Exhibit 2.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of 12:01 a.m. on December 2, 2004 (the "Effective Time"), by and between
SPEEDEMISSIONS, INC., a Georgia corporation maintaining an address at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Purchaser"),and SIT'S EMI MOBILE TESTING UNIT a company organized and existing
under the laws of the State of Iexas, maintaining business offices, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ("Seller") and ▇▇▇▇▇ ▇▇▇▇▇(the "Shareholder")
(hereinafter the Seller and the Shareholder are sometimes referred to,
individually as a "Seller Party" and collectively as the "Seller Parties").
BACKGROUND INFORMATION
Seller is in the business of providing mobile vehicle emissions testing
services (the "Business"), and the Shareholder is the owner of all of the
capital stock in Seller. This Agreement sets forth the terms and conditions upon
which Purchaser is acquiring from Seller, and Seller is selling and delivering
to Purchaser, those assets used by Seller in the operation of the Business.
OPERATIVE PROVISIONS
In consideration of the mutual covenants and conditions hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Seller, the Shareholder and Purchaser hereby
mutually agree as follows:
1. SALE AND TRANSFER OF ASSETS; CLOSING.
1.1. Assets. Upon the terms and subject to the conditions set forth in
this Agreement, at the Closing (hereinafter defined), Seller shall sell, convey,
assign, transfer and deliver to Purchaser, and Purchaser shall purchase and
acquire from Seller, all of Sellers' right, title, and interest in and to
certain of Seller's property and assets, real, personal or mixed, tangible and
intangible, of every kind and description, wherever located as specifically set
forth on Exhibit A (the "Assets"), but excluding the Excluded Assets
(hereinafter defined). Notwithstanding anything herein to the contrary, the
transfer of the Assets pursuant to this Agreement shall not include the
assumption of any Liability (hereinafter defined) related to the Assets,
Business or operations of Seller except as expressly provided herein.
1.2. Excluded Assets. Notwithstanding anything to the contrary
contained in Section 1.1 or elsewhere in this Agreement, the following assets of
Seller (collectively, the "Excluded Assets") are not part of the sale and
purchase contemplated hereunder, are excluded from the Assets and shall remain
the property of Seller after the Effective Time.
1.2.1 all minute books, stock records and corporate seals;
1.2.2 any equity securities of Seller held in treasury;
1.2.3 all personnel records and other records that Seller is
required by law to retain in its possession;
1.2.4 all rights in connection with and assets of any employee
benefit plans maintained by Seller;
1.2.5 cash and bank deposits of Seller as of the Effective
Time;
1.2.6 all rights of Seller under this Agreement; and
1.2.7 all assets, if any, specifically set forth on Schedule
1.2.
1.3. Consideration. The consideration for the Assets (the "Purchase
Price") will be Thirty-six Thousand Dollars ($36,000.00) to be paid by Purchaser
to Seller after Closing via an earn-out schedule of $1,000.00 per month for a
period of thirty-six (36) months.
1.4. Liabilities. At the Closing, Purchaser shall assume and agree to
discharge only the obligations of Seller arising after the Effective Time under
the Premises Lease, as hereinafter defined (the "Assumed Liabilities"). Except
for the Assumed Liabilities, Purchaser shall not assume any Liabilities of
Seller or the Shareholder; and Seller shall pay, perform and discharge all of
such Liabilities in accordance with their terms. For purposes of this Agreement,
the term "Liabilities" means any existing or future liability, obligation, debt,
account payable, lease obligation, contract, agreement, duty or commitment of
Seller or Shareholder of any kind, character or description, whether known or
unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed,
liquidated or unliquidated, secured or unsecured, joint or several, due or to
become due, vested or unvested, executory, determined, determinable or
otherwise, and whether or not the same is required to be accrued on the
financial statements of Seller or the Shareholder.
1.5. Allocation. Seller and Purchaser agree that the allocation (the
"Purchase Price Allocation") of the Purchase Price among the Assets shall be as
set forth on Schedule 1.5.
