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STOCK PURCHASE AGREEMENT

Purchase and Sale Agreement

STOCK PURCHASE AGREEMENT | Document Parties: TITAN GLOBAL HOLDINGS, INC. | Crescent Fuels, Inc You are currently viewing:
This Purchase and Sale Agreement involves

TITAN GLOBAL HOLDINGS, INC. | Crescent Fuels, Inc

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Title: STOCK PURCHASE AGREEMENT
Governing Law: Kansas     Date: 10/28/2008
Industry: Communications Equipment     Sector: Technology

STOCK PURCHASE AGREEMENT, Parties: titan global holdings  inc. , crescent fuels  inc
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STOCK PURCHASE AGREEMENT

 

AMONG

 

TITAN GLOBAL HOLDINGS, INC.,

 

CRESCENT FUELS, INC.

 

AND

 

PHILLIP NEAR

 

 

 

 

Dated: Effective 12:01 a.m., October 1, 2008

 

 


 

 

 

STOCK PURCHASE AGREEMENT

 

 

THIS STOCK PURCHASE AGREEMENT is made effective as of 12:01 a.m., October 1, 2008 (the “Agreement”), among Titan Global Holdings, Inc., a corporation existing under the laws of Utah (the “Purchaser”), Crescent Fuels, Inc. (the “Company” of “CFI”) and Phillip Near (the “Seller”), a shareholder in the Company.

 

W I T N E S S E T H :

 

WHEREAS, the Seller owns an aggregate of 5,244 shares of common stock, $0.01 par value, of the Company (the “Shares”) which Shares constitute 52.44% of the issued and outstanding shares of the common stock of the Company; and

 

WHEREAS, the Seller desires to sell to Purchaser, and the Purchaser desires to purchase from the Seller, the Shares for the purchase price and upon the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:

 

ARTICLE I

 

SALE AND PURCHASE OF SHARES

 

1.1   Sale and Purchase of Shares . Effective as of 12:01 a.m., October 1, 2008 (the “Effective Time”) and upon the terms and subject to the conditions contained herein, on the closing date of the transactions contemplated herein (the “Closing Date”), the Seller shall sell, assign, transfer, convey and deliver to the Purchaser, and the Purchaser shall purchase from the Seller, all Shares of the Company owned by the Seller (the “Closing”).

 

ARTICLE II

 

PURCHASE PRICE AND OTHER CONSIDERATION

 

2.1   Purchase Price . The purchase price for the common stock shall be an aggregate of $980,244, consisting of (i) $1.00 in cash per share ($5,244 in the aggregate), plus 325,000 shares of the common stock of Purchaser, which Purchaser values at $975,000 ($3.00 per share), together with the additional consideration set forth in Section 2.2, below.

 

2.2   Additional Consideration . As additional consideration for the Shares, Purchaser agrees to pay, perform and cause the following:

 

(a)

Seller shall be released and discharged from liability with respect to that certain Note Receivable of the Company in the amount of $1,357,228.71, which Note was previously issued and from time to time amended, restated and reissued in connection with Seller’s acquisition of the Shares;

 


 

 

 

 

(b)

Purchaser shall acquire and/or cause Greystone Business Credit to acquire from M & I Marshall & Ilsley Bank (“M&I Bank”) all of the indebtedness owed by the Company’s subsidiaries, Crescent Oil Company, Inc. and Crescent Stores, Inc. (save and except a certain equipment lease due M & I Equipment Finance which shall remain due and owing). Seller’s personal guarantee of such indebtedness shall be modified as provided in (c), below, and all suits, claims and causes of action whatsoever in favor of said Bank arising from, or in any way relating to such indebtedness, shall be deemed as of closing released and discharged as against Seller and as against the officers, directors, stockholders and employees of the Company and its subsidiaries. If such indebtedness is acquired by Greystone Business Credit, Purchaser shall cause Greystone to issue written confirmation of the modification, release and discharge of the obligations set forth herein. The foregoing notwithstanding, Purchaser may arrange interim or bridge financing through M&I Bank, partial or complete, in which event Seller’s personal guarantee shall be reduced to the amount of the interim or bridge financing provided to Purchaser (and Crescent Oil Company, Inc. and Crescent Stores, Inc.) by M & I Bank in accordance with loan purchase and financing agreement between Purchaser and M & I Bank. At such time, and to the extent, Purchaser secures financing through Greystone Business Credit, the guarantee provisions of subparagraph (c), below, shall become applicable but with Seller’s personal guarantee amount reduced dollar for dollar for any continuing debt obligations due M & I Bank for which Seller has continuing personal liability until such time as the obligations due M & I Bank are paid and discharged.

