STOCK AND MEMBERSHIP INTEREST
PURCHASE AGREEMENT
Standard Tel Acquisitions,
LLC
Trans-West Network Solutions,
ProLogic Communications, Inc.,
Michael Promotico, Craig Scarborough, Keith Askew,
Herbert C. Rosen, Sam Standridge, and Peggy
Standridge
THIS STOCK AND
MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “
Agreement ”), dated as of this 17th day
of July, 2008, is by and among Standard Tel Acquisitions, LLC (the
“ Purchaser ”), and Trans-West Network
Solutions, Inc., d/b/a Standard Tel, a California corporation
(“ Trans-West ”), ProLogic
Communications, Inc., a Nevada corporation (“
ProLogic ”), Michael Promotico, Herbert C.
Rosen, Sam Standridge, and Peggy Standridge (each a “
Trans-West Shareholder ” and collectively
“ Trans-West Shareholders ”), and Keith
Askew and Craig Scarborough (each a “ ProLogic
Shareholder ” and collectively the “
ProLogic Shareholders ”).
A. The
Trans-West Shareholders are the only owners of all of the issued
and outstanding shares (the “ Shares ”)
of common stock of Trans-West;
B. The
ProLogic Shareholders are the registered and beneficial owners of
all of the issued and outstanding shares of common stock of
ProLogic;
C. On
June 1, 2006, Trans-West and ProLogic formed Standard Tel
Networks, LLC (the “ Company ”), entered
into an operating agreement for the operation of the Company (the
“ Operating Agreement ”) and contributed
all their assets to the Company, and since such time, the Company
business has been operated through the Company;
D. Trans-West
and ProLogic (collectively the “ Members
”) are the only owners of all of the issued and outstanding
membership interests (the “ Interests ”)
of the Company;
E. The
Company is in the business of selling, designing, analyzing and
implementing converged Voice over IP (VoIP), data and wireless
business communications systems and solutions for commercial
organizations of all types and sizes in the United States
(collectively, such business activities conducted by the Company
together with related activities and business conducted by the
Company shall be referred to herein as the “ Company
Business ”);
F. The
Trans-West Shareholders desire to sell to the Purchaser, and the
Purchaser desires to purchase from the Trans-West Shareholders, all
of the Shares, subject to the terms and conditions set forth in
this Agreement; and
G. ProLogic
desires to sell to Purchaser, and the Purchaser desires to purchase
from ProLogic, all of ProLogic’s Interest in the Company,
subject to the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE , in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
“Actual Adjusted EBITDA” has the meaning
set forth in Section 2.4 .
“Adjusted EBITDA” means the
Company’s earnings before interest, depreciation and
amortization for the twelve-month period ending May 31, 2008,
as historically calculated by the Company and consistent with the
Financial Statements, adjusted, however, as indicated in
Schedule 2.3(a) . The parties hereto agree that the
line item on Schedule 2.3(a) entitled
“pro-rated payroll addbacks” is to remain fixed at
$769,789, regardless of the Purchaser’s post-closing audit of
the twelve-month period ending May 31, 2008, but that all
other components of the addbacks listed on the schedule are subject
to confirmation and adjustment per the post-closing adjustment
process contemplated by Section 2.4 .
“
Affiliate ” of any Person means any person
directly or indirectly controlling, controlled by, or under common
control with, any such Person and any officer, director or
controlling person of such Person.
“
Agreement ” has the meaning set forth in the
preamble to this Agreement.
“
Ancillary Agreements ” means the Escrow
Agreement, the Restrictive Covenant Agreement to be signed by each
Seller Party, and the Release and each agreement, document,
instrument or certificate contemplated by this Agreement or to be
executed by the Purchaser or any Seller Party in connection with
the consummation of the transactions contemplated by this
Agreement, in each case only as applicable to the relevant party or
parties to such Ancillary Agreement, as indicated by the context in
which such term is used.
“Baseline Net Asset Value” means the
greater of (i) $500,000 or (ii) the amount by which the
Company’s assets exceed its liabilities as of May 31,
2008 as reported on the balance sheet included within the Interim
Financial Statements submitted on Schedule 4.20
; provided, however, that the inventory reflected in such balance
sheet shall be adjusted to reflect the actual quantity of the
Company’s inventory on May 31, 2008 with the value of
such actual inventory being determined using the Company’s
historical method of accounting as consistently applied.
“Brookside” means Brookside Technology
Holdings Corp., a Florida corporation.
“Cash
Component” has the meaning set forth in
Section 2.2(a) .
“Cash
Hold-back” has the meaning set forth in
Section 2.3(d) .
“ Cash
Shortfall ” has the meaning set forth in
Section 2.4(b) .
“
Claims Notice ” has the meaning set forth in
Section 7.2(a) .
“
Closing ” has the meaning set forth in
Section 3.1 .
“
Closing Date ” has the meaning set forth in
Section 3.1 .
“
Code ” means the Internal Revenue Code of 1986,
as amended.
“
Company ” has the meaning set forth in the
Recitals.
“
Contracts ” means all contracts, agreements
(including, without limitation, employment and restrictive covenant
agreements), leases (whether real or personal property),
commitments, instruments, guarantees, bids, orders and proposals
and all oral understandings.
“
Controlled Group ” has the meaning set forth in
Section 4.14(e) .
“
Copyright ” means all copyrights, copyrightable
works, mask work rights, rights in databases, data collections,
copyright registrations and applications for copyright registration
and equivalents and counterparts of the foregoing.
“
Domain Names ” means all Internet electronic
addresses, uniform resource locators and alphanumeric designations
associated therewith and all registrations for any of the
foregoing, including, without limitation, any and all rights to the
following names and domain names: www.standtel.com.
“ Due
Diligence Investigation ” has the meaning set forth
in Section 10.1(a) .
“ Due
Diligence Period ” has the meaning set forth in
Section 10.1(a) .
“
EBITDA Dispute Notice ” has the meaning set for
in Section 2.4(a)
“
Employee Plan ” or collectively, “
Employee Plans ” has the meaning set forth in
Section 4.14(a) .
“
Environment ” means soil, surface waters,
groundwater, land, stream sediments, surface or subsurface strata,
ambient air, indoor air or indoor air quality, including, without
limitation, any material or substance used in the physical
structure of any building or improvement.
