is required to consummate such transactions.
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In the event of termination pursuant to this paragraph (a) of
this Section 3.5, no obligation, right, or liability shall
arise hereunder and each Party shall bear all of the expenses
incurred by it in connection with the negotiation, drafting and
execution of this Agreement and the transactions herein
contemplated.
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of CECC if
Availent shall fail to comply in any material respect with any of
its covenants or agreements contained in this Agreement or if any
of the representations or warranties of Availent contained herein
shall be inaccurate in any material respect, which noncompliance
or inaccuracy is not cured after 20 days written notice thereof
is given to Availent. If this Agreement is terminated pursuant
to this paragraph (b) of this Section 3.5, this Agreement shall
be of no further force or effect and no obligation, right or
liability shall arise hereunder.
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Availent if
CECC shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of
the representations or warranties of CECC contained herein shall
be inaccurate in any material respect, which noncompliance or
inaccuracy is not cured after 20 days written notice thereof is
given to CECC. If this Agreement is terminated pursuant to this
paragraph (c) of this Section 3.5, this Agreement shall be of no
further force or effect and no obligation, right or liability
shall arise hereunder.
In the event of termination pursuant to paragraph (b) and
(c) of this Section 3.5, the breaching Party shall bear all of
the expenses incurred by the other Party in connection with the
negotiation, drafting and execution of this Agreement and the
transactions herein contemplated. Notwithstanding same, if the
Agreement is terminated by CEC due to any breach of the Agreement
by Availent as set forth in (b) above, Availent shall pay a
liquidated damages penalty of $50,000 to CEC in addition to any
other damages incurred by CEC due to the breach.
Section 4.6 LIABILITIES OF MORTGAGE. Except as set forth
in Schedule 3.3 (b) hereof, Availant agrees that it shall remain
responsible for all of the liabilities of Mortgage prior to the
Closing Date and shall indemnify CEC for all damages incurred by
such liabilities in accordance with Section 5.6.
ARTICLE V
SPECIAL COVENANTS
Section 5.1 ACCESS TO PROPERTIES AND RECORDS. Prior to
closing, Availent will afford to the officers and authorized
representatives of CECC full access to the properties, books and
records of each other, in order that each may have full
opportunity to make such reasonable investigation as it shall
desire to make of its affairs and each will furnish CECC with
such additional financial and operating data and other
information as to the business and properties, as CECC shall from
time to time reasonably request.
Section 5.2 AVAILABILITY OF RULE 144. CECC and Availent
shareholders holding "restricted securities," as that term is
defined in Rule 144 promulgated pursuant to the Securities Act
will remain as "restricted securities". The stockholders of CECC
and Availent holding restricted securities of CECC and Availent
as of the date of this Agreement and their respective heirs,
administrators, personal representatives, successors and assigns,
are intended third Party beneficiaries of the provisions set
forth herein. The covenants set forth in this Section 4.2 shall
survive the Closing and the consummation of the transactions
herein contemplated.
Section 5.3 SPECIAL COVENANTS AND REPRESENTATIONS
REGARDING THE CECC COMMON SHARES TO BE ISUED IN THE EXCHANGE.
The consummation of this Agreement, including the issuance of the
CECC Redeemable, Convertible Preferred Shares to the Shareholders
of Availent as contemplated hereby, constitutes the offer and
sale of securities under the Securities Act, and applicable state
statutes. Such transaction shall be consummated in reliance on
exemptions
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from the registration and prospectus delivery requirements of
such statutes which depend, inter alia, upon the circumstances
under which the Availent Shareholders acquire such securities.
Section 5.4 THIRD PARTY CONSENTS. CECC and Availent
agree to cooperate with each other in order to obtain any
required third party consents to this Agreement and the
transactions herein contemplated.
Section 5.5 ACTIONS PRIOR AND SUBSEQUENT TO CLOSING.
