AGREEMENT OF PURCHASE AND SALE OF ASSETS
AMONG
ORGANIC TO GO, INC.
ORGANIC TO GO FOOD CORPORATION
FPO, INC.
doing business as
MEL’S MARKET
MEL’S DELIVERY
JOELLE’S
SOUPS DU JOUR
and
SIMON’S
and
LARRY J. HAMLIN
May 14, 2008
AGREEMENT OF PURCHASE AND SALE OF ASSETS
THIS
AGREEMENT OF PURCHASE AND SALE OF ASSETS is made as of
May 14, 2008, by
and among FPO, INC., a Washington corporation doing business
as “MEL’S MARKET,” “MEL’S
DELIVERY,” “JOELLE’S,” “SOUPS DU
JOUR” AND “SIMON’S” (
“Company” ),
LARRY J. HAMLIN (the
“Shareholder” ),
ORGANIC
TO GO, INC., a Delaware corporation (
“Buyer” )
and ORGANIC TO GO FOOD CORPORATION, a Delaware corporation (
“Parent” ).
Company and Shareholder are together referred to in this agreement
as
“Selling Parties.” This
agreement is made under the following circumstances:
A.
Buyer
is a wholly owned subsidiary of Parent.
B.
Buyer
desires to purchase from Company and Company desires to sell
to Buyer, on the terms and subject to the conditions set forth
in this agreement, certain business and properties of
Company.
C.
Selling
Parties desire that this transaction be consummated on the
terms and subject to the conditions of this
agreement.
NOW,
THEREFORE, in consideration of the mutual covenants,
agreements, representations, and warranties contained in this
agreement, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1
SALE AND TRANSFER OF ASSETS
Subject
to the terms and conditions set forth in this agreement, at
the Closing (as hereinafter defined), Company shall sell,
convey, transfer, assign, and deliver to Buyer, and Buyer
shall purchase from Company, all of the assets, properties,
and business of Company of every kind, character, and
description, whether tangible, intangible, personal, or mixed,
and wherever located, including without limitation the assets
described on
Schedule 1 attached
to this agreement, other than the property and rights specifically
excluded in
Schedule 1 attached
to this agreement (the
“Excluded Assets” ).
The assets acquired by Buyer pursuant to this agreement are
referred to as the
“Acquired Assets” .
1.2
CONSIDERATION FROM BUYER AT CLOSING
The
total purchase price of the Acquired Assets shall be One
Million Seven Hundred Thousand Dollars ($1,700,000) plus the
actual cost to Company of Company’s inventory on hand as
of the close of business on the day immediately preceding the
Closing Date (the “
Inventory Cost ”),
less the actual cost to Company’s customers of
Company’s outstanding gift certificates that are assumed by
Buyer, as described on
Schedule 1.3 attached
to this agreement (the “
Gift Certificate Amount ”).
Inventory
shall include, without limitation, food, beverages, paper goods,
uniforms and office supplies, provided that the total Inventory
Cost of all items other than food and beverages shall not exceed
Five Hundred Dollars ($500). As payment of such purchase price,
Buyer shall deliver to Company:
1.2(a)
Cash at Closing .
At the Closing, cash, by bank cashier’s check, or by wire
transfer, in the amount of Two Hundred Fifty Thousand Dollars
($250,000) plus the Inventory Cost, less the Gift Certificate
Amount.
1.2(b)
Additional Cash. Cash,
by checks or by wire transfers, in the total amount of Nine Hundred
Fifty Thousand Dollars ($950,000) made payable to Company, in six
(6) quarterly installments beginning three (3) months after the
Closing, as provided below. The unpaid amount described in this
paragraph shall bear interest at the Prime Rate, as published in
the
Wall Street Journal ,
as adjusted during the term of the obligation, from the Closing
Date until paid. The first quarterly installment shall equal
$225,000 plus accrued interest, the second, third, fourth and fifth
quarterly installment shall equal $158,333 plus accrued interest
and the sixth quarterly installment shall equal 91,668 plus accrued
interest. If at any time or from time to time Buyer shall be
entitled to be paid any amount pursuant to this agreement, Buyer
shall be entitled, if it so elects, to set-off such amount against
the amount payable under this paragraph 1.2(b). This right of
set-off shall be in addition to and not in substitution of any
other rights to which Buyer shall be entitled. The obligation
described in this paragraph shall be secured pursuant to a Security
Agreement in the form of
Schedule 1.2(b) (the
“
Security Agreement ”)
and Financing Statement UCC-1.