“
Environmental Condition ” means any condition
of the Environment with respect to the Real Property, with respect
to any property previously owned, leased or operated by the Company
to the extent such condition of the Environment existed at the time
of such ownership, lease or operation, or with respect to any other
real property at which any Hazardous Material generated by the
operation of the business of the Company prior to the Closing Date
has been treated, stored or disposed of, which violates any
Environmental Law, or even though not violative of any
Environmental Law, nevertheless results, or could possibly result,
in any Hazardous Material Release, or Threat of Hazardous Material
Release, damage, loss, cost, expense, claim, demand, order or
liability.
“
Environmental Law ” means any federal, state or
local law, regulation, rule, ordinance, common law, policy or
guideline relating to the health, safety or protection of the
Environment, Hazardous Material Releases into the Environment,
workplace safety or injury to persons relating to Hazardous
Material Releases of into the Environment.
“
ERISA ” means the Employee Retirement Income
Security Act of 1974, as amended.
“
Escrow Agent ” has the meaning set forth in
Section 2.3(d) .
“
Escrow Agreement ” means that certain escrow
agreement, dated as of the Closing Date, by and among the
Purchaser, the Seller Parties and Escrow Agent in the form attached
hereto as Exhibit A .
“Estimated Adjusted EBITDA ” has
the meaning set forth in Section 2.3(a)
.
“Estimated Net Assets” has the meaning
set forth in Section 2.5 .
“
Expiration Date ” has the meaning set forth in
Section 7.3(a) .
" Excluded
Representations ” has the meaning set forth in
Section 7.3(a) .
“
Family Affiliate ” means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law, including adoptive relationships,
of any Person.
“
Financial Statements ” has the meaning set
forth in Section 4.20(a) .
“
GAAP ” means United Stated Generally Accepted
Accounting Principles.
“
Governmental Authority ” means any government
or political subdivision or regulatory authority, whether federal,
state, local or foreign, or any agency or instrumentality of any
such government or political subdivision or regulatory authority,
or any federal state, local or foreign court or
arbitrator.
“
Guarantee ” by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing or otherwise supporting in whole or in part the
payment of any Indebtedness or other obligation of any other Person
and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation
of such other Person (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such
Indebtedness or other obligations of the payment of such
Indebtedness or to protect such obligee against loss in respect of
such Indebtedness (in whole or in part); provided
,
however , that the term Guarantee shall not include
endorsements for deposit or collection in the Ordinary Course of
Business. The term “ Guarantee ” used as
a verb has a correlative meaning.
“
Hazardous Material ” means any pollutant, toxic
substance, including asbestos and asbestos-containing materials,
hazardous waste, hazardous material, hazardous substance,
contaminant, petroleum or petroleum-containing materials, radiation
and radioactive materials, leaded paints, toxic mold and other
harmful biological agents, and polychlorinated biphenyls as defined
in, the subject of, or which could give rise to, liability under
any Environmental Law.
“
Hazardous Materials Release ” means any
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, migrating, disposing or
dumping of a Hazardous Material into the Environment (including,
without limitation, the abandonment or discarding of barrels,
containers and other closed receptacles containing any Hazardous
Materials) and any condition that results in the exposure of a
Person to a Hazardous Material.
“
Indebtedness ” of any Person means: either
(a) any liability of any Person (i) for borrowed money
(including the current portion thereof), or (ii) under any
reimbursement obligation relating to a letter of credit,
bankers’ acceptance or note purchase facility, or
(iii) evidenced by a bond, note, debenture or similar
instrument (including a purchase money obligation), or
(iv) for the payment of money relating to leases that are
required to be classified as capitalized lease obligations in
accordance with GAAP, or (v) for all or any part of the
deferred purchase price of property or services (other than trade
payables), including any “earnout” or similar payments
or any non-compete payments, or (vi) under interest rate swap,
hedging or similar agreements or (b) any liability of others
described in the preceding clause (a) that such Person has
Guaranteed, that is recourse to such Person or any of its assets or
that is otherwise its legal liability or that is secured in whole
or in part by the assets of such Person. For purposes of this
Agreement, Indebtedness includes (A) any and all accrued
interest, success fees, prepayment premiums, make-whole premiums or
penalties and fees or expenses actually incurred (including
attorneys’ fees) associated with the prepayment of any
Indebtedness, (B) any and all amounts owed by the Company to
any of their Affiliates, including, without limitation, the Seller
Parties, and (C) any and all bonuses or incentive payments
owed by the Company to any of their employees.
“
Indemnified Party ” has the meaning set forth
in Section 7.2(a) .
“
Indemnifying Party ” has the meaning set forth
in Section 7.2(a) .
“
Indemnity Threshold ” has the meaning set forth
in Section 7.2(a) .
“Independent Accountant” means a
nationally or internationally recognized accounting firm (other
than a firm which has provided services to Purchaser or Seller
Parties) mutually agreed upon by Purchaser and Seller
Representative; provided, however, that should the parties be
unable to agree on such accounting firm within thirty days after
the determination of need for such Independent Accountant pursuant
to Section 2 hereof, such firm shall be determined in
Purchaser’s reasonable discretion (it being agreed that such
firm selected by Purchaser shall not have provided services to
Purchaser or Seller Parties).
“
Intellectual Property ” means Copyrights,
Domain Names, Patents, Software, Trademarks and Trade
Secrets.
“Interest” has the meaning set forth in
the Recitals.
“
Interim Financial Statements ” has the meaning
set forth in Section 4.20(a) .
“
Investment ” means any equity interest,
directly or indirectly, in any Person.
“
IRS ” means the Internal Revenue
Service.
“ To
the knowledge of the Seller Parties ” and similar
phrases mean that none of the Seller Parties, nor the directors,
shareholders, officers or managers of the Company, has any actual
knowledge, implied knowledge or belief that the statement made is
incorrect. For this purpose, “implied knowledge” means
all information available in the books, records and files of the
Company or Trans-West and all information that any of such Persons
should have known in the course of operating and managing the
business and affairs of the Company or Trans-West.
“
Law ” means any law, statute, code, ordinance,
regulation, interpretation, ruling or other requirement of any
Governmental Authority.
“
Lease ” has the meaning set forth in
Section .
“
Leased Real Property ” has the meaning set
forth in Section 4.7(b) .
“
Liability Claim ” has the meaning set forth in
Section 7.2(a) .
“
Liens ” has the meaning set forth in
Section 2.1(a) .
“
Litigation Conditions ” has the meaning set
forth in Section 7.2(b) .