(a) From and after the date of this Agreement until the Closing
Date, except as permitted or contemplated by this Agreement, CECC
and Availent will each use its best efforts to:
(i) maintain and keep its properties in states of good
repair and condition as at present, except for
depreciation due to ordinary wear and tear and damage
due to casualty;
(ii) maintain in full force and effect insurance comparable
in amount and in scope of coverage to that now maintained by it;
(iii) perform in all material respects all of its obligations
under material contracts, leases and instruments relating to or
affecting its assets, properties and business.
(b) From and after the date of this Agreement until the Closing
Date, CECC will not, without the prior consent of Availent:
(i) except as otherwise specifically set forth herein, make
any change in its articles of incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding Common
Shares, except as may otherwise be required by law, or effect
any stock split or otherwise change its capitalization, except
as provided herein;
(iii) enter into or amend any employment, severance or
agreements or arrangements with any directors or officers;
(iv) grant, confer or award any options, warrants,
conversion rights or other rights not existing on the date
hereof to acquire any Common Shares; or
(v) purchase or redeem any Common Shares.
Section 5.6 INDEMNIFICATION.
(a) CECC and Acquisition Group hereby agree to indemnify, defend
and hold harmless Availent, each of the officers, agents and
directors and current shareholders of Availent as of the Closing
Date against any loss, liability, claim, damage or expense
(including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened or any claim
whatsoever), to which it or they may become subject to or rising
out of or based on any inaccuracy appearing in or
misrepresentation made in this Agreement. The indemnification
provided for in this paragraph shall survive the Closing and
consummation of the transactions contemplated hereby and
termination of this Agreement; and
(b) Availent hereby agrees to indemnify, defend and hold
harmless CECC, each of the officers, agents, directors and
current shareholders of CECC as of the Closing Date against any
loss, liability, claim, damage or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation,
commenced or threatened or any claim whatsoever), to which it or
they may
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become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made in this Agreement. In
addition, Availent hereby agrees to indemnify CECC, each of the
officers, agents, directors and current shareholders of CECC as
of the Closing Date against any loss, liability, claim, damage or
expense (including, but not limited to, any and all expense
whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened or any
claim whatsoever), to which it or they may become subject arising
out of any liability of Mortgage, known or unknown, prior to the
Closing Date. The indemnification provided for in this paragraph
shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF AVAILENT
The obligations of Availent under this Agreement are subject
to the satisfaction, at or before the Closing Date, of the
following conditions:
Section 6.1 ACCURACY OF REPRESENTATIONS. The
representations and warranties made by CECC and Acquisition Group
in this Agreement were true when made and shall be true at the
Closing Date with the same force and effect as if such
representations and warranties were made at the Closing Date
(except for changes therein permitted by this Agreement), and CECC
and Acquisition Group shall have performed or compiled with all
covenants and conditions required by this Agreement to be
performed or complied with by CECC or Acquisition Group prior to
or at the Closing. Availent shall be furnished with a certificate,
signed by a duly authorized officer of CECC and dated the Closing
Date, to the foregoing effect.
Section 6.2 DIRECTOR APPROVAL. The Board of Directors of
CECC and Acquisition Group shall have approved this Agreement and
the transactions contemplated herein.
Section 6.3 OFFICER'S CERTIFICATE. Availent shall be
furnished with a certificate dated the Closing date and signed by
a duly authorized officer of CECC to the effect that: (a) the
representations and warranties of CECC and Acquisition Group set
forth in the Agreement and in all Exhibits, Schedules and other
documents furnished in connection herewith are in all material
respects true and correct as if made on the Effective Date; and
(b) CECC and Acquisition Group have performed all covenants,
satisfied all conditions, and complied with all other terms and
provisions of the Agreement to be performed, satisfied or
complied with by it as of the Effective Date.
Section 6.4 NO MATERIAL ADVERSE CHANGE. Prior to the
Closing Date, there shall not have occurred any material adverse
change in the financial condition, business or operations of nor
shall any event have occurred which, with the lapse of time or
the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of CECC
or Acquisition Group.
