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:
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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;
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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.
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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:
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(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;
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Receipt of
Appalachian Oil Company of upfront incentive payments from branded
oil company suppliers;
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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,
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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.
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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.
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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.
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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.
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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.
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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.
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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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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.
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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.
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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.
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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:
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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;
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(b) by mutual written consent of the Seller and the
Purchaser; or
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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.
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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”).
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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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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.
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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.
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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.
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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.
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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.”)
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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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.
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(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.
(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.
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.
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;
(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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