EXHIBIT 10.4
ASSET PURCHASE AGREEMENT WITH NPS, INC.
EHXIBIT 10.4
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made and entered
into as of the 1st day of December 2006 by and among National Professional
Services Inc., a Delaware corporation ("NPS"), Xxxxxxx XxXxxxxx, an individual
and shareholder of NPS ("XxXxxxxx"), Xxxxxx Xxxxxx, an individual and
shareholder of NPS ("Xxxxxx"), Xxxxx Xxxxxxxx, an individual and shareholder of
NPS ("Beaumont"), Xxxx Xxxxxx, an individual and shareholder of NPS ("Xxxxxx"),
Xxxxxxx Xxxxx, an individual and shareholder of NPS ("Xxxxx"), Xxx X. Xxxxxxxxx,
an individual and shareholder of NPS ("Xxxxxxxxx") (LaPierre, Ragain, Beaumont,
Taylor, Siler, and Xxxxxxxxx collectively, the "Seller"), and Environmental
Service Professionals, Inc., a Nevada corporation (the "Buyer" or "Company"),
with respect to the following facts:
R E C I T A L S
A. Seller owns 100% of the total issued and outstanding capital
stock of NPS.
B. NPS is engaged in the business of developing, marketing, and
selling a Web based moisture management report system (the
"Business").
C. The Company desires to acquire from LaPierre, Ragain,
Beaumont, Taylor, Siler, and Xxxxxxxxx and LaPierre, Ragain,
Beaumont, Taylor, Siler, and Xxxxxxxxx desire to sell to the
Company 100% of the total issued and outstanding stock of NPS
in exchange for $175,000 in cash and 425,000 shares of the
Company's common stock (the "Shares"), 225,000 of which Shares
will be subject to a call option ("Call Option").
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged by the parties to this Agreement,
and in light of the above recitals to this Agreement, the parties to this
Agreement hereby agree as follows:
1. SALE AND PURCHASE
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1.1 SALE AND PURCHASE OF STOCK. In consideration for the Purchase Price
(as defined in Section 1.2 of this Agreement) and the other covenants of the
Company in this Agreement, LaPierre, Ragain, Beaumont, Taylor, Siler, and
Xxxxxxxxx hereby agree to convey to the Company all of their capital stock (the
"NPS Stock") and right, title and interest in and to NPS, on the Closing Date
(as defined in Section 5.1 of this Agreement).
1.2 PURCHASE PRICE. As consideration for the sale by LaPierre, Ragain,
Beaumont, Taylor, Siler, and Xxxxxxxxx of the shares of NPS Stock to the Company
on the Closing Date (as defined in Section 5.1 of this Agreement), the Company
will pay to the Seller the following (the "Purchase Price"): (i) $175,000 in
cash (the "Cash Payment") (ii) 425,000 shares (the "Shares") of the Company's
common stock (the "Stock Payment"); provided however, that the Company will have
the right the repurchase all or any portion of 225,000 of the Shares for a
repurchase price of $1.00 per Share at any time during the first twelve months
following the Closing Date (the "Call Option"), and (iii) a 36 month
non-exclusive license to Healthy World Environmental, Inc., an Oregon
corporation owned by Xxxxxx, and Bio Science Services West, a company owned by
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Xxxxxx, to teach the Certified Mold Professional program. Unless registered
under the Securities Act of 1933, as amended, prior to issuance to Seller, the
Shares will bear the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED
UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
The Shares will also bear the following legend regarding the Company's Call
Option:
"THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A CALL OPTION WHICH EXPIRES ON TWELVE MONTHS AFTER THE CLOSING 2007."
2. NON-COMPETE.
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As an inducement to Buyer to enter into and to perform its obligations
under this Agreement, LaPierre, Ragain, and Beaumont covenant to enter into a
non-compete agreement with the Buyer on or before the Closing Date pursuant to
which LaPierre, Ragain, and Beaumont will agree that for a period of the shorter
of (i) five years from the Closing Date or (ii) 30 months from the date of
termination of each respective Consulting Agreement referenced in Section 3 of
this Agreement, and in any event while LaPierre, Ragain, Beaumont are employees,
officers, directors, or consultants of the Buyer or any of its affiliates, they
will not directly or indirectly, whether (a) as employees, agents, consultants,
employers, principal, partners, officers or directors; (b) holders of more than
five percent of any class of equity securities or more than five percent of the
aggregate principal amount of any class of equity securities or more than five
percent of the aggregate principal amount of any class of debt, notes or bonds
of a company with publicly traded equity securities; or (c) in any other
individual or representative capacities whatsoever, in each case for their own
account or the account of any other person or entity, engage in any business or
trade competing with the then business or trade of the Buyer or its affiliates
in the United States (the "Non-Compete Agreement"). LaPierre, Ragain, and
Beaumont acknowledge that the restrictions set forth in this Section 2 are fair
and reasonable with respect to their duration, scope and area. If, at the time
of enforcement of this Section 2, a court holds that the duration, scope or area
restrictions stated herein are unreasonable under circumstances then existing,
the parties agree that the maximum duration, scope or area reasonable under such
circumstances will be substituted for the stated duration, scope or area. In the
event of any breach of any provisions of this Section 2, Buyer will have the
right, in addition to any other rights and remedies existing in its favor
hereunder, to enforce its rights and the obligations of LaPierre, Ragain, and
Beaumont under this Section 2 not only by an action or actions for damages but
also by an action or actions for specific performance and/or injunctive or other
equitable relief in order to enforce or prevent any violations of the provisions
of this Section 4. The parties agree that the sum of ten thousand dollars
($10,000) of the cash portion of the Purchase Price will be allocated to the
covenant not to compete set forth in Section 2 of this Agreement.
3. CONSULTING AGREEMENTS.
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3.1. XXXXXXXX AND XXXXXX. On the Closing Date (as defined in Section
5.1 of this Agreement), the Company will enter into a consulting agreement with
each of XxXxxxxx and Xxxxxx pursuant to which XxXxxxxx and Xxxxxx will promote,
market, and lobby the Company's training program and on-line inspection software
system in consideration for which XxXxxxxx and Xxxxxx will each receive 10% of
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the gross receipts earned by the Company from such training program and 10% of
the gross receipts earned by the Company from fees generated by such on-line
inspection software system, respectively. Notwithstanding the foregoing,
XxXxxxxx and Xxxxxx agree to provide the following services to the Company on an
exclusive basis, free of charge: (i) transition services for a period of thirty
(30) days from the Closing Date, and (ii) introductions to all relevant contacts
related to the continued marketing, development, and lobbying of the NPS assets
for a period of ninety (90) days after the Closing Date.
3.2 BEAUMONT. On the Closing Date, the Company and Beaumont will enter
into a consulting agreement pursuant to which Beaumont will receive $2,000 per
month for a period of twelve months from the Closing Date in consideration for
providing the Company with five (5) days per month of technical support for the
NPS on-line software system. Notwithstanding the foregoing, Beaumont agrees to
provide introductions to the Company free of charge to all relevant contacts
related to the continued marketing, development, and lobbying of the NPS assets
for a period of ninety (90) days from the date first above written on this
Agreement.
4. FORMATION OF NATIONAL ASSOCIATION OF MOISTURE MANAGEMENT PROFESSIONALS.
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After the Closing, the Company agrees to spend up to $50,000 and to use
its best efforts to form the National Association of Moisture Management
Professionals ("NAMMP"). The Company agrees to name Beaumont a Director of
Education for NAMMP. The Company will retain the right to appoint up to 60% of
the governing members of NAMMP and will draft the NAMMP's controlling documents.