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF CECC
The obligations of CECC and Acquisition Group under this
Agreement are subject to the satisfaction, at or before the
Closing date (unless otherwise indicated herein), of the
following conditions:
Section 7.1 ACCURACY OF REPRESENTATIONS. The
representations and warranties made by Availent in this Agreement
were true when made and shall be true as of the Closing Date
(except for changes therein permitted by this Agreement) with the
same force and effect as if such representations and warranties
were made at and as of the Closing Date, and Availent shall have
performed and complied with all covenants and conditions required
by this Agreement to be performed or complied with by Availent
prior to or at the Closing. CECC shall have been furnished with
a certificate, signed by a duly authorized executive officer of
Availent and dated the Closing Date, to the foregoing effect.
Section 7.2 DIRECTOR APPROVAL. The Board of Directors of
Availent shall have approved this Agreement and the transactions
contemplated herein.
Section 7.3 OFFICER'S CERTIFICATE. CECC shall have been
furnished with a certificate dated the Closing Date and signed by
a duly authorized officer of Availent to the effect that: (a)
the representations and warranties of Availent set forth in the
Agreement and in all Exhibits, Schedules and other documents
furnished in connection herewith are in all material respects
true and correct as if made on the Effective Date; (b) Availent
has performed all covenants, satisfied all conditions, and
complied with all other terms and provisions of this Agreement to
be performed, satisfied or complied with by it as of the
Effective Date; (c) since such date and other than as
previously disclosed to CECC, Availent has not entered into any
material transaction other than transactions which are usual and
in the ordinary course if its business; and (d) no litigation,
proceeding, investigation or inquiry is pending or, to the best
knowledge of Availent, threatened, which might result in an
action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or, to the extent not disclosed in
the Availent Schedules, by or against Availent which might result
in any material adverse change in any of the assets, properties,
business or operations of Availent.
Section 7.4 NO MATERIAL ADVERSE CHANGE. Prior to the
Closing Date, there shall not have occurred any material adverse
change in the financial condition, business or operations of nor
shall any event have occurred which, with the lapse of time or
the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of
Availent.
Section 7.5 OTHER ITEMS. CECC shall have received such
further documents, certificates or instruments relating to the
transactions contemplated hereby as CECC may reasonably request.
Section 7.6 ACQUISITION OF BROYD, INC. The closing of
this agreement shall be subject to the simultaneous closing of
Acquisition Group's acquisition of Broyd, Inc. d/b/a First Texas
Residential.
Section 7.7 SHAREHOLDER APPROVAL. The Shareholders of
Availent shall have approved this Agreement and the transactions
contemplated herein by a majority vote.
Section 7.8 DUE DILIGENCE. The closing of this Agreement
shall be subject to a satisfactory completion of due diligence on
the officers and directors of Availent, Mortgage Corp., and
Broyd, Inc.
Section 7.9 ADVISCO CAPITAL CORP. LOAN. The closing of
this agreement shall be subject to the simultaneous closing of
CECC's loan with Advisco Capital Corp.
Section 7.10 EMPLOYMENT AGREEMENTS. Successful execution
of employment agreements by the principals of Mortgage and of
Broyd, Inc., shall be made by CECC inclusive of incentives
incorporating securities from CECC.
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Section 7.11 LINE OF CREDIT. A simultaneous closing of a
warehouse line of credit of not less than $15,000,000 shall be
obtained by CECC with the assistance of Knightsbridge Capital.
Section 7.12 ACQUISITION GROUP SPIN-OUT. At closing,
Acquisition Group shall enter into an agreement whereby it could
participate in a registered spin-out from CECC. The Availent
shareholders shall retain fifty (50%) of Acquisition Group and
the spin out shall be subject to the written approval by CEC.
Upon the spin out, the $1,500,000 in redeemable preferred stock
set forth in Section 4.1(c) at a rate of 7.5% per quarter with a
balloon payment for the balance after twenty-four (24) months.
Section 7.13 SETTLEMENT AGREEMENTS. Availent and Mortgage
shall provide proof that they have entered into settlement
agreements with the secured and trade creditors, as well as with
the Internal Revenue Service, on terms acceptable to CECC.