 

 

(c)

Seller’s personal guarantee of the Bank indebtedness to be acquired pursuant to (c), above, shall be modified and reduced to the maximum sum of $16,000,000, and shall be further reduced dollar for dollar for, and with respect to, each of the following economic benefits to be derived (directly or indirectly) by Purchaser from future business events, to wit:

 

(i)   Receipt by Crescent Oil Company, Inc. of $6,675,000 in MSA Cash Out   and up front BIP payments from ConocoPhillips;

(ii)   Receipt by Crescent Oil Company, Inc. of any other upfront incentive   payments from branded oil company suppliers including those planned for   the Wichita market development program;

 

(iii)

Receipt of Appalachian Oil Company of upfront incentive payments from branded oil company suppliers;

 

(iv)

EBITDA (“Earnings Before Interest Taxes Depreciation and Amortization” computed in accordance with generally accepted accounting principles, consistently applied) of Crescent Oil Company, Inc., but excluding from EBITDA the effects of the items set forth in (c)(i) and (c)(ii), above; and/or,

 

 

(v)

Payments, from whatever source, in permanent reduction of the guaranteed indebtedness.

 

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until such time as the maximum sum of the personal guarantee is reduced to zero. Purchaser shall procure the written consent of Greystone Business Credit to this arrangement for reduction of the personal guarantee, pursuant to which the reduction shall be contingent upon Greystone’s receipt in debt reduction (or in reduction of required credit advances) of the items described in (c)(i) and (c)(ii) above, all as may be more fully provided by the instrument pursuant to which Greystone’s consent is granted. In the event the holder of the Seller’s personal guarantee should demand payment thereunder by reason of Purchaser’s default in payment or performance of its obligations, Seller shall have and be entitled to exercise all rights of subrogation and indemnification as against Purchaser as are available under the common law.

 

(d)

Purchaser shall enter into, perform and simultaneously close at Closing a Stock Purchase Agreement with the owners of all remaining issued and outstanding shares of the capital stock of the Company, upon such terms and conditions as may be mutually satisfactory.

 

 

(e)

Purchaser, the Company, and each subsidiary of the Company, shall be deemed at Closing to have released and discharged Seller in his capacity as a director, officer, stockholder and employee of the Company and its subsidiaries as to any and all suits, claims and causes of action whatsoever arising from or any way relating to Seller’s prior service in those offices and capacities. Provided, however, if it shall be determined that the Company or its subsidiaries shall have suffered any damages by any “bad acts” (theft, misappropriation or fraudulent representation adversely affecting the financial condition of the Company) then the foregoing release shall not be operative with respect to such bad acts and resulting damages. It is specifically agreed that “bad acts” shall not include: (i) any matter disclosed to Purchaser in the Related Party Table appearing at Subfolder I.21 at ftp://tgh:crescent@crescentoil.com (the “Datasite”); (ii) Compensation, bonuses or benefits previously paid by the Company or its subsidiaries; or (iii) Seller’s personal use of Company apartments, vehicles or services of employees.

 

 

(f)

Purchaser, the Company, and each subsidiary of the Company shall be deemed at Closing to have released and discharged each director, officer, stockholder and employee (other than Near, whose release and continuing liability is as set forth in (e), above) from any and all suits, claims or causes of action whatsoever arising from or relating to such persons prior services in those capacities.

 

 

(g)

The corporate indemnification policies of the Company and the subsidiaries as set forth in the Articles of Incorporation and/or Operating Agreements and Bylaws shall remain in full force and effect with respect to matters arising or relating to periods of time preceding the Closing.

