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PURCHASE AGREEMENT

Purchase and Sale Agreement

PURCHASE AGREEMENT | Document Parties: FLIGHT SAFETY TECHNOLOGIES INC | Advanced Plasma Products, Inc | Cummins Family Holdings, LLC | Cummins Family Limited Partnership You are currently viewing:
This Purchase and Sale Agreement involves

FLIGHT SAFETY TECHNOLOGIES INC | Advanced Plasma Products, Inc | Cummins Family Holdings, LLC | Cummins Family Limited Partnership

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Title: PURCHASE AGREEMENT
Governing Law: New York     Date: 1/16/2009
Industry: Aerospace and Defense     Sector: Capital Goods

PURCHASE AGREEMENT, Parties: flight safety technologies inc , advanced plasma products  inc , cummins family holdings  llc , cummins family limited partnership
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Exhibit 10.2

PURCHASE AGREEMENT

Purchase Agreement (" Agreement ") dated as of January 13, 2009 between Flight Safety Technologies, Inc., a Nevada corporation (the " Company ") and Cummins Family Limited Partnership, an Idaho limited partnership (the "Purchaser" ).

W I T N E S S E T H :

Whereas, the Company desires to sell and issue to Purchaser, and Purchaser wishes to purchase from the Company: (i) an aggregate of 20,000 shares of the Company's Series A Convertible Preferred Stock, par value $.001 per share (" Preferred Shares ") on the Closing Date (as such term is defined below) and (ii) such number of additional Preferred Shares on the Earn-out Closing Date (as such term is defined below) determined in accordance with Section 1.1(a)(ii) hereof; and

Whereas, the Preferred Shares shall have the rights, designations and preferences set forth in the Certificate of Designations (the " Certificate ") in the form of Exhibit 1.1A attached hereto, and shall be convertible into shares (" Common Shares "), of the Company's common stock, par value $.001 par share (" Common Stock );

Now, Therefore, in consideration of the foregoing premises and the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


  1. Purchase and Sale of Series A Convertible Preferred Shares
      1. Issuance of Preferred Shares .
        1. Issuance.
          1. Initial Closing . On the Closing Date (as such term is defined below), and upon the following terms and conditions, the Company shall issue and sell to Purchaser, and Purchaser shall purchase from the Company, 20,000 Preferred Shares.
          2. Earn-out Closing . On the two (2) year anniversary of the Closing Date (the "Earn-out Closing Date" ), and upon the following terms and conditions, the Company shall issue and sell to Purchaser, and Purchaser shall purchase from the Company, such number of Preferred Shares as shall equal the quotient of (A) the excess (if any) of (x) the Cummins Family Produce Value (as such term is defined below) over (y) the Initial Closing Consideration Value divided by (B) the Original Issue Price (as such term is defined below). In the event the Cummins Family Produce Value does not exceed the Initial Closing Consideration Value, no Preferred Shares shall be issued under this Section 1.1(a)(ii).

For purpose of this Agreement, the following terms shall have the meanings indicated:

            "Average Monthly Cummins Family Produce EBITDA" shall equal the average of the Monthly Cummins Family Produce EBITDA during the preceding twenty-four (24) month period, as calculated one (1) month prior to the Earn-out Closing Date.

"Cummins Family Produce" means Cummins Family Produce, Inc., an Idaho corporation.

"Cummins Family Produce Value" shall equal the product of (A) 4.25 multiplied by (B) 12 multiplied by (C) the Average Monthly Cummins Family Produce EBITDA (as such term is defined above).

"GAAP" means generally accepted accounting principles as from time to time in effect, including the statements and interpretations of the United States Financial Accounting Standards Board.

"Initial Closing Consideration Value" shall mean the sum of (A) the Preferred Share Value plus (B) the Stearns Note Value.

"Monthly Cummins Family Produce EBITDA" means, for each month, (A) the net income (or loss) of Cummins Family Produce determined in accordance with GAAP plus (B) all amounts deducting in computing such net income in respect of (x) depreciation, amortization and other noncash charges, (y) interest expense, and (z) income tax expense.

"Original Issue Price" means One Hundred and No/100ths Dollars ($100.00).

"Preferred Share Value" means Two Million and No/100ths Dollars ($2,000,000.00).

"Stearns Note" means the promissory note of Wesley Cummins to Stearns Bank National Association dated May 15, 2008 in the original principal amount of Two Hundred Fifty Thousand and No/100ths Dollars ($250,000.00).

