Stock Purchase Agreement
Made as of
March 15, 2000,
Between
Elite Technologies, Inc.,
Buyer,
and
Ace Manufacturing Group, Ltd.
S. Randy Ragsdale, Individually,
Seller(s)
Table of Contents
Page
1. DEFINITIONS. 1
- --------------------------------------------------------------------------------
1.1. "APPLICABLE CONTRACT"
1
1.2. "BREACH"
1
1.3. "BUYER"
1
1.4. "BUYER'S STOCK"
1
1.5. "CLOSING"
1
1.6. "CLOSING DATE"
1
1.8. "CONSENT"
1
1.9. "CONTEMPLATED TRANSACTIONS"
2
1.10. "CONTRACT"
2
1.11. "DAMAGES"
2
1.12. "DISCLOSURE SCHEDULE"
2
1.13. "ENCUMBRANCE"
2
1.14. "ENVIRONMENTAL REQUIREMENTS"
2
1.15. "ERISA"
2
1.16. "FACILITIES"
2
1.17. "GAAP"
3
1.18. "GOVERNMENTAL AUTHORIZATION"
3
1.19. "GOVERNMENTAL BODY"
3
1.20. "IRC"
3
1.21. "IRS"
3
1.22. "KNOWLEDGE"
3
1.23. "LEGAL REQUIREMENT"
3
1.24. "OPERATING INCOME"
3
1.25. "ORDER"
4
1.26. "ORDINARY COURSE OF BUSINESS"
4
1.27. "ORGANIZATIONAL DOCUMENTS"
4
1.28. "PERSON"
4
1.29. "PLAN"
4
1.30. "PROCEEDING"
4
1.31. "RELATED PERSON"
4
1.32. "REPRESENTATIVE"
5
1.33. "SECURITIES ACT"
5
1.34. "SELLER"
5
1.35. "SHARES"
5
1.36. "SUBSIDIARY"
6
1.37. "TAX RETURN"
6
1.38. "THREATENED"
6
2. TRANSFER OF SHARES; REIMBURSEMENT AMOUNT; CLOSING. 6
- --------------------------------------------------------------------------------
2.1. SHARES.
---- ------
6
2.2. BUYER'S STOCK.
---- -------------
6
2.3. CLOSING.
---- -------
6
2.4. CLOSING OBLIGATIONS.
---- -------------------
6
3. REPRESENTATIONS AND WARRANTIES OF SELLER. 7
- --------------------------------------------------------------------------------
3.1. ORGANIZATION AND GOOD STANDING.
---- ------------------------------
7
3.2. AUTHORITY; NO CONFLICT.
---- ----------------------
8
3.3. CAPITALIZATION.
---- --------------
9
3.4. FINANCIAL STATEMENTS.
---- --------------------
9
3.5. BOOKS AND RECORDS.
---- -----------------
9
3.6. TITLE TO PROPERTIES; ENCUMBRANCES.
---- ---------------------------------
10
3.7. NO UNDISCLOSED LIABILITIES.
---- --------------------------
10
3.8. TAXES.
---- -----
11
3.9. NO MATERIAL ADVERSE CHANGE.
---- --------------------------
11
3.10. EMPLOYEE BENEFITS MATTERS.
----- -------------------------
11
3.11. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
---------------------------------------------------------------
12
3.12. LEGAL PROCEEDINGS; ORDERS.
----- -------------------------
13
3.13. ABSENCE OF CERTAIN CHANGES AND EVENTS.
----- -------------------------------------
14
3.14. CONTRACTS; NO DEFAULTS.
----- ----------------------
15
3.15. INSURANCE.
----- ---------
16
3.16. ENVIRONMENTAL MATTERS.
----- ---------------------
17
3.17. EMPLOYEE MATTERS.
----- ----------------
17
3.18. INTELLECTUAL PROPERTY RIGHTS OF THE COMPANY.
----- -------------------------------------------
17
3.19. CERTAIN PAYMENTS.
----- ----------------
19
3.20. DISCLOSURE.
----- ----------
20
3.21. BROKERS OR FINDERS.
----- ------------------
20
4. REPRESENTATIONS AND WARRANTIES OF BUYER. 20
- --------------------------------------------------------------------------------
4.1. ORGANIZATION AND GOOD STANDING.
---- ------------------------------
20
4.2. AUTHORITY.
---- ---------
20
4.3. INVESTMENT INTENT.
---- -----------------
20
4.4. CERTAIN PROCEEDINGS.
---- -------------------
21
4.5. BROKERS OR FINDERS.
---- ------------------
21
5. COVENANTS OF SELLER PRIOR TO CLOSING DATE. 21
- --------------------------------------------------------------------------------
5.1. ACCESS AND INVESTIGATION.
---- ------------------------
21
5.2. OPERATION OF THE BUSINESS OF THE COMPANY.
---- ----------------------------------------
21
5.3. NEGATIVE COVENANT.
---- -----------------
22
5.4. REQUIRED APPROVALS.
---- ------------------
22
5.5. NOTIFICATION.
---- ------------
22
5.6. NO NEGOTIATION.
---- --------------
22
5.7. CLOSING OF BANK ACCOUNTS.
---- ------------------------
23
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE. 23
- --------------------------------------------------------------------------------
6.1. APPROVALS OF GOVERNMENTAL BODIES/THIRD PARTY CONSENTS.
---- -----------------------------------------------------
23
6.2. ACCESS AND INVESTIGATION.
---- ------------------------
23
6.3. OPERATION OF THE BUSINESS OF THE COMPANY.
---- ----------------------------------------
23
6.4. NOTIFICATION.
---- ------------
24
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. 24
- --------------------------------------------------------------------------------
7.1. ACCURACY OF REPRESENTATIONS.
---- ---------------------------
24
7.2. SELLER'S PERFORMANCE.
---- --------------------
24
7.3. CONSENTS.
---- --------
24
7.4. ADDITIONAL DOCUMENTS.
---- --------------------
24
7.5. NO PROCEEDINGS.
---- --------------
25
7.6. NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.
---- ---------------------------------------------------
25
7.7. NO PROHIBITION.
---- --------------
25
7.8. EMPLOYMENT AGREEMENT.
---- --------------------
25
7.9. REGISTRATION OF SHARES FOR SELLER.
---- ---------------------------------
25
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. 25
- --------------------------------------------------------------------------------
8.1. ACCURACY OF REPRESENTATIONS.
---- ---------------------------
25
8.2. BUYER'S PERFORMANCE.
---- -------------------
25
8.3. CONSENTS.
---- --------
26
8.4. ADDITIONAL DOCUMENTS.
---- --------------------
26
8.5. NO INJUNCTION.
---- -------------
26
9. TERMINATION. 26
- --------------------------------------------------------------------------------
9.1. TERMINATION EVENTS.
---- ------------------
26
9.2. EFFECT OF TERMINATION.
---- ---------------------
27
10. INDEMNIFICATION; REMEDIES. 27
- --------------------------------------------------------------------------------
10.1. AGREEMENT BY SELLER TO INDEMNIFY.
----- --------------------------------
27
10.2. AGREEMENTS BY BUYER TO INDEMNIFY.
----- --------------------------------
28
10.3. MATTERS INVOLVING THIRD PARTIES.
----- -------------------------------
29
11. POST-CLOSING AGREEMENTS. 30
- --------------------------------------------------------------------------------
11.1. CONSISTENCY IN REPORTING.
----- ------------------------
30
12. GENERAL PROVISIONS. 30
- --------------------------------------------------------------------------------
12.1. EXPENSES.
----- --------
30
12.2. PUBLIC ANNOUNCEMENTS.
----- --------------------
30
12.3. CONFIDENTIALITY.
----- ---------------
30
12.4. NOTICES.
----- -------
31
12.5. JURISDICTION; SERVICE OF PROCESS.
----- --------------------------------
32
12.6. FURTHER ASSURANCES.
----- ------------------
32
12.7. WAIVER.
----- ------
32
12.8. ENTIRE AGREEMENT AND MODIFICATION.
----- ---------------------------------
32
12.9. DISCLOSURE SCHEDULE.
----- -------------------
33
12.10. ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS.