“
Losses ” has the meaning set forth in
Section 7.1(a) .
" Material
Adverse Effect ” shall mean any change, event,
violation, inaccuracy, circumstance, or effect that is, or could
reasonably expected to be, materially adverse to the business,
assets (including intangible assets), liabilities, financial
condition, results of operations or business prospects of the
Company or Trans-West taken as whole or on the ability of the
Seller Parties to consummate timely the transactions contemplated
herein; provided, however, any change or circumstance resulting
primarily from generally applicable economic conditions shall not
constitute a Material Adverse Effect.
“
Material Customers ” has the meaning set forth
in Section 4.27(a) .
“
Material Suppliers ” has the meaning set forth
in Section 4.27(b) .
“ Net
Asset Value ” has the meaning set forth in
Section 2.5(a) .
“ Net
Asset Value Excess ” has the meaning set forth in
Section 2.5(c) .
“ Net
Asset Value Shortfall ” has the meaning set forth in
Section 2.5(b) .
“ Net
Asset Value Dispute Notice ” has the meaning set
forth in Section 2.5(a) .
“Operating Agreement” has the meaning set
forth in the Recitals.
“
Order ” means any order, judgment, injunction,
award, decree, ruling, charge or writ of any Governmental
Authority.
“
Ordinary Course of Business ” means the
ordinary course of business of the Company consistent with past
custom and practice (including with respect to quantity and
frequency).
“
Owned Real Property ” has the meaning set forth
in Section 4.7(a) .
“
Patents ” means all patents, industrial and
utility models, industrial designs, certificates of invention and
other indicia of invention ownership issued or granted by any
Governmental Authority, and all applications, provisionals,
reissues, re-examinations, extensions, divisions, continuations (in
whole or in part) and equivalents and counterparts of the
foregoing.
“
Permit ” means any environmental permit,
license, approval, consent or authorization issued by a federal,
state or local governmental authority.
“Permitted Leases and Notes” mean the
capital equipment and automobile leases and promissory notes set
forth in Schedule 10.2(g), in an amount not to exceed the
amounts set forth on such schedules.
“Per
Share Price” has the meaning set forth in
Section 2.2(b) .
“
Permitted Liens ” means Liens for current
Taxes, assessments, fees and other charges by Governmental
Authorities that are not due and payable as of the Closing
Date.
“
Person ” means any individual, sole
proprietorship, partnership, corporation, limited liability
company, unincorporated society or association, trust or other
entity.
“
Post-Closing Tax Period ” means any Tax period
beginning after the Closing Date.
“
Pre-Closing Tax Period ” means any Tax period
ending on or before the Closing Date.
“ProLogic” has the meaning set forth in
the preamble to this Agreement.
“ProLogic Shareholders” has the meaning
set forth in the preamble to this Agreement.
“
Promotico Employment Agreement ” has the
meaning set forth in Section 3.2(d) .
“
Purchase Price ” has the meaning set forth in
Section 2.2 .
“
Purchaser ” has the meaning set forth in the
preamble to this Agreement.
“
Purchaser’s Confidential Information ”
has the meaning set forth in Section 8.1(a)
.
“
Restrictive Covenant Agreement ” has the
meaning set forth in Section 2.2(a) .
“ Real
Property ” means any and all real property and
interests in real property of the Company, including the Owned Real
Property and the Leased Real Property, any real property leaseholds
and subleaseholds, purchase options, easements, licenses, rights to
access and rights of way and any other real property otherwise
owned, occupied or used by the Company.
“ Real
Property Leases ” has the meaning set forth in
Section 4.7(b) .
“
Returns ” means all Tax returns, statements,
reports and forms (including estimated Tax or information returns
and reports).
“
Release ” has the meaning set forth in
Section 3.2(e) .
“
Seller Parties ” means Trans-West, ProLogic,
the Trans-West Shareholders and the ProLogic
Shareholders.
“
Seller Representative ” means Michael
Promotico.
“
Shares ” has the meaning set forth in the
Recitals.
“
Software ” means all computer software and
code, including assemblers, applets, compilers, source code, object
code, development tools, design tools, user interfaces and data, in
any form or format, however fixed.
“
Stock Component ” has the meaning set forth in
Section 2.2(b) .
“Stock Holdback” has the meaning set
forth in Section 2.3(c) .
“
Stock Shortfall ” has the meaning set forth in
Section 2.4(b)(ii) .
“
Tangible Personal Property ” has the meaning
set forth in Section 4.7(c) .
“
Tax ” means (a) any net income,
alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, profits,
license, withholding on amounts paid to or by the Company, payroll,
employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, GST, custom, duty
or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest, penalty,
addition to tax or additional amount imposed by any Taxing
Authority, whether disputed or not, (b) any liability of the
Company for the payment of any amounts of any of the foregoing
types as a result of being a member of an affiliated, consolidated,
combined or unitary group or being a party to any agreement or
arrangement whereby liability of the Company for payment of such
amounts was determined or taken into account with reference to the
liability of any other Person and (c) any liability of the
Company for the payment of any amounts as a result of being a party
to any tax sharing agreements or arrangements (whether or not
written) binding on the Company or with respect to the payment of
any amounts of any of the foregoing types as a result of any
express or implied obligation to indemnify any other
Person.
“ Tax
Matter ” has the meaning set forth in
Section 6.3 .
“
Taxing Authority ” means any Governmental
Authority responsible for the administration or the imposition of
any Tax.
“
Threat of Hazardous Material Release ” means a
substantial likelihood of a Release that requires action to prevent
or mitigate damage or injury to health, safety or the Environment
that might result from such Release.
“
Trademarks ” means all trademarks, trade names,
fictitious business names, service marks, certification marks,
collective marks and other proprietary rights to words, names,
slogans, symbols, logos, devices, sounds, other things or
combination thereof used to identify, distinguish and indicate the
source or origin of goods or services, and all registrations,
renewals and applications for registration, equivalents and
counterparts of the foregoing, and the goodwill of the Company
associated with each of the foregoing.
“
Trade Secrets ” means all inventions,
discoveries, ideas, processes, designs, models, formulae, patterns,
compilations, programs, devices, methods, techniques, processes,
know-how, proprietary information, customer lists, software code,
technical information, data and databases, drawings and blueprints,
and all other information and materials that would constitute a
trade secret under applicable law.
“Trans-West” has the meaning set forth in
the preamble to this Agreement.