"Stearns Note Value" means the principal amount outstanding under the Stearns Note as of the Closing Date.

The calculations set forth in this Section 1.1(a)(ii) shall be performed by an accounting firm mutually acceptable to the Company and Purchaser. In the event they are unable to agree upon such an accounting firm at least ninety (90) days prior to the Earn-out Closing Date, the accounting firm will be selected by an arbitrator located in New York, New York selected by the American Arbitration Association (or if such organization ceases to exist, the arbitrator shall be chosen by a court of competent jurisdiction). The arbitrator shall select the accounting firm (within 10 days of his appointment) from a list, jointly prepared by the Purchaser and the Company, of not more than four accounting firms in the United States, of which no more than two may be named by the Company and no more than two may be named by the Purchaser. The arbitrator may consider, within the ten-day period allotted, arguments from the parties regarding which accounting firm to choose, but the selection by the arbitrator shall be made in its sole discretion from the list of four.

The Company and the Purchaser shall submit their respective calculations and other relevant data to the accounting firm, and the accounting firm shall as soon as practicable thereafter make its own determination of the calculations set forth herein. The determination of the final calculations by such accounting firm shall be final and binding upon the parties. The Company shall pay the fees and expenses of the accounting firm and arbitrator (if any). If required by any such accounting firm or arbitrator, the Company shall execute a retainer and engagement letter containing reasonable terms and conditions, including, without limitation, customary provisions concerning the rights of indemnification and contribution by the Company in favor of such accounting firm or arbitrator and its officers, directors, partners, employees, agents and affiliates.

        1. Purchase Price. The purchase price for the Preferred Shares to be acquired by Purchaser (the " Purchase Price ") shall be an aggregate of 1,000 shares (collectively, the "Cummins Family Produce Shares" ) of common stock, no par value per share, of Cummins Family Produce (the "Cummins Family Produce Stock" ).
        2. Initial Closing .
          1. The initial closing of the purchase and sale of the Preferred Shares (the " Closing ") shall take place at the offices of Tobin, Carberry, O'Malley, Riley & Selinger, P.C., 43 Broad Street, New London, CT 06320-0058 (the "Company's Counsel" ) at 10:00 am. local time on: (x) the date on which the last to be fulfilled or waived of the conditions set forth in Article 4 hereof and applicable to the Closing shall be fulfilled or waived in accordance herewith, or (y) such other time and place and/or on such other date as Purchaser and the Company may agree. The date on which the Closing occurs is referred to herein as the " Closing Date ".
          2. On the Closing Date, (x) the Company shall deliver to Pacific Stock Transfer Company, the stock registrar and transfer agent for the Company, irrevocable instructions to register 20,000 Preferred Shares in the name of the Purchaser and to immediately deliver to the Purchaser one or more certificates (as reasonably requested by the Purchaser) representing such Preferred Shares and (y) the Purchaser shall deliver to the Company one or more certificates (as reasonably requested by the Company) representing the Cummins Family Produce Shares in the name of the Company. In addition, each party shall deliver all documents, instruments and writings required to be delivered by such party pursuant to this Agreement at or prior to the Closing.
        1. Earn-out Closing .
          1. The closing with respect to the shares to be issued (if any) under Section 1.1(a)(ii) (the "Earn-out Closing" ) shall take place at the offices of the Company's Counsel at 10:00 am. local time on the Earn-out Closing Date, or at such other time and place and/or on such other date as Purchaser and the Company may agree.
          2. On the Earn-out Closing Date, the Company shall deliver to Purchaser one or more certificates (as reasonably requested by such Purchaser) representing such number of Preferred Shares calculated in accordance with Section 1.1(a)(ii), which Preferred Shares shall be issued in the name of Purchaser or its nominee. In addition, each party shall deliver all documents, instruments and writings required to be delivered by such party pursuant to this Agreement at or prior to the Earn-out Closing.