5. CLOSING AND FURTHER ACTS.
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5.1 TIME AND PLACE OF CLOSING. Upon satisfaction or waiver of the
conditions set forth in Section 8 of this Agreement, the closing of the
transactions contemplated by this Agreement (the "Closing") will take place at
0000 X. Xxxxxxxx Xxxxxx Xxx, Xxxx Xxxxxxx, Xxxxxxxxxx 00000 at 11:00 a.m. (local
time) on the date that the parties may mutually agree in writing, but in no
event later than January 25, 2007 (the "Closing Date"), unless extended by
mutual written agreement of the parties.
5.2 ACTIONS AT CLOSING. At the Closing, the following actions will
take place:
(a) Buyer will pay to Seller the Purchase Price as described
in Section 1.2 of this Agreement by delivery of (i) the appropriate
cash or cash equivalent, which will be deposited in a single account
designated by NPS in a writing delivered to the Buyer prior to the
Closing, and NPS will be solely responsible for disbursing said monies
among the appropriate parties, and (ii) stock certificates evidencing
the Stock Payment.
(b) Seller will tender to the Company certificates and any
other documents evidencing 100% of Seller's 100% ownership in NPS.
(c) NPS will deliver to Buyer copies of necessary resolutions
of the Board of Directors of NPS authorizing the execution, delivery,
and performance of this Agreement and the other agreements contemplated
by this Agreement for NPS' execution, and consummation of the
transactions contemplated by this Agreement, which resolutions have
been certified by an officer of NPS as being valid and in full force
and effect.
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(d) Buyer will deliver to Seller copies of corporate
resolutions of the Board of Directors of Buyer authorizing the
execution, delivery and performance of this Agreement and the other
agreements contemplated by this Agreement for Buyer's execution, if
any, and consummation of the transactions contemplated by this
Agreement, which resolutions have been certified by an officer of Buyer
as being valid and in full force and effect.
(e) Each of NPS and the Company will deliver to the other
party true and complete copies of each party's Certificate of
Incorporation and a Certificate of Good Standing from the appropriate
official of each party's jurisdiction of incorporation, which
certificates and certificates of good standing are dated not more than
30 days prior to the Closing Date.
(g) Any additional documents or instruments as a party may
reasonably request or as may be necessary to evidence and affect the
sale, assignment, transfer and delivery of the NPS Stock to the Buyer.
5.3 CONDUCT OF BUSINESS PRIOR TO CLOSING. After the execution of
this Agreement by the Buyer and until the Closing, NPS will:
(a) consistent with the ordinary course of business, maintain
the operations and goodwill of the Business and NPS, and continue its
relationships with persons having business dealings with NPS; and
(b) consistent with the ordinary course of business, maintain
all of the assets of NPS in their current condition, ordinary wear and
tear excepted, and insurance on all of said assets in such amounts and
of such kinds comparable to that in effect on the date of this
Agreement; and
(c) maintain the books, accounts and records of NPS using NPS'
normal business practices consistently applied, including recognition
of revenues and expenses, continue to collect accounts receivable and
pay accounts payable utilizing normal procedures and without
discontinuing or accelerating payment of such accounts and comply with
all contractual and other obligations applicable to the NPS; and
(d) not make any change to, or otherwise amend in any way, the
contracts with, salaries, wages or other compensation of, any officer,
director, agent or other similar representative of NPS (including any
increase in any benefits or benefit plan costs or any change in any
bonus, insurance, pension, compensation or other benefit plan); and
(e) not hire any officer, director, employee, agent or other
similar representative of NPS except employees hired in the normal
course of business; and
(f) not incur any indebtedness for borrowed money except in
the ordinary course of business, and not pledge or grant liens or
security interests in any of the NPS' Assets; and
(g) not sell, transfer or dispose of any assets except for
sales in the ordinary course of business; and
(h) not distribute any assets of NPS to any of its
shareholders or other affiliates of the NPS, or to any other party.
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5.4 NO SOLICITATION AND DUE DILIGENCE. NPS will not, nor will NPS
encourage, facilitate, solicit, or authorize any of its shareholders, directors,
officers, employees, agents or representatives to solicit or enter into any
discussion (or continue any discussion) with any third party (including the
provision of any information to a third party), or enter into any agreement or
understanding of any kind regarding the purchase, sale, lease, assignment,
conveyance or other disposition or acquisition of all or any portion of its
assets, the Business or any capital stock of NPS, for the period commencing on
the date first above written and extending until December 31, 2006. During this
period and until the Closing or termination of this Agreement, NPS will fully
cooperate with the Buyer, and it representatives to enable them to conduct
complete due diligence of NPS, the Business, and the books, records and
documents relating to NPS and the Business.
5.5 DUE DILIGENCE BY BUYER. Until the Closing, NPS and Seller will
fully cooperate with reasonable requests made by Buyer, and its representatives
to enable them to conduct due diligence of NPS.
6. REPRESENTATIONS AND WARRANTIES OF NPS AND SELLER.
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NPS and Seller represent and warrant to Buyer as follows:
6.1 POWER AND AUTHORITY; BINDING NATURE OF AGREEMENT. NPS and Seller
have full power and authority to enter into this Agreement and to perform their
obligations hereunder. The execution, delivery, and performance of this
Agreement by NPS has been duly authorized by all necessary action on its part.
Assuming that this Agreement is a valid and binding obligation of each of the
other parties hereto, this Agreement is a valid and binding obligation of NPS
and Seller. XxXxxxxx and Xxxxxx hereby specifically represent and warrant that
they have and each of them has a binding, valid and fully enforceable special
power of attorney coupled with an interest from Beaumont, Taylor, Xxxxx and
Xxxxxxxxx (collectively, the "Special Sellers") to execute this Agreement and
all related documents, and to take all appropriate action, on behalf of the
Special Sellers and each of them to implement all of the transaction
contemplated by this Agreement.
6.2 SUBSIDIARIES. There is no corporation, general partnership, limited
partnership, joint venture, association, trust or other entity or organization
that NPS directly or indirectly controls or in which NPS directly or indirectly
owns any equity or other interest.
6.3 GOOD STANDING. NPS (i) is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated,
(ii) has all necessary power and authority to own its assets and to conduct its
business as it is currently being conducted, and (iii) is duly qualified or
licensed to do business and is in good standing in every jurisdiction (both
domestic and foreign) where such qualification or licensing is required.
6.4 CHARTER DOCUMENTS AND CORPORATE RECORDS. NPS has delivered to Buyer
complete and correct copies or provided Buyer with the right to inspect true and
complete copies of all (i) the articles of incorporation, bylaws and other
charter or organizational documents of NPS, including all amendments thereto,
(ii) the stock records of NPS, and (iii) the minutes and other records of the
meetings and other proceedings of the shareholders and directors of NPS. NPS is
not in violation or breach of (i) any of the provisions of its articles of
incorporation, bylaws or other charter or organizational documents, or (ii) any
resolution adopted by its shareholders or directors. There have been no meetings
or other proceedings of the shareholders or directors of NPS that are not fully
reflected in the appropriate minute books or other written records of NPS.