Section 7.14 ACQUISITION GROUP DIRECTORS. At closing,
Acquisition Group shall have a total of five directors. CECC
shall have the right to appoint two of the directors for a
minimum of a three year term. This provision shall survive any
spin-off of Acquisition Group from CECC.
Section 7.15 APPROVED AUDITING FIRM. Availent and CECC
shall agree, prior to closing, as to the auditing firm to be used
for the next two calendar years to audit Acquisition Group.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 BROKERS AND FINDERS. Each Party hereto
hereby represents and warrants that it is under no obligation,
express or implied, to pay certain finders in connection with the
bringing of the Parties together in the negotiation, execution,
or consummation of this Agreement. The Parties each agree to
indemnify the other against any claim by any third person for any
commission, brokerage or finder's fee or other payment with
respect to this Agreement or the transactions contemplated hereby
based on any alleged agreement or understanding between the
indemnifying Party and such third person, whether express or
implied from the actions of the indemnifying Party.
Section 8.2 LAW, FORUM AND JURISDICTION. This Agreement
shall be construed and interpreted in accordance with the laws of
the State of Texas, United States of America.
Section 8.3 NOTICES. Any notices or other communications
required or permitted hereunder shall be sufficiently given if
personally delivered to it or sent by registered mail or
certified mail, postage prepaid, or by prepaid telegram addressed
as follows:
If to CECC: 30 Arbor Way
Henderson, NV 89156
If to Availent: 2720 Stemmons Freeway
South Tower, Suite 600
Dallas, Texas 75207
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or such other addresses as shall be furnished in writing by any
Party in the manner for giving notices hereunder, and any such
notice or communication shall be deemed to have been given as of
the date so delivered, mailed or telegraphed.
Section 8.4 ATTORNEYS' FEES. In the event that any Party
institutes any action or suit to enforce this Agreement or to
secure relief from any default hereunder or breach hereof, the
breaching Party or Parties shall reimburse the non-breaching
Party or Parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or
collecting any judgment rendered therein.
Section 8.5 CONFIDENTIALITY. In the event chat any Party
hereto agrees with the other Party that, unless and until the
transactions contemplated by this Agreement have been
consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to
another Party or any subsidiary thereof from any representative,
officer, director or employee, or from any books or records or
from personal inspection, of such other Party, and shall not use
such data or information or disclose the same to others, except:
(i) to the extent such data is a matter of public knowledge or
is required by law to be published; and (ii) to the extent that
such data or information must be used or disclosed in order to
consummate the transactions contemplated by this Agreement.
Section 8.6 SCHEDULES; KNOWLEDGE. Each Party is presumed
to have full knowledge of all information set forth in the other
Party's schedules delivered pursuant to this Agreement.
Section 8.7 THIRD PARTY BENEFICIARIES. This contract is
solely between CECC and Availent and except as specifically
provided, no director, officer, stockholder, employee, agent,
independent contractor or any other person or entity shall be
deemed to be a third party beneficiary of this Agreement.
Section 8.8 ENTIRE AGREEMENT. This Agreement represents
the entire agreement between the Parties relating to the subject
matter hereof. This Agreement alone fully and completely
expresses the agreement of the Parties relating to the subject
matter hereof. There are no other courses of dealing,
understanding, agreements, representations or warranties, written
or oral, except as set forth herein. This Agreement may not be
amended or modified, except by a written agreement signed by all
Parties hereto.
Section 8.9 SURVIVAL. The representations, warranties
and covenants of the respective Parties shall survive the Closing
Date.
Section 8.10 COUNTERPARTS. This Agreement may be executed
in multiple counterparts, each of which shall be deemed an
original and all of which taken together shall be but a single
instrument.
Section 8.11 AMENDMENT OR WAIVER. Every right and
remedy provided herein shall be cumulative with every other right
and remedy, whether conferred herein, at law, or in equity, and
may be enforced concurrently herewith, and no waiver by any Party
of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then,
theretofore, or thereafter occurring or existing. At any time
prior to the Closing Date, this Agreement may be amended by a
writing signed by all Parties hereto, with respect to any of the
terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance
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hereof may be extended by a writing signed by the Party or
Parties for whose benefit the provision is intended.