  1. Representations and Warranties
      1. Representations and Warranties of the Company . The Company hereby makes the following representations and warranties to Purchaser as of the date hereof and as of the Closing Date:
        1. Organization and Qualification; Material Adverse Effect. The Company is a corporation duly incorporated and existing in good standing under the laws of the State of Nevada and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company does not have any direct or indirect subsidiaries (defined as any entity of which the Company owns, directly or indirectly, 50% or more of the equity or voting power) other than the subsidiaries listed on Schedule 2.1(a) attached hereto. The subsidiaries listed on Schedule 2.1(a) hereto are direct subsidiaries wholly owned by the Company, and there are no outstanding shares, options, warrants or other rights to subscribe for or acquire any capital stock in such subsidiaries except outstanding common stock in such subsidiaries held by the Company. Except where specifically indicated to the contrary, all references in this Agreement to subsidiaries shall be deemed to refer to all direct and indirect subsidiaries of the Company. Except where specifically indicated to the contrary, all references in this Article 2 to the Company shall be deemed to refer to the Company and its consolidated subsidiaries. Except as for Schedule 2.1(b) , each of the Company and its subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary other than those in which the failure so to qualify would not have a Material Adverse Effect. " Material Adverse Effect " with respect to any entity means any adverse effect on the business, operations, properties or financial condition of the entity with respect to which such term is used and which is (either alone or together with all other adverse effects) material to such entity and its subsidiaries taken as a whole, and any material adverse effect on the transactions contemplated under Transaction Documents (as defined below).
        2. Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement and the Certificate (the " Transaction Documents ") and to issue the Preferred Shares in accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including the issuance of the Preferred Shares and Common Shares, have been duly authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors (or any committee or subcommittee thereof) is necessary, (iii) the Transaction Documents have been duly executed and delivered by the Company and (iv) the Transaction Documents constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of creditors' rights and remedies or by other equitable principles of general application.
        3. Capitalization. The authorized capital stock of the Company consists of 50 million shares of Common Stock and 5 million shares of preferred stock; as of October 17, 2008 there were 8,684,646 shares of Common Stock issued and outstanding; prior to giving effect to the transactions completed by this Agreement, there are no shares of preferred stock issued or outstanding; and, except as set forth on Schedule 2.1(c) or in the Pre-Agreement SEC Documents (as such term is defined below), no shares of Common Stock and no shares of preferred stock were reserved for issuance to persons other than the Purchaser or purchasers of Preferred Shares pursuant to the Cash Purchase Agreement (as such term is defined below). All of the outstanding shares of the Company's Common Stock have been validly issued and are fully paid and nonassessable. No shares of capital stock are entitled to preemptive rights and, except as set forth in the Pre-Agreement SEC Documents, there are no outstanding options and outstanding warrants for shares of Common Stock. Except as set forth on Schedule 2.1(c)(i) or in the Pre-Agreement SEC Documents, there are no other scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights exchangeable for or convertible into, any shares of capital stock of the Company, or contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company or options, warrants, scrip, rights to subscribe to, or commitments to purchase or acquire, any shares, or securities or rights convertible or exchangeable into shares, of capital stock of the Company. There are no scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights exchangeable for or convertible into, any shares of capital stock of the subsidiaries of the Company, or contracts, commitments, understandings, or arrangements by which the subsidiaries of the Company is or may become bound to issue additional shares of capital stock of the subsidiaries of the Company or options, warrants, scrip, rights to subscribe to, or commitments to purchase or acquire, any shares, or securities or rights convertible or exchangeable into shares, of capital stock of the subsidiaries of the Company. Attached hereto as Exhibit 2.1(c)(ii) is a true and correct copy of the Company's Articles of Incorporation (the " Charter "), as in effect on the date hereof, and attached hereto as Exhibit 2.1(c)(iii) is a true and correct copy of the Company's By-Laws, as in effect on the date hereof (the " By-Laws "). Attached hereto as Exhibit 2.1(c)(iv) is a true and correct copy of the Articles of Incorporation of Advanced Plasma Products, Inc. (the " Subsidiary Charter "), as in effect on the date hereof, and attached hereto as Exhibit 2.1(c)(v) is a true and correct copy of the By-Laws of Advanced Plasma Products, Inc., as in effect on the date hereof (the "Subsidiary By-Laws "). All corporate minute books and records of the Company and its subsidiaries have been made available for inspection by the Purchaser. The corporate minute books and records of the Company and its subsidiaries contain all material resolutions adopted by the stockholders or the board of directors of the Company and its subsidiaries. The Company and its subsidiaries' books, accounts and records are, and have been, maintained in the Company and its subsidiaries' usual, regular and ordinary manner, in accordance with generally accepted accounting principles and all material transactions to which either the Company or its subsidiaries is or has been a party are properly reflected therein.