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6.5 FINANCIAL STATEMENTS. NPS has delivered to Buyer the following
financial statements relating to NPS prior to the Closing (the "NPS Financial
Statements"): (i) the unaudited assets of NPS as of September 30, 2006 and (ii)
the unaudited statements of income for the years ended December 31, 2004 and
2005 and the nine months ended September 30, 2006 and the unaudited balance
sheet, statements of retained earnings and shareholders' equity for the month
ended September 30, 2006. Except as stated therein or in the notes thereto, the
NPS Financial Statements: (a) present fairly the financial position of NPS as of
the respective dates thereof and the results of operations and changes in
financial position of NPS for the respective periods covered thereby; and (b)
have been prepared in accordance with NPS' normal business practices applied on
a consistent basis throughout the periods covered. Buyer understands that
pursuant to Section 8.1(e) of this Agreement, the NPS Financial Statements will
be audited, prepared in accordance with GAAP and delivered to the Buyer prior to
the Closing at the expense of NPS.
6.6 CAPITALIZATION. The authorized capital stock of NPS consists of
1,500 shares of common stock, no par value per share, of which 1,500 shares are
issued and outstanding, and no shares of preferred stock. All of the outstanding
shares of the capital stock of NPS are validly issued, fully paid and
nonassessable, and have been issued in full compliance with all applicable
federal, state, local and foreign securities laws and other laws.
6.7 ABSENCE OF CHANGES. Except as otherwise set forth on Schedule 6.7
hereto or otherwise disclosed to Buyer in writing prior to the Closing, since
September 30, 2006:
(a) There has not been any material adverse change in the
business, condition, assets, operations or prospects of NPS and no
event has occurred or, to NPS' knowledge, is expected to occur after
the Closing that might have a material adverse effect on the business,
condition, assets, operations or prospects of NPS.
(b) NPS has not (i) declared, set aside or paid any dividend
or made any other contribution in respect of any shares of capital
stock, nor (ii) repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities.
(c) NPS has not sold or otherwise issued any shares of capital
stock or any other securities.
(d) NPS has not amended its articles of incorporation, bylaws
or other charter or organizational documents, nor has it effected or
been a party to any merger, recapitalization, reclassification of
shares, stock split, reverse stock split, reorganization or similar
transaction.
(e) NPS has not formed any subsidiary or contributed any funds
or other assets to any subsidiary.
(f) NPS has not purchased or otherwise acquired any assets,
nor has it leased any assets from any other person, except in the
ordinary course of business consistent with past practice.
(g) NPS has not made any capital expenditure outside the
ordinary course of business or inconsistent with past practice, or in
an amount exceeding ten thousand dollars ($10,000) singly or in excess
of fifty thousand dollars ($50,000) in the aggregate, without Buyer's
consent.
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(h) NPS has not sold or otherwise transferred any assets to
any other person, except in the ordinary course of business consistent
with past practice and at a price equal to the fair market value of the
assets transferred.
(i) There has not been any loss, damage or destruction to any
of the properties or assets of NPS (whether or not covered by
insurance).
(j) NPS has not written off as uncollectible any indebtedness
or accounts receivable, except for write offs that were made in the
ordinary course of business consistent with past practice and that
involved less than $10,000 singly and less than $50,000 in the
aggregate.
(k) NPS has not leased any assets to any other person except
in the ordinary course of business consistent with past practice and at
a rental rate equal to the fair rental value of the leased assets.
(l) NPS has not mortgaged, pledged, hypothecated or otherwise
encumbered any assets, except in the ordinary course of business
consistent with past practice.
(m) NPS has not entered into any contract, or incurred any
debt, liability or other obligation (whether absolute, accrued,
contingent or otherwise), except for (i) contracts that were entered
into in the ordinary course of business consistent with past practice
and that have terms of less than six months and do not contemplate
payments by or to NPS which will exceed, over the term of the contract,
ten thousand dollars ($10,000) in the aggregate, and (ii) current
liabilities incurred in the ordinary course of business consistent with
the past practice.
(n) NPS has not made any loan or advance to any other person,
except for advances that have been made to customers in the ordinary
course of business consistent with past practice and that have been
properly reflected as "accounts receivables."
(o) Other than annual raises or bonuses paid or provided
consistent with past business practices, NPS has not paid any bonus to,
or increased the amount of the salary, fringe benefits or other
compensation or remuneration payable to, any of the directors, officers
or employees of NPS.
(p) No contract or other instrument to which NPS is or was a
party or by which NPS or any of its assets are or were bound has been
amended or terminated, except in the ordinary course of business
consistent with past practice.
(q) NPS has not discharged any lien or discharged or paid any
indebtedness, liability or other obligation, except for current
liabilities that (i) are reflected in the NPS Financial Statements as
of September 30, 2006 or have been incurred since September 30, 2006 in
the ordinary course of business consistent with past practice, and (ii)
have been discharged or paid in the ordinary course of business
consistent with past practice.
(r) NPS has not forgiven any debt or otherwise released or
waived any right or claim, except in the ordinary course of business
consistent with past practice.
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(s) NPS has not changed its methods of accounting or its
accounting practices in any respect.
(t) NPS has not entered into any transaction outside the
ordinary course of business or inconsistent with past practice.
(u) NPS has not agreed or committed (orally or in writing) to
do any of the things described in clauses (b) through (t) of this
Section 6.7.
6.8 ABSENCE OF UNDISCLOSED LIABILITIES. NPS has no debt, liability or
other obligation of any nature (whether due or to become due and whether
absolute, accrued, contingent or otherwise) that is not reflected or reserved
against in the NPS Financial Statements as of September 30, 2006, except for
obligations incurred since September 30, 2006 in the ordinary and usual course
of business consistent with past practice.
6.9 CONTRACTS.
(a) NPS has delivered to Buyer a complete and accurate list
and provided Buyer with true and complete copies of all contracts or
agreements of NPS which are (i) material to the Business as currently
conducted; (ii) are subject to default or termination upon a change in
control of NPS; (iii) create a partnership or joint venture; (iv)
impose a noncompetition obligation on NPS, or an officer, director or
employee thereof; or (v) relating to the employment of any individual
on a full-time, part-time, consulting, or other basis (collectively,
"Material Contracts").
(b) Each Material Contract is in full force and effect and is
valid and enforceable in accordance with its terms.
(c) No event has occurred or circumstance exists that may
contravene, conflict with or result in a violation or breach of, or
give any party to a Material Contract the right to declare a default or
exercise any remedy thereunder, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify any Material
Contract.
(d) Neither NPS nor any of its affiliates have received any
written notice regarding any actual, alleged or potential violation or
breach of, or default under, any Material Contract which has not been
entirely cured.
6.10 ACCOUNTS RECEIVABLE. Except as otherwise disclosed in writing to
Buyer prior to the Closing, all of NPS' accounts receivable represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of Business and have been collected or are collectible in
the lawful and ordinary course of business as heretofore conducted, subject to
the reserve for bad debt recorded on the NPS Financial Statements.
6.11 NPS ASSETS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in
a breach of the terms and conditions of, or result in a loss of rights
under, or result in the creation of any lien, charge or encumbrance
upon, any of the assets of the Business.
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(b) NPS has good and marketable title to all of its assets,
free and clear of all mortgages, liens, leases, pledges, charges,
encumbrances, equities or claims, except as expressly disclosed in
writing by Seller to Buyer prior to the Closing Date.
(c) NPS owns all copyrights, trademarks, and tradenames
related to the Business and the use of such copyrights, trademarks, and
tradenames has not and will not infringe on the rights of any third
party.
(d) NPS' assets are not subject to any material liability,
absolute or contingent, which has not been disclosed by Seller to Buyer
in writing prior to the Closing Date nor is NPS subject to any
liability, absolute or contingent, which has not been disclosed to and
acknowledged by Buyer in writing prior to the Closing Date.
(e) Seller has provided to Buyer in writing an accurate
description of all of the assets of NPS or used in the business of NPS.