Section 8.12 EXPENSES. Each Party herein shall bear all
of their respective costs and expenses incurred in connection
with the negotiation of this Agreement and in the consummation of
the transactions provided for herein and the preparation thereof.
Section 8.13 HEADINGS; CONTEXT. The headings of the
sections and paragraphs contained in this Agreement are for
convenience of reference only and do not form a part hereof and
in no way modify, interpret or construe the meaning of this
Agreement.
Section 8.14 BENEFIT. This Agreement shall be binding
upon and shall inure only to the benefit of the Parties hereto,
and their permitted assigns hereunder. This Agreement shall not
be assigned by any Party without the prior written consent of the
other Party.
Section 8.15 PUBLIC ANNOUNCEMENTS. Except as may be
required by law, neither Party shall make any public announcement
or filing with respect to the transactions provided for herein
without the prior consent of the other Party hereto.
Section 8.16 SEVERABILITY. In the event that any
particular provision or provisions of this Agreement or the other
agreements contained herein shall for any reason hereafter be
determined to be unenforceable, or in violation of any law,
governmental order or regulation, such unenforceability or
violation shall not affect the remaining provisions of such
agreements, which shall continue in full force and effect and be
binding upon the respective Parties hereto.
Section 8.17 FAILURE OF CONDITIONS; TERMINATION. In
the event of any of the conditions specified in this Agreement
shall not be fulfilled on or before the Closing Date, either of
the Parties have the right either to proceed or, upon prompt
written notice to the other, to terminate and rescind this
Agreement. In such event, the Party that has failed to fulfill
the conditions specified in this Agreement will liable for the
other Party's legal fees. The election to proceed shall not
affect the right of such electing Party reasonably to require the
other Party to continue to use its efforts to fulfill the unmet
conditions.
Section 8.18 NO STRICT CONSTRUCTION. The language of this
Agreement shall be construed as a whole, according to its fair
meaning and intendment, and not strictly for or against either
Party hereto.
Section 8.19 EXECUTION KNOWING AND VOLUNTARY. In
executing this Agreement, the Parties severally acknowledge and
represent that each: (a) has fully and carefully read and
considered this Agreement; (b) has been or has had the
opportunity to be fully apprized by its attorneys of the legal
effect and meaning of this document and all terms and conditions
hereof; (c) is executing this Agreement voluntarily, free from
any influence, coercion or duress of any kind.
Section 8.20 AMENDMENT. At any time after the Closing
Date, this Agreement may be amended by a writing signed by both
Parties, with respect to any of the terms contained herein, and
any term or condition of this Agreement may be waived or the time
for performance hereof may be extended by a writing signed by the
Party or Parties for whose benefit the provision is intended.
-18-
IN WITNESS WHEREOF, the corporate Parties hereto have caused
this Agreement to be executed by their respective officers,
hereunto duly authorized, and entered into this ___ day of July,
2004.
CEC INDUSTRIES, CORP.
-----------------------------
Brian Dvorak, President/CEO
AVAILENT ACQUISITION GROUP, INC.
------------------------------
AVAILENT FINANCIAL, INC.
------------------------------
Patrick McGeeney, President/CEO
WITH REGARD TO THE REPRESENTATIONS SET FORTH IN ARTICLE 3
AVAILANT MORTGAGE, INC.