 

 

(h)

Purchaser and the Company shall in good faith attempt to secure release of all of Seller’s personal guarantees for corporate debts and obligations on or before 9/30/11, except with respect to the guaranteed indebtedness due Greystone Business Credit, the reduction of Seller’s liability upon personal guarantee shall proceed in accordance with 2.2(c), above.

 

 

(i)

At or before Closing, Seller and Purchaser shall cause settlement of the informal retirement plan program between Partners Plus, Inc. and employee Debbie Rash by payment of the sum of $15,000.

 

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(j)

On or before 9/30/09, Seller and Purchaser shall cause the Company to acquire the outstanding membership interests in CBC Realty, LLC held by certain key employees of the Company for the amounts stated as follows: Jerry Davidson ($17,000); Debbie Rash ($10,500); and Ted Bogle ($10,500). Further the Company shall assume and cause such employees to be released from liability on mortgage indebtedness due from CBC Realty, LLC with respect to the real estate at 1401 W. 11 th Street, Coffeyville, Kansas.

 

 

(k)

In the event Purchaser elects to change or replace the Company’s Health Insurance Plan, any waiting period applicable to existing employees shall be waived by the insurer. In the event Purchaser elects to terminate, change or consolidate the Company’s 401K Plan, existing employees shall be credited for prior years of service and for hours of service in the current year, and employee contributions shall be deemed 100% vested.

 

 

(l)

Seller has disclosed to Purchaser the existence of certain related party transactions or relationships, including Seller’s participation in Landco Holdings, Allison G. Enterprises and the real estate holdings of Sharper Images. The parties shall negotiate in good faith for Purchaser’s acquisition of Seller’s interest in such business so as to eliminate any business conflict. In the event the parties are unable to reach agreement for such acquisition within 60 days after Closing, such related party contracts and obligations shall be either continued on their existing terms or terminated at Purchaser’s option.

 

ARTICLE III

CLOSING AND TERMINATION

 

3.1   Closing Date . Subject to the satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof (or the waiver thereof by the party entitled to waive that condition), the Closing of the sale and purchase of the Shares provided for in Section 1.1 hereof (the "Closing") shall take place at 116 W. Myrtle, Independence, Kansas (or at such other place as the parties may designate in writing) on such date as the Seller and the Purchaser may designate.

 

3.2   Termination of Agreement . This Agreement may be terminated prior to the Closing as follows:

 

 

(a)

At the election of the Seller or the Purchaser on or after October 31, 2008, if the Closing shall not have occurred by the close of business on such date, provided that the terminating party is not in default of any of its obligations hereunder;

 

(b)   by mutual written consent of the Seller and the Purchaser; or

 

 

(c)

by the Seller or the Purchaser if there shall be in effect a final nonappealable order of a governmental body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; it being agreed that the parties hereto shall promptly appeal any adverse determination which is not nonappealable (and pursue such appeal with reasonable diligence).

 

 

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3.3   Procedure Upon Termination . In the event of termination and abandonment by the Purchaser or the Seller, or both, pursuant to Section 3.2 hereof, written notice thereof shall forthwith be given to the other party or parties, and this Agreement shall terminate, and the purchase of the Shares hereunder shall be abandoned, without further action by the Purchaser or the Seller. If this Agreement is terminated as provided herein, each party shall redeliver all documents, work papers and other material of any other party relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the party furnishing the same.

 

3.4   Effect of Termination . In the event that this Agreement is validly terminated as provided herein, then each of the parties shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to the Purchaser, the Company or the Seller; provided, further, however, that nothing in this Section 3.4 shall relieve the Purchaser or the Seller of any liability for a breach of this Agreement.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

 

When used in this Article IV, any representation given with respect to the Company shall be a representation with respect to the Company and its subsidiaries. The Seller hereby represents and warrants to the Purchaser that:

 

4.1   Organization and Good Standing of the Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation in Schedule 4.6. The Company is not presently required to be qualified to transact business in any other jurisdiction where the failure to so qualify would have an adverse effect on the business of the Company.