1.2(c)
Parent Common Stock .
A stock certificate issued to Company (the
“Stock Certificate” )
representing a total number of shares of the Common Stock of
Parent, par value $0.001 per share (the
“Parent Shares” ),
equal to shares having an aggregate Market Value (as hereinafter
defined) of Five Hundred Thousand Dollars ($500,000) which shall be
delivered to Company within ten (10) business days after the
Closing. For purposes of this Agreement, the
“Market Value” of
the Parent Shares shall equal the average of the closing prices of
the Parent Shares in the over the counter market (or on any
national securities exchange if shares of Parent’s Common
Stock are listed on a national securities exchange) during the ten
(10) consecutive trading days ending three (3) trading days before
the Closing.
1.3
ASSUMPTION OF LIABILITIES
Buyer
shall not assume any contracts, obligations, debts or
liabilities under this agreement, other than those listed
on
Schedule 1.3 attached
to this agreement (the
“Assumed Contracts” ).
It is expressly understood and agreed that Buyer shall not be
liable for any of the contracts, obligations, debts or liabilities
of Company of any kind and nature, other than those listed
on
Schedule 1.3 ,
if any.
1.4
ALLOCATION OF PURCHASE PRICE
The
purchase price of the Acquired Assets shall be allocated as
follows:
|
1.
|
Furniture,
Fixtures and Equipment
|
$105,000
|
| |
|
|
|
2.
|
Inventory
|
Inventory
Cost
|
| |
|
|
|
3.
|
Goodwill,
Trade Names and Intangible Assets
|
$1,595,000
|
| |
|
|
|
4.
|
Gift
Certificates
|
Gift
Certificate Amount
|
| |
|
|
| |
Total
Purchase Price
|
$1,700,000
plus Inventory Cost less the Gift Certificate
Amount
|
Each
of the parties shall report this transaction for federal and
state tax purposes in accordance with this allocation of the
purchase price.
1.5
TAXES
Buyer
shall pay all sales and use taxes arising out of the transfer
of the Acquired Assets. Company shall pay its portion,
prorated as of the Closing Date, of state and local real and
personal property taxes, and all other taxes of
Company’s business. Buyer shall not be responsible for
any business, sales, occupation, withholding, or similar tax,
or any taxes of any kind related to any period before the
Closing Date.
ARTICLE 2
SELLING PARTIES’ REPRESENTATIONS AND
WARRANTIES
Selling
Parties, jointly and severally, represent and warrant that
except as set forth in the Disclosure Schedule attached to
this agreement as
Schedule 2 :
2.1
ORGANIZATION, STANDING AND QUALIFICATION OF
COMPANY
Company
is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Washington and has all
necessary powers to own its properties and to operate its
business as now owned and operated by it; and neither the
ownership of its properties nor the nature of its business
requires Company to be qualified in any jurisdiction other
than the state of its organization.
2.2
SHARE OWNERSHIP
Shareholder
owns, beneficially and of record, all of the outstanding
shares of capital stock of Company free and clear of all
liens, encumbrances, security agreements, equities, options,
claims, charges, and restrictions. There are no outstanding
subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating
Company to issue or to transfer any additional shares of its
capital stock, or any other interests in Company.
2.3
SUBSIDIARIES
Company
does not own, directly or indirectly, any interest or
investment (whether equity or debt) in any Company,
partnership, limited liability company, business, trust, or
other entity.