(f) Seller has provided to Buyer in writing a list of all
contracts, agreements, licenses, leases, arrangements, commitments and
other undertakings to which NPS is a party or by which it or its
property is bound. Except as specified by Seller to Buyer in writing
prior to the Closing Date, all of such contracts, agreements, leases,
licenses and commitments are valid, binding and in full force and
effect.
(g) All of the machinery, equipment, furniture and fixtures as
of the Closing Date will be in the same condition as on the date of
this Agreement, normal wear and tear excepted. NPS hereby conveys to
Buyer (to the extent it is able under the applicable warranty
documents) any and all product warranty or similar rights that NPS may
have against third parties in respect of the condition of any assets.
6.12 COMPLIANCE WITH LAWS; LICENSES AND PERMITS. NPS is not in
violation of, nor has it failed to conduct its business in full compliance with,
any applicable federal, state, local or foreign laws, regulations, rules,
treaties, rulings, orders, directives or decrees. NPS has delivered to Buyer a
complete and accurate list and provided Buyer with the right to inspect true and
complete copies of all of the licenses, permits, authorizations and franchises
to which NPS is subject and all said licenses, permits, authorizations and
franchises are valid and in full force and effect. Said licenses, permits,
authorizations and franchises constitute all of the licenses, permits,
authorizations and franchises necessary to permit NPS to conduct its business in
the manner in which it is now being conducted, and NPS is not in violation or
breach of any of the terms, requirements or conditions of any of said licenses,
permits, authorizations or franchises.
6.13 TAXES. Except as disclosed herein, NPS has accurately and
completely filed with the appropriate United States state, local and foreign
governmental agencies all tax returns and reports required to be filed (subject
to permitted extensions applicable to such filings), and has paid or accrued in
full all taxes, duties, charges, withholding obligations and other governmental
liabilities as well as any interest, penalties, assessments or deficiencies, if
any, due to, or claimed to be due by, any governmental authority (including
taxes on properties, income, franchises, licenses, sales and payrolls). (All
such items are collectively referred to herein as "Taxes"). The NPS Financial
Statements fully accrue or reserve all current and deferred taxes. NPS is not a
party to any pending action or proceeding, nor is any such action or proceeding
threatened by any governmental authority for the assessment or collection of
Taxes. No liability for taxes has been incurred other than in the ordinary
course of business. There are no liens for Taxes except for liens for property
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taxes not yet delinquent. NPS is not a party to any Tax sharing, Tax allocation,
Tax indemnity or statute of limitations extension or waiver agreement and in the
past year has not been included on any consolidated combined or unitary return
with any entity other than NPS. NPS has duly withheld from each payment made to
each person from whom such withholding is required by law the amount of all
Taxes or other sums (including but not limited to United States federal income
taxes, any applicable state or municipal income tax, disability tax,
unemployment insurance contribution and Federal Insurance Contribution Act
taxes) required to be withheld therefrom and has paid the same to the proper tax
authorities prior to the due date thereof. To the extent any Taxes withheld by
NPS have not been paid as of the Closing Date because such Taxes were not yet
due, such Taxes will be paid to the proper tax authorities in a timely manner.
All Tax returns filed by the NPS are accurate and comply with and were prepared
in accordance with applicable statutes and regulations.
6.14 ENVIRONMENTAL COMPLIANCE MATTERS. To the best of the knowledge of
NPS, without conducting any study or independent investigation, NPS has at all
relevant times with respect to the Business been in material compliance with all
environmental laws, and has received no potentially responsible party notices or
similar notices from any governmental agencies or private parties concerning
releases or threatened releases of any "hazardous substance" as that term is
defined under 42 U.S.C. 960(1)(14).
6.15 COMPENSATION. Since September 30, 2006, NPS has not paid or
committed to pay to or for the benefit of any of its officers or directors any
compensation of any kind other than wages, salaries and benefits at times and
rates in effect on September 30, 2006, subject to wage increases of less than
ten percent paid or payable to employees other than officers and directors, nor
have they effected or agreed to effect any amendment or supplement to any
employee profit sharing, stock option, stock purchase, pension, bonus,
incentive, retirement, medical reimbursement, life insurance, deferred
compensation or any other employee benefit plan or arrangement. NPS does not
have any bonus plan or obligations with respect to any bonus plan. NPS has
provided Buyer with a full and complete list of all officers, directors,
employees and consultants of NPS as of the date hereof, specifying their names
and job designations, their dates of hire, the total amount paid or payable as
wages, salaries or other forms of direct compensation, and the basis of such
compensation, whether fixed or commission or a combination thereof.
6.16 NO DEFAULT.
(a) Each of the contracts, agreements or other instruments of
NPS and each of the standard Customer Agreements or contracts of NPS is
a legal, binding and enforceable obligation by or against NPS, subject
to the effect of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar federal or state laws affecting the rights
of creditors and the effect or availability of rules of law governing
specific performance, injunctive relief or other equitable remedies
(regardless of whether any such remedy is considered in a proceeding at
law or in equity). No party with whom NPS has an agreement or contract
is in default thereunder or has breached any terms or provisions
thereof which is material to the conduct of NPS' business.
(b) NPS has performed, or is now performing, the obligations
of, and NPS is not in material default (or would by the lapse of time
and/or the giving of notice be in material default) in respect of, any
contract, agreement or commitment binding upon it or its assets or
properties and material to the conduct of its Business. No third party
has raised any claim, dispute or controversy with respect to any of the
executory contracts of NPS, nor has NPS received notice of warning of
alleged nonperformance, delay in delivery or other noncompliance by NPS
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with respect to its obligations under any of those contracts, nor are
there any facts which exist indicating that any of those contracts may
be totally or partially terminated or suspended by the other parties
thereto.
6.17 BUSINESS AND CUSTOMERS. NPS has provided Buyer a complete and
accurate list and provided Buyer with the right to inspect true and complete
copies of (a) a written list of all its customers as of the Closing Date, (b)
the amount for which each such customer was invoiced during the nine month
period ending September 30, 2006, and (c) the expiration date of the NPS'
contracts with such customers. Except as otherwise disclosed to Buyer in
writing, NPS has received no notice and, has no reason to believe, that any
significant customer of NPS (i) has ceased, or will cease, to use the products,
goods, or services of NPS, (ii) has substantially reduced, or will substantially
reduce, the use of products, goods, or services of NPS or (iii) has sought, or
is seeking, to reduce the price it will pay for products, goods, or services of
NPS, including in each case after the consummation of the transactions
contemplated hereby. No customer of NPS described in clause (a) of this section
has otherwise threatened to take any action described in the preceding sentence
as a result of the consummation of the transactions contemplated by this
Agreement.
6.18 SUPPLIERS. NPS has provided Buyer with (a) the names of all
suppliers from which NPS ordered inventories and other products, goods, and
services with an aggregate purchase price for each such supplier of $10,000 or
more during the nine month period ended September 30, 2006 and (b) the amount
for which each such supplier invoiced NPS during such period. NPS has not
received any notice from any such supplier indicating that there is or will be a
material change in the price of such items or services, and has no reason to
believe that there will be any such material change in the price of such items
or services, or that any such supplier (other than Buyer) will not sell such
items to NPS at any time after the Closing Date on terms and conditions similar
to those used in its current sales to NPS, subject to general and customary
price increases. No supplier to NPS described in clause (a) of the first
sentence of this section has otherwise threatened to take any action described
in the preceding sentence as a result of the consummation of the transactions
contemplated by this Agreement.