        4. Issuance of Common Shares. The Preferred Shares and Common Shares are duly authorized and reserved for issuance and, upon issuance in accordance with terms of this Agreement, the Certificate, and the Preferred Shares, respectively, such Preferred Shares and Common Shares, as the case may be, will be validly issued, fully paid and non-assessable, free and clear of any and all liens and claims and the holders of such Preferred Shares and Common Shares shall be entitled to all rights and preferences accorded to a holder of Preferred Shares and Common Stock, as the case may be. The Common Stock is currently traded on the Over-the-Counter market.
        5. No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, the issuance of the Preferred Shares and the issuance of Common Shares do not and will not (i) result in a violation of the Company's Charter or By-Laws or (ii) except as set forth on Schedule 2.1(e) , conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or material instrument to which the Company or any of its subsidiaries is a party (collectively, " Company Agreements ") except for such conflicts, defaults or rights of termination, amendment, acceleration or cancellation which would not have a Material Adverse Effect, or (iii) result in a violation of any federal, state, local or foreign law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected, except (other than in the case of clause (i) above) where such violation would not reasonably be expected to have a Material Adverse Effect. The business of the Company and its direct and indirect subsidiaries is being conducted in compliance with (i) its Charter and By-Laws, (ii) the Subsidiary Charter and Subsidiary By-Laws (as applicable), (iii) all Company Agreements (except where such violation would not reasonably be expected to have a Material Adverse Effect) and (iv) all applicable laws, ordinances or regulations of any governmental entity (except as disclosed in the reports or documents filed at least 5 business days prior to the Closing Date by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act (the "Pre-Agreement SEC Documents" ) or where such violation would not reasonably be expected to have a Material Adverse Effect) . Except for filings, consents and approvals required under applicable state and federal securities laws or as specifically contemplated by this Agreement, the Company is not required under federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or the Certificate or to issue and sell the Preferred Shares or the Common Shares issuable upon conversion thereof.
        6. SEC Documents; No Non-Public Information; Financial Statements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and the Company and its subsidiaries have filed all reports, schedules, forms, statements and other documents required to be filed by it with the Securities and Exchange Commission (" SEC ") pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the " Exchange Act "), including all such proxy information, solicitation statements and registration statements, and any amendments thereto required to have been filed (all of the foregoing including filings incorporated by reference therein being referred to herein as the " SEC Documents ") except where the failure to make such filings (i) would not have a Material Adverse Effect on the Company and (ii) would not now or in the future negatively impact the ability of shareholders of the Company to sell shares of Common Stock pursuant to Rule 144 under the Exchange Act. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such SEC Documents and, as of the date they were filed, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The SEC Documents contain all material information concerning the Company and its subsidiaries required to be filed, and no event or circumstance has occurred prior to the date hereof which would require the Company to disclose such event or circumstance in order to make the statements in the SEC Documents not misleading or which, under applicable law, rule or regulation, requires public disclosure by the Company, but which has not, or will have not, been so disclosed.
        7. Financial Statements. The financial statements of the Company and its subsidiaries included in the SEC Documents comply in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (except in the case of unaudited interim statements, to the extent they may not include footnotes, may be condensed or summary statements) and fairly present in all material respects the financial position of the Company and its subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The audited financial statements of each of the Company and its subsidiaries for the fiscal year ending May 31, 2008 have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (except in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company and its subsidiaries, as the case may be, as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
        8. Principal Exchange/Market. The Common Stock is currently traded on the over-the-counter market.
        9. No Material Adverse Change. Since August 31, 2008 (other than as set forth in the Pre-Agreement SEC Documents or on Schedule 2.1(i) ), no Material Adverse Effect has occurred or exists, and no event or circumstance has occurred, to the Company's knowledge, that with notice or the passage of time or both the Company believes is reasonably likely to result in a Material Adverse Effect with respect to the Company or its subsidiaries.
        10. No Undisclosed Liabilities . The Company and its subsidiaries have no liabilities or obligations not disclosed in the Pre-Agreement SEC Documents (as defined below), other than those liabilities incurred in the ordinary course of the Company's or its subsidiaries' respective businesses since August 31, 2008, which liabilities, individually or in the aggregate, do not or would not have a Material Adverse Effect on the Company or its direct or indirect subsidiaries.
        11. Sarbanes-Oxley Act . The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 and any and all applicable rules and regulations, promulgated by the SEC thereunder, except where such non-compliance would not have, individually or in the aggregate, a Material Adverse Effect.
        12. No General Solicitation. Neither the Company, nor any of its affiliates, or, to its knowledge, any person acting on its or their behalf has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Preferred Shares and Common Shares.
        13. No Integrated Offering. Neither the Company, nor any of its affiliates, nor to its knowledge any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the Preferred Shares and the Common Shares under the Act.