2.4
FINANCIAL STATEMENTS
Schedule 2 to
this agreement includes the balance sheets of Company as of
December 31, 2005,
2006 and 2007,
together with related statements of operations, stockholder’s
equity and cash flows for the periods then ended, prepared by
Company’s independent public accountants (collectively,
the
“Financial Statements” )
.
The Financial Statements have been prepared in accordance with
generally accepted accounting principals consistently followed by
Company throughout the periods indicated, and fairly present the
financial position of Company as of the respective dates of the
balance sheets included in the Financial Statements, and the
results of its operations for the respective periods
indicated.
2.5
ABSENCE OF SPECIFIED CHANGES.
Since
December 31, 2007 there has been no:
2.5(a)
Transaction
by Company except in the ordinary course of business as
conducted on that date;
2.5(b)
Capital
expenditure by Company exceeding $25,000;
2.5(c)
Material
adverse change in the financial condition, liabilities,
assets, business, or prospects of Company taken as a
whole;
2.5(d)
Destruction,
damage to, or loss of any asset of Company (whether or not
covered by insurance) that materially and adversely affects
the financial condition, business, or prospects of
Company;
2.5(e)
Labor
trouble or other event or condition of any character
materially and adversely affecting the financial condition,
business, assets, or prospects of Company;
2.5(f)
Change
in accounting methods or practices (including, without
limitation, any change in depreciation or amortization
policies or rates) by Company;
2.5(g)
Revaluation
by Company of any of its assets;
2.5(h)
Increase
in the salary or other compensation payable or to become
payable by Company to any of its officers, directors, or
employees, or the declaration, payment, or commitment or
obligation of any kind for the payment, by Company, of a bonus
or other additional salary or compensation to any such
person;
2.5(i)
Sale
or transfer of any asset of Company, except in the ordinary
course of business;
2.5(j)
Amendment
or termination of any contract, agreement, or license to which
Company is a party, except in the ordinary course of
business;
2.5(k)
Loan
by Company to any person or entity, or guaranty by Company of
any loan;
2.5(l)
Mortgage,
pledge, or other encumbrance of any asset of
Company;
2.5(m)
Waiver
or release of any right or claim of Company except in the
ordinary course of business;
2.5(n)
Commencement
or notice or threat of commencement of any civil litigation or
any governmental proceeding against or investigation of
Company or the affairs of either of them;
2.5(o)
Other
event or condition of any character that has or might
reasonably have a material and adverse effect on the financial
condition, business, assets, or prospects of
Company;
2.5(p)
Agreement
by Company to do any of the things described in the preceding
clauses (a) through (o).
2.6
DEBTS, LIABILITIES AND OBLIGATIONS
A
true and complete schedule of all debts, liabilities and
obligations of Company is provided in Section 2.6
of
Schedule 2 .
Company has no debts, liabilities, or obligations of any nature,
whether accrued, absolute, contingent, or otherwise, and whether
due or to become due, that are not set forth in Section 2.6
of
Schedule 2 .
2.7
TAX RETURNS AND AUDITS
Within
the times and in the manner prescribed by law, Company has
filed all federal, state, and local tax returns required by
law and has paid all taxes, assessments, and penalties due and
payable, including without limitation all sales taxes. There
are no present disputes or claims as to taxes of any nature
payable by Company. All tax returns and reports filed by
Company are true, correct and complete. All taxes that Company
is or was required to withhold, deduct or collect have been
withheld, deducted and collected and, to the extent required,
have been paid to the proper government agency or other
depository.
2.8
REAL PROPERTY
A
complete list of all real property owned by or leased to
Company is provided in Section 2.8 of
Schedule 2 to
this agreement. The zoning of each property described in
Section 2.8 of
Schedule 2 permits
the presently existing improvements and continuation of the
business presently being conducted on such property. All buildings
and other improvements located on such real property are in good
condition and repair, ordinary wear and tear excepted.