6.19 PRODUCT WARRANTIES. Except as otherwise disclosed in writing to
Buyer prior to the Closing and for warranties under applicable law, (a) there
are no warranties, express or implied, written or oral, with respect to the
products of NPS, (b) there are no pending or threatened claims with respect to
any such warranty, and (c) NPS has no, and after the Closing Date, will have no,
liability with respect to any such warranty, whether known or unknown, absolute,
accrued, contingent, or otherwise and whether due or to become due, other than
customary returns in the ordinary course of business that are fully reserved
against in the NPS Financial Statements.
6.20 PROPRIETARY RIGHTS.
(a) NPS has provided Buyer in writing a complete and accurate
list and provided Buyer with the right to inspect true and complete
copies of all software, patents and applications for patents,
trademarks, trade names, service marks, and copyrights, and
applications therefore, owned or used by NPS or in which it has any
rights or licenses, except for software used by NPS and generally
available on the commercial market. NPS has provided Buyer with a
complete and accurate description of all agreements or provided Buyer
with the right to inspect true and complete copies of all agreements of
NPS with each officer, employee or consultant of NPS providing NPS with
title and ownership to patents, patent applications, trade secrets and
inventions developed or used by NPS in its business. To NPS' knowledge,
all of such agreements are valid, enforceable and legally binding,
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subject to the effect or availability of rules of law governing
specific performance, injunctive relief or other equitable remedies
(regardless of whether any such remedy is considered in a proceeding at
law or in equity).
(b) NPS owns or possesses licenses or other rights to use all
computer software, software programs, patents, patent applications,
trademarks, trademark applications, trade secrets, service marks, trade
names, copyrights, inventions, drawings, designs, customer lists,
propriety know-how or information, or other rights with respect thereto
(collectively referred to as "Proprietary Rights"), used in the
business of NPS, and the same are sufficient to conduct NPS' business
as it has been and is now being conducted.
(c) To NPS' knowledge, the operations of NPS do not conflict
with or infringe, and no one has asserted to NPS that such operations
conflict with or infringe on any Proprietary Rights owned, possessed
or used by any third party. There are no claims, disputes, actions,
proceedings, suits or appeals pending against NPS with respect to any
Proprietary Rights, and to the knowledge of the management of NPS none
has been threatened against NPS. To the best knowledge of the
management of NPS there are no facts or alleged fact which would
reasonably serve as a basis for any claim that NPS does not have the
right to use, free of any rights or claims of others, all Proprietary
Rights in the development, manufacture, use, sale or other disposition
of any or all products or services presently being used, furnished or
sold in the conduct of the business of NPS as it has been and is now
being conducted.
(d) To NPS' knowledge, no employee of NPS is in violation of
any term of any employment contract, proprietary information and
inventions agreement, non-competition agreement, or any other contract
or agreement relating to the relationship of any such employee with NPS
or any previous employer.
6.21 INSURANCE. NPS has provided Buyer with a complete and accurate
list of all policies of insurance and provided Buyer with the right to inspect
true and complete copies of all policies of insurance to which NPS is a party or
is a beneficiary or named insured as of the Closing Date. NPS has in full force
and effect, with all premiums due thereon paid, the policies of insurance set
forth therein. All the insurable properties of NPS are insured in amounts and
coverage and against risks and losses which are adequate and usually insured
against by persons holding or operating similar properties in similar
businesses. There were no claims in excess of $10,000 asserted or currently
outstanding under any of the insurance policies of NPS in respect of all motor
vehicle, general liability, errors and omissions, workers compensation, and
medical claims during the calendar year ending on December 31, 2005 or the nine
months ending September 30, 2006.
6.22 LABOR RELATIONS. None of the employees of NPS are represented by
any union or are parties to any collective bargaining arrangement, and no
attempts are being made to organize or unionize any of NPS' employees. Except as
disclosed in writing to Buyer prior to the Closing, there is not presently
pending or existing, and there is not presently threatened, any (a) strike,
slowdown, picketing, work stoppage or employee grievance process, or (b) action,
arbitration, audit, hearing, investigation, litigation, or suit (whether civil,
criminal, administrative, investigative, or informal) against or affecting NPS
relating to the alleged violation of any legal requirement pertaining to labor
relations or employment matters. NPS is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, occupational safety and health and is not engaged
in any unfair labor practices. NPS is in compliance with the Immigration Reform
and Control Act of 1986.
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6.23 EMPLOYEE BENEFITS. NPS has provided Buyer with a complete and
accurate list of all employee payroll and benefit plans of the NPS and provided
Buyer with the right to inspect true and complete copies of all employee payroll
and benefit plans of NPS (i) currently in effect, and (ii) with respect to which
NPS may have any liability or obligation (the "Employee Plans"). NPS has made
available to Buyer a copy of each Employee Plan, including any amendments
thereto and all related trust agreements and insurance contracts and, to the
extent any Employee Plan is not in writing, a short summary of such plan has
been provided to Buyer. All Employee Plans have been administered in substantial
compliance with their terms, except for any noncompliance that could not be
reasonably expected to have a material adverse effect on NPS, its Business, or
the Acquired Assets. Except as disclosed to Buyer by NPS in writing, none of the
employees of NPS are covered by a collective bargaining agreement or any
multi-employer plan.
6.24 S CORPORATION STATUS. NPS has not at any time elected to be
treated as, and is not currently governed by, Subchapter S of the Internal
Revenue Code of 1986, as amended.
6.25 CONDITION OF PREMISES. All real property leased by NPS is in good
condition and repair, ordinary wear and tear excepted.
6.26 NO DISTRIBUTOR AGREEMENTS. Except as disclosed in writing to Buyer
prior to the Closing, NPS is not a party to, nor is the property of NPS bound
by, any distributors' or manufacturer's representative or agency agreement.
6.27 CONFLICT OF INTEREST TRANSACTIONS. No past or present shareholder,
director, officer or employee of NPS or any of their affiliates (i) is indebted
to, or has any financial, business or contractual relationship or arrangement
with NPS, or (ii) has any direct or indirect interest in any property, asset or
right which is owned or used by NPS or pertains to the business of NPS.
6.28 LITIGATION. There is no action, suit, proceeding, dispute,
litigation, claim, complaint or investigation by or before any court, tribunal,
governmental body, governmental agency or arbitrator pending or threatened
against or with respect to NPS which (i) if adversely determined would have an
adverse effect on the business, condition, assets, operations or prospects of
NPS, or (ii) challenges or would challenge any of the actions required to be
taken by NPS under this Agreement. There exists no basis for any such action,
suit, proceeding, dispute, litigation, claim, complaint or investigation.
6.29 NON-CONTRAVENTION. Neither (a) the execution and delivery of this
Agreement, nor (b) the performance of this Agreement will: (i) contravene or
result in a violation of any of the provisions of the organizational documents
of NPS; (ii) contravene or result in a violation of any resolution adopted by
the shareholders or directors of NPS; (iii) result in a violation or breach of,
or give any person the right to declare (whether with or without notice or lapse
of time) a default under or to terminate, any agreement or other instrument to
which NPS is a party or by which NPS or any of its assets are bound; (iv) give
any person the right to accelerate the maturity of any indebtedness or other
obligation of NPS; (v) result in the loss of any license or other contractual
right of NPS; (vi) result in the loss of, or in a violation of any of the terms,
provisions or conditions of, any governmental license, permit, authorization or
franchise of NPS; (vii) result in the creation or imposition of any lien,
charge, encumbrance or restriction on any of the assets of NPS; (viii) result in
the reassessment or revaluation of any property of NPS; by any taxing authority
or other governmental authority; (ix) result in the imposition of, or subject
NPS; to any liability for, any conveyance or transfer tax or any similar tax; or
(x) result in a violation of any law, rule, regulation, treaty, ruling,
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directive, order, arbitration award, judgment or decree to which NPS or any of
its assets or any limited liability interests are subject.