“Trans-West Shareholder” has the meaning
set forth in the preamble to this Agreement.
ARTICLE II PURCHASE AND
SALE
(a)
Purchase and Sale of Shares . Subject to the terms
and conditions of this Agreement, at the Closing, the Purchaser
shall purchase from the Trans-West Shareholders and the Trans-West
Shareholders shall sell, transfer, assign, convey and deliver to
the Purchaser, all of the Shares, free and clear of any mortgage,
pledge, hypothecation, rights of others, claim, security interest,
encumbrance, title defect, title retention agreement, voting trust
agreement, interest, option, lien, charge or similar restrictions
or limitations, including any restriction on the right to vote,
sell or otherwise dispose of the Shares (collectively, the “
Liens ”).
(b)
Purchase and Sale of Interest . Subject to the terms
and conditions of this Agreement, at the Closing, the Purchaser
shall purchase from ProLogic and the ProLogic shall sell, transfer,
assign, convey and deliver to the Purchaser, all of
ProLogic’s Interests in the Company, free and clear of all
Liens.
2.2
Purchase Price . In full consideration for the transfer
of the Shares and the Interests, and the Seller Parties entering
into the form of restrictive covenant agreement attached as
Exhibit B hereto (the “Restrictive
Covenant Agreement ”), the Purchaser shall pay or
cause to be paid to the Trans-West Shareholders and ProLogic,
subject to the adjustments and payable in the manner set forth
below, and less any and all outstanding Indebtedness (other than
the Permitted Leases and Notes) of the Company as of the Closing
Date, the following (the “ Purchase Price
”):
(a) a
payment of immediately available funds in an amount equal to three
times the Actual Adjusted EBITDA minus Three Hundred Thousand
Dollars ($300,000.00) (the “ Cash Component
”); and
(b) such
number of shares of the common stock of Brookside as shall be
determined by dividing the Actual Adjusted EBITDA by the weighted
average closing stock price of Brookside (“ Per Share
Price ”) during the thirty (30) days prior to
Closing Date (the “ Stock Component
”).
2.3 Closing
Payment . An estimate of the Purchase Price shall be paid
at Closing as follows:
(a) No
later than five days before Closing, the Company shall prepare and
deliver to Purchaser a schedule setting forth the calculation of
the Adjusted EBITDA for the Company for the twelve-month period
ending May 31, 2008 (the “Estimated Adjusted
EBITDA”).
(b) At
Closing, Purchaser shall pay to the Seller Parties an amount equal
to three times the Estimated Adjusted EBITDA minus Eight Hundred
Thousand and No/Dollars ($800,000.00).
(c) At
Closing, Purchaser shall pay the Seller Parties one-half of such
number of shares of Brookside as shall be determined by dividing
the Estimated Adjusted EBITDA by the Per Share Price.
(d) At
Closing, the Purchaser shall deposit with Shumaker, Loop &
Kendrick, LLP (the “ Escrow Agent ”)
(i) Five Hundred Thousand Dollars ($500,000.00) (the “
Cash
Holdback ”) and (ii) one-half of such number
of shares of Brookside as shall be determined by dividing the
Estimated Adjusted EBITDA by the Per Share Price (
“Stock Holdback” ), which shall be held,
administered and distributed by Escrow Agent in accordance with the
terms of the Escrow Agreement and Sections 2.4
and 2.5 and Article VII of this
Agreement.
(a) Within
ninety (90) days after the Closing Date, Purchaser shall
deliver to Seller Representative a schedule setting forth its
calculation of the Adjusted EBITDA for the Company for the twelve
month period ending on May 31, 2008 (the “ Actual
Adjusted EBITDA ”). The Seller Representative shall
have a thirty (30) day period to review the Purchaser’s
calculation of the Actual Adjusted EBITDA. If Seller Representative
disputes Purchaser’s calculation of the Actual Adjusted
EBITDA, Seller Representative shall deliver a written notice
(“ EBITDA Dispute Notice ”) to Purchaser
within thirty (30) days of delivery of Purchaser’s
calculation. Seller Representative shall set forth in detail in the
EBITDA Dispute Notice the basis for its disagreement with the
Purchaser’s calculation of the Actual Adjusted EBITDA. If
Seller Representative fails to deliver the EBITDA Dispute Notice
within the allotted time period, Seller Representative shall be
deemed to have agreed to the given calculation delivered by
Purchaser, which calculation shall be final, conclusive and binding
upon all of the parties hereto. If Seller Representative disputes
the calculation of the Actual Adjusted EBITDA within the allotted
time period, the parties in good faith will attempt to jointly
resolve any dispute during the thirty day period following the
delivery of the EBITDA Dispute Notice. If Purchaser and Seller
Representative can resolve their dispute and agree upon the
calculation of the Actual Adjusted EBITDA, they shall memorialize
their agreement in writing and such mutually agreed upon figure
shall be final, conclusive and binding upon all of the parties. If
Purchaser and Seller Representative cannot resolve the dispute to
their mutual satisfaction, Purchaser and Seller Representative
shall engage the Independent Accountant to determine the
appropriate amount of Actual Adjusted EBITDA consistent with this
Agreement. The fees and expenses of the Independent Accountant
shall be shared equally by Purchaser, on the one hand, and Seller
Parties, on the other hand, with each being severally, but not
jointly, responsible for one half of such fees and expenses. Each
of Purchaser and Seller Parties shall provide the Independent
Accountant such of their respective work papers as may be requested
by the Independent Accountant. The Independent Accountant shall be
requested to complete its engagement within forty-five
(45) days of being retained by Purchaser and Seller Parties.
The determination of the Independent Accountant shall be final,
binding and conclusive upon the parties.
(b) Upon
the final, conclusive and binding determination of the Actual
Adjusted EBITDA in accordance with
Section 2.4(b) , if such amount is less than the
Estimated Adjusted EBITDA:
(i) The
difference between the Cash Component determined using the
Estimated Adjusted EBITDA and the Cash Component determined using
the Actual Adjusted EBITDA (the “ Cash
Shortfall ”) shall be deducted from the Cash
Holdback. If, after such deduction, any cash remains, such
remainder shall promptly be paid to Seller Parties, subject to any
further adjustments as contemplated by
Section 2.5 below. If the Cash Shortfall exceeds
the Cash Holdback, Seller Parties shall promptly (and in any event
within five (5) days) jointly and severally pay the amount of
such excess to Purchaser in cash.