2.9
HAZARDOUS MATERIALS
To
the best knowledge and belief of Selling Parties, there are no
underground storage tanks located on the real property
described in Section 2.8 of
Schedule 2 in
which any hazardous material, as defined below, has been or is
begin stored, nor has there been any spill, disposal, discharge or
release of any hazardous material into, upon, from or over that
real property or into or upon ground or surface water on that real
property. As used in this paragraph, “hazardous
material” means any hazardous or toxic substance, material or
waste that is regulated by any federal authority or by any state or
local governmental authority where the substance, material or waste
is located.
2.10
ENVIRONMENTAL
Except
as disclosed in Section 2.10 of
Schedule 2 ,
(i) Company complies in all respects with all applicable
federal, state or local environmental, health and safety statutes
and regulations, (ii) Company is not the subject of any
pending judicial or administrative proceeding alleging the
violation of any federal, state or local environmental, health or
safety statute or regulation, (iii) Company is not the subject
of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any hazardous
or toxic waste, substance or constituent, or other substance into
the environment, (iv) Company has not filed any notice under
any federal or state law indicating past or present treatment,
storage or disposal of hazardous waste, or reporting a spill or
release of a hazardous or toxic waste, substance or constituent, or
other substance into the environment, nor does Company have or has
it had any problems relating to toxic or hazardous wastes, and
(v) Company does not have any contingent liability in
connection with any release of any hazardous or toxic waste,
substance or constituent, or other substance into the
environment.
2.11
INVENTORY
The
inventories of raw materials, work in progress, and finished
goods (collectively,
“Inventories” )
shown on Company’s balance sheet as of December 31, 2007,
included in the Financial Statements, consist of items that are
usable and salable in the ordinary course of business by Company.
The value of the Inventories has been determined on a first-in,
first-out basis consistent with prior years. Except for sales made
in the ordinary course of business since that date, all the
Inventories are the property of Company. No items are subject to
any security interest, except as set forth in
Schedule 2 .
2.12
OTHER TANGIBLE PERSONAL PROPERTY
The
books and records of Company contain a complete and accurate
description, and specify the location, of all motor vehicles,
machinery, equipment, furniture, fixtures, supplies, tools,
and all other tangible personal property owned by, in the
possession of, or used by Company in connection with its
business. The Acquired Assets constitute all tangible personal
property necessary for the conduct by Company of its business
as now conducted. No personal property used by Company in
connection with its business is held under any lease, security
agreement, conditional sales contract, or other title
retention or security arrangement, or is other than in the
possession and under the control of Company except as stated
in
Schedule 2 .
All such personal property is in good operating condition and
repair, ordinary wear and tear excepted.
2.13
INTELLECTUAL PROPERTY
Company
has not infringed, and is not now infringing, on any trade
name, trademark, service mark, copyright, patent, trade
secret, or other intellectual property right belonging to any
other person, firm, or Company. A schedule of all intellectual
property, including without limitation, trade names,
trademarks, service marks, copyrights, patents and trade
secrets and their registrations, if any, owned by Company or
in which it has any rights or licenses, together with a brief
description of each, is provided in Section 2.13
of
Schedule 2 (
“Company Intellectual Property”
).
Except as set forth in
Schedule 2 ,
Company is not a party to any license, agreement or arrangement,
whether as licensor, licensee or otherwise, with respect to any
intellectual property necessary for its business as now conducted
by it (including without limitation those listed in
Section 2.13 of
Schedule 2 ),
and that use does not, and will not, conflict with, infringe, on or
otherwise violate any rights of others. Company has the right and
authority to use Company Intellectual Property as currently used by
it, and that use does not, and will not, conflict with, infringe
on, or violate any intellectual property rights of others. Each
trade secret’s documentation is current, accurate, and
sufficient in detail and content to identify and explain it, and to
allow its full and proper use by Buyer without reliance on the
special knowledge or memory of others.
2.14
TITLE TO ASSETS
Company
has good and marketable title to all its assets and interests
in assets, whether real, personal, mixed, tangible, or
intangible, which constitute all the assets and interests in
assets that are used in the business of Company. All these
assets are free and clear of mortgages, liens, pledges,
charges, encumbrances, equities, claims, easements, rights of
way, covenants, conditions, or restrictions, except for
(i) the lien of current taxes not yet due and payable,
and (ii) possible minor matters that, in the aggregate,
are not substantial in amount and do not materially detract
from or interfere with the present or intended use of any of
these assets, nor materially impair business operations.