------ -------------------------------------------------
33
12.11. SEVERABILITY.
------ ------------
33
12.12. SECTION HEADINGS; CONSTRUCTION.
------ ------------------------------
33
12.13. TIME OF ESSENCE.
------ ---------------
33
12.14. GOVERNING LAW.
------ -------------
33
12.15. COUNTERPARTS.
------ ------------
33
Stock Purchase Agreement
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of March 15,
2000, by Elite Technologies, Inc., a Texas corporation, ("Buyer"), and AMG,
LTD., a Georgia Corporation, Stephen Randy Ragsdale, individually and
collectively hereinafter referred to as ("Seller").
RECITALS:
Seller desire to sell, and Buyer desires to purchase, all of the issued
and outstanding shares (the "Shares") of capital stock of Ace Manufacturing
Group, LTD. for the consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1.:
"Applicable Contract" - any Contract (i) under which Seller or Company
has or may acquire any rights; (ii) under which Seller or Company has or may
become subject to any obligation or liability or (iii) by which Seller or
Company or any of the assets owned or used by it is or may become bound.
"Breach" - a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (i) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision or
(ii) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence or circumstance.
"Buyer" - as defined in the first paragraph of this Agreement.
"Buyer's Stock" - 500,000 restricted shares of Seller's capital stock.
"Closing" - as defined in Section 2.4.
"Closing Date" - the date and time as of which the Closing actually
takes place.
1.7 "Company" - Ace Manufacturing Group, Ltd.
"Consent" - any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" - all of the transactions contemplated by
this Agreement, including:
A. The transfer of the Shares by Seller to Buyer;
B. The execution, delivery, and performance of the Closing
Obligations set forth in Section 2.5;
C. The performance by Buyer and Seller of their respective
covenants and obligations under this Agreement;
D. Buyer's acquisition and ownership of the Shares and exercise
of control over the Company; and
E. The transfer of Buyer's Stock to Seller; and
F. Payment by Buyer to Seller of the Reimbursement Amount.
"Contract" - any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Damages" - any loss, liability, claim, damages (including, without
limitation, incidental and consequential damages), expense (including, without
limitation, costs of investigation and defense and reasonable attorneys' fees)
or diminution of value, whether or not involving a third party.
"Disclosure Schedule" - the disclosure schedule delivered by Seller to
Buyer concurrently with the execution and delivery of this Agreement.
"Encumbrance" - any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environmental Requirements" - means federal, state and local laws
relating to pollution or protection of the environment, including laws or
provisions relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials, substances, or wastes
into air, surface water, groundwater, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials, substances, or wastes.
"ERISA" - the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Facilities" - any real property, leaseholds, or other interests
currently or formerly owned or operated by Seller and any buildings, plants,
structures, or equipment (including motor vehicles) currently or formerly owned
or operated by Seller.
"GAAP" - generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the financial statements
referred to in Section 3.4. were prepared.
"Governmental Authorization" - any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" - any:
A. Nation, state, county, city, town, village,
district, or other jurisdiction of any nature;
B. Federal, state, local, municipal, foreign, or other
government;
C. Governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
D. Multi-national organization or body; or
E. Body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"IRC" - the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" - the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
A. Such individual is actually aware of such fact or other
matter; or
B. A prudent individual given his position with the Company could
be reasonably expected to discover or otherwise become aware of such fact or
other matter.
"Legal Requirement" - any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Operating Income" - means the net income of the Company determined in
accordance with GAAP before income taxes and after all other charges except:
A. Unless otherwise approved by Buyer, any general and administrative
expense (i.e., allocation of the Company's general corporate overhead)
attributable to the Company and all subsidiaries of the Company that is not
directly related to the operation of the Company in the Ordinary Course of
Business; provided, however, Operating Income shall include reimbursement by
Seller of expenses at a fair market price mutually agreed to by Buyer and Seller
for expenses previously incurred by Seller, but that have for administrative
convenience or efficiency reasons been centralized with Buyer; and
B. Any amortization of goodwill of the Company and all Subsidiaries of
the Company.
C. In the event that certain expenses incurred by the Seller are for
the principal or partial benefit of the Company or other subsidiaries of the
Company, then the parties hereto shall endeavor to track and determine in a fair
and equitable manner that portion of such expenses that should fairly and
reasonably be allocated to the Company or such other subsidiaries of the
Company, and therefore not included in arriving at Operating Income for purposes
of this Agreement.
"Order" - any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" - an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
A. Such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
B. Such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
C. Such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Organizational Documents" - (i) the Articles or Certificate of
Incorporation and the Bylaws of a corporation; (ii) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person and (iii) any amendment to any of the foregoing.
"Person" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan" - as defined in Section 3.10.1.
"Proceeding" - any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Related Person" - with respect to a particular individual:
A.Each other member of such individual's Family;
B.Any Person that is directly or indirectly controlled by such
individual or one (1) or more members of such individual's Family;
C.Any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
D. Any Person with respect to which such individual or one (1) or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
A. Any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
B. Any Person that holds a Material Interest in such specified Person;
C. Each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
D. Any Person in which such specified Person holds a Material Interest;
E. Any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
Any Related Person of any individual described in clause B. or C.
For purposes of this definition, (i) the "Family" of an individual
includes (1) the individual; (2) the individual's spouse and former spouses; (3)
any other natural person who is related to the individual or the individual's
spouse within the second degree and (4) any other natural person who resides
with such individual and (2) "Material Interest" means direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) of voting securities or other voting interests representing at least
[five percent (5%)] of the outstanding voting power of a Person or equity
securities or other equity interests representing at least [five percent (5%)]
of the outstanding equity securities or equity interests in a Person.
"Representative" - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act" - the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Seller" - as defined in the first paragraph of this Agreement.
"Shares" - as defined in the Recitals of this Agreement.
"Subsidiary" - with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one (1) or more of its
Subsidiaries; [when used without reference to a particular Person, "Subsidiary"
means a Subsidiary of the Company].
"Tax Return" - any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threatened" - a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future. TRANSFER OF SHARES; REIMBURSEMENT AMOUNT;
CLOSING.
Shares. In exchange for the transfer of Buyer's Stock, as set forth in
Section 2.2, and subject to the terms and conditions of this Agreement, at the
Closing, Seller will transfer the Shares to Buyer.
Buyer's Stock. In exchange for the transfer of Shares as set forth in
Section 2.1, and subject to the terms and conditions of this Agreement, at the
Closing, Buyer shall transfer to Seller the Buyer's Stock.
Closing. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Morris, Manning & Martin, L.L.P., at
1600 Atlanta Financial Center, 3343 Peachtree Road, N.E., Atlanta, Georgia
30326, at 10:00 a.m. (local time) on March 31, 2000, or at such other time and
place as the parties may agree. Except as otherwise provided in Section 9.,
failure to consummate the purchase and sale provided for in this Agreement on
the date and time and at the place determined pursuant to this Section 2.3. will
not result in the termination of this Agreement and will not relieve any party
of any obligation under this Agreement.