------------------------------
-19-
Schedule 2.3 (b)
----------------
Dallas County Tax Office Approximately $6480.23
Schedule 2.5
------------
Equipment listed on the most recent Availent Financial balance
sheet has the following liens securing the following notes:
Notes Payable Bobby Lutz $375,000 Availent secured
Financial
Notes Payable Bobby Lutz 25,000 Availent secured
Financial
Notes Payable Bobby Lutz 125,000 Availent secured
Financial
Notes Payable Marilyn Bunch 5,000 Availent secured
Financial
Notes Payable Inwood Bank 40,000 Availent secured
Financial
Notes Payable Lori McColl 40,000 Availent secured
Financial
Notes Payable John Gross 200,000 Availent secured
Financial
Notes Payable Kelley Bergstrom 125,000 Availent secured
Financial
Notes Payable Kelley Bergstrom 402,000 Availent secured
Financial
Notes Payable Charles Rabie 53,000 Availent secured
Trust Financial
Schedule 2.6
------------
Pending Litigation:
Bowne of Dallas, LP
Jason Nichols
Jason Hartman
Natash, Ltd.
Jeff Wasserman
Patricia Arst
Judgments:
Jason Nichols Approximately $43,000
Jeff Wasserman Approximately $62,000
Patricia Arst Approximately $18,000
Philip Corley Approximately $25,000
Schedule 2.7(a)
---------------
Availent Financial Leases:
Citicorp Vendor Finance: Lease Number- 2836780
Schedule 2.7(b)
---------------
Judgments:
Jason Nichols Approximately $43,000
Jeff Wasserman Approximately $62,000
Patricia Arst Approximately $18,000
Philip Corley Approximately $25,000
Schedule 2.7(c)
---------------
Five year Employment Agreement for Patrick A. McGeeney.
Availent Financial, Inc. Equity Incentive Plan
Stock Option Agreements for Patrick A. McGeeney.
Stock Option Agreements for Michael L. Banes.
Availent Financial 401(k) Plan
Consulting Agreement with Kelley Bergstrom.
Consulting Agreement with Bobby Lutz.
Schedule 2.9
------------
Availent Financial is behind on lease payments to:
Citicorp Vendor Finance: Lease Number -2836780
Citcorp Vendor Finance is the finance company for a copier.
Schedule 2.14
-------------
Availent Financial, Inc. Equity Incentive Plan
Stock Option Agreements for Patrick A. McGeeney
Stock Option Agreements for Michael L. Banes
Schedule 3.3(b)
---------------
IRS Federal Tax Lien: Approximately $692,000
Texas Workforce Commission: Approximately $20,919.62
Alabama Unemployment: Approximately $405
California Unemployment: Approximately $379.23
Indiana Unemployment: Approximately $280.80
Louisiana Unemployment: Approximately $383.32
Mississippi Employment
Security Commission: Approximately $2278.21
Alabama Income Tax: Approximately $2949.15
California Income Tax: Approximately $38.38
Louisiana Income Tax: Approximately $2739.89
Mississippi Income Tax: Approximately 7477.82
Schedule 3.3(c)
---------------
IRS Tax Lien: Approximately $692,000
Bobby Lutz: $32,000
Schedule 3.5
------------
IRS Tax Lien: Approximately $692,000
Schedule 3.6
------------
Pending Litigation:
Burns and Company vs. Availent Mortgage, Inc.
Judgments:
Patricia Mahony Approximately $14,767 and $4,891
Philip Corley Approximately $25,000
Schedule 3.7(a)
---------------
Availent Mortgage Leases:
Citicorp Vendor Finance--Lease Number- 2836781
--Lease Number- 3570760
Dell Financial Services-Lease Number- 003-1997303-003
---Lease Number- 001-1997303-001
---Lease Number- 003-1997303-002
Contracts:
Availent-Beth Wolff, Ltd
Schedule 3.7(b)
---------------
Judgments:
Patricia Mahony Approximately $14,767 and $4,891.
Philip Corley Approximately $25,000
Schedule 3.7(c)
---------------
Five year Employment Agreement for Michael L. Banes.
Schedule 3.9
------------
Availent Mortgage is behind on lease payments to:
Citicorp Vendor Finance: Lease Number -2836781
Lease Number --3570760
Citcorp Vendor Finance is the finance company for copiers.
Dell Financial Services: Lease Number - 003-1997303-003
Lease Number - 001-1997303-001
Lease Number - 003-1997303-002
Dell Financial Services is the finance company for computers and
printers.