(ii) The
difference between the Stock Component determined using the
Estimated Adjusted EBITDA and the Stock Component determined using
the Actual Adjusted EBITDA shall hereinafter be referred to as the
(“ Stock Shortfall ”). One-half of the
Stock Shortfall shall be deducted from the Stock Holdback and
Seller Parties shall promptly (and in any event within five
(5) days) return to Purchaser shares of common stock of
Brookside paid at Closing in an amount equal to the other half of
the Stock Shortfall. Subject to the adjustment contemplated by
Sections 2.5 below and Purchaser’s rights
of set-off, pursuant to Section 7.3(b) , any
remaining shares in the Stock Holdback, as adjusted pursuant to
this Section, shall be paid to Seller Parties on the first
anniversary of the Closing Date.
(c) Upon
the final, conclusive and binding determination of the Actual
Adjusted EBITDA in accordance with Section 2.4 ,
if such amount is more than the Estimated Adjusted
EBITDA:
(i) Purchaser
shall promptly pay Seller Parties, in immediately available funds,
an amount equal to the difference between the Cash Component
determined using the Estimated Adjusted EBITDA and the Cash
Component determined using the Actual Adjusted EBITDA;
and
(ii) Purchaser
shall promptly cause Brookside to issue to Seller Parties, such
number of shares of common stock of Brookside equal to (A) the
amount equal to the difference between the Stock Component
determined using the Estimated Adjusted EBITDA and the Stock
Component determined using the Actual Adjusted EBITDA divided by
(B) the Per Share Price.
2.5 Net Assets
Purchase Price Adjustment.
(a) Within
ninety (90) days after the Closing Date, Purchaser shall
deliver to Seller Representative a schedule setting forth its
calculation of the Net Asset Value. “Net Asset
Value” means the amount by which the Company’s
assets exceed the Company’s liabilities on the Closing Date
determined on the basis of the Company’s historical method of
accounting as consistently applied, as reflected in the calculation
of the Baseline Net Asset Value. The parties acknowledge and agree
that the Company’s inventory will be restated at the Closing
by a physical inventory, and the results of such inventory will be
reflected in the Net Asset Value at Closing. The Seller
Representative shall have a thirty (30) day period to review
the Purchaser’s calculation of the Net Asset Value. If Seller
Representative disputes Purchaser’s calculation of the Net
Asset Value, Seller Representative shall deliver a written notice
(“Net Asset Value Dispute Notice”) to Purchaser within
thirty (30) days of delivery of Purchaser’s calculation.
Seller Representative shall set forth in detail in the Net Asset
Value Dispute Notice the basis for its disagreement with the
Purchaser’s calculation of the Net Asset Value. If Seller
Representative fails to deliver the Net Asset Value Dispute Notice
within the allotted time period, Seller Representative shall be
deemed to have agreed to the given calculation delivered by
Purchaser, which calculation shall be final, conclusive and binding
upon the parties. If Seller Representative disputes the calculation
of the Net Asset Value within the allotted time period, the parties
in good faith will attempt to jointly resolve any dispute during
the thirty day period following the delivery of the Net Asset Value
Dispute Notice. If Purchaser and Seller Representative can resolve
their dispute and agree upon the calculation of the Net Asset
Value, they shall memorialize their agreement in writing and such
mutually agreed upon figure shall be final, conclusive and binding
upon all of the parties. If Purchaser and Seller Representative
cannot resolve the dispute to their mutual satisfaction, Purchaser
and Seller Representative shall engage the Independent Accountant
to determine the appropriate amount of Net
Asset Value
consistent with this Agreement. The fees and expenses of the
Independent Accountant shall be shared equally by Purchaser, on the
one hand, and Seller Parties, on the other, with each being
severally, but not jointly, responsible for one half of such fees
and expenses. Each of Purchaser and Seller Parties shall provide
the Independent Accountant such of their respective work papers as
may be requested by the Independent Accountant. The Independent
Accountant shall be requested to complete its engagement within
forty-five (45) days of being retained by Purchaser and Seller
Representative. The determination of the Independent Accountant
shall be final, binding and conclusive upon the parties.
(b) Upon
the final, conclusive and binding determination of the Net Asset
Value in accordance with Section 2.5 , if such
amount is less than the Baseline Net Asset Value (the amount of
such shortfall being hereinafter referred to as the “
Net Asset Value Shortfall ”):
(i) Seventy-five
percent (75%) of the Net Asset Value Shortfall shall be deducted
from the Cash Holdback and such amount shall promptly be released
from escrow and returned to Purchaser. If, after such deduction,
any cash remains, such remainder shall promptly be paid to the
Seller Parties, subject to any further adjustments as contemplated
by Section 2.4 above. If the Cash Shortfall
exceeds the Cash Holdback, Seller Parties shall promptly (and in
any event within five (5) days) jointly and severally pay the
amount of such excess to Purchaser in cash.
(ii) An
amount of shares of Brookside common stock in the amount of
twenty-five percent (25%) of the Net Asset Value Shortfall divided
by the Per Share Price, shall be deducted from the Stock Holdback
and such shares shall promptly be released from escrow and returned
to Purchaser for cancellation. Subject to the adjustment
contemplated by Sections 2.4 above and
Purchaser’s rights of set-off, pursuant to
Article VII , the remaining Stock Holdback, as
adjusted pursuant to this Section, shall be paid to Seller Parties
on the first anniversary of the Closing Date.
(c) Upon
the final, conclusive and binding determination of the Net Asset
Value in accordance with Section 2.5 , if such
amount is more than the Baseline Net Asset Value (the amount of
such excess being hereinafter referred to as the “ Net
Asset Value Excess ”):
(i) Purchaser
shall promptly pay to Seller Parties, in immediately available
funds, cash in the amount of seventy five percent (75%) of the Net
Asset Value Excess; and
(ii) Purchaser
shall promptly cause Brookside to issue to Seller Parties, such
number of shares of common stock of Brookside equal to twenty five
percent (25%) of the Net Asset Value Excess divided by the Per
Share Price.