Closing Obligations. At the Closing:
-------------------
A. Seller will deliver to Buyer:
(i) Certificates. Certificates representing
------------
the Shares, duly endorsed (or accompanied by duly executed stock powers) for
transfer to Buyer;
(ii) Good Standing Certificate. Seller shall have
--------------------------
delivered to Buyer a certificate evidencing the good standing of the Company as
of a recent practicable date;
(iii) Certificate. A certificate substantially in
-----------
the form of Exhibit A hereto, executed by Seller representing and warranting
---------
to Buyer that each of Seller's representations and warranties in this Agreement
was accurate in all respects as of the date of this Agreement and is accurate in
all respects as of the Closing Date as if made on the Closing Date (giving full
effect to any supplements to the Disclosure Schedule that were delivered by
Seller to Buyer prior to the Closing Date in accordance with Section 5.5.); and
(iv) Mutual Release. Seller shall have delivered
--------------
to Buyer a mutual release, executed by Seller, substantially in the form of
Exhibit B to be attached at closing
- -----------------------------------
(v) All Corporate records, organzational
documents, minutes of Board of Director and Shareholder meetings and corporate
seal.
B. Buyer will deliver to Seller:
(i) Certificates. Certificates representing
------------
Buyer's Stock, duly endorsed (or accompanied by duly executed stock powers) for
transfer to Seller, or a Board of Directors resolution signifying the order of
the transfer of shares to Seller to be effectuated immediately, withou delay;
(ii) Certificate. A certificate in the form of
-----------
Exhibit C hereto executed by Buyer to the effect that, except as otherwise
---------
stated in such certificate, each of Buyer's representations and warranties in
this Agreement was accurate in all respects as of the date of this Agreement and
is accurate in all respects as of the Closing Date as if made on the Closing
Date; and
(iii) Mutual Release. Buyer shall have delivered
--------------
to Seller a Mutual Release, executed by Buyer, substantially in the form of
Exhibit B to be attached at closing.
- -----------------------------------
REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
Organization and Good Standing.
------------------------------
A. Schedule 3.1 of the Disclosure Schedule contains a complete
and accurate list of the Company's name, its jurisdiction of incorporation,
other jurisdictions in which it is authorized to do business, and its
capitalization (including the identity of each stockholder and the number of
shares held by each).
The Company is a corporation duly organized, validly existing,
and in good standing under the laws of Georgia, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under Applicable Contracts.
Seller is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification.
B. Seller has made available to Buyer copies of the
Organizational Documents of the Company, as currently in effect.
Authority; No Conflict.
----------------------
A. This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
Upon the execution and delivery by Seller of the closing documents set forth in
Section 2.4A (collectively, the "Seller's Closing Documents"), the Seller's
Closing Documents will constitute the legal, valid, and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms.
Seller has the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and the Seller's
Closing Documents and to perform his obligations under this Agreement and the
Seller's Closing Documents.
B. Except as set forth in Schedule 3.2 of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) Contravene, conflict with, or result in a
violation of (1) any provision of the Organizational Documents of the Company
or (2) any resolution adopted by the board of directors or the stockholders of
the Company;
(ii) Contravene, conflict with, or result in
a violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which Seller or
the Company, or any of the assets owned or used by Seller, may be subject;
(iii) Contravene, conflict with, or result in
a violation of any of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by Seller or that otherwise relates to
the business of, or any of the assets owned or used by, the Company;
(iv) Cause Buyer or Seller to become subject to,
or to become liable for the payment of, any Tax;
(v) Contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract; or
(vi) Result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or used by Seller.
Except as set forth in Schedule 3.2 of the Disclosure Schedule, Seller
nor the Company is or will be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
Capitalization. The authorized equity securities of the Company consist
of 1000 shares of common stock, .01 par value per share, of which 1000 shares
are issued and outstanding and constitute the Shares.
Seller is and will be on the Closing Date the record and beneficial
owners and holders of the Shares, free and clear of all Encumbrances.
With the exception of the Shares (which are owned by Seller), all of
the outstanding equity securities and other securities of the Company are owned
of record and beneficially by Seller, free and clear of all Encumbrances. No
legend or other reference to any purported Encumbrance appears upon any
certificate representing equity securities of the Company.
All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of the Company, including, but not limited to, stock
options, warrants, convertible securities, redemption rights, registration
rights and the like.
None of the outstanding equity securities or other securities of the
Company was issued in violation of the Securities Act or any other Legal
Requirement.
Financial Statements. Seller shall deliver to Buyer, at closing date to
--------------------
be attached as Schedule 3.4:
------------
A. Unaudited balance sheets of Seller as of August, 1999, and
as of, together with the related statements of income, changes in stockholder
equity and cash flow (collectively, the "Financial Statements") for the periods
referred to in such financial statements.
B. The Financial Statements were prepared in accordance with
this Agreement and with GAAP consistently applied.
The Financial Statements and notes, if any, fairly present the
financial condition and the results of operations, changes in stockholders'
equity, and cash flow of the Company as at the respective dates of and for the
periods referred to in such Financial Statements, all in accordance with GAAP,
subject, in the case of interim Financial Statements, to normal recurring
year-end adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse) and the absence of notes.
Books and Records. The books of account, minute books, stock record
books, and other records of the Company, all of which have been made available
to Buyer, are complete and correct and have been maintained in accordance with
sound business practices.
The minute books of the Company contain accurate and complete records
of all meetings held of, and corporate action taken by, the stockholders, the
Boards of Directors, and committees of the Boards of Directors of the Company,
and no meeting of any such stockholders, Board of Directors, or committee has
been held for and no material action has been taken at any meeting for which
minutes have not been prepared and are not contained in such minute books. At
the Closing, all of those books and records will be in the possession of Seller.
Title to Properties; Encumbrances. Seller owns (with good and
marketable title in the case of real property, subject only to the Encumbrances
permitted by this Section) all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) that they purport to own
located in the facilities owned or operated by Seller or reflected as owned in
the books and records of the Company, including all of the properties and assets
reflected in the Closing Date Financial Statements (except for assets held under
capitalized leases disclosed or not required to be disclosed in Schedule 3.6 of
the Disclosure Schedule which shall be attached to this Agreement as Schedule
3.6 at the closing date.).
All material properties and assets reflected in the Closing Date
Financial Statements are free and clear of all Encumbrances and are not, in the
case of real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except, with
respect to all such properties and assets:
A. Mortgages or security interests shown on the Closing
Date Financial Statements as securing specified liabilities or obligations,
with respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists;
B. Liens for current taxes not yet due; and
C. With respect to real property:
(i) Minor imperfections of title, if any, none
of which is substantial in amount, materially detracts from the value or impairs
the use of the property subject thereto, or impairs the operations of the
Company; and
(ii) Zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject
thereto.
All buildings, plants, and structures owned by Seller lie wholly within
the boundaries of the real property owned by Seller and do not encroach upon the
property of, or otherwise conflict with the property rights of, any other
Person. All property and assets of the the Company shall be in the possession
and control of Seller at Closing, including but not limited to, all Facilities.
No Undisclosed Liabilities. Except as set forth in Schedule 3.7 of the
Disclosure Schedule, Seller has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Closing Date Financial Statements and current liabilities incurred in the
Ordinary Course of Business since the respective dates thereof.
Taxes. Except as set forth on Schedule 3.8 to the Disclosure Schedule,
Seller has timely filed all tax returns and reports required to be filed by it,
including, without limitation, all federal, state and local tax returns, and has
paid in full or made adequate provision by the establishment of reserves for all
taxes and other charges which have become due or which are attributable to the
conduct of Seller's business prior to Closing. Seller will continue to make
adequate provision for all such taxes and other charges for all periods through
the Closing Date.
Except as set forth on Schedule 3.8 to the Disclosure Schedule, Seller
shall have no Knowledge of any tax deficiency proposed or threatened against
Seller. There are no tax liens upon any property or assets of the Company.
Except as set forth on Schedule 3.8 to the Disclosure Schedule, Seller
has made all payments of estimated taxes when due in amounts sufficient to avoid
the imposition of any penalty.
Except as set forth on Schedule 3.8 to the Disclosure Schedule, all
taxes and other assessments and levies which Seller was required by law to
withhold or to collect have been duly withheld and collected, and have been paid
over to the proper governmental entity.
