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STOCK PURCHASE AGREEMENT

Stock Purchase Agreement

STOCK PURCHASE AGREEMENT | Document Parties: AMS HEALTH SCIENCES INC | AMS MANUFACTURING, INC.  | HEARTLAND CUP, INC. You are currently viewing:
This Stock Purchase Agreement involves

AMS HEALTH SCIENCES INC | AMS MANUFACTURING, INC. | HEARTLAND CUP, INC.

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Title: STOCK PURCHASE AGREEMENT
Governing Law: Oklahoma     Date: 11/17/2005
Industry: Personal and Household Prods.     Law Firm: McAfee & Taft     Sector: Consumer/Non-Cyclical

STOCK PURCHASE AGREEMENT, Parties: ams health sciences inc , ams manufacturing  inc.  , heartland cup  inc.
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Exhibit 10.17

 

STOCK PURCHASE AGREEMENT

Dated as of September 1, 2005

among

BUYER:

AMS MANUFACTURING, INC.

PARENT:

AMS HEALTH SCIENCES, INC.

COMPANY:

HEARTLAND CUP, INC.

PRINCIPAL SHAREHOLDER:

TRUETT McCARTY

AND

CERTAIN SHAREHOLDERS OF THE COMPANY

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

 

Page

 

ARTICLE I. DEFINITIONS

 

 

1

 

1.1 Defined Terms

 

 

1

 

1.2 Other Terms

 

 

1

 

 

 

 

 

 

ARTICLE II. PURCHASE AND SALE OF SHARES

 

 

1

 

2.1 Agreement to Purchase and Sell Shares

 

 

1

 

2.2 Purchase Price for the Shares

 

 

1

 

2.3 Manner of Payment of the Purchase Price Consideration

 

 

1

 

2.4 Manner of Delivery of Shares

 

 

2

 

2.5 Restrictive Legend

 

 

2

 

 

 

 

 

 

ARTICLE III. CLOSING

 

 

2

 

3.1 Closing

 

 

2

 

3.2 Deliveries at Closing

 

 

2

 

 

 

 

 

 

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL SHAREHOLDER

 

 

3

 

4.1 Organization and Good Standing

 

 

3

 

4.2 Authority; No Conflict

 

 

3

 

4.3 Capitalization

 

 

4

 

4.4 Financial Statements

 

 

4

 

4.5 Books and Records

 

 

4

 

4.6 Title to Properties; Encumbrances

 

 

4

 

4.7 Condition and Sufficiency of Assets

 

 

5

 

4.8 Accounts Receivable

 

 

5

 

4.9 Inventory

 

 

5

 

4.10 No Undisclosed Liabilities

 

 

6

 

4.11 Taxes

 

 

6

 

4.12 Compliance with Legal Requirements; Governmental Authorizations

 

 

7

 

4.13 Legal Proceedings; Orders

 

 

8

 

4.14 Contracts; No Defaults

 

 

8

 

4.15 Insurance

 

 

10

 

4.16 Environmental Matters

 

 

10

 

4.17 Labor Relations; Compliance; Employees

 

 

12

 

4.18 Intellectual Property Rights

 

 

12

 

4.19 No Other Agreements to Sell Assets or Capital Stock of the Company

 

 

13

 

4.20 Relationships with Related Persons

 

 

13

 

4.21 Customers and Suppliers

 

 

13

 

4.22 Brokers and Finders

 

 

13

 

4.23 Affiliate Indebtedness

 

 

13

 

4.24 Disclosure

 

 

13

 

 

 

 

 

 

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

 

 

14

 

5.1 Ownership of the Shares

 

 

14

 

5.2 Shareholder Authority

 

 

14

 


 

 

 

 

 

 

 

 

Page

 

5.3 Investment Intent

 

 

14

 

 

 

 

 

 

ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

 

15

 

6.1 Organization of Buyer

 

 

15

 

6.2 Authorization; No Conflict

 

 

15

 

6.3 Disclosure

 

 

16

 

6.4 Brokers or Finders

 

 

16

 

6.5 Legal Proceedings

 

 

16

 

 

 

 

 

 

ARTICLE VII. POST-CLOSING COVENANTS OF THE BUYER

 