2.6
Allocation of Purchase Price . The Purchase Price, as
adjusted, shall be allocated and paid to the Seller Parties in the
percentages set forth in Schedule 2.6 . The
portion of the Purchase Price allocated to ProLogic’s
Interests in the Company shall be re-allocated among the underlying
assets of the Company for purposes of Sections 741 and 751,
754 and 755 of the Code as follows: (i) the fair market value
of those assets included in the Interim Financial Statements of the
Company shall be deemed to be equal to the values shown on such
statements (adjusted as appropriate to the Closing Date); and
(ii) the fair market value of the good will and going concern
value of the Company shall be deemed to equal any residual amount
of the Purchase Price so allocated.
ARTICLE III CLOSING AND
DELIVERIES
3.1
Closing . Unless this Agreement is terminated prior to
the Closing Date (as defined below), the closing of the
transactions contemplated hereby (the “ Closing
” ) shall take place on or before August 31, 2008,
provided that the conditions precedent to Closing which have not
been waived by Purchaser or Seller Parties have been fulfilled (the
“ Closing Date ” ), at the offices of the
Purchaser, unless another date or place is agreed to in writing by
the parties hereto.
3.2
Deliveries by the Seller Parties . At the Closing, the
Seller Parties shall deliver, or cause to be delivered, to the
Purchaser the following items:
(a) a
receipt evidencing receipt by the Seller Parties of the Cash
Component of the Purchase Price;
(b) a
copy of the Escrow Agreement, duly executed by each Seller
Party;
(c) a
copy of the Restrictive Covenant Agreement, duly executed by each
Seller Party;
(d) a
copy of an employment agreement, by and between Michael Promotico
and the Company, duly executed by Michael Promotico, in the form
mutually acceptable to Michael Promotico and the Purchaser (the
“ Promotico Employment Agreement
”);
(e) a
copy of a release, in the form attached hereto as
Exhibit C , duly executed by each Seller Party
(the “ Release ”);
(f) a
legal opinion of counsel to the Seller Parties in form attached
hereto as Exhibit “D” , (the “
Opinion ”) ;
(g)
(i) a stock certificate or certificates representing all of
the Shares with duly executed stock power(s) attached in proper
form for transfer to the Purchaser; (ii) a certificate or
certificates representing all of the Interests with duly executed
power(s) attached in proper form for transfer to the Purchaser; and
(iii) any other documents that are necessary to transfer to
the Purchaser good and valid title to the Shares and Interests,
with any necessary transfer tax stamps affixed or accompanied by
evidence that all transfer Taxes have been paid;
(h) a
reasonably current good standing certificate for:
(i) the
Company issued by the Secretary of State of the State of California
and by the secretary of state in each state in which the Company is
qualified to do business as a foreign corporation; and
(ii) Trans-West
issued by the Secretary of State of the State of California and by
the secretary of state in each state in which Trans-West is
qualified to do business as a foreign corporation.
(i) copies
of the Articles of Organization of the Company, certified by the
Secretary of State of the State of California, and copies of the
Operating Agreement of the Company, certified by an officer of the
Company;
(j) copies
of the Articles of Incorporation of Trans-West, certified by the
Secretary of State of the State of California, and copies of their
Bylaws of the, certified by an officer of Trans-West;
(k) the
original corporate record books and member record books of the
Company and Trans-West, respectively;
(l) a
certificate of an officer of the Company and Trans-West, dated as
of the Closing Date, setting forth in sufficient detail acceptable
to the Purchaser the aggregate amount of each of their Indebtedness
as of the Closing Date;
(m) appropriate
termination statements under the Uniform Commercial Code and other
instruments as may be requested by the Purchaser to extinguish all
Indebtedness of the Company and Trans-West and all security
interests related thereto, to the extent directed by the
Purchaser;
(n) all
of the consents listed on Schedule 4.6
;
(o) written
resignations of each director and officer of the Company and
Trans-West;
(p) copies
of resolutions of the Board of Directors of ProLogic approving the
execution and delivery of this Agreement and the Ancillary
Agreements, and the consummation of the transactions contemplated
hereby and thereby, certified by an officer of ProLogic;
and
(q) such
other documents and instruments as the Purchaser shall reasonably
request to consummate the transactions contemplated by this
Agreement.
3.3
Deliveries by the Purchaser . At Closing, the Purchaser
shall deliver, or cause to be delivered, to the Seller Parties the
following items:
(a) the
Purchase Price payable as set forth in
Section 2.2 ;
(b) a
copy of the Escrow Agreement, duly executed by the
Purchaser;
(c) a
copy of the Promotico Employment Agreement, duly executed by the
Company; and
(d) such
other documents and instruments as the Seller Parties shall
reasonably request to consummate the transactions contemplated by
this Agreement.
ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF THE SELLER PARTIES
The Seller Parties
represent and warrant to the Purchaser as follows:
4.1
Existence and Good Standing . Trans-West and the Company
are companies duly incorporated, validly existing and in good
standing under the laws of the State of California and are duly
authorized, qualified or licensed to do business as foreign
corporations in each of the jurisdictions set forth on
Schedule 4.1 . Neither Trans-West nor the
Company is qualified to do business in any jurisdiction other than
as set forth on Schedule 4.1 and the nature of
the business conducted by Trans-West and the Company, nor the
property owned, licensed or operated by Trans-West and the Company,
requires them to qualify to do business as a foreign corporation in
any other jurisdiction.
4.2
Power . Each of Trans-West and the Company has the
requisite corporate or other power and authority to (a) own or
lease and to operate its respective properties and assets as and
where currently owned, operated and leased and (b) carry on
its respective business as currently conducted.
4.3
Validity and Enforceability . The Seller Parties have
the requisite corporate or other power, authority and capacity to
execute, deliver and perform the Seller Parties’ obligations
under this Agreement and the Ancillary Agreements. This Agreement
and each of the Ancillary Agreements have been duly authorized,
executed and delivered by the Seller Parties and, assuming due
authorization, execution and delivery by the Purchaser, represent
the legal, valid and binding obligations of the Seller Parties,
enforceable against the Seller Parties in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, fraudulent conveyance and
other similar Laws and principles of equity affecting
creditors’ rights and remedies generally. No further action
on the part of the Seller Parties is or will be required in
connection with the transactions contemplated by this Agreement or
the Ancillary Agreements.