Except as set forth in Schedule 3.8 to the Disclosure Schedule, the
federal and state income tax returns and local returns, if any, of Seller have
never been audited by the income tax authorities, nor are any such audits in
process. Except as set forth in Schedule 3.8, to the Disclosure Schedule there
are no outstanding agreements or waivers extending the statute of limitations
applicable to any federal or state income tax returns of the Company for any
period.
No Material Adverse Change. Since January, 1996 there has not been any
material adverse change in the business, operations, properties, prospects,
assets, or condition of the Company, and no event has occurred or circumstance
exists that may result in such a material adverse change.
Employee Benefits Matters.
-------------------------
3.10.1 Schedule 3.10.1 lists all plans, programs, and similar
agreements, commitments or arrangements, whether oral or written, maintained by
or on behalf of Seller or any other party that provide benefits or compensation
to, or for the benefit of, current or former employees of the Company ("Plan" or
"Plans"). Except as set forth on Schedule 3.10.1 to the Disclosure Schedule only
current and former employees of the Company participate in the Plans. Copies of
all Plans and, to the extent applicable, all related trust agreements, actuarial
reports, and valuations for the most recent year, all summary plan descriptions,
prospectuses, Annual Report Form 5500s or similar forms (and attachments
thereto) for the most recent year, all Internal Revenue Service determination
letters, and any related documents requested by Buyer, including all amendments,
modifications and supplements thereto, have been delivered to Buyer, and all of
the same are or will be true, correct and complete.
3.10.2 With respect to each Plan to the extent applicable:
A. No litigation or administrative or other
proceeding is pending or threatened involving such Plan;
B. To the Knowledge of Seller, such Plan has been
administered and operated in substantial compliance with, and has been amended
to comply with all applicable laws, rules, and regulations, including, without
limitation, ERISA, the Internal Revenue Code, and the regulations issued under
ERISA and the Internal Revenue Code;
C.Seller and its predecessors, if any, have made and
as of the Closing Date will have made or accrued, all payments and contributions
required, or reasonably expected to be required, to be made under the provisions
of such Plan or required to be made under applicable laws, rules and
regulations, with respect to any period following, such amounts to be determined
using the ongoing actuarial and funding assumptions of the Plan;
D. Such Plan is fully funded in an amount sufficient
to pay all liabilities accrued (including liabilities and obligations for health
care, life insurance and other benefits after termination of employment) and
claims incurred to the date hereof;
E. On the Closing Date such Plan will be fully funded
in an amount sufficient to pay all liabilities accrued (including liabilities
and obligations for health care, life insurance and other benefits after
termination of employment) and claims incurred to the Closing Date, or adequate
reserves will be set up on the Company's books and records, or paid-up insurance
will be provided, therefor; and
F. Such Plan has been administrated and operated only
in the ordinary and usual course and in accordance with its terms, and there has
not been in the year prior hereto any increase in the liabilities of such Plan
beyond increases typically experienced by employers similar to the Company.
Compliance With Legal Requirements; Governmental Authorizations.
---------------------------------------------------------------
A. Except as set forth in Schedule 3.11 of the Disclosure
-------------
Schedule:
(i) The Company is, and at all times since
January, 1996, has been, in full compliance with each Legal Requirement that is
or was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) No event has occurred or circumstance exists
that (with or without notice or lapse of time) (1) may constitute or result in a
violation by Seller of, or a failure on the part of Seller to comply with, any
Legal Requirement or (2) may give rise to any obligation on the part of Seller
to undertake, or to bear all or any portion of the cost of, any remedial action
of any nature; and
(iii) Seller has not received, at any time since
January, 1996, any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding (1) any actual, alleged,
possible, or potential violation of, or failure to comply with, any Legal
equirement or (2) any actual, alleged, possible, or potential obligation on the
part of Seller to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
B. Schedule 3.11 Except as set forth in Schedule 3.11 of the
------------- ------------
Disclosure Schedule:
(i) The Company is, and at all times since
January, 1996, has been, in full compliance with all of the terms and
requirements of any applicable Governmental Authorization;
(ii) No event has occurred or circumstance exists
that may with or without notice or lapse of time) (1) constitute or result
directly or indirectly in a violation of or a failure to comply with any term or
requirement of any applicable Governmental Authorization or (2) result directly
or indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any applicable Governmental
Authorization;
(iii) Seller has not received, at any time since
January, 1996, any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding (1) any actual, alleged,
possible, or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization or (2) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
(iv) All applications required to have been
filed for the renewal of the Governmental Authorizations have been duly filed on
a timely basis with the appropriate Governmental Bodies, and all other filings
required to have been made with respect to such Governmental Authorizations have
been duly made on a timely basis with the appropriate Governmental Bodies.
The Seller has obtained any Governmental Authorizations necessary to
permit the Company to lawfully conduct and operate their businesses in the
manner they currently conduct and operate such businesses and to permit the
Company to own and use their assets in the manner in which they currently own
and use such assets.
Legal Proceedings; Orders.
-------------------------
A. Except as set forth in Schedule 3.12 of the Disclosure
--------------
Schedule, there is no pending Proceeding:
(i) That has been commenced by or against Seller
or that otherwise relates to or may affect the business of, or any of the assets
owned or used by, Seller; or
(ii) That challenges, or that may have the effect
of preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions.
To the Knowledge of Seller, (i) no such Proceeding has been Threatened
and (ii) no event has occurred or circumstance exists that may give rise to or
serve as a basis for the commencement of any such Proceeding. Seller shall have
delivered to Buyer copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in Schedule 3.12 of the Disclosure Schedule.
The Proceedings listed in Schedule 3.12 of the Disclosure Schedule will not have
a material adverse effect on the business, operations, assets, condition, or
prospects of the Company.
B. Except as set forth in Schedule 3.12 of the Disclosure
-------------
Schedule:
(i) There is no Order to which any of Seller, or
any of the assets owned or used by the Company, is subject;
(ii) Seller is not subject to any Order that
relates to the business of, or any of the assets owned or used by, the Company;
and
(iii) No officer, director, agent, or employee of
the Company is subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct, activity, or
practice relating to the business of the Company.
C. Except as set forth in Schedule 3.12 of the Disclosure
-------------
Schedule:
(i) Seller is, and at all times since January,
1996, has been, in full compliance with all of the terms and requirements of
each Order to which it, or any of the assets owned or used by it, is or has been
subject;
(ii) No event has occurred or circumstance exists
that may constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any Order to
which Seller, or any of the assets owned or used by Seller, is subject; and
(iii) Seller has not received, at any time since
January, 1996, any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any term or
requirement of any Order to which the Company, or any of the assets owned or
used by the Company, is or has been subject.
Absence of Certain Changes and Events. Except as set forth in Schedule
3.13 of the Disclosure Schedule, since January, 1996, the Company has conducted
its business only in the Ordinary Course of Business and there has not been any:
A. Change in the Company's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock of the
Company; issuance of any security convertible into such capital stock; grant of
any registration rights; purchase, redemption, retirement, or other acquisition
by the Company of any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital stock;
B. Amendment to the Organizational Documents of the Company;
C. Payment or increase by Seller of any bonuses, salaries, or
other compensation to any stockholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment, severance,
or similar Contract with any director, officer, or employee;
D. Adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of the Company;
E. Damage to or destruction or loss of any asset or property
of the Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of the Company, taken as a whole;
F. Entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement or (ii) any Contract or transaction
involving a total remaining commitment by or to the Company of at least Five
Thousand and No/100 Dollars ($5,000.00);
G. Sale (other than sales of inventory in the Ordinary Course
of Business), lease, or other disposition of any asset or property of the
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of the Company, including the sale, lease, or
other disposition of any of the Software and Intangibles;
H. Cancellation or waiver of any claims or rights with a value
to the Company in excess of Five Thousand and No/100 Dollars ($5,000.00);
I. Material change in the accounting methods used by the
Company; or
J. Agreement, whether oral or written, by Seller to do any of
the foregoing.