 

16

 

7.1 Principal Shareholder Guarantees

 

 

16

 

 

 

 

 

 

ARTICLE VIII. INDEMNIFICATION; REMEDIES

 

 

16

 

8.1 Survival of Representations, Etc.

 

 

16

 

8.2 Indemnification by Principal Shareholder

 

 

16

 

 

 

 

 

 

ARTICLE IX. MISCELLANEOUS

 

 

18

 

9.1 Assignment

 

 

18

 

9.2 Notices

 

 

18

 

9.3 Choice of Law

 

 

18

 

9.4 Entire Agreement; Amendments and Waivers

 

 

19

 

9.5 Multiple Counterparts

 

 

19

 

9.6 Expenses

 

 

19

 

9.7 Invalidity

 

 

19

 

9.8 Titles

 

 

19

 

9.9 Burden and Benefit

 

 

19

 

9.10 Consent to Jurisdiction

 

 

19

 

9.11 Attorneys’ Fees

 

 

19

 

9.12 No Interpretation Against Drafter

 

 

20

 

9.13 Construction

 

 

20

 

9.14 Further Assurances

 

 

20

 

ii 


 

STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE AGREEMENT is dated as of September 1 st , 2005 (this “Agreement”), is by and among AMS Manufacturing, Inc., an Oklahoma corporation (“Buyer”), AMS Health Sciences, Inc., an Oklahoma corporation (the “Parent”), Heartland Cup, Inc., an Oklahoma corporation (the “Company”), Truett McCarty, (the “Principal Shareholder”) and the shareholders listed on the signature pages attached hereto (collectively with the Principal Shareholder, the “Shareholders”).

RECITALS

     A. The Shareholders own the issued and outstanding shares of capital stock (the “Shares”) of the Company owned by each Shareholder, as set forth in Exhibit A hereto.

     B. Buyer desires to acquire, and the Shareholders desire to transfer, all of the Shares of the Company on the terms and subject to the conditions herein contained.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

     1.1 Defined Terms . As used herein, capitalized terms below shall have the meanings set forth on Appendix A . Any of such terms, unless the context otherwise requires, may be used in the singular or plural, depending upon the reference.

     1.2 Other Terms . Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning indicated throughout this Agreement.

ARTICLE II.

PURCHASE AND SALE OF SHARES

     2.1 Agreement to Purchase and Sell Shares . On the terms and subject to the conditions contained in this Agreement, at the Closing, Buyer shall purchase from the Shareholders, and the Shareholders shall sell to Buyer (the “Share Purchase”), the Shares free and clear of all options, proxies, voting trusts, voting agreements, judgments, pledges, charges, escrows, rights of first refusal and first offer, mortgages, indentures, claims, transfer restrictions, liens, security interests and other encumbrances (collectively, “Claims”); together with all rights now and hereafter attaching or accruing thereto.

     2.2 Purchase Price for the Shares . The purchase price (the “Purchase Price Consideration”) for each Share shall be 1/10 of a validly issued, fully paid and nonassessable share of the Parent’s common stock (the “Parent Common Stock”).

     2.3 Manner of Payment of the Purchase Price Consideration . At the Closing, Parent shall pay the Purchase Price Consideration on behalf of Buyer to each Shareholder for each Share delivered by such Shareholder for purchase at Closing.

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     2.4 Manner of Delivery of Shares . At the Closing, the Shareholders shall deliver to Buyer certificates evidencing the Shares (together with all rights then or thereafter attaching thereto) duly endorsed in blank, or accompanied by valid stock powers duly executed in blank, in proper form for transfer.

     2.5 Restrictive Legend . The Shareholders understand and acknowledge that there will be placed on the certificates for the shares of Parent Common Stock issued as Purchase Price Consideration, or any substitution therefore, in addition to any other legend which may be required, a legend stating in substance:

“THE SALE, TRANSFER OR OTHER DISTRIBUTION OF THE SHARES EVIDENCED BY THIS CERTIFICATE BY THE HOLDER HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SHARES MAY NOT BE PUBLICLY SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION UNDER SAID ACT.”

ARTICLE III.