6.30 APPROVALS. NPS has provided Buyer with a complete and accurate
list of all jurisdictions in which NPS is authorized to do business. No
authorization, consent or approval of, or registration or filing with, any
governmental authority is required to be obtained or made by NPS in connection
with the execution, delivery or performance of this Agreement, including the
conveyance to Buyer of the Business.
6.31 BROKERS. NPS has not agreed to pay any brokerage fees, finder's
fees or other fees or commissions with respect to the transactions contemplated
by this Agreement, and, to NPS' knowledge, no person is entitled, or intends to
claim that it is entitled, to receive any such fees or commissions in connection
with such transaction.
6.32 SPECIAL GOVERNMENT LIABILITIES. NPS has no existing or pending
liabilities, obligations or deferred payments due to any federal, state or local
government agency or entity in connection with its business or with any program
sponsored or funded in whole or in part by any federal, state or local
government agency or entity, nor is NPS or Seller aware of any threatened action
or claim or any condition that could support an action or claim against NPS, the
Business for any of said liabilities, obligations or deferred payments.
6.33 FULL DISCLOSURE. Neither this Agreement (including the exhibits
hereto) nor any statement, certificate or other document delivered to Buyer by
or on behalf of NPS contains any untrue statement of a material fact or omits to
state a material fact necessary to make the representations and other statements
contained herein and therein not misleading.
6.34 NON-DISTRIBUTIVE INTENT. The Shares being acquired by Seller as
part of the Purchase Price pursuant to this Agreement are not being acquired by
Seller with a view to the public distribution of them.
6.35 REPRESENTATIONS TRUE ON CLOSING DATE. The representations and
warranties of NPS set forth in this Agreement are true and correct on the date
hereof, and will be true and correct on the Closing Date as though such
representations and warranties were made as of the Closing Date. Buyer's
knowledge will not act as a waiver of any breach of the representations and
warranties contained herein by NPS or Seller.
6.36 TAX ADVICE. NPS and Seller hereby represent and warrant that they
have sought their own independent tax advice regarding the transactions
contemplated by this Agreement and neither NPS nor Seller have relied on any
representation or statement made by Buyer, the Company, or their representatives
regarding the tax implications of such transactions.
7. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Seller as follows:
7.1 POWER AND AUTHORITY; BINDING NATURE OF AGREEMENT. Buyer has full
power and authority to enter into this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by Buyer
have been duly authorized by all necessary action on its part. Assuming that
this Agreement is a valid and binding obligation of the other party hereto, this
Agreement is a valid and binding obligation of Buyer.
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7.2 GOOD STANDING OF BUYER. Buyer (i) is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated, (ii) has all necessary power and authority to own its assets and
to conduct its business as it is currently being conducted, and (iii) is duly
qualified or licensed to do business and is in good standing in every
jurisdiction (both domestic and foreign) where such qualification or licensing
is required.
7.3 CHARTER DOCUMENTS AND CORPORATE RECORDS OF BUYER. Buyer has made
available to Seller to review complete and correct copies of (i) the articles of
incorporation, bylaws and other charter or organizational documents of Buyer,
including all amendments thereto, (ii) the stock records of Buyer, and (iii) the
minutes and other records of the meetings and other proceedings of the
shareholders and directors of Buyer. Buyer is not in violation or breach of (i)
any of the provisions of its articles of incorporation, bylaws or other charter
or organizational documents, or (ii) any resolution adopted by its shareholders
or directors. There have been no meetings or other proceedings of the
shareholders or directors of Buyer that are not fully reflected in the
appropriate minute books or other written records of Buyer.
7.4 CAPITALIZATION OF BUYER. The authorized capital stock of Buyer
consists of 100,000,000 shares of common stock, par value $0.001 per share,
approximately 19,400,000 shares of which are issued and outstanding, and
1,000,000 shares of preferred stock, par value $0.001 per share, none of which
are issued or outstanding. All of the outstanding shares of the capital stock of
Buyer are validly issued, fully paid and nonassessable, and have been issued in
full compliance with all applicable federal, state, local and foreign securities
laws and other laws. Buyer either has sufficient authorized capital stock to
meet its obligations under this Agreement or has the ability to authorize the
issuance of additional capital stock.
7.5 FINANCIAL STATEMENTS. The Company has made available to Seller to
review the following financial statements (the "Company Financial Statements"):
the audited income statements and statement of operations of the Company for the
fiscal years ended December 31, 2003, 2004, and 2005, the audited balance sheet
of the Company as of December 31, 2005, and the unaudited income statements,
statement of operations, and balance sheet of the Company for the nine months
ended September 30, 2006. Except as stated therein or in the notes thereto, the
Company Financial Statements: (a) present fairly the financial position of the
Company as of the respective dates thereof and the results of operations and
changes in financial position of the Company for the respective periods covered
thereby; and (b) have been prepared in accordance with the Company's normal
business practices applied on a consistent basis throughout the periods covered.
7.6 APPROVALS. To Buyer's knowledge, no authorization, consent or
approval of, or registration or filing with, any governmental authority or any
other person is required to be obtained or made by Buyer in connection with the
execution, delivery or performance of this Agreement or the Employment
Agreement.
7.7 BROKERS. Buyer has not agreed to pay any brokerage fees, finder's
fees or other fees or commissions with respect to the transactions contemplated
by this Agreement, and, to Buyer's knowledge, no person is entitled, or intends
to claim that it is entitled, to receive any such fees or commissions in
connection with such transaction.
7.8 REPRESENTATIONS TRUE ON CLOSING DATE. To the Buyer's knowledge, the
representations and warranties of Buyer set forth in this Agreement are true and
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correct on the date hereof, and will be true and correct on the Closing Date as
though such representations and warranties were made as of the Closing Date.
7.9 NON-DISTRIBUTIVE INTENT. The shares of NPS Stock being purchased by
the Company pursuant to this Agreement are not being acquired by the Company
with a view to the public distribution of them.
7.10 NON CONTRAVENTION. To the Company's knowledge neither the
execution and delivery of this Agreement, nor the performance of this Agreement
will contravene or result in a material violation of any of the provisions of
any other agreement or obligation of the Company.
8. CONDITIONS TO CLOSING.
---------------------
8.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's
obligation to close the stock purchase as contemplated in this Agreement is
conditioned upon the occurrence or waiver by Buyer of the following:
(a) Seller shall have delivered to the Company all
certificates evidencing Seller's ownership of 100% of the capital stock
of NPS.
(b) All Taxes (except corporate income taxes) due and payable
by NPS without regard to any deferral by reason of extension, payment
programs, or any other reason, must have been paid in full. Any Taxes
accrued but not yet payable must be reflected on NPS' balance sheet
delivered to Buyer.
(c) The financial condition of NPS must be as set forth in the
NPS Financial Statements as of September 30, 2006, except for changes
arising as a result of the conduct of NPS' Business in the ordinary
course of business, since September, 2006. NPS must submit to Buyer
prior to or as soon as practicable after the Closing audited financial
statements prepared in accordance with GAAP, certified by an
independent certified public accounting firm qualified to practice
before the Securities and Exchange Commission, covering NPS' two most
recent fiscal years (at NPS's expense) and its most recent fiscal
quarter (unaudited and prepared in NPS' normal business practices
consistently applied).