Company is in possession of all premises leased to it from
others. Company does not occupy any real property in violation
of any law, regulation, or decree.
2.15
CUSTOMERS AND SALES
Correct
and current lists of Company’s twenty (20) largest
customers together with summaries of the sales made to each
customer during 2006 and during 2007 are included in
Section 2.15 of
Schedule 2 .
Except as indicated in Section 2.15 of
Schedule 2 ,
no Selling Party has any information, nor is aware of any fact,
indicating that any of these customers intends to cease doing
business with Company or materially alter the amount of the
business that such customer is presently doing with
Company.
2.16
EMPLOYMENT AGREEMENTS
A
list of all employment agreements, severance agreements,
collective bargaining agreements, pension, bonus,
profit-sharing, stock option, or other agreements providing
for employee remuneration or benefits to which Company is a
party or is bound is included in Section 2.16 of
Schedule 2 .
All of these agreements are in full force and effect, and neither
Company nor any other party is in default under any of these
agreements. There is no pending nor, to Selling Parties’
knowledge, threatened labor dispute, strike, slowdown, employee
grievance process, or work stoppage affecting Company’s
business. There is no organizational activity or other labor
dispute against or affecting Company, nor is any application or
petition for an election of or for certification of a collective
bargaining agent pending. Company
does not provide or sponsor any retirement plan or retirement
benefits for any of its current or past employees.
2.17
INSURANCE POLICIES.
A
description of all insurance policies held by Company
concerning its business and properties, and the respective
principal amounts of each, is provided in Section 2.17
of
Schedule 2 .
Company has maintained and now maintains (i) insurance on all its
assets and business of a type customarily insured, covering
property damage and loss of income by fire or other casualty, and
(ii) adequate insurance protection against all liabilities, claims,
and risks against which it is customary to insure. Company is not
in default with respect to payment of premiums on any such policy.
No claim is pending under any such policy.
2.18
OTHER CONTRACTS
Except
for the agreements listed in Section 2.18 of
Schedule 2 ,
copies of which have been furnished or made available to Buyer,
Company is not a party to, nor is its property bound by, any
representative or agency agreement, any output or requirements
agreement, any agreement not entered into in the ordinary course of
business, any indenture, mortgage, deed of trust, lease, or any
agreement that is unusual in nature, duration, or amount
(including, without limitation, any agreement requiring the
performance by Company of any obligation for a period of time
extending beyond six months from the Closing Date or calling for
consideration of more than $25,000). There is no default or event
that with notice or lapse of time, or both, would constitute a
default by any party to any of these agreements. Company has
received no notice that any party to any of these agreements
intends to cancel or terminate any of these agreements or to
exercise or not exercise any options under any of these agreements.
No consent or approval of any other party is required in connection
with the assignment to and assumption by Buyer of the agreements
listed in Section 2.18 of
Schedule 2 .
2.19
COMPLIANCE WITH LAWS
Company
has complied with and is not in violation of applicable
federal, state, and local statutes, laws, and regulations
(including, without limitation, any applicable employment,
immigration, building, zoning or other law, ordinance, or
regulation) affecting or relating to its properties,
employees, or the operation of its business. Company has all
licenses and permits required to operate its business, and no
governmental or third party approval is required to assign and
transfer such licenses and permits to Buyer pursuant to this
agreement.
2.20
LITIGATION
There
is no suit, action, arbitration, or legal, administrative, or
other proceeding, or governmental investigation, pending or
threatened, to the best knowledge of Selling Parties, against
or affecting Company or its businesses, assets, or financial
condition, except as set forth in
Schedule 2 .
The litigation matters set forth in
Schedule 2 ,
if decided adversely to Company, will not result in a material
adverse change in the business, assets, or financial condition of
Company. Selling Parties have furnished or made available to Buyer
copies of all relevant court papers and other documents relating to
the matters set forth in
Schedule 2 .