The issuance of the Preferred Shares and Common Shares to Purchaser will not be integrated with any other issuance of the Company's securities (past, current or future) which requires stockholder approval (except where such approval is obtained).

        1. [Intentionally omitted].
        2. Intellectual Property. The Company and/or its wholly-owned subsidiaries owns or has licenses to use certain patents, copyrights and trademarks (" intellectual property ") necessary for the conduct of its business , except as set forth on in the Pre-Agreement SEC Documents . The Company and its subsidiaries have all intellectual property rights which it believes are needed to conduct the business of the Company and its subsidiaries as it is now being conducted or as proposed to be conducted as disclosed in the Pre-Agreement SEC Documents. The Company and its subsidiaries have no reason to believe that the material intellectual property rights which it owns are invalid or unenforceable. To the Company's knowledge, except as set forth in the Pre-Agreement SEC Documents , the use of such intellectual property by the Company or its subsidiaries does not infringe upon or conflict with any right of any third party, and neither the Company nor any of its subsidiaries has received notice of any such infringement or conflict, which individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. Except as set forth in the Pre-Agreement SEC Documents , the Company and its subsidiaries have no knowledge of any infringement of its intellectual property by any third party that is expected to have a Material Adverse Effect.
        3. No Litigation. Except as set forth on Schedule 2.1(p) , no litigation or claim (including those for unpaid taxes) against the Company or any of its subsidiaries which could reasonably be expected to have a Material Adverse Effect on the Company or could reasonably be expected to materially and adversely affect the transactions contemplated by the Transaction Documents is pending or, to the Company's knowledge, threatened, and to the Company's knowledge, no other event has occurred, which could reasonably be expected to have a Material Adverse Effect on the Company or could reasonably be expected to materially and adversely affect the transactions contemplated hereby. There is no legal proceeding described in the Pre-Agreement SEC Documents that could reasonably be expected to have a Material Adverse Effect on the Company.
        4. Brokers. Except as set forth on Schedule 2.1(q) , the Company has taken no action which would give rise to any claim by any person for brokerage commissions, finder's fees or similar payments by the Company or Purchaser relating to this Agreement or the transactions contemplated hereby.
        5. Other Purchasers. Except as set forth on Schedule 2.1(r)(i) (or in the Pre-Agreement SEC Documents), there are no outstanding securities issued or issuable by the Company that are entitled to registration rights under the Act. Other than the Preferred Shares and except as set forth on Schedule 2.1(r)(ii) (or the Pre-Agreement SEC Documents solely with respect to clause (i)) there are no outstanding securities issued by the Company (i) that are directly or indirectly convertible into, exercisable into, or exchangeable for, shares of Common Stock of the Company, or (ii) that have anti-dilution or similar rights that would be affected by the issuance of the Preferred Shares or the Common Shares .
        6. Certain Transactions . Other than in connection with this Agreement and the Cash Purchase Agreement (as such term is defined below), and except as disclosed in the Pre-Agreement SEC Documents and Schedule 2.1(s) , none of the officers, directors, or key employees of the Company is presently a party to any transaction with the Company or any of its subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.
        7. Taxes. Since May 31, 2008, all federal, state, city and other tax returns, reports and declarations required to be filed or extended by or on behalf of the Company and each of its subsidiaries have been filed or extended and all such filed returns are complete and accurate in all material respects, and disclose all taxes required to be paid in the periods covered thereby. All taxes required to be withheld by or on behalf of the Company or any such subsidiary in connection with amounts paid or owing to any employees, independent contractor, creditor or other party have been withheld, and such withheld taxes have either been duly and timely paid to the proper governmental authorities or set aside in accounts for such purposes.
        8. No Reliance on Purchaser. The Company acknowledges and agrees that Purchaser is acting solely in the capacity of an arm's length purchaser with respect to this Agreement, the Certificate and the transactions contemplated hereby and thereby. The Company further acknowledges that neither Purchaser nor any of its partners, members, directors, officers, agents, employees or any other person acting on its behalf is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement, the Certificate and the transactions contemplated hereby and thereby. The Company further represents to the Purchaser that the Company's decision to enter into this Agreement and file the Certificate has been based solely on the independent evaluation by the Company and its representatives.
        9. Foreign Corrupt Practices Act . Neither the Company, nor any director, officer, agent, employee or other person acting on behalf of the Company or any subsidiary of the Company has, in the course of acting for, or on behalf of, the Company, directly or indirectly used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; directly or indirectly made any direct or indirect unlawful payment to any foreign or domestic government or party official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any similar treaties of the United States; or directly or indirectly made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government or party official or employee.
        10. MFN and Variable Rate Transactions . Except as set on Schedule 2.1(w) , the Company has not entered into any MFN Transaction or Variable Rate Transaction (other than the sale of Preferred Shares under this Agreement and the Cash Purchase Agreement (as such term is defined below)), pursuant to which: (1) securities or potential obligations to issue securities are still outstanding or (2) the issuance, conversion, or exercise, as the case may be, of the Preferred Shares trigger, or may in the future trigger, an adjustment.