 

4.2   Authority .

 

 

(a)

The Company presently has full power and authority (corporate and otherwise) to carry on its business and has all permits and licenses that are necessary to the conduct of its business or to the ownership, lease or operation of its properties and assets, except where the failure to have such permits and licenses would not have a material adverse effect on the Company’s business or operations (“Material Adverse Effect”).

 

 

(b)

The execution of this Agreement and the delivery hereof to the Purchaser and the sale contemplated herein have been, or will be prior to Closing, duly authorized by the CFI’s Board of Directors and by CFI’s stockholders having full power and authority to authorize such actions.

 

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(c)

Subject to any consents required under Section 4.7 below, the Seller and the Company have the full legal right, power and authority to execute, deliver and carry out the terms and provisions of this Agreement; and this Agreement has been duly and validly executed and delivered on behalf of Seller and the Company and constitutes a valid and binding obligation of the Seller and the Company enforceable in accordance with its terms.

 

 

(d)

Except as set forth in Section 4.2, neither the execution and delivery of this Agreement, the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement will violate, conflict with, result in a breach of, or constitute a default under any statute, regulation, indenture, mortgage, loan agreement, or other agreement or instrument to which the Company or the Seller is a party or by which it or any of them is bound, any charter, regulation, or bylaw provision of the Company, or any decree, order, or rule of any court or governmental authority or arbitrator that is binding on the Company or the Seller in any way, except where such would not have a Material Adverse Effect, except potential for breach of covenant is asserted by Wells Fargo with respect to real estate mortgage loan, and except any covenants as may be contained in the M & I Bank Loan documents.

 

4.3   Shares .

 

 

(a)

The Company’s authorized and issued capital stock consists of: (i) 10,000 shares of Common Stock, $1.00 par value per share, of which 5,244 shares have been issued to the Seller; and (ii) 1,250 preferred shares, par value of $1,000 shares. All of the Shares are duly authorized, validly issued, fully paid and non-assessable.

 

 

(b)

The Seller is the lawful record and beneficial owner of all the Shares, free and clear of any liens, pledges, encumbrances, charges, claims or restrictions of any kind, except as set forth in Section 4.3, and have, or will have on the Closing Date, the absolute, unilateral right, power, authority and capacity to enter into and perform this Agreement without any other or further authorization, action or proceeding, except as specified herein.

 

 

(c)

There are no authorized or outstanding subscriptions, options, warrants, calls, contracts, demands, commitments, convertible securities or other agreements or arrangements of any character or nature whatever under which any Seller or the Company are or may become obligated to issue, assign or transfer any shares of capital stock of the Company, except: (i) share purchase option in favor of Johnson Enterprises of Kansas, LLC; and (ii) conversion privilege of the holders of the preferred shares. Upon the delivery to Purchaser on the Closing Date of the certificate(s) representing the Shares, Purchaser will have good, legal, valid, marketable and indefeasible title to the Shares, free and clear of any liens, pledges, encumbrances, charges, agreements, options, claims or other arrangements or restrictions of any kind.

 

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4.4   Basic Corporate Records . The copies of the Articles of Incorporation of the Company certified by the Secretary of State or other authorized official of the jurisdiction of incorporation), and the Bylaws of the Company (certified as of the date of this Agreement as true, correct and complete by the Company’s secretary or assistant secretary), all of which have been delivered to the Purchaser, are true, correct and complete as of the date of this Agreement.

 

4.5   Minute Books . The minute books of the Company, which shall be exhibited to the Purchaser between the date hereof and the Closing Date, each contain true, correct and complete minutes and records of all meetings, proceedings and other actions of the shareholders, Boards of Directors and committees of such Boards of Directors of the Company, if any, except where such would not have a Material Adverse Effect and, on the Closing Date, will, to the best of Seller’s knowledge, contain true, correct and complete minutes and records of any meetings, proceedings and other actions of the shareholders, Boards of Directors and committees of such Boards of Directors of the Company.

 

4.6   Subsidiaries and affiliates . Except as set forth in Schedule 4.6, the Company does not have any ownership, voting or profit and loss sharing percentage interest in any other corporations, partnerships, businesses, entities, enterprises or organizations.