Company is not in default with respect to any order, writ,
injunction, or decree of any federal, state, local, or foreign
court, department, agency, or instrumentality. Except as set forth
in
Schedule 2 ,
Company is not presently engaged in any legal action to recover
monies due to it or damages sustained by it.
2.21
AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION
The
consummation of the transactions contemplated by this
agreement will not result in or constitute any of the
following: (i) a default or an event that, with notice or
lapse of time or both, would be a default, breach, or
violation of the articles of incorporation or bylaws of
Company or any lease, license, promissory note, conditional
sales contract, commitment, indenture, mortgage, deed of
trust, or other agreement, instrument, or arrangement to which
any Shareholder or Company is a party or by which any of them
or the property of any of them is bound; or (ii) the
creation or imposition of any lien, charge, or encumbrance on
any of the properties of Company.
2.22
AUTHORITY AND CONSENTS
Selling
Parties have the right, power, legal capacity, and authority
to enter into, and perform their respective obligations under,
this agreement, and no approvals or consents of any persons
other than Selling Parties are necessary in connection with
it. The execution and delivery of this agreement by Company
has been duly authorized by all necessary corporate
action.
2.23
INTEREST IN CUSTOMERS, SUPPLIERS, AND
COMPETITORS
No
Shareholder, nor any officer, director, or employee of Company
nor any spouse or child of any of them, has any direct or
indirect interest in any competitor, supplier, or customer of
Company or in any person from whom or to whom Company leases
or licenses any real or personal property, or in any other
person with whom Company is doing business, except as stated
in
Schedule 2 .
2.24
IDENTIFICATION AND COMPENSATION
A
list of all officers, directors, employees, and agents of
Company stating the rates of compensation payable to them is
included in
Schedule 2 .
2.25
COMPANY DOCUMENTS
Selling
Parties have furnished to Buyer, for its examination, copies
of Company’s articles of incorporation and
bylaws.
2.26
ACQUISITION OF SHARES FOR OWN ACCOUNT
The
Parent Shares will be acquired for investment for
Company’s own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part
thereof, and Company has no present intention of selling,
granting any participation in, or otherwise distributing the
Parent Shares. Company does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any
third person, with respect to any of the Parent
Shares.
2.27
DISCLOSURE OF INFORMATION
Company
believes it has received all of the information it considers
necessary or appropriate for deciding whether to acquire the
Parent Shares. Company has had an opportunity to ask questions
and receive answers from Buyer regarding the terms and
conditions of the issuance of the Parent Shares and the
business, properties, prospects and financial condition of
Buyer. The foregoing, however, does not limit or modify the
representations and warranties of Buyer in Article 3 of
this agreement or the right of Company to rely
thereon.
2.28
INVESTMENT EXPERIENCE
Selling
Parties are investors in securities of companies in the
development stage and are able to fend for themselves, can
bear the economic risk of the ownership of the Parent Shares,
and have such knowledge and experience in financial or
business matters that they are capable of evaluating the
merits and risks of the acquisition of the Parent
Shares.
2.29
ACCREDITED INVESTOR
Shareholder
has a net worth in excess of $1,000,000.
2.30
RESTRICTED SECURITIES
Selling
Parties understand that the Parent Shares will be
characterized as “restricted securities” under the
federal securities laws inasmuch as they are being acquired in
a transaction not involving a public offering and that under
such laws and applicable regulations
the Parent Shares may be resold without registration under the
Securities Act of 1933 (the “Act”) only in certain
limited circumstances. Selling
Parties are familiar with SEC Rule 144, as presently in
effect, and understand the resale limitations imposed thereby and
by the Act.