CLOSING

     3.1 Closing . Upon the terms and subject to the conditions set forth herein, the closing of the Transactions (the “Closing”) shall occur immediately upon execution of this Agreement at the offices of McAfee & Taft, Two Leadership Square, 211 N. Robinson, Oklahoma City, OK 73102 or such other place as the parties may otherwise agree.

     3.2 Deliveries at Closing.

     (a)  Deliveries Made by the Buyer or the Parent . At the Closing, the Buyer will deliver to the Company and the Shareholders the following: (i) the Purchase Price Consideration; (ii) a certificate executed by the Secretary or an Assistant Secretary of the Buyer certifying as of the Closing Date (A) a true and complete copy of the Organizational Documents of the Buyer, (B) a true and complete copy of the resolutions of the board of directors of the Buyer authorizing the execution, delivery and performance of this Agreement and the consummation of the Transactions, and (C) incumbency matters; and (iii) such other certificates or documents as shall be reasonably requested by the Company in accordance with the provisions of this Agreement and to consummate the Transactions.

     (b)  Deliveries Made by the Company. At the Closing, the Company will deliver to the Buyer the following: (i) a certificate executed by the Secretary or an Assistant Secretary of the Company certifying as of the Closing Date (A) a true and complete copy of the Organizational Documents of the Company, (B) a true and complete copy of the resolutions of the board of directors and shareholders of the Company authorizing the execution, delivery and performance of this Agreement and the consummation of the Transactions, and (C) incumbency matters; (ii) a certificate of each appropriate Secretary of State certifying the good standing of the Company in its state of incorporation and all states in which it is qualified to do business; (iii) an unconditional resignation from each member of the board of directors and each officer of the Company from his or her office or from the board of directors of the Company, as applicable, in form and substance satisfactory to the Buyer and (iv) such other certificates or documents as shall be reasonably requested by the Buyer in accordance with the provisions of this Agreement and to consummate the Transactions.

2


 

     (c)  Deliveries Made by the Shareholders. At the Closing, each Shareholder will deliver to the Buyer the following: (i) certificates evidencing all of the issued and outstanding shares of capital stock of the Company owned by the Shareholders as set forth on Exhibit A , duly endorsed in blank for surrender and cancellation; and (ii) a shareholder release in substantially the form attached hereto as Exhibit B .

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL SHAREHOLDER

     The Company and the Principal Shareholder, jointly and severally, hereby represent and warrant as follows:

     4.1 Organization and Good Standing . The Company is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under Contracts to which it is a party. The Company is duly qualified to do business and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification. The Company has delivered to the Buyer true and complete copies of the Organizational Documents of the Company, as currently in effect.

     4.2 Authority; No Conflict.

     (a) This Agreement and the other Transaction Documents to which the Company is a party (the “ Company Closing Documents ”) have been or will be prior to Closing duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, in each case except as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights generally and (ii) the general principles of equity, regardless of whether asserted in a proceeding in equity or at law. The Company has all requisite power and authority to execute and deliver this Agreement and the Company Closing Documents and to perform its respective obligations under this Agreement and the Company Closing Documents.

     (b) Neither the execution and delivery of this Agreement and the Company Closing Documents nor the consummation or performance of any of the Transactions will, directly or indirectly (with or without notice or lapse of time):

          (i) contravene, conflict with or result in a violation of (A) any provision of the Organizational Documents of the Company or (B) any resolution or other action adopted or taken by the board of directors or the shareholders of the Company;

          (ii) contravene, conflict with or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which the Company or any of the assets owned or used by any Acquired Company may be subject;

          (iii) contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by the Company or that otherwise relates to the business of, or any of the assets owned or used by, the Company;

3


 

          (iv) contravene, conflict with or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify, any Contract; or

          (v) result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by the Company.

     The Company is not and will not be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Transactions.