The term " MFN Transaction " shall mean a transaction in which the Company issues or sells any securities in a capital raising transaction or series of related capital raising transactions (the " MFN Offering ") which grants to a purchaser (the " MFN Purchaser ") the right to receive additional shares (including without limitation as a result of a lower conversion, exchange or exercise price but excluding customary antidilution protections) based upon subsequent transactions of the Company on terms more favorable than those granted to such MFN Purchaser in such MFN Offering. As used herein, term " Variable Rate Transaction " shall mean a transaction in which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include (pursuant to the terms of the securities or the transaction documents pursuant to which such securities were issued) the right to receive additional shares of, Common Stock either (x) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Stock at any time after the initial issuance of such debt or equity securities, or (y) with a fixed conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock (but excluding standard stock split anti-dilution provisions), or (ii) any securities of the Company pursuant to an "equity line" structure which provides for the sale, from time to time, of securities of the Company which are registered for resale under the Act.

        1. Acknowledgement of Dilution. The number of shares of Common Stock issuable upon conversion of the Preferred Shares may increase substantially in certain circumstances. The Company acknowledges that its obligation to issue shares of Common Stock in accordance with the Transaction Documents is absolute and unconditional, regardless of the dilution that such issuance may have on other shareholders of the Company.
        2. Insurance . The Company and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as reasonably prudent and customary in the businesses in which the Company and its direct and indirect subsidiaries are engaged. Neither the Company nor any such subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.
        3. Application of Takeover Protections . The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any anti-takeover or control share provisions contained in the Company's Charter or By-Laws or arising under Nevada law, including without limitation Nevada Revised Statute Section 78-378, et. seq., which is or could become applicable to Purchaser as a result of the transactions contemplated by the Transaction Documents, including, without limitation, the issuance of the Preferred Shares, Common Shares and the Purchaser's ownership of such securities.
        4. Indebtedness . Except as disclosed in Schedule 2.1(aa) or in the Company's most recently filed annual report on form 10-KSB, neither the Company nor any of its subsidiaries has any outstanding Indebtedness (as defined below). For purposes of this Agreement: (i) " Indebtedness " of any person or entity (each, a " Person ") means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in accordance with GAAP, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and (ii) "Contingent Obligation" means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
        5. Investment Company Status . The Company is not, and immediately after receipt of payment for the Preferred Shares issued under this Agreement will not be, an "investment company" or an entity "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act" ), and shall conduct its business in a manner so that it will not become subject to the Investment Company Act.
        6. Listing and Maintenance Requirements . Except as disclosed in the Pre-Agreement SEC Documents, since September 19, 2008, the Company has been in compliance with all listing and maintenance requirements for the over-the-counter Market except, in each case, as could not reasonably be expected to result in a Material Adverse Effect. Since September 19, 2008, the Company has not received any communication, written or oral, from the SEC or the over-the-counter market regarding the suspension or delisting of the Common Stock.
        7. Purchase Representations .
          1. Access to Other Information. The Company acknowledges that Purchaser has made available to the Company the opportunity to examine such additional documents from Purchaser and Cummins Family Produce and to ask questions of, and receive full answers from, Purchaser and Cummins Family Produce concerning, among other things, Cummins Family Produce, its financial condition, its management, its prior activities and any other information which the Company considers relevant or appropriate in connection with entering into this Agreement.
          2. Risks of Purchase. The Company acknowledges that the Cummins Family Produce Shares have not been registered under the Act. The Company is capable of assessing the risks of an investment in the Cummins Family Produce Shares and is fully aware of the economic risks thereof.