(d) NPS must have delivered to Buyer a certificate executed by
the Secretary of NPS certifying (i) the names of the officers of NPS
authorized to sign this Agreement to which it is a party and all other
documents and instruments executed by NPS pursuant hereto, together
with the true signatures of such officers; (ii) copies of corporate
resolutions adopted by the Board of Directors of NPS authorizing the
appropriate officers of NPS to execute and deliver this Agreement and
all other agreements, documents and instruments executed by the Seller
pursuant hereto and to consummate the transactions contemplated herein.
(e) The Buyer must in its sole discretion be satisfied with
its full and complete due diligence of NPS and all other aspects of the
transactions contemplated by this Agreement, including but not limited
to financial, legal and business affairs of NPS and discussions with
NPS' customers and vendors. The Buyer must confirm its satisfaction in
a writing delivered to the Seller.
(f) Such directors of NPS as the Company shall have specified
in writing shall have submitted their resignations (to be effective as
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of the Closing) from the Board of Directors of the Company. The
directors of NPS shall have duly appointed (effective as of the
Closing) such other persons as the Company shall have designated to
fill the vacancies on the Company's Board of Directors.
(g) All representations and warranties of NPS and Seller made
in this Agreement or in any exhibit or schedule hereto delivered by NPS
or Seller must be true and correct as of the Closing Date with the same
force and effect as if made on and as of that date. Buyer must receive
a written representation from NPS and Seller at the Closing that no
material adverse change has occurred to NPS or the Business between
September 30, 2006 and the Closing Date.
(h) NPS must have performed and complied with all agreements,
covenants and conditions required by this Agreement to be performed or
complied with by NPS prior to or at the Closing Date.
(i) NPS must have signed any customary investor representation
letters requested by the Buyer in connection with the issuance of the
Buyer's securities as part of the purchase price for the NPS Stock,
which will include, but not be limited to representations and
warranties by NPS and Seller confirming their investment
sophistication, knowledge, and experience, their financial condition,
and their access to information regarding the Buyer.
8.2 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. Seller's
obligation to close the stock purchase as contemplated in this Agreement is
conditioned upon the occurrence or waiver by Seller of the following:
(a) All representations and warranties of Buyer made in this
Agreement or in any exhibit hereto delivered by Buyer must be true and
correct on and as of the Closing Date with the same force and effect as
if made on and as of that date.
(b) Buyer must have performed and complied with all agreements
and conditions required by this Agreement to be performed or complied
with by Buyer prior to or at the Closing Date.
8.3 NOTICE REQUIREMENT. Seller or NPS will give prompt written notice
to Buyer of any development occurring after the date of this Agreement, or any
item about which NPS did not have actual knowledge on the date of this
Agreement, which causes or reasonably could be expected to cause a breach of any
of the representations and warranties in Section 6 of this Agreement. Buyer will
give prompt written notice to Seller of any development occurring after the date
of this Agreement, or any item about which Buyer did not have actual knowledge
on the date of this Agreement, which causes or reasonably could be expected to
cause a breach of any of the representations and warranties in Section 7 of this
Agreement.
9. FURTHER ASSURANCES AND POST CLOSING COVENANTS AND OBLIGATIONS.
-------------------------------------------------------------
Following the Closing, Buyer shall, whenever reasonably requested by
Seller (including reasonable prior notice to Buyer) and during normal business
hours, permit Seller or their respective representatives to have access to such
business records (including without limitation computer files) turned over to
Buyer pursuant to this Agreement as may be required by Seller. Buyer shall use
commercially reasonable efforts to preserve and maintain NPS' payroll records
for each fiscal year until the expiration of the statute of limitations (and any
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waivers or extensions thereof) for tax purposes relating to such year, and all
other records relating to the Business for at least three years after the
Closing Date.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
------------------------------------------
All representations and warranties made by each of the parties hereto
will survive the Closing for a period of three years after the Closing Date.
11. INDEMNIFICATION.
---------------
11.1 INDEMNIFICATION BY SELLER. Seller agrees to indemnify, defend and
hold harmless Buyer and its affiliates against any and all claims, demands,
losses, costs, expenses, obligations, liabilities and damages, including
interest, penalties and attorney's fees and costs, incurred by Buyer or any of
its affiliates arising, resulting from, or relating to any and all liabilities
of NPS accrued prior to the Closing or relating to the NPS Stock, any
misrepresentation of a material fact or omission to disclose a material fact
made by Seller or NPS in this Agreement, in any exhibits to this Agreement or in
any other document furnished or to be furnished by Seller or NPS under this
Agreement, or any breach of, or failure by NPS or Seller to perform, any of
their representations, warranties, covenants or agreements in this Agreement or
in any exhibit or other document furnished or to be furnished by NPS or Seller
under this Agreement.
11.2 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify, defend and
hold harmless Seller against any and all claims, demands, losses, costs,
expenses, obligations, liabilities and damages, including interest, penalties
and attorneys' fees and costs incurred by Seller arising, resulting from or
relating to any breach of, or failure by Buyer to perform, any of its
representations, warranties, covenants or agreements in this Agreement or in any
exhibit or other document furnished or to be furnished by Buyer under this
Agreement.
11.3 PROCEDURE FOR INDEMNIFICATION CLAIMS.
(a) Whenever any parties become aware that a claim (an
"Underlying Claim") has arisen entitling them to seek indemnification
under this Section 11 of the Agreement, such parties (the "Indemnified
Parties") shall promptly send a notice ("Notice") to the parties liable
for such indemnification (the "Indemnifying Parties") of the right to
indemnification (the "Indemnity Claim"); provided, however, that the
failure to so notify the Indemnifying Parties will relieve the
Indemnifying Parties from liability under this Agreement with respect
to such Indemnity Claim only if, and only to the extent that, such
failure to notify the Indemnifying Parties results in the forfeiture by
the Indemnifying Parties of rights and defenses otherwise available to
the Indemnifying Parties with respect to the Underlying Claim. Any
Notice pursuant to this Section 11.3(a) shall set forth in reasonable
detail, to the extent then available, the basis for such Indemnity
Claim and an estimate of the amount of damages arising therefrom.
(b) If an Indemnity Claim does NOT result from or arise in
connection with any Underlying Claim or legal proceedings by a third
party, the Indemnifying Parties will have thirty (30) calendar days
following receipt of the Notice to issue a written response to the
Indemnified Parties, indicating the Indemnifying Parties' intention to
either (i) contest the Indemnity Claim or (ii) accept the Indemnity
Claim as valid. The Indemnifying Parties' failure to provide such a
written response within such thirty (30) day period shall be deemed to
be an acceptance of the Indemnity Claim as valid. In the event that an
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Indemnity Claim is accepted as valid, the Indemnifying Parties shall,
within fifteen (15) Business Days thereafter, pay the damages incurred
by the Indemnified Parties in respect of the Underlying Claim in cash
by wire transfer of immediately available funds to the account or
accounts specified by the Indemnified Parties. To the extent
appropriate, payments for indemnifiable damages made pursuant to
Section 11 of the Agreement will be treated as adjustments to the
Purchase Price.
(c) In the event an Indemnity Claim results from or arises in
connection with any Underlying Claim or legal proceedings by a third
party, the Indemnifying Parties shall have fifteen (15) calendar days
following receipt of the Notice to send a Notice to the Indemnified
Parties of their election to, at their sole cost and expense, assume
the defense of any such Underlying Claim or legal proceeding; provided
that such Notice of election shall contain a confirmation by the
Indemnifying Parties of their obligation to hold harmless the
Indemnified Parties with respect to damages arising from such
Underlying Claim. The failure by the Indemnifying Parties to elect to
assume the defense of any such Underlying Claim within such fifteen
(15) day period shall entitle the Indemnified Parties to undertake
control of the defense of the Underlying Claim on behalf of and for the
account and risk of the Indemnifying Parties in such manner as the
Indemnified Parties may deem appropriate, including, but not limited
to, settling the Underlying Claim. However, the parties controlling the
defense of the Underlying Claim shall not settle or compromise such
Underlying Claim without the prior written consent of the other
parties, which consent shall not be unreasonably withheld or delayed.