(a) The
authorized capital stock of Trans-West consists of 1,000,000 shares
of common stock, of which 120,000 shares are issued, and all of
which have been duly authorized and validly issued and are fully
paid and non-assessable. The Shares represent the only issued and
outstanding shares of the capital stock of Trans-West. Except as
set forth on Schedule 4.4(a) , there are no
outstanding options, warrants, rights, calls, subscriptions, claims
of any character, agreements, obligations, convertible or
exchangeable securities, or other commitments, contingent or
otherwise, of any kind obligating Trans-West to issue, directly or
indirectly, any additional shares of its capital stock or other
equity securities. Except as set forth on
Schedule 4.4(a) there are no agreements,
commitments or contracts relating to the issuance, sale, transfer
or voting of any equity securities or other securities of
Trans-West. Schedule 4.4(a) lists all of the
Subsidiaries of Trans-West and except as listed on
Schedule 4.4(a) , Trans-West has no Subsidiaries
or other Investments.
(b) The
Interests constitute all of the outstanding membership interests of
the Company, all of which have been duly authorized and validly
issued and are fully paid and non-
assessable, and
there no other equity interests in the Company. Trans-West owns 80%
of the Interest, free and clear of all Liens, and ProLogic owns the
other 20% of the Interest, free and clear of all Liens. Except as
set forth on Schedule 4.4(b) , there are no
outstanding options, warrants, rights, calls, subscriptions, claims
of any character, agreements, obligations, convertible or
exchangeable securities, or other commitments, contingent or
otherwise, of any kind obligating the Company to issue, directly or
indirectly, any additional membership interest or other equity
securities. Except as set forth on
Schedule 4.4(b) there are no agreements,
commitments or contracts relating to the issuance, sale, transfer
or voting of any equity securities or other securities of the
Company. Except as listed on Schedule 4.4(b) ,
the Company has no Subsidiaries or other Investments.
4.5 No
Conflict . Neither the execution of this Agreement or the
Ancillary Agreements to which the Seller Parties are a party nor
the performance by the Seller Parties of their obligations
hereunder or thereunder will (a) violate or conflict with the
Articles of Incorporation or Bylaws of Trans-West or, to the
knowledge of the Seller Parties, any Law or Order, (b) violate
or conflict with the Articles of Organization or Operating
Agreement of the Company or any Law or Order (c) violate,
conflict with or result in a breach or termination of, or otherwise
give any Person additional rights or compensation under, or the
right to terminate or accelerate, or constitute (with notice or
lapse of time, or both) a default under the terms of any Contract
to which Trans-West or the Company are a party or by which any of
the assets or the properties of Trans-West or the Company are bound
or (c) result in the creation or imposition of any Lien with
respect to any of the assets or properties of Trans-West or the
Company.
4.6
Consents . Except as set forth on
Schedule 4.6 , no consent, approval or
authorization of any Person, including any Governmental Authority,
is required to be made or obtained by any of the Seller Parties or
the Company in connection with the execution and delivery by the
Seller Parties of this Agreement or the Ancillary Agreements or the
consummation of the transactions contemplated hereby or
thereby.
(i) ProLogic
has good and marketable title to its Interests, free and clear of
all Liens. Upon the consummation of the transactions contemplated
by this Agreement, the Purchaser will acquire good and valid title
to ProLogic’s Interest, free and clear of all
Liens.
(ii) Trans-West
Shareholders have good and marketable title to the Shares, free and
clear of all Liens. Upon the consummation of the transactions
contemplated by this Agreement, the Purchaser will acquire good and
valid title to the Shares free and clear of all Liens.
(iii) Other
than the Permitted Liens, the Company has (i) good and
marketable indefeasible fee simple title to the real property,
together with all of the improvements thereon, to those properties
set forth on Schedule 4.7(a)(i) (the “
Owned Real Property ”) and (ii) good and
marketable title to, valid and enforceable leasehold interests in,
or a valid and enforceable license to, all of its other tangible
assets and properties (including, without limitation, the Leased
Real Property).
(b)
Real Property Leases .
Schedule 4.7(b) sets forth a true and complete
description of all real property leased, licensed to or otherwise
used or occupied (but not owned) by Trans-West or the Company
(collectively, the “ Leased Real Property
”) including the address thereof, the annual fixed rental,
the expiration of the term, any extension options and any security
deposits. A true and correct copy of each such lease, license or
occupancy agreement, and any amendments thereto, with respect to
the Leased Real Property (collectively, the “ Real
Property Leases ”) has been delivered to the
Purchaser, and no changes have been made to any Real Property
Leases since the date of delivery. All of the Leased Real Property
is used or occupied by the Company or Trans-West pursuant to a Real
Property Lease. Each Real Property Lease is in full force and
effect and is valid, binding and enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, fraudulent conveyance and
other similar Laws and principles of equity affecting
creditors’ rights and remedies generally. There are no
existing defaults by Trans-West or the Company or, to the knowledge
of the Seller Parties, the lessor under any of the Real Property
Leases, and, to the knowledge of the Seller Parties, no event has
occurred which (with notice, lapse of time or both) could
reasonably be expected to constitute a breach or default under any
of the Real Property Leases by any party or give any party the
right to terminate, accelerate or modify any Real Property Lease.
Except as set forth on Schedule 4.7(b) ,
(i) no consent is required from the lessor under any of the
Real Property Leases in order to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements and
(ii) no Affiliate or Family Affiliate of Trans-West, the
Company or any Seller Parties is the owner or lessor of any Leased
Real Property.
(c)
Tangible Personal Property .
Schedule 4.7(c) sets forth a true and complete
list, by category, of all equipment, machinery and other similar
tangible personal property, with an individual original cost of
$5,000 or more, that is owned or leased by the Company (the “
Tangible Personal Property ”).
(d)
Absence of Violations . Except as set forth on
Schedule 4.7(d) :
(i) None
of the Real Property, nor the leasing, occupancy or use of the Real
Property, is in violation of any Law, including, without
limitation, any building, zoning, environmental or other ordinance,
code, rule or regulation, and there are no work orders, notices of
deficiency or notices of violation issued by any Governmental
Authority affecting the Real Property.
(ii) The
condition and use of the Real Property conforms to each applicable
certificate of occupancy and all other permits required to be
issued in connection with the Real Property. Trans-West and the
Company have obtained all permits necessary for the operation of
the business of Trans-West and the Company at the Real Property,
and each is zoned to permit the current use of the Real
Property.
(iii) All
utilities and services enter the Real Property from adjoining
public streets.
(e)
Reassessments . To the knowledge of Seller Parties,
there is not now pending nor contemplated any reassessment of any
parcel included in the Real Property that could result in a change
in the rent, additional rent or other sums and charges payable by
Trans-West or the Company under any agreement relating to the Real
Property.