Contracts; No Defaults.
----------------------
A. Except as set forth in Schedule 3.17(A) of the Disclosure
----------------
Schedule:
(i) Other than as set forth or provided for
on the Financial Statements, the Company has not or may not acquire any rights
under, and the Company has not or may not become subject to any obligation or
liability under, any Contract under which the Company is obligated to make
payments totaling, or services having a value equal to, $5,000 or more ; and
(ii) To the Knowledge of Seller, no officer,
director, agent, employee, consultant, or contractor of the Company is bound by
any Contract that purports to limit the ability of such officer, director,
agent, employee, consultant, or contractor to (1) engage in or continue any
conduct, activity, or practice relating to the business of the Company or (2)
assign to the Company or to any other Person any rights to any invention,
improvement, or discovery.
B. Except as set forth in Schedule 3.17 (B) of the
-----------------
Disclosure Schedule, each material Contract is in full force and effect and is
valid and enforceable in accordance with its terms.
C. Except as set forth in Schedule 3.17(C) of the Disclosure
----------------
Schedule:
(i) The Company is, and at all times since
January, 1996, has been, in full compliance with all applicable terms and
requirements of each Contract under which such Seller has or had any obligation
or liability or by which such Seller or any of the assets owned or used by the
Company is or was bound;
(ii) Each other Person that has or had any
obligation or liability under any Contract under which the Company has or had
any rights is, and at all times since January, 1996, has been, in full
compliance with all applicable terms and requirements of such Contract;
(iii) No event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give Seller or other Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract; and
(iv) Seller has not given to or received from
any other Person, at any time since January, 1996, any notice or other
communication (whether oral or written) regarding any actual, alleged, possible,
or potential violation or breach of, or default under, any Contract.
F. There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to Seller
under current or completed Contracts with any Person and no such Person has made
written demand for such renegotiation.
G. The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Company have been entered into in the
Ordinary Course of Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in violation of any Legal
Requirement.
Insurance.
---------
A. Seller have delivered to Buyer:
(i) True and complete copies of all policies
of insurance to which the Company or Seller is a party or under which the
Company, or any director of the Company, is or has been covered at any time
within the two (2) years preceding the date of this Agreement;
(ii) True and complete copies of all pending
applications for policies of insurance; and
(iii) Any statement by the auditor of the
Company's financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
B. Except as set forth on Schedule 3.15(B) of the Disclosure
----------------
Schedule:
(i) All policies to which Seller is a party or
that provide coverage to Seller, the Company, or any director or officer of an
the Company:
(1) Are valid, outstanding, and
enforceable;
(2) Taken together in the reasonable
judgment of Seller, provide adequate insurance coverage for the assets and the
operations of the Company for all risks to which the Company are normally
exposed;
(3) Are sufficient for compliance with
all Legal Requirements and Contracts to which Seller is a party or by which it
is bound;
(4) Will continue in full force and
effect following the consummation of the Contemplated Transactions; and
(5) Do not provide for any retrospective
premium adjustment or other experienced-based liability on the part of Seller.
(ii) Neither Seller nor the Company has received
(1) any refusal of coverage or any notice that a defense will be afforded with
reservation of rights or (2) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder.
(iii) Seller has paid all premiums due, and have
otherwise performed all of their respective obligations, under each policy to
which Seller is a party or that provides coverage to the Company or director
thereof.
(iv) Seller has given notice to the insurer of
all claims that may be insured thereby.
Environmental Matters. Except as set forth in Schedule 3.16 of the
Disclosure Schedule, at all times since January, 1996, Seller has obtained and
is in compliance with all permits, licenses and other authorizations required to
do business by Environmental Requirements.
Employee Matters.
----------------
Except as set forth on Schedule 3.17, at all times since January, 1996,
Seller has complied in all respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health and plant closing.
Except as set forth on Schedule 3.17, Seller is not liable for the
payment of any compensation, Damages, taxes, fines, penalties, or other amounts,
however, designated, for failure to comply with any of the foregoing Legal
Requirements.
Intellectual Property Rights of the Company.
-------------------------------------------
A. Definitions. As used in this Agreement, and in addition
-----------
to any other terms defined in this Agreement, the following terms shall have the
following meanings.
(i) "Software" means any computer program,
--------
operating system, applications system, firmware or software of any nature,
whether operational, under development or inactive, including all object code,
source code, technical manuals, compilation procedures, execution procedures,
flow charts, programmers notes, user manuals and other documentation thereof,
whether in machine-readable form, programming language or any other language or
symbols and whether stored, encoded, recorded or written on disk, tape, film,
memory device, paper or other media of any nature.
(ii) "Owned Software" means all Software owned
---------------
by the Company, whether purchased from a third party, developed by or on behalf
of the Company, currently under development or otherwise.
(iii) "Customer Software" means all Software,
-----------------
other than the Owned Software, that is, directly or through Distributors, either
(x) offered or provided to customers of the Company or (y) used by the Company
to provide information or services to customers of the Company for a fee.
(iv) "Seller Software" means the Owned Software
---------------
and the Customer Software.
(v) "Other Software" means all Software, other
--------------
than the Company's Software, that is licensed by the Company from third parties
or otherwise used by the Company for any purpose whatsoever.
(vi) "Intangible" means:
----------
(1) Patents, patent applications, patent
disclosures, all re-issues, divisions, continuations, renewals, extensions and
continuation-in-parts thereof and improvements thereto;
(2) Trademarks, service marks, trade
dress, logos, trade names, and corporate names and registrations and
applications for Registration thereof and all goodwill associated therewith;
(3) Copyrights, Registrations thereof
and applications for Registration thereof;
(4) Maskworks, Registrations thereof and
applications for Registration thereof;
(5) Trade secrets and confidential
business information (including ideas, formulas, compositions, inventions,
whether patentable or unpatentable and whether or not reduced to practice,
know-how, manufacturing and production processes and techniques, research and
development information, drawings, flow charts, processes, ideas,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial, marketing, and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information);
(6) Other proprietary rights;
(7) All income, royalties, Damages and
payments due at Closing or thereafter with respect to the Owned Software,
Customer Software, Other Software, or other Intangibles and all other rights
thereunder including, without limitation, Damages and payments for past, present
or future infringements or misappropriations thereof, the right to sue and
recover for past, present or future infringements or misappropriations thereof;
(8) All rights to use all of the
foregoing forever; and
(9) All other rights in, to, and under
the foregoing in all countries.
B. Ownership and Right to License.
------------------------------
(i) Except as set forth in Schedule 3.18 of
--------------
the Disclosure Schedule, to the Knowledge of the Seller, at all times since
January, 1996, Seller has good and marketable title to the Owned Software and
Intangibles attributable to the Owned Software, and have the full right to use
all of the Customer Software and Other Software, and Intangibles attributable
thereto, as used or required to operate Seller's businesses as currently
conducted and as contemplated in the future in accordance with Seller's written
business plans, free and clear of any liens, claims, charges or encumbrances
which would affect the use of such Software in connection with the operation of
Seller's business as currently conducted and as contemplated in the future in
accordance with Seller's written business plans.
(ii) To the Knowledge of Seller, no rights of
any third party not previously obtained are necessary to market, license, sell,
modify, update, and/or create derivative works for any Software as to which
Seller take any such action in their respective businesses as currently
conducted and as contemplated in the future in accordance with Seller's written
business plans.
(iii) To the Knowledge of Seller, none of the
Software or Intangibles or their respective past or current uses by or through
Seller have violated or infringed upon, or is violating or infringing upon, any
Software, patent, copyright, trade secret or other Intangible of any Person. To
the knowledge of Seller, Seller has adequately maintained all trade secrets and
copyrights with respect to such Software.