2.31
FURTHER LIMITATIONS ON DISPOSITION
Without
in any way limiting the representations set forth above,
Selling Parties shall not make any disposition of all or any
portion of the Parent Shares unless and until:
(a)
There
is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is
made in accordance with such Registration Statement;
or
(b)
(i) Selling
Parties shall have notified Buyer of the proposed disposition
and shall have furnished Buyer with a detailed statement of
the circumstances surrounding the proposed disposition, and
(ii) if reasonably requested by Buyer, Selling Parties
shall have furnished Buyer with an opinion of counsel,
reasonably satisfactory to Buyer, that such disposition will
not require registration of such shares under the Act. Buyer
will not require opinions of counsel for transactions made
pursuant to Rule 144 except in unusual
circumstances.
(c)
Notwithstanding
subsections (a) and (b) above, no such registration
statement or opinion of counsel shall be necessary for a
transfer by Company to any Shareholder, if such Shareholder
agrees in writing to be subject to the terms of this agreement
to the same extent as if he were acquiring the Parent Shares
directly pursuant to this agreement.
2.32
LEGEND
The
Stock Certificate may bear the following legend:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT.”
2.33
NO ADVERTISEMENT
The
issuance of the Parent Shares has not been accomplished by the
publication of any advertisement.
2.34
FULL DISCLOSURE
None
of the representations and warranties made by Shareholder or
Company, or made in any certificate or memorandum furnished or
to be furnished by either of them, or on their behalf,
contains or will contain any untrue statement of a material
fact, or omits any material fact the omission of which would
be misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER AND
PARENT
Buyer
and Parent represent and warrant that:
3.1
ORGANIZATION, STANDING AND QUALIFICATION OF BUYER AND
PARENT
Buyer
and Parent are each corporations duly organized, validly
existing, and in good standing under the laws of the State of
Delaware and have all necessary powers to own their properties
and to operate their businesses as now owned and operated by
them. Buyer is duly qualified to do intrastate business and is
in good standing in California and in each other jurisdiction
in which the nature of Buyer’s business or of its
properties makes such qualification necessary.
3.2
SUBSIDIARY
Parent
is the sole stockholder of Buyer.
3.3
SEC FILINGS; FINANCIAL STATEMENTS
3.3(a)
Parent
has filed all forms, reports and documents required to be
filed by it with the Securities and Exchange Commission
(the
“SEC” )
from February 13, 2007 through the date of this agreement
(collectively, the
“Parent SEC Reports” ).
As of the respective dates they were filed (and if amended or
superseded by a filing before the date of this agreement, then on
the date of such filing), (i) the Parent SEC Reports complied
in all material respects with the requirements of the Act or the
Securities Exchange Act of 1934, as the case may be, and
(ii) none of the Parent SEC Reports contained any untrue
statement of a material fact or omitted or state a material fact
required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading.
3.3(b)
Each
of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Parent SEC Reports
was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes
thereto
or,
in the case of unaudited statements, as permitted by Form 10-Q
or 8-K promulgated by the SEC) and each presented fairly, in all
material respects, the consolidated financial position of Parent
and its consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated therein, except as
otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to have
a material adverse effect).
3.3(c)
Since
the date of the most recent filing with the SEC by Parent,
there has not occurred any event that (singly or together with
other such events) would reasonably be expected to have a
material adverse effect on Buyer or Parent.
3.4
TAX RETURNS AND AUDITS
Within
the times and in the manner prescribed by law, Buyer and
Parent each have filed all federal, state, and local tax
returns required by law and have paid all taxes, assessments,
and penalties due and payable, including without limitation
all sales taxes. There are no present disputes as to taxes of
any nature payable by Buyer or Parent.
3.5
COMPLIANCE WITH LAWS
Buyer
and Parent each have complied with and are not in violation of
applicable federal, state, or local statutes, laws, and
regulations (including, without limitation, any applicable
employment, immigration, building, zoning, or other law,
ordinance, or regulation) affecting or relating to their
properties, employees, or the operation of its
business.
3.6
LITIGATION
There
is no material suit, action, arbitration, or legal,
administrative, or other proceeding, or governmental
investigation, pending or threatened, to the best knowledge of
Buyer or Parent, against or affecting Buyer or Parent or
either of their businesses, assets, or financial condition.
Neither Buyer nor Parent is in default with respect
to
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