          3. Purchaser Interest. The Company is acquiring the Cummins Family Produce Shares for its own account and not with a view to distribution in violation of any securities laws. The Company has no present intention to sell the Cummins Family Produce Shares in violation of federal or state securities laws, provided, however , that by making the representations herein, the Company does not agree to hold the Cummins Family Produce Shares for any minimum or other specific term and reserves the right to dispose of the Cummins Family Produce Shares at any time in accordance with federal and state securities laws applicable to such disposition.
          4. Restricted Securities. The Company acknowledges and understands that the terms of transfer of the Cummins Family Produce Shares have not been reviewed by the SEC or by any state securities authorities and that the Cummins Family Produce Shares have been issued in reliance on the certain exemptions from registration under the Act, which exemptions depend upon, among other things, the representations made and information furnished by the Company, including the bona fide nature of the Company's investment intent as expressed above.
          5. Ability to Bear Economic Risk . The Company (i) is able to bear the economic risk of its investment in the Cummins Family Produce Shares, (ii) is able to hold the Cummins Family Produce Shares for an indefinite period of time and (iii) can afford a complete loss of its investment in the Cummins Family Produce Shares.
          6. No Public Solicitation. At no time was the Company presented with or solicited by any general mailing, leaflet, public promotional meeting, newspaper or magazine article, radio or television advertisement, or any other form of general advertising or general solicitation in connection with the issuance.
        1. Cash Purchase Transaction . The Company is entering into a purchase and sale agreement on or about the date hereof (the " Cash Purchase Agreement ") with one or more investors pursuant to which the Company will issue Preferred Shares on the Initial Closing Date at the price per share equal to the Original Issue Price, which purchase price shall be paid in cash (with the exception of Company employees purchasing up to an aggregate of 1,000 Preferred Shares partially in cash and partially through promissory notes). The Company has provided the Purchaser with a true and correct copy of the Cash Purchase Agreement and all documents execution in connection therewith.
      1. Representations and Warranties of the Purchasers . Purchaser hereby makes the following representations and warranties to the Company as of the date hereof and on the Closing Date:
        1. Organization and Qualification. Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and is duly qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing would not reasonably be expected to have a Material Adverse Effect on Purchaser.
        2. Authorization; Enforcement. (i) Purchaser has the requisite power and authority to enter into and perform this Agreement, to purchase the Preferred Shares being sold to it hereunder, and to acquire the Common Shares, (ii) the execution and delivery of this Agreement by such Purchaser and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate or partnership action, and (iii) this Agreement constitutes valid and binding obligations of Purchaser enforceable against Purchaser in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of creditors' rights and remedies or by other equitable principles of general application.
        3. No Conflicts. The execution, delivery and performance of this Agreement and the consummation by Purchaser of the transactions contemplated hereby do not and will not (i) result in a violation of Purchaser's organizational documents, (ii) conflict with any agreement, indenture or instrument to which Purchaser is a party, or (iii) result in a material violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to Purchaser. Purchaser is not required to obtain any consent or authorization of any governmental agency in order for it to perform its obligations under this Agreement.
        4. Representations Regarding Cummins Family Produce .
          1. Organization and Qualification; Material Adverse Effect. Cummins Family Produce is a corporation duly incorporated and existing in good standing under the laws of the State of Idaho and has the requisite corporate power to own its properties and to carry on its business as now being conducted. Cummins Family Produce does not have any direct or indirect subsidiaries (defined as any entity of which Cummins Family Produce owns, directly or indirectly, 50% or more of the equity or voting power). Cummins Family Produce is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary other than those in which the failure so to qualify would not have a Material Adverse Effect on Cummins Family Produce.
          2. Capitalization. The authorized capital stock of Cummins Family Produce consists of 10,000 shares of Cummins Family Produce Stock, of which the 1,000 Cummins Family Produce Shares to be transferred hereunder are the only shares outstanding. No shares of capital stock are entitled to preemptive rights and, there are no outstanding options or warrants for shares of Cummins Family Produc

 
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