To the Knowledge of Seller, Seller has performed all obligations
imposed upon them with regard to the Customer Software and Other Software which
are required to be performed by them on or prior to the date hereof, and Seller
nor, to the Knowledge of Seller, any other party, is in breach of or default
thereunder in any respect, nor to the Seller's Knowledge is there any event
which with notice or lapse of time or both would constitute a default
thereunder.
Certain Payments. Since January, 1996, neither Seller nor any director,
officer, agent, or employee of the Company, nor to Seller's Knowledge any other
Person associated with or acting for or on behalf of Seller, has directly or
indirectly:
A. Made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business; (ii) to pay for favorable treatment
for business secured; (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Copmany or any affiliate
of the Company or (iv) in violation of any Legal Requirement.
B. Established or maintained any fund or asset that has not
been recorded in the books and records of the Company.
Disclosure.
----------
A. No representation or warranty of Seller in this Agreement
and no statement in the Disclosure Schedule omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
B. No notice given pursuant to Section 5.5. will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
C. There is no fact known to Seller that has specific
application to Seller or the Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as Seller can
reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Company (on a consolidated
basis) that has not been set forth in this Agreement or the Disclosure Schedule.
Brokers or Finders. Seller and its agents have incurred no obligation
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as follows:
Organization and Good Standing. Buyer is a Texas corporation.
------------------------------
Authority. This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the closing documents set forth in
Section 2.5.B (collectively, the "Buyer's Closing Documents"), the Buyer's
Closing Documents will constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms.
Buyer has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and the Buyer's Closing Documents and to perform its
obligations under this Agreement and the Buyer's Closing Documents.
Investment Intent. Buyer is acquiring the Shares for its own account
------------------
and not with a view to their distribution within the meaning of Section 2 (11)
of the Securities Act.
Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened.
Brokers or Finders. Buyer and its agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Seller harmless from any such payment alleged to be due by or
through Buyer as a result of the action of Buyer or its officers or agents.
4.6. Full Disclosure. To the best knowledge of Buyer, it's officers,
directors or agents, no representation, warranty or covenant of Buyer contained
in this Agreement or in any other written statement or certificate delivered by
Buyer pursuant to this Agreement or in connection with the transactions
contemplated herein or in any SEC filing contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading. To
the best knowledge of Buyer, it's officers, directors or agents, there is no
fact which adversely affects, or in the future may adversely affect, the
business, operations, cash flows, affairs, prospects, properties or assets or
the condition, financial or otherwise of the Buyer which has not been disclosed
in this Agreement, or in the documents, certificates and written statements
furnished to Seller for use in connection with the transactions contemplated
hereby or in any SEC filing.
COVENANTS OF SELLER PRIOR TO CLOSING DATE.
Access and Investigation. Between the date of this Agreement and the
-------------------------
Closing Date, Seller will, and will cause the Company and its Representatives
to:
A. Afford Buyer and its Representatives and prospective
lenders and their Representatives (collectively, "Buyer's Advisors") full and
free access to the Company's personnel, properties (including subsurface
testing), contracts, books and records, and other documents and data;
B. Furnish Buyer and Buyer's Advisors with copies of all such
contracts, books and records, and other existing documents and data as Buyer
may reasonably request; and
C. Furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information as Buyer may reasonably
request.
Operation of the Business of the Company. Between the date of this
Agreement and the Closing Date, Seller will:
A. Conduct the business of the Company only in the Ordinary
Course of Business;
B. Use its commercially reasonable efforts to preserve intact
the current business organization of the Company, keep available the services of
the current officers, employees, and agents of the Company, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with the Company or
Seller;
C. Confer with Buyer concerning operational matters of a
material nature; and
D. Otherwise report periodically to Buyer concerning the
status of the business, operations, and finances of the Company.
Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Seller will
not without the prior consent of Buyer, take any affirmative action, or fail to
take any reasonable action within their or its control, as a result of which any
of the changes or events listed in Section 3.13. is likely to occur.
Required Approvals. As promptly as practicable after the date of this
Agreement, Seller will, and will cause the Company to, make all filings required
by Legal Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Seller
will, and will cause the Company to:
A. Cooperate with Buyer with respect to all filings that Buyer
reasonably elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transactions; and
B. Cooperate with Buyer in obtaining all required Consents.
Notification. Between the date of this Agreement and the Closing Date,
Seller will promptly notify Buyer in writing if Seller becomes aware of any fact
or condition that causes or constitutes a Breach of any of Seller's
representations and warranties as of the date of this Agreement, or if Seller
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition.
Should any such fact or condition require any change in the Disclosure
Schedule if the Disclosure Schedule were dated the date of the occurrence or
discovery of any such fact or condition, Seller will promptly deliver to Buyer a
supplement to the Disclosure Schedule specifying such change. During the same
period, each Seller will promptly notify Buyer of the occurrence of any Breach
of any covenant of Seller in this Section 5. or of the occurrence of any event
that may make the satisfaction of the conditions in Section 7. impossible or
unlikely.
No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Section 9., Seller will not, and will cause its
Representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the Ordinary Course
of Business) of the Company, or any of the capital stock of the Company, or any
merger, consolidation, business combination, or similar transaction involving
Seller.
Closing of Bank Accounts. Seller shall cause the closing of all Company
-------------------------
bank accounts for which Seller, or its officers and directors, have sole
signature authority.
COVENANTS OF BUYER PRIOR TO CLOSING DATE.
Approvals of Governmental Bodies/Third Party Consents. As promptly as
practicable after the date of this Agreement, Buyer will, and will cause each of
its Related Persons to, make all filings required by Legal Requirements to be
made by them to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Buyer will,
and will cause each Related Person to:
A. Cooperate with Seller with respect to all filings that
Seller is required by Legal Requirements to make in connection with the
Contemplated Transactions; and
B. Cooperate with Seller in obtaining all consents identified
in Schedule 3.2 of the Disclosure Schedule; provided that this Agreement will
not require Buyer to dispose of or make any change in any portion of its
business or to incur any other burden to obtain a Governmental Authorization.
Access and Investigation. Between the date of this Agreement and the
-------------------------
Closing Date, Buyer will, and will cause its Representatives to:
A. Afford Seller and its Representatives and prospective
lenders and their Representatives (collectively, "Seller's Advisors") full and
free access to Buyer's personnel, properties (including subsurface testing),
contracts, books and records, and other documents and data;
B. Furnish Seller and Seller's Advisors with copies of all
such contracts, books and records, and other existing documents and data as
Seller may reasonably request; and
C. Furnish Seller and Seller's Advisors with such additional
financial, operating, and other data and information as Seller may reasonably
request.
Operation of the Business of the Company. Between the date of this
Agreement and the Closing Date, Buyer will:
A. Conduct the business of Buyer only in the Ordinary Course
of Business;
B. Use commercially reasonable efforts to preserve intact the
current business organization of Buyer; and
A. Confer with Seller concerning operational matters of a material nature.
Notification. Between the date of this Agreement and the Closing Date,
Buyer will promptly notify Seller in writing if Buyer becomes aware of any fact
or condition that causes or constitutes a Breach of any of Buyer's
representations and warranties as of the date of this Agreement, or if Buyer
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
Accuracy of Representations.
---------------------------
A. All of Seller's representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the Disclosure Schedule.
B. Each of Seller's representations and warranties in Article
3. must have been accurate in all respects as of the date of this Agreement, and
must be accurate in all respects as of the Closing Date as if made on the
Closing Date, without giving effect to any supplement to the Disclosure
Schedule.
Seller's Performance.
--------------------
A. All of the covenants and obligations that Seller is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
B. Each document required to be delivered pursuant to Section
2.4. must have been delivered by closing, and each of the other covenants and
obligations in Section 5. must have been performed and complied with in all
respects.
C. The results of any investigation performed by Buyer in
connection with Section 5.1. shall be satisfactory to Buyer in its sole
discretion.