(f)
No Condemnation . There is no pending condemnation,
expropriation, eminent domain or similar proceeding affecting all
or any portion of the Real Property. The Seller Parties have not
received any written notice or oral notice of any such proceeding,
and the Seller Parties have no knowledge that any such proceeding
is contemplated.
(g)
Condition of Property . There are no material defects
in, mechanical failure of, or damage to, the Real Property. The
mechanical, electrical and HVAC systems serving the Real Property
are in good working condition.
4.8
Necessary Property and Condition of Property . The
assets and properties owned, leased or licensed by the Company are
in good condition and repair (subject to normal wear and tear
consistent with the age of the assets and properties) and
constitute all of the properties necessary to conduct the Company
Business as it is currently conducted.
4.9 Company
Business . On June 1, 2006, Trans-West and ProLogic
formed the Company, entered into the Operating Agreement and
contributed all of their assets and operations to the Company.
Except as set forth on Schedule 4.9 , since such
time, all business of Trans-West and ProLogic, including the
Company Business, has been conducted solely by the Company. Except
as set forth on Schedule 4.9 , neither
Trans-West nor ProLogic have any assets or operations, other than
their respective Interests in the Company. Except as set forth on
Schedule 4.9 , Trans-West has no liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, whether known or unknown, regardless
of when asserted), obligations, Indebtedness, Contracts or
employees and is not a party to any agreements or Contracts other
than the Operating Agreement, all of which will be terminated prior
to Closing.
4.10
Litigation . Except as set forth on
Schedule 4.10 , there is no instance in which
Trans-West or the Company is or has been within the three-year
period prior to the Closing Date (a) subject to any
unsatisfied Order or (b) a party or, to the knowledge of the
Seller Parties, is threatened to be made a party to any complaint,
action, suit, proceeding, hearing or investigation of any Person or
Governmental Authority. No event has occurred or circumstances
exist that could give rise to or serve as a basis for the
commencement of any complaint, action, suit, proceeding, hearing or
investigation of any Person or Governmental Authority. There are no
judicial or administrative actions, proceedings or investigations
pending or, to the knowledge of any of the Seller Parties,
threatened that question the validity of this Agreement, the
Ancillary Agreements or any of the transactions contemplated hereby
or thereby. Without limiting the generality of the foregoing, there
are no pending or, to the knowledge of any of the Seller Parties,
threatened actions by any Governmental Authority to modify the
zoning classification of, or to condemn or take by power of eminent
domain (or purchase in lieu thereof), or to classify as a landmark,
or otherwise to take or restrict in any way the right to use,
develop or alter, all or any part of the Real Property.
4.11
Compliance with Laws . To the knowledge of the Seller
Parties, Trans-West and the Company are now, and have been within
the past three years, in compliance with all Laws and Orders,
including, without limitation, those respecting (a) labor and
employment Laws, standards and practices (including, without
limitation, all payroll and payroll withholding practices
associated therewith), (b) zoning, and (c) Intellectual
Property. None of the Seller Parties have knowledge of any proposed
Law or Order that would be applicable to Trans-West or the Company
and that would
reasonably be
expected to adversely affect any assets, properties, liabilities,
operations or prospects of Trans-West or the Company.
4.12
Conduct of Business . Except as set forth on
Schedule 4.12 , since March 31, 2008, the
business and operations of the Company have been conducted in the
Ordinary Course of Business and there has not been any adverse
change in the operation of the business or the performance or
financial condition of the Company. Without limiting the generality
of the foregoing, since December 31, 2007, and except as set
forth on Schedule 4.12 , the Company has
not:
(a) borrowed
any amount or incurred or become subject to any liability except
(i) current liabilities incurred in the Ordinary Course of
Business, (ii) liabilities under Contracts entered into in the
Ordinary Course of Business and (iii) borrowings under lines
of credit existing on such date;
(b) sold,
assigned, licensed, leased or transferred (including, without
limitation, transfers with employees, Affiliates, the Seller
Parties or their respective Family Affiliates) any assets or
properties except in the Ordinary Course of Business, or cancelled
any debts or claims;
(c) waived
any rights of value or suffered any losses in the Ordinary Course
of Business;
(d) declared
or paid any dividends or other distributions with respect to any
shares of its capital stock or redeemed or purchased, directly or
indirectly, any shares of its capital stock or any
options;
(e) taken
any other action or entered into any other transaction (including
any transactions with employees, Affiliates, shareholders or their
respective Family Affiliates) other than in the Ordinary Course of
Business or the transactions contemplated by this Agreement and the
Ancillary Agreements;
(f)
(i) increased the salary, wages or other compensation rates of
any officer, employee, director or consultant except in the
Ordinary Course of Business, (ii) made or granted any increase
in any Employee Plan, or amended or terminated any existing
Employee Plan, or adopted any new Employee Plan or (iii) made
any commitment or incurred any liability to any labor
organization;
(g) made
any capital expenditures or commitments therefor;
(h) made
any material change in accounting or Tax principles, practices or
policies from those utilized in the preparation of the Financial
Statements, except as may be required under applicable
Law;
(i) made
any write-off or write-down of or made any determination to
write-off or write-down any of its assets and
properties;
(j) made
any change in its general pricing practices or policies or any
change in its credit or allowance practices or policies;
(k) entered
into any amendment, modification, termination (partial or complete)
or granted any waiver under or given any consent with respect to
any Contract that is required to be disclosed in the schedules to
this Agreement;
(l) commenced
or terminated any line of business; or
(m) received
written notice from any customer or supplier that such customer or
supplier has ceased, may cease or will cease to do business with
it.
(a)
Union and Employee Contracts . Except as set forth on
Schedule 4.13(a) , (i) neither the Company
nor Trans-West is a party to, bound by or currently negotiating any
written or oral employment, services, fee, union, collective
bargaining, agency, management, independent contractor, consulting
or similar type of agreements, contracts or arrangements,
including, without limitation, any change of control, termination
or severance, employee compensation or benefits, bonus, retention
bonus, profit-sharing, stock or stock option, unusual or special
employment compensation arrangements, (ii) neither the Company
nor Trans-West have agreed to recognize any union or other
collective bargaining unit and (iii) no union or collective
bargaining unit has been certified as representing the employees of
Trans-West or the Company and no organizational attempt has been
made or, to the knowledge of any of the Seller Parties, threatened
by or on behalf of any labor u
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