1.6. Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement (the "Contemplated Transactions") shall take
place contemporaneously with the execution of this Agreement in the offices of
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Small, P.C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("CPMAS"), attorneys for Purchaser. At the Closing the
parties shall deliver the following documents:
1.6.1 Selling Parties' Deliveries at the Closing. Seller and the
Shareholder shall deliver to Purchaser at the Closing the following items:
(i) a ▇▇▇▇ of Sale from Seller to Purchaser in form and
substance acceptable to Purchaser;
2
(ii) a copy of the resolutions duly adopted by Seller's
Board of Director and Shareholder authorizing the
execution, delivery, and performance of this
Agreement and the consummation of the Contemplated
Transactions, certified by an officer of Seller;
(iii) unaudited financial statements and Georgia Clean Air
Force management reports for each monthly financial
period subsequent to April 30, 2004 and prior to the
Effective Time;
(iv) titles to all motor vehicles being transferred to
Purchaser hereunder, endorsed for assignment;
(v) evidence that any and all security interests covering
the Assets have been released by Seller's lender; and
(vi) all other documents or instruments required by this
Agreement or reasonably required by Purchaser's
counsel to consummate the Contemplated Transactions.
1.6.2 Purchaser's Deliveries at the Closing. Purchaser shall
deliver to Seller at the Closing, the following items:
(i) a copy of the resolutions duly adopted by the Board
of Directors of Purchaser authorizing the execution,
delivery, and performance of this Agreement and the
consummation of the Contemplated Transactions,
certified by an officer of Purchaser; and
(ii) all other documents or instruments required by this
Agreement or reasonably required by Purchaser's
counsel to consummate the Contemplated Transactions.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES. The Seller Parties,
jointly and severally, represent and warrant to Purchaser as follows, which
representations and warranties shall survive the consummation of the
Contemplated Transactions:
2.1. Organization; Power; Authority. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Georgia, with full power and authority to carry on the Business as now being
conducted and to own, operate and lease (as the case may be) the Assets and to
perform all of its obligations. Seller has the corporate power and authority to
sell, assign, transfer, convey and deliver to Purchaser the Assets as
contemplated by this Agreement, and the execution, delivery and performance of
this Agreement and the Contemplated Transactions have been properly and duly
authorized by Seller. Shareholder has the authority to enter into this Agreement
and consummate the Contemplated Transactions. This Agreement and all other
agreements executed in connection with the Contemplated Transactions constitute,
or will constitute upon execution, the legal, valid and binding obligations of
Seller and Shareholder, enforceable in accordance with their respective terms.
3
2.2. No Conflict or Violation; Approvals. The execution, delivery and
performance of this Agreement and the Contemplated Transactions will not (a)
violate or conflict with Seller's articles of incorporation or by-laws; (b)
cause a breach of, or a default under, or create any right for any party to
accelerate, terminate, modify or require notice under or cancel, any contract,
permit, authorization or concession that Seller or the Shareholder is a party or
by which any of the Assets are bound; (c) violate by Seller or Shareholder any
law, rule, regulation, constitution, injunction, judgment, order, decree, ruling
or other restriction of any government, government agency or court; or (d)
impose any encumbrance, restriction or charge on the Business or on any of the
Assets. No consent, approval or authorization of, or declaration, filing or
registration with, any authority, or any other person or entity, is required to
be made or obtained by Seller or Shareholder in connection with the execution,
delivery and performance of the Agreement and the Contemplated Transactions,
except as have been received by Seller or Shareholder prior to the Closing.
2.3. Capitalization. The Shareholder owns 100% of the outstanding
capital stock of Seller free and clear of all encumbrances. No other person has
a contract right, whether by issuance, sale, transfer, or otherwise to any
capital stock of Seller. Seller has no subsidiaries.
2.4. Financial Statements. Seller has delivered to the Purchaser
complete and correct copies of unaudited financial statements of Seller for the
period ended as of July 31, 2004 (the "Financial Statements"). The Financial
Statements were prepared in accordance with GAAP consistently applied throughout
the periods indicated; are consistent with the books and records of the
Business; and present fairly the financial condition and results of operations
of the Business as of the date thereof and the period then ended. There has not
been any change in the assets, liabilities, financial condition or operations of
Seller