Consents. Each of the Consents identified in Schedule 3.2 of the
-------- -------------
Disclosure Schedule must have been obtained and must be in full force and
effect.
Additional Documents. Seller shall deliver such other documents as
Buyer may reasonably request for the purpose of (i) evidencing the accuracy of
any of Seller's representations and warranties; (ii) evidencing the performance
by Seller of, or the compliance by Seller with, any covenant or obligation
required to be performed or complied with by such Seller; (iii) evidencing the
satisfaction of any condition referred to in this Section 7. or (iv) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
No Proceedings. Since the date of this Agreement, there must not have
been commenced or Threatened against Buyer, or against any Person affiliated
with Buyer, any Proceeding (i) involving any challenge to, or seeking Damages or
other relief in connection with, any of the Contemplated Transactions or (ii)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
No Claim Regarding Stock Ownership or Sale Proceeds. There must not
have been made or Threatened by any Person any claim asserting that such Person
(i) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock of, or any other voting, equity, or
ownership interest in, any of Seller or (ii) is entitled to all or any portion
of the Purchase Price payable for the Shares, except as has been orally
disclosed to Buyer.
No Prohibition. Neither the consummation nor the performance of any of
the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (i) any applicable Legal
Requirement or Order or (ii) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
Employment Agreement. On or before the Closing Date, Seller(s) shall
---------------------
have entered into an employment agreement with Buyer.
Registration of Shares for Seller. Buyer hereby certifies that it
intends to file a registration statement under exception rule SB-2, for a block
of Buyers common stock. Buyer agrees to allow Seller "piggyback" registration
rights of Buyers common stock in an amount so that Seller shall receive a
benefit of two hundred fifty thousand dollars ($250,000.00). Seller agrees to
sell the registered shares through Buyers Investment Banker only, and only in an
amount of shares (as deemed by the Investment Banker of Buyer) as not to cause
any adverse effect on stock price of Buyer.
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
Buyer's Performance.
-------------------
A. All of the covenants and obligations that Buyer is required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
B. Buyer must have delivered each of the documents required
to be delivered by Buyer pursuant to Section 2.5.
Consents. Each of the Consents identified in Schedule 3.2 of the
-------- -------------
Disclosure Schedule must have been obtained and must be in full force and
effect.
Additional Documents. Buyer must have caused the following documents to
be delivered to Seller such other documents as Seller may reasonably request for
the purpose of (i) evidencing the accuracy of any representation or warranty of
Buyer; (ii) evidencing the performance by Buyer of, or the compliance by Buyer
with, any covenant or obligation required to be performed or complied with by
Buyer; (iii) evidencing the satisfaction of any condition referred to in this
Section 8. or (iv) otherwise facilitating the consummation of any of the
Contemplated Transactions.
No Injunction. There must not be in effect any Legal Requirement or any
injunction or other Order that (i) prohibits the sale of the Shares by Seller to
Buyer and (ii) has been adopted or issued, or has otherwise become effective,
since the date of this Agreement. 8.6.
8.6 Employment Agreements. Buyer and Stephen R. Ragsdale shall enter into an
Employment Agreement, in a form to be mutually agreed by the parties. 8.7
Performance of Buyer's Stock. Buyer shall use best efforts, at all times, to
maintain promotion of Buyer's stock in the public market (AMEX, NYSE, Etc.).
Should the stock price of Buyer fall below one dollar ($1.00) for the average of
five business days from the date of the anniversary of this Agreement through
five business days after the date of the anniversary of this Agreement, and the
price of Buyers stock fail to rise above one dollar ($1.00), Seller shall have
one of the following options:
Seller may terminate this Agreement, and 100% of the stock of Seller
shall be returned. Seller shall return 100% of the stock of Buyer. Provision 9.2
of this Agreement shall immedately take effect.
B. Seller shall receive an additional five hundred thousand (500,000)
shares of common stock of Buyer, with "piggy back" registration rights.
TERMINATION.
Termination Events.
------------------
This Agreement may, by notice given prior to or at the Closing, be
terminated:
A. By either Buyer or Seller if a material Breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been waived;
B. (i) By Buyer if any of the conditions in
Section 7. have not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Buyer to comply with its obligations under this Agreement) and
Buyer has not waived such condition on or before the Closing Date;
(ii) By Seller, if any of the conditions in
Section 7. have not been satisfied of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of
Seller to comply with their obligations under this Agreement) and Seller has not
waived such condition on or before the Closing Date; or
C. By mutual consent of Buyer and Seller; or
D. By either Buyer or Seller if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before March
31, 2000, or such later date as the parties may agree upon.
Effect of Termination. Each party's right of termination under Section
9.1. is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 9.1., all further
obligations of the parties under this Agreement will terminate, except that the
obligations in Sections 12.1. and 12.3. will survive; provided, however, that if
this Agreement is terminated by a party because of the Breach of the Agreement
by the other party or because one (1) or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired. INDEMNIFICATION; REMEDIES.
Agreement by Seller to Indemnify. Seller (the "Seller Indemnifying
Party"), agrees that they will indemnify and hold Buyer harmless in respect of
the aggregate of all indemnifiable Damages of Buyer.
For this purpose, "indemnifiable Damages" of Buyer means the aggregate
of all Damages incurred or suffered by Buyer resulting from:
A. Any inaccurate representation or warranty made by Seller
in or pursuant to this Agreement;
B. Any default in the performance of any of the covenants or
agreements made by Seller in this Agreement; or
C. The failure of any Seller to pay, discharge or perform any
liability or obligation of Seller or of Seller resulting from the operation of
Seller's business prior to the Closing Date.
With respect to the measurement of "Indemnifiable Damages", Buyer shall
have the right to be put in the same financial position as it would have been
had each of the representations and warranties of Seller been true and correct
and had each of the covenants of Seller been performed in full.
The amount of any indemnifiable Damages otherwise payable to Buyer
hereunder shall be reduced if the indemnifiable Damages incurred by Buyer will
provide Buyer with income tax deductions or credits. The amount of the reduction
shall be the amount of the actual cash tax savings realized by Buyer as a result
of such deductions or credits, discounted to its present value as of the date of
the payment of the indemnifiable Damages from the date such indemnifiable
Damages were incurred by Buyer at the rate of interest charged on such date by
the Internal Revenue Service on underpayment of taxes.
The foregoing obligation of Seller Indemnifying Party to indemnify
Buyer shall be subject to each of the following principles or qualifications:
3. Each of the representations and warranties made by Seller
in this Agreement or pursuant hereto, shall survive for a period of one (1) year
after the Closing; provided, however, that the representations and warranties
made by Seller to the extent they relate to Seller's title to the Shares shall
survive forever and that the representations and warranties made by Seller and
Shareholder in Section 3.8. hereof ("Taxes") shall in each case survive until
the first (1st) anniversary of the later of:
A. The date on which applicable period of limitation
on assessment or refund of tax has expired; or
B. The date on which the applicable taxable year (or
portion thereof) has been closed.
No claim for the recovery of indemnifiable Damages may be asserted by
Buyer against Seller Indemnifying Party or their successors in interest after
such representations and warranties shall be thus extinguished; provided,
however, that claims first asserted in writing within the applicable period
shall not thereafter be barred.
Agreements by Buyer to Indemnify. Buyer (the "Buyer Indemnifying
Party"), agrees to indemnify and hold Seller (the "Seller Indemnified Party")
harmless in respect of the aggregate of all indemnifiable Damages of any of
Seller Indemnified Parties.
For this purpose, "indemnifiable Damages" of the of Seller Indemnified
Party means the aggregate of all Damages incurred or suffered by the Seller
Indemnified Party resulting from:
A. Any inaccurate representation or warranty made by Buyer or
pursuant to this Agreement; or
B. Any default in the performance of any of the covenants or
agreements made by Buyer in this Agreement.