The non-controlling parties shall be entitled to participate in (but
not control) the defense of any such action, with their own counsel and
at their own expense.
(d) The Indemnifying Parties and the Indemnified Parties will
cooperate reasonably, fully and in good faith with each other, at the
sole expense of the Indemnifying Parties, in connection with the
defense, compromise or settlement of any Underlying Claim including,
without limitation, by making available to the other parties all
pertinent information and witnesses within their reasonable control.
12. INJUNCTIVE RELIEF.
-----------------
12.1 DAMAGES INADEQUATE. Each party acknowledges that it would be
impossible to measure in money the damages to the other party if there is a
failure to comply with any covenants and provisions of this Agreement, and
agrees that in the event of any breach of any covenant or provision, the other
party to this Agreement will not have an adequate remedy at law.
12.2 INJUNCTIVE RELIEF. It is therefore agreed that the other party to
this Agreement who is entitled to the benefit of the covenants and provisions of
this Agreement which have been breached, in addition to any other rights or
remedies which they may have, will be entitled to immediate injunctive relief to
enforce such covenants and provisions, and that in the event that any such
action or proceeding is brought in equity to enforce them, the defaulting or
breaching party will not urge a defense that there is an adequate remedy at law.
13. FURTHER ASSURANCES.
------------------
Following the Closing, Seller shall furnish to Buyer such instruments
and other documents as Buyer may reasonably request for the purpose of carrying
out or evidencing the transactions contemplated hereby.
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14. FEES AND EXPENSES.
-----------------
Each party hereto shall pay all fees, costs and expenses that it incurs
in connection with the negotiation and preparation of this Agreement and in
carrying out the transactions contemplated hereby (including, without
limitation, all fees and expenses of its counsel and accountant).
15. WAIVERS.
-------
If any party at any time waives any rights hereunder resulting from any
breach by the other party of any of the provisions of this Agreement, such
waiver is not to be construed as a continuing waiver of other breaches of the
same or other provisions of this Agreement. Resort to any remedies referred to
herein will not be construed as a waiver of any other rights and remedies to
which such party is entitled under this Agreement or otherwise.
16. SUCCESSORS AND ASSIGNS.
----------------------
Each covenant and representation of this Agreement will inure to the
benefit of and be binding upon each of the parties, their personal
representatives, assigns and other successors in interest.
17. ENTIRE AND SOLE AGREEMENT.
-------------------------
This Agreement constitutes the entire agreement between the parties and
supersedes all other agreements, representations, warranties, statements,
promises and undertakings, whether oral or written, with respect to the subject
matter of this Agreement. This Agreement may be modified or amended only by a
written agreement signed by the parties against whom the amendment is sought to
be enforced. The parties acknowledge that as of the execution of this Agreement,
that certain Letter of Intent among certain of the parties dated October 4, 2006
will be terminated and be of no further force or effect.
18. GOVERNING LAW.
-------------
This Agreement will be governed by the laws of California without
giving effect to applicable conflict of laws provisions. With respect to any
litigation arising out of or relating to this Agreement, each party agrees that
it will be filed in and heard by the state or federal courts with jurisdiction
to hear such suits located in Los Angeles County, California.
19. COUNTERPARTS.
------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts will be deemed to be an original, and
such counterparts will constitute but one and the same instrument.
20. ASSIGNMENT.
----------
Except in the case of an affiliate of the Buyer, this Agreement may not
be assignable by any party without prior written consent of the other parties.
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21. REMEDIES.
--------
Except as otherwise expressly provided herein, none of the remedies set
forth in this Agreement are intended to be exclusive, and each party will have
all other remedies now or hereafter existing at law, in equity, by statute or
otherwise. The election of any one or more remedies will not constitute a waiver
of the right to pursue other available remedies.
22. SECTION HEADINGS.
----------------
The section headings in this Agreement are included for convenience
only, are not a part of this Agreement and will not be used in construing it.
23. SEVERABILITY.
------------
In the event that any provision or any part of this Agreement is held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability will not affect the validity or enforceability of any other
provision or part of this Agreement.
24. NOTICES.
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Each notice or other communication hereunder must be in writing and
will be deemed to have been duly given on the earlier of (i) the date on which
such notice or other communication is actually received by the intended
recipient thereof, or (ii) the date five (5) days after the date such notice or
other communication is mailed by registered or certified mail (postage prepaid)
to the intended recipient at the following address (or at such other address as
the intended recipient will have specified in a written notice given to the
other parties hereto):
IF TO NPS:
National Professional Services, Inc.
X.X Xxx 0000
Xxxxx, Xxxxxx 00000
Telephone: 000.000.0000
Facsimile:
IF TO SELLER:
Xxxx XxXxxxxx AND TO: Xxxxxx Xxxxxx
0000 Xxxx-X-Xxxxxx Xxx,. X.X. Xxx 0000
Xx. Xxxxxxxxxx, Xxxxxxx., 00000 Xxxxx, Xxxxxx 00000
Telephone: 000.000.0000 Telephone:000.000.0000
Facsimile: 727.367.5969 Facsimile:503.922.0876
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IF TO BUYER:
Environmental Service Professionals, Inc.
0000 Xxxxxxxx Xxxxxx Xxx, Xxxxx 000
Xxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx Xxxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
25. PUBLICITY.
---------
Except as may be required in order for a party to comply with
applicable laws, rules, or regulations or to enable a party to comply with this
Agreement, or necessary for the Buyer to prepare and disseminate any private or
public placements of its securities or to communicate with its shareholders, no
press release, notice to any third party or other publicity concerning the
transactions contemplated by this Agreement will be issued, given or otherwise
disseminated without the prior approval of each of the parties hereto; provided,
however, that such approval will not be unreasonably withheld.
IN WITNESS WHEREOF, this Agreement has been entered into as of the date
first above written.
NPS: NATIONAL PROFESSIONAL SERVICES INC.,
a Delaware corporation
By:/s/ Xxxxxx Xxxxxx
------------------------------------
Xxxxxx Xxxxxx, President
XXXXXXXX/SELLER: /s/ Xxxx XxXxxxxx
------------------------------------------------------
Xxxx XxXxxxxx, Individually
XXXXXX/SELLER: /s/ Xxxxxx Xxxxxx
------------------------------------------------------
Xxxxxx Xxxxxx, Individually
BEAUMONT/SELLER: *
------------------------------------------------------
Xxxxx Xxxxxxxx, Individually
XXXXXX/SELLER: *
------------------------------------------------------
Xxxx Xxxxxx, Individually
XXXXX/SELLER: *
------------------------------------------------------
Xxxxxxx Xxxxx, Individually
XXXXXXXXX/SELLER: *
------------------------------------------------------
Xxx X. Xxxxxxxxx, Individually
*BY /s/ Xxxxxx Xxxxxx
_________________________________________________
XXXXXX XXXXXX, AS ATTORNEY-IN-FACT FOR
BEAUMONT, TAYLOR, XXXXX AND XXXXXXXXX
COMPANY/BUYER: ENVIRONMENTAL SERVICE PROFESSIONALS, INC.,
a Nevada corporation
By: /s/ Xxxxxx Xxxxxx
---------------------------------------------------
Xxxxxx Xxxxxx, Chief Executive Officer
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