 

4.7   Consents . No consents or approvals of any public body or authority and no consents or waivers from other parties to leases, licenses, franchises, permits, indentures, agreements or other instruments are (i) required for the lawful consummation of the transactions contemplated hereby, or (ii) necessary in order that the business currently conducted by the Company can be conducted by the Purchaser in the same manner after the Closing as heretofore conducted by the Company, nor will the consummation of the transactions contemplated hereby result in creating, accelerating or increasing any liability of the Company, except where the failure of any of the foregoing would not have a Material Adverse Effect.

 

4.8   Financial Statements . The Seller has delivered, or will deliver prior to Closing, to the Purchaser copies of the following financial statements (which include all existing notes and schedules attached thereto), all of which are true, complete and correct, have been prepared from the books and records of the Company in accordance with generally accepted accounting principles (“GAAP”) consistently applied with past practice and fairly present the financial condition, assets, liabilities and results of operations of the Company as of the dates thereof and for the periods covered thereby:

 

the unaudited balance sheet of the Company as of 12/31/05 and 12/31/06, and the related statements of operations, and of cash flows the Company for the periods then ended, together with the unaudited balance sheet of the Company and the related statements of operations of Company for the periods ended 12/31/07 and 9/30/08 (such statements, including the related notes and schedules thereto, are referred to herein as the “Financial Statements.”)

 

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The foregoing notwithstanding: (i) Seller has disclosed to Purchaser that Grant Thornton has withdrawn its opinion relative to the 12/31/06 financial statements due to reservations concerning accounting with respect to Variable Interest Entities (in particular, Crescent Stores Corporation and other subsidiaries of the Company) and current recognition of income from certain capital asset sale transactions (potentially subject to treatment as deferred gain); (ii) the Company has not had professional (CPA) assistance with the internally prepared financial statements and Seller discloses that departures from GAAP may exist; (iii) GAAP and related Financial Accounting Standard Board rules are complex and subject to varying interpretations, assumptions and applications, and Seller makes no representations or warranties with respect to any such technical matters; and (iv) Seller and Purchaser acknowledge and agree that given the facts and circumstances under which this acquisition is made, substantial restatement and adjustment of the Financial Statements are likely to be made to account for fair value in a purchase type transaction, with associated write down of impaired assets and increase in reserves and contingencies, and Seller has no technical knowledge, and makes no affirmative representations or warranties, as to the consequences of such restatement and adjustments.

 

For the purposes hereof, the balance sheet of the Company as of September 30, 2008 is referred to as the “Balance Sheet” and September 30, 2008 is referred to as the “Balance Sheet Date”.

 

4.9   Records and Books of Account . The records and books of account of the Company reflect all material items of income and expense and all material assets, liabilities and accruals, have been, and to the Closing Date will be, regularly kept and maintained in conformity with GAAP applied on a consistent basis with preceding years subject to the limitations and disclaimers set forth in 4.8, above.

 

4.10   Absence of Undisclosed Liabilities . Except as and to the extent reflected or reserved against in the Company’s Financial Statements, there are no liabilities or obligations of the Company of any kind whatsoever, whether accrued, fixed, absolute, contingent, determined or determinable, and including without limitation (i) liabilities to former, retired or active employees of the Company under any pension, health and welfare benefit plan, vacation plan or other plan of the Company, (ii) tax liabilities incurred in respect of or measured by income for any period prior to the close of business on the Balance Sheet Date, or arising out of transactions entered into, or any state of facts existing, on or prior to said date, and (iii) contingent liabilities in the nature of an endorsement, guarantee, indemnity or warranty, and there is no condition, situation or circumstance existing or which has existed that could reasonably be expected to result in any liability of the Company, other than liabilities and contingent liabilities incurred in the ordinary course of business since the Balance Sheet Date consistent with the Company’s recent customary business practice, none of which is materially adverse to the Company. The foregoing notwithstanding, Seller has disclosed to Purchaser (and this representation and warranty is hereby limited with respect to) the following: (i) the Company and its subsidiaries have multiple outstanding motor fuel procurement and supply agreements, together with related incentive, branding and purchasing contracts and commitments, pursuant to which the Company and subsidiaries have substantial contingent liabilities; and (ii) the Company is engaged in an environmentally risky business (motor fuel handling, storage, sale and distribution) which entails some existing and known contingent liabilities (as disclosed at the Datasite) and significant risk of yet unknown and future liability.