     4.3 Capitalization . The authorized equity securities of the Company consist solely of 5,000,000 shares of common stock, of which 2,415,000 shares are issued and outstanding. All of the outstanding shares of the Company’s capital stock are duly authorized, validly issued, fully paid and non-assessable. The number Shares owned by each of the Shareholders as of the date of this Agreement and immediately prior to the Closing are set forth on Exhibit A . No legend or other reference to any purported Encumbrance appears upon any certificate evidencing the Shares. There are no contracts, agreements or understandings relating to the issuance, sale or transfer of any shares of capital stock or other securities of the Company. There are no outstanding subscriptions, calls, commitments, warrants or options for the purchase of shares of any capital stock or other securities of the Company or any securities convertible into or exchangeable for shares of capital stock or other securities issued by the Company, or any other commitments of any kind for the issuance of additional shares of capital stock or other securities issued by the Company. None of the outstanding capital stock or equity interests or other securities of the Company was issued in violation of the Securities Act or any other Legal Requirement. The Company does not own, nor has any Contract to acquire, any equity securities or other securities of any Person or any direct or indirect equity or ownership interest in any other business.

     4.4 Financial Statements . The Company has delivered to Buyer: (i) an unaudited balance sheet of the Company as of July 31, 2005 (the “Balance Sheet”), and the related profit and loss statements for the period from January 1, 2005 through July 31, 2005 (referred to, collectively with the Balance Sheet, as the “Financial Statements”). The Financial Statements fairly present the financial condition and the results of operations of the Company as of the respective dates of, and for the periods referred to in, the Financial Statements, all in accordance with the books and records of the Company.

     4.5 Books and Records . The books of account and stock record books of the Company, all of which have been provided to the Buyer, are complete and correct in all respects and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls, and, with respect to the books of account, fairly and accurately reflect the income, expenses, assets and liabilities of the Company. The minute books of the Company contain, accurate records of all meetings held of, and corporate actions taken by, the shareholders, the boards of directors, and committees of the boards of directors of the Company. At the Closing, all of those books and records will be in the possession of the Company.

     4.6 Title to Properties; Encumbrances.

     (a) The Company has delivered to Buyer copies of the deeds and other instruments (as recorded) by which the Company acquired such real property and interests, and copies of all title insurance policies, opinions, abstracts, and surveys in the possession of the Company and relating to such property or interests.

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     (b) The Company has delivered a true and accurate copy of all such leases or other documents creating such real property interests to the Buyer and all such leases or documents are in full force and effect and are legal, valid, binding and enforceable against the Company and, the other parties thereto. Following the Closing, such leases or documents will continue to be in full force and effect and legal, valid, binding and enforceable against the Company and against all other parties thereto. There are no disputes, oral agreements or forbearances in effect as to any such leases.

     (c) The Company owns (with good and marketable title in the case of real property, subject only to the matters permitted by the following sentence) all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) that it purports to own located in the Facilities owned or operated by the Company or reflected as owned in the books and records of the Company, including all of the properties and assets reflected in the Balance Sheet (except for personal property sold since the date of the Balance Sheet in the Ordinary Course of Business), and all of the properties and assets purchased or otherwise acquired by the Company since the date of the Balance Sheet (except for personal property acquired and sold since the date of the Balance Sheet in the Ordinary Course of Business and consistent with past practice). All properties and assets reflected in the Balance Sheet are free and clear of all Encumbrances and are not, in the case of real property, subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except, with respect to all such properties and assets, (i) mortgages or security interests reflected in the Balance Sheet as securing specified liabilities or obligations or, with respect to which no default exists, (ii) mortgages or security interests incurred in connection with the purchase of property or assets after the date of the Balance Sheet (such mortgages and security interests being limited to the property or assets so acquired), (iii) liens for current taxes not yet due for which there are adequate reserves in the Financial Statements, and (iv) with respect to real property, (A) minor imperfections of title, if any, none of which is substantial in amount, materially detracts from the value or impairs the use of the property subject thereto, or impairs the operations of the Company, and (B) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto. All buildings, plants, and structures owned by the Company lie wholly within the boundaries of the real property owned by the Company and do not encroach upon the property of, or otherwise conflict with the property rights of, any other Person.

     4.7 Condition and Sufficiency of Assets . The buildings, plants, structures, motor vehicles and equipment of the Company are in good operating condition and repair, ordinary wear and tear excepted, and none of such buildings, plants, structures motor vehicles and equipment of the Company are in need of maintenance or repairs except for ordinary, routine maintenance and repairs. The buildings, plants, structures, motor vehicles and equipment of the Company are sufficient for the continued operation of the business of the Company after the Closing in substantially the same manner as conducted prior to the Closing.