With respect to the measurement of "Indemnifiable Damages", the Seller
Indemnified Party shall have the right to be put in the same financial position
as they would have been had each of the representations and warranties of Buyer
Indemnifying Party been true and correct and had each of the covenants of Buyer
Indemnifying Party been performed in full.
The amount of any indemnifiable Damages otherwise payable to any Seller
Indemnified Party hereunder shall be reduced if the indemnifiable Damages
incurred by Seller Indemnified Party will provide such Party with income tax
deductions or credits. The amount of the reduction shall be the amount of the
actual cash tax savings realized by Seller Indemnified Party as a result of such
deductions or credits discounted to its present value as of the date of the
payment of the indemnifiable Damages from the date such indemnifiable Damages
were incurred by Seller Indemnified Party at the rate of interest charged on
such date by the Internal Revenue Service on underpayment of taxes.
The foregoing obligation of Buyer Indemnifying Party to indemnify
Seller Indemnified Party shall be subject to each of the following principles or
qualifications:
10.2.1 Each of the representations and warranties made by
Buyer in Article 4 of this Agreement shall survive for a period of one (1) year
after the Closing Date, and thereafter all such representations and warranties
shall be extinguished.
No claim for the recovery of indemnifiable Damages pursuant to clause
(i) of Section 10.2. may be asserted by Seller Indemnified Party against Buyer
Indemnifying Party or its successors in interest after such representations and
warranties shall be thus extinguished; provided, however, that claims first
asserted in writing within the applicable period shall not thereafter be barred.
Matters Involving Third Parties. If any third party shall notify Buyer
or Seller (the "Indemnified Party") with respect to any matter which may give
rise to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 10., then the Indemnified Party shall notify each
Indemnifying Party thereof promptly; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any liability or obligation hereunder unless (and
then solely to the extent that) the Indemnifying Party thereby is Damaged.
If any Indemnifying Party notifies the Indemnified Party within fifteen
(15) days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then:
A. The Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice satisfactory to the Indemnified
Party;
B. The Indemnified Party may retain separate co-counsel at its
sole cost and expense (except that the Indemnifying Party will be responsible
for the fees and expenses of the separate co-counsel to the extent the
Indemnified Party concludes that the counsel the Indemnifying Party has selected
has a conflict of interest);
C. The Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without the
written consent of the Indemnifying Party (not to be withheld or delayed
unreasonably); and
D. The Indemnifying Party will not consent to the entry of any
judgment with respect to the matter, or enter into any settlement which does not
include a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld or delayed unreasonably).
If no Indemnifying Party notifies the Indemnified Party within fifteen
(15) days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then the Indemnified Party
may defend against, or enter into any settlement with respect to, the matter in
any manner it may deem appropriate.
10.4. Limitations on Indemnification. Notwithstanding the provisions of
Sections 10.1 or 10.2 hereof, neither party shall have any liability to
indemnify the other until and to the extent that the aggregate amount of
indemnifiable claims hereunder equals or exceeds $5,000, and the cap on any
indemnification claims hereunder shall in no event exceed an amount equal to one
half of the value of Buyer's Stock transferred hereunder valued as of the
Closing Date.
POST-CLOSING AGREEMENTS.
Consistency in Reporting. Each party hereto agrees that: (i) the
transaction is intended to qualify as a tax-free transaction under the I.R.C.;
(ii) the transaction shall be reported for Federal income tax purposes as a
tax-free transaction; (iii) for purposes of all financial statements, tax
returns and reports, and communications with third parties, the transactions
contemplated in this agreement and ancillary or collateral transactions will be
treated as a tax-free transaction; and (iv) if the characterization of any
transaction contemplated in this agreement or any ancillary or collateral
transaction is challenged, each party hereto will testify, affirm and ratify
that the characterization contemplated in such agreement was with the
characterization intended by the party; provided, however, that nothing herein
shall be construed as giving rise to any obligation if the reporting position is
determined to be incorrect by final decision of a court of competent
jurisdiction. GENERAL PROVISIONS.
Expenses. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants.
Seller will cause the Company not to incur any out-of-pocket expenses
in connection with the Contemplated Transactions. In the event of termination of
this Agreement, the obligation of each party to pay its own expenses will be
subject to any rights of such party arising from a breach of this Agreement by
another party.
Public Announcements. Any public announcement or similar publicity with
respect to this Agreement or the Contemplated Transactions will be issued, if at
all, at such time and in such manner as Buyer determines. Unless consented to by
Buyer in advance or required by Legal Requirements, prior to the Closing, Seller
shall, and shall cause the Company to, keep this Agreement strictly confidential
and may not make any disclosure of this Agreement to any Person.
Seller and Buyer will consult with each other concerning the means by
which the Company's employees, customers, and suppliers and others having
dealings with Seller will be informed of the Contemplated Transactions, and
Buyer will have the right to be present for any such communication.
Confidentiality. Between the date of this Agreement and the Closing
Date, Buyer and Seller will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Company to
maintain in confidence, and not use to the detriment of another party or the
Company any written, oral, or other information obtained in confidence from
another party or an Seller in connection with this Agreement or the Contemplated
Transactions, unless:
A. Such information is already known to such party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party;
B. The use of such information is necessary or appropriate
in making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions; or
C. The furnishing or use of such information is required by
or necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, Seller waives, and
will upon Buyer's request cause Seller to waive, any cause of action, right, or
claim arising out of the access of Buyer or its representatives to any trade
secrets or other confidential information of the Company.
Notices. All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (i) delivered by hand (with written confirmation of receipt); (ii) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested or (iii) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Seller:
AMG, Ltd..
4182 Winters Chapel Road
Doraville, GA 30360
Attn: S. Randy Ragsdale, President
With a copy to:
Paul Suda, Esq.
1362 Salem Drive
Alpharetta, GA 31141
Attn: Paul Suda
Buyer: Elite Technologies, Inc.
3700 Crestwood Parkway
Suite 1000
Duluth, GA 30096
With a copy to: Morris, Manning & Martin, L.L.P.
1600 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326-1044
Attention: Bryan G. Harrison, Esq.
Telecopy No.: (404) 365-9532
Jurisdiction; Service of Process. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the State of Georgia,
County of Gwinnett, or, if it has or can acquire jurisdiction, in the United
States District Court for the Northern District of Georgia, and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
Further Assurances. The parties agree (i) to furnish upon request to
each other such further information; (ii) to execute and deliver to each other
such other documents and (iii) to do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.
Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege.
To the maximum extent permitted by applicable law:
A. No claim or right arising out of this Agreement or the
documents referred to in this Agreement can be discharged by one (1) party,
in whole or in part, by a waiver or renunciation of the claim or right unless
in writing signed by the other party;
B. No waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and
C. No notice to or demand on one (1) party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
Entire Agreement and Modification. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter (including the
Letter of Intent between Buyer and Seller) and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment.
Disclosure Schedule.
-------------------
A. The disclosures in the Disclosure Schedule, and those in
any Supplement thereto, must relate only to the representations and warranties
in the Section of the Agreement to which they expressly relate and not to any
other representation or warranty in this Agreement.
B. In the event of any inconsistency between the statements in
the body of this Agreement and those in the Disclosure Schedule (other than an
exception expressly set forth as such in the Disclosure Schedule with respect to
a specifically identified representation or warranty), the statements in the
body of this Agreement will control.
Assignments, Successors and No Third-Party Rights. Neither party may
assign any of its rights under this Agreement without the prior consent of the
other parties, which will not be unreasonably withheld, except that Buyer may
assign any of its rights under this Agreement to any Subsidiary of Buyer.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
Section Headings; Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
Time of Essence. With regard to all dates and time periods set forth
----------------
or referred to in this Agreement, time is of the essence.
Governing Law. This Agreement will be governed by the laws of the
--------------
State of Georgia without regard to conflicts of laws principles.
Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.