 

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4.11   Taxes .

 

 

(a)

For purposes of this Agreement, “Tax” or “Taxes” refers to: (i) any and all federal, state, local and foreign taxes, assessments and other governmental charges, duties, impositions and liabilities relating to taxes, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes and escheatment payments, together with all interest, penalties and additions imposed with respect to such amounts and any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity; and (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of any express or implied obligation to indemnify any other person or as a result of any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity.

 

(b)   (i)     The Company has timely filed all federal, state, local and foreign returns, estimates, information statements and reports (“Returns”) relating to Taxes required to be filed by the Company with any Tax authority effective through the Closing Date. All such Returns are true, correct and complete in all respects, except for immaterial amounts where such would not have a Material Adverse Effect. The Company has paid all Taxes shown to be due on such Returns. The Company is not currently the beneficiary of any extensions of time within which to file any Returns. The Seller and the Company have furnished and made available to the Purchaser complete and accurate copies of all income and other Tax Returns and any amendments thereto filed by the Company in the last three (3) years.

 

(ii)   The Company, as of the Closing Date, will have withheld and accrued or paid to the proper authority all Taxes required to have been withheld and accrued or paid, except for immaterial amounts where such would not have a Material Adverse Effect.

 

(iii)   The Company has not been delinquent in the payment of any Tax nor is there any Tax deficiency outstanding or assessed against such company. The Company has not executed any unexpired waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

 

(iv)   There is no dispute, claim, or proposed adjustment concerning any Tax liability of the Company either (A) claimed or raised by any Tax authority in writing or (B) based upon personal contact with any agent of such Tax authority, and there is no claim for assessment, deficiency, or collection of Taxes, or proposed assessment, deficiency or collection from the Internal Revenue Service or any other governmental authority against the Company which has not been satisfied. The Company is not a party to nor has it been notified in writing that it is the subject of any pending, proposed, or threatened action, investigation, proceeding, audit, claim or assessment by or before the Internal Revenue Service or any other governmental authority, nor does the Company have any reason to believe that any such notice will be received in the future. Neither the Internal Revenue Service nor any state or local taxation authority has audited any income tax return of the Company within the last 5 years. The Company has not filed any requests for rulings with the Internal Revenue Service. Except as provided to the Company’s respective accountants, no power of attorney has been granted by the Company with respect to any matter relating to Taxes of such company. There are no Tax liens of any kind upon any property or assets of the Company, except for inchoate liens for Taxes not yet due and payable.

 

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(v)   Except for immaterial amounts which would not have a Material Adverse Effect, the Company has no liability for any unpaid Taxes which has not been paid or accrued for or reserved on the Financial Statements in accordance with GAAP, whether asserted or unasserted, contingent or otherwise.

 

(vi)   There is no contract, agreement, plan or arrangement to which the Company is a party as of the date of this Agreement, including but not limited to the provisions of this Agreement, covering any employee or former employee of the Company that, individually or collectively, would reasonably be expected to give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). There is no contract, agreement, plan or arrangement to which the Company is a party or by which it is bound to compensate any individual for excise taxes paid pursuant to Section 4999 of the Code.

 

(vii)   The Company has not filed any consent agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by the Company.

 

(viii)   The Company is not a party to, nor has any obligation under any tax-sharing, tax indemnity or tax allocation agreement or arrangement (except among its existing subsidiary corporations, which is an informal arrangement).

 

(ix)   None of the Company’s assets are tax exempt use property within the meaning of Section 168(h) of the Code.

 

4.12   Accounts Receivable . The accounts receivable of the Company shown on the Balance Sheet Date, and those to be shown in the Financial Statements, are, and will be, actual bona fide receivables from transactions in the ordinary course of business representing valid and binding obligations of others for the total dollar amount shown thereon, and as of the Balance Sheet Date were not (and presently are not) subject to any recoupments, set-offs, or counterclaims which would be material in amount. All such accounts receivable are and will be actual bona fide receivables from transactions in the ordinary course of business.

 

4.13   Inventory . The inventories of the Company are located at the locations disclosed in Schedule 3.3 of the Security Agreement by and among CFI, Crescent Corporation, Crescent Realty, Inc., Crescent Holdings, Inc., Crescent Business Development Corp., Partners Plus, Inc., and Greystone Business Credit II, L.L.C. (“Security Agreement”). The inventories of the Company shown on its Balance Sheet (net of reserves) are carried at values which reflect the normal inventory valuation policy of the Company of stating the items of inventory at average cost in accordance with generally accepted accounting principles consistently applied. Inventory acquired since the Balance Sheet Date has been acquired in the ordinary course of business and valued as set forth above. The Company will maintain the inventory in the normal and ordinary course of business from the date hereof through the Closing Date. Notwithstanding the foregoing, the Company is using commercially reasonable best efforts to sell slow moving inventory prior to the Closing Date.

 

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4.14   Machinery and Equipment . All Fixed Assets owned, used or held by the Company are situated at its several business premises and are currently used in its business. Substantially all Fixed Assets of the Company are set forth on Schedule 3.3 to the Security Agreement.

 

4.15.   Real Property Matters . [RESERVED]

 

4.16   Leases . All leases of real and personal property of the Company are listed in the Security Agreement and are in full force and effect and constitute legal, valid and binding obligations of the respective parties thereto enforceable in accordance with their terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting generally the enforcement of creditor’s rights, and have not been assigned or encumbered. The Company has performed in all material respects the obligations required to be performed by it under all such leases to date and it is not in default in any material respect under any of said leases, except as set forth in Schedule 4.16, nor has it made any leasehold improvements required to be removed at the termination of any lease, except signs. No other party to any such lease is in material default thereunder. None of the leases listed thereon require the consent of a third party in connection with the transfer of the Shares.

 

4.17   Patents, Software, Trademarks, Etc. The Company owns, or possesses adequate licenses or other rights to use, all patents, software, trademarks, service marks, trade names and copyrights, trade secrets, and web sites, if any, necessary to conduct its business as now operated by it. The patents, software, trademarks, service marks, copyrights, trade names and trade secrets, web sites, if any, registered in the name of or owned or used by or licensed to the Company and applications for any thereof (hereinafter the “Intangibles”) have been disclosed to the Purchaser. Seller hereby specifically acknowledge that all right, title and interest in and to all Intangibles owned by the Company shall be transferred as part of the Company to Purchaser as part of the transaction contemplated hereby. No officer, director, shareholder or employee of the Company or any relative or spouse of any such person owns any patents or patent applications or any inventions, software, secret formulae or processes, trade secrets or other similar rights, nor is any of them a party to any license agreement, used by or useful to the Company or related to its business. All of said Intangibles are valid and in good standing to the best of Seller’s knowledge, and are free and clear of all liens, security interests, charges, restrictions and encumbrances of any kind whatsoever, and have not been licensed to any third party. The Company have not been charged with, nor have they infringed, nor to the Seller’s knowledge is either threatened to be charged with infringement of, any patent, proprietary rights or trade secrets of others in the conduct of its business, and, to the date hereof, neither the Seller nor the Company has received any notice of conflict with or violation of the asserted rights in intangibles or trade secrets of others. The Company is not now manufacturing any goods under a present permit, franchise or license. The consummation of the transactions contemplated hereby will not alter or impair any rights of the Company in any such Intangibles or in any such permit, franchise or license. The Intangibles and other like information and data are in such form and of such quality and will be maintained in such a manner that the Company can, following the Closing, sell the products and provide the services heretofore provided by it so that such products and services meet applicable specifications and conform with the standards of quality and cost of production standards heretofore met by it. The Company has the sole and exclusive right to use its corporate and trade names in the jurisdictions where it transacts business. The foregoing notwithstanding, the limitations on use and availability of the “Jump Start” service mark are as disclosed at the Datasite.

 

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4.18   Insurance Policies . All insurance premiums in respect of insurance coverages held by the Company have been, and to the Closing Date will be, paid in full, if due and owing. All claims, if any, made against the Company which are covered by such policies have been, or are being, settled or defended by the insurance companies that have issued such policies. Up to the Closing Date, all insurance coverage will be maintained in full force and effect and will not be cancelled, modified or changed without the express written consent of the Purchaser, except to the extent the maturity dates of any such insurance policies expiring prior to the Closing Date. No insurance policies have been cancelled by the issuer thereof, and, to the knowledge of the Seller and CFI, between the date hereof and the Closing Date, there shall be no increase in the premiums with respect to any such insurance policy caused by any action or omission of the Seller or of the Company.

 

4.19   Banking Lists . The Seller or the Company will deliver to the Purchaser prior to the Closing Date the following accurate lists and summary descriptions relating to the Company the name of each bank in which the Company has an account or safe deposit box and the names of all persons authorized to draw thereon or have access thereto.

 

4.20   Lists of Contracts, Etc. The Company or the Seller has provided a list of the following items (whether written or oral) relating to the Company, which list identifies and fairly summarizes each item:

 

(i)   All collective bargaining and other labor union agreements (if any); all employment agreements with any officer, director, employee or consultant; and all employee pension, health and welfare benefit plans, group insurance, bonus, profit sharing, severance, vacation, hospitalization, and retirement plans, post-retirement medical benefit plans, and any other plans, arrangements or custom requiring payments or benefits to current or retiring employees.

 

(ii)   All joint venture contracts of the Company relating to the Business;

 

(iii)   All contracts of the Company relating to (a) obligations for borrowed money, (b) obligations evidenced by bonds, debentures, notes or other similar instruments, (c) obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (d) obligations under capital leases, (e) debt of others secured by a lien on any asset of the Company, and (f) debts of others guaranteed by the Company.

 

(iv)   All agreements of the Company relating to the supply of raw materials for and the distribution of the products of its business, including without limitation all sales agreements, manufacturer’s representative agreements and distribution agreements of whatever magnitude and nature, and any commitments therefor;

 

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(v)   All contracts that individually provide for aggregate future payments to or from the Company of $25,000 or more, to the extent not included in (i) through (iv) above;

 

(vi)   All contracts of the Company that have a term exceeding one year and that may not be cancelled without any liability, penalty or premium, to the extent not included in (i) through (v) above;

 

(vii)   A complete list of all outstanding powers of attorney granted by the Company; and

 

(viii)   All other contracts of the Company material to the business, assets, liabilities, financial condition, results of operations or prospects of the Business taken as a whole to the extent not included above.

 

All material contracts, agreements and commitments of the Company described above are valid, binding and in full force and effect, and (ii) neither the Company nor, to the best of Seller’s knowledge, any other party to any such contract, agreement, or commitment has materially breached any provision thereof or is in default thereunder. The sale of the Shares by the Seller in accordance with this Agreement will not result in the termination of any material contract, agreement or commitment of the Company, and immediately after the Closing, each such material contracts, agreements and commitments will continue in full force and effect without the imposition or acceleration of any burdensome condition or other obligation on the Company resulting from the sale of the Shares by the Seller. True and complete copies of the contracts, leases, licenses and other documents will be delivered to the Purchaser, certified by the Secretary or Assistant Secretary of the Company as true, correct and complete copies, not later than the Closing Date.

 

There are no pending disputes with customers or vendors of the Company regarding quality or return of goods involving amounts in dispute with any one customer or vendor, whether for related or unrelated claims, in excess of $50,000, all of which will be resolved to the reasonable satisfaction of Purchaser prior to the Closing Date. To the best knowledge of Seller and CFI, there has not been any event, happening, threat or fact that would lead them to believe that any of said customers or vendors will terminate or materially alter their business relationship with either of the Company after completion of the transactions contemplated by this Agreement.

 

4.21   Compliance With the Law . Neither of the Seller or Company is in violation of any applicable federal, state, local or foreign law, regulation or order or any other, decree or requirement of any governmental, regulatory or administrative agency or authority or court or other tribunal (including, but not limited to, any law, regulation order or requirement relating to securities, properties, business, products, manufacturing processes, advertising, sales or emp


 
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