     4.8 Accounts Receivable . All accounts receivable of the Company that are reflected on the Balance Sheet (collectively, the “Accounts Receivable”) represent valid obligations arising from sales actually made or services actually performed in the Ordinary Course of Business. There is no contest, claim or right of setoff, other than returns in the Ordinary Course of Business, with any obligor of any Accounts Receivable relating to the amount or validity of such Accounts Receivable.

     4.9 Inventory . The inventory as set forth on the Balance Sheet or arising since the date of the Balance Sheet was acquired and has been maintained in accordance with the regular business practices of the Company, consists of new and unused items, substantially all of which is commercially usable or saleable in the Ordinary Course of Business.

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     4.10 No Undisclosed Liabilities . The Company has no liabilities except for (a) liabilities, to the extent reflected or reserved against in the Balance Sheet, and (b) liabilities which have arisen in the Ordinary Course of Business since the date thereof.

     4.11 Taxes .

     (a) The Company has filed all Tax Returns that it is required to file. All such Tax Returns were correct and complete in all material respects. All taxes due and owing by any of the Company (whether or not shown on any Tax Return) have been paid. The Company is not currently the beneficiary of any extension of time within which to file any Tax Return.

     (b) There is no material dispute or claim concerning any Tax liability of the Company either (A) claimed or raised by any authority in writing or (B) as to which the Company or its directors or officers has knowledge based upon personal contact with an agent of such authority. No waiver of any statute of limitations with respect to any Tax Return has been given by the Company. All deficiencies asserted or assessments made as a result of any examinations have been fully paid.

     (c) There are no liens for Taxes upon any of the assets of the Company (other than liens for taxes not yet due and payable).

     (d) The Company is not a party to, is not bound by and has no obligation under any Tax sharing allocation or indemnity agreement or similar Contract or arrangement.

     (e) The Company has never been a member of an affiliated group of corporations, within the meaning of IRC § 1504, except for a consolidated group of which the Company is the common parent.

     (f) The Company has never filed a consent pursuant to the collapsible corporation provisions of IRC § 341(f) (or any corresponding provision of state, local or foreign income Tax law) or agreed to have IRC § 341(f)(2) (or any corresponding provision of state, local or foreign income Tax law) apply to any disposition of any asset owned by it.

     (g) None of the assets of the Company is property that the Company is required to treat as being owned by any other Person pursuant to the “safe harbor lease” provisions of former IRC § 168(f)(8).

     (h) None of the assets of the Company directly or indirectly secures any debt the interest on which is Tax-exempt under IRC § 103(a).

     (i) None of the assets of the Company is “tax-exempt use property” within the meaning of IRC § 168(h).

     (j) The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any change in method of accounting for a taxable period ending on or prior to the Closing Date.

     (k) The Company has never participated in nor is participating in an international boycott within the meaning of IRC § 999.

     (l) The Company has complied with the withholding, reporting and remittance requirements of IRC §§ 1441-1464, IRC §§ 3101-3102, IRC §§ 3401-3406, IRC § 6041 and IRC § 6049.

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     (m) The unpaid Taxes of the Company (A) do not, as of the date of the Balance Sheet, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Balance Sheet (rather than in any notes thereto) and (B) will not exceed that reserve as adjusted for operations and transactions through the Closing Date in accordance with the past custom and practices of the Acquired Company in filing its Tax returns.

     (n) The Company uses the accrual method of accounting for income tax purposes and, since its inception, has not made any change in accounting methods, received a ruling from any taxing authority (or other Governmental Authority) or signed an agreement with any taxing authority (or other Governmental Authority) relating to the Company’s method of accounting for income tax purposes.

     (o) No power of attorney granted by the Company with respect to any Taxes is currently in force.

     (p) No Shareholder of the Company is a Person other than a United States Person within the meaning of the IRC.

     (q) The Company is not subject to any joint venture, partnership or other arrangement or contract that could be treated as a partnership for federal or applicable state income tax purposes or for any other Tax purposes.

     (r) The Company has provided to the Buyer a listing of each state, local and foreign jurisdiction in which the Company is required to file or be included in a Tax Return. No written claim has ever been received by the Company from a taxing authority or other Governmental Body in a jurisdiction where the Acquired Company does not pay Taxes or file Tax Returns that the Company is or may be subject to Taxes assessed by such jurisdiction, no such claim has been or is Threatened by a taxing authority or other Governmental Body.

     (s) The Company neither has nor has had a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States and such foreign jurisdiction.

     (t) The Company has not participated in a transaction that has been specifically identified by the IRS as a tax avoidance transaction or that is subject to either the disclosure list maintenance or registration requirements of IRC §§ 6011, 6111 or 6112 and the regulations thereunder, and has not disclosed any transactions to the IRS under any penalty amnesty program.

     4.12 Compliance with Legal Requirements; Governmental Authorizations .

     (a) (i) The Company is, and at all times has been, in compliance with each material Legal Requirement that is or was applicable to it or to the conduct or operation of the Company’s business or the ownership or use of any of its assets; (ii) no event has occurred or circumstance exists that (with or without notice or lapse of time) (A) could reasonably be expected to constitute or result in a violation by the Company, or a failure on the part of the Company to comply with, any Legal Requirement or (B) could reasonably be expected to give rise to any obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature; and (iii) the Company has not received any written or other notice or communication from any Governmental Body or any other Person regarding (A) any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement by the Company or (B) any actual, alleged, possible or potential obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature.

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     (b) (i) The Company is, and at all times has been, in full compliance with all of the terms and requirements of each Governmental Authorization; (ii) no event has occurred or circumstance exists that may (with or without notice or lapse of time) (A) constitute or result directly or indirectly in a violation of or a failure to comply with any term or requirement of any Governmental Authorization or (B) result directly or indirectly in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Governmental Authorization; (iii) the Company has not received, any written or, other notice or communication from any Governmental Body or any other Person regarding (A) any actual, alleged, possible or potential violation of or failure to comply with any term or requirement of any Governmental Authorization or (B) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of or modification to any Governmental Authorization; and (iv) all applications required to have been filed for the renewal of the Governmental Authorizations have been duly filed on a timely basis with the appropriate Governmental Bodies, and all other material filings required to have been made with respect to such Governmental Authorizations have been duly made on a timely basis with the appropriate Governmental Bodies.

     4.13 Legal Proceedings; Orders .

     (a) There is no pending Proceeding: (i) that has been commenced by or against the Company, or that otherwise relates to or may affect the business of, or any of the assets owned or used by, the Company; or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Transactions. No such Proceeding has been Threatened. No event has occurred or circumstance exists that could reasonably be expected to give rise to or serve as a basis for the commencement of any such Proceeding. The Company has delivered to the Buyer copies of all pleadings, correspondence, and other documents relating to any Proceeding.

     (b) There is no Order: (i) to which the Company or any of the assets owned or used by the Company is subject; (ii) to which the Company is subject that relates to the business of, or any of the assets owned or used by, the Company; and (iii) to which any officer, director or key employee of the Company is subject that prohibits such officer, director, agent or employee from engaging in or continuing any conduct, activity or practice relating to the business of the Company or otherwise.

     (c) The Company is not in violation of any Order to which it is subject. No event has occurred or circumstance exists that may constitute or result in (with or without notice or lapse of time) a violation of or failure to comply with any term or requirement of any Order to which the Company or any of the assets owned or used by the Company is subject. The Company has not received, any written or other notice or communication from any Governmental Body or any other Person regarding any actual, alleged, possible or potential violation of, or failure to comply with, any term or requirement of any Order to which the Company or any of the assets owned or used by the Company, is or has been subject.

     4.14 Contracts; No Defaults.

     (a) The Company has made available to the Buyer true and complete copies, of each of the following Contracts to which the Company is a party or by which any of their respective assets and properties is bound:

          (i) each Contract (other than routine purchase orders) that involves or will involve performance of services or delivery of goods by the Company;

          (ii) each lease, rental or occupancy agreement, license, installment and conditional sale agreement of the Company and each other Contract affecting the ownership, leasing or use of, title to, or any leasehold or other interest in, any real or personal property;

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          (iii) each licensing or royalty agreement or similar with respect to patents, trademarks, copyrights or other Employed Intellectual Property, including all agreements with current or former employees, consultants or contractors regarding the appropriation or the non-disclosure orally of the Employed Intellectual Property, and perpetual, paid-up licenses for commonly available software programs;

          (iv) each collective bargaining agreement or other Contract with any labor union or other employee representative of a group of employees and each other written employment or consulting agreement with any employees or consultants;

          (v) each joint venture or partnership Contract (however named) or similar Contracts involving a sharing of profits, losses, costs or liabilities by the Company with any other Person;

          (vi) each Contract containing covenants that in any way purport to restrict the business activity of the Company or any of its Affiliates or limit the freedom of the Company or any of its Affiliates to engage in any line of business or to compete with any Person;

          (vii) each Contract providing for payments to or by any Person based on sales, purchases or profits, other than direct payments for goods and salesman commission agreements;

          (viii) each power of attorney granted by or to the Company that is currently, or will be at the Closing, effective and outstanding;

          (ix) each Contract for capital expenditures;

          (x) each Contract between the Company and its former or current shareholders, directors, officers and employees or other Contract providing for a commitment of employment, consulting or management services;

          (xi) each written warranty, guaranty, and or other similar undertaking with respect to contractual performance extended by the Company, other than in the Ordinary Course of Business;

          (xii) each Contract, the termination of or default under which could reasonably be expected to have a Material Adverse Effect on the Company;

          (xiii) each Contract (other than this Agreement) that (A) limits or restricts the ability of the Company to declare or pay dividends on, to make any other distribution in respect of or to issue or purchase, redeem or otherwise acquire its capital stock, to incur indebtedness, to incur or suffer to exist any Encumbrance, to purchase or sell any assets and properties, to change the lines of business in which it participates or engages or to engage in any merger or other business combination or (B) requires the Company to maintain specified financial ratios or levels of net worth or other indicia of financial condition;

          (xiv) each Contract under which the Company has advanced or loaned any funds;

          (xv) each Contract under which the Company subcontracts work to third parties outside of the Ordinary Course of Business;

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          (xvi) each Contract between or among the Company, on the one hand, and any Shareholder or any of their affiliates, on the other hand;

          (xvii) each Contract (other than routine purchase orders) that (A) involves the obligation to make a payment, pursuant to the terms of any such Contract, by or to the Company and (B) cannot be terminated within 30 days after giving notice of termination without resulting in any cost or penalty to any Acquired Company; and

          (xviii) each amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing.

     (b) Each Contract is in full force and effect and binding upon the Company and constitutes a legal, valid and binding agreement of each other party thereto, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar creditor’s rights laws. The Company has performed (and has no present expectations of not fully performing) all obligations required to be performed by it in connection with the Contracts and the Company is not in material violation of or material default under any such Contract (or with notice or lapse of time or both, would be in violation of or default under any such Contract) and no Contract has been canceled by any party thereto.

     (c) The Company has not given to or received from any other Person any written or other notice or communication regarding any actual, alleged, possible or potential violation or breach of, or default under, any Contract.

     (d) There are no renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate any amounts paid or payable to the Company under any Contract and no Party to any Contract has made written demand for such renegotiation. No current customer has informed the Company that it shall stop or decrease its rate of business with the Company or that it desires to renegotiate any Contract.

     4.15 Insurance . The Company has delivered to the Buyer a true and correct list of all insurance policies that are currently held by the Company. All insurance policies are in the name of the Company, are outstanding and in full force and effect, and all premiums due for such polices are currently paid. Since December 31, 2004, the Company has not received notice of cancellation or termination of any such policy, nor has it been denied or had revoked or rescinded any policy of insurance, nor has it borrowed against any such policies. The Company carries, or is covered by, insurance with companies that as of the date of this Agreement are financially sound and reputable in such amounts with such deductibles and against such risks and losses as are reasonable for the business and assets of the Company.

     4.16 Environmental Matters .

     (a) The Facilities for which the Company is legally responsible (i) are in compliance with Environmental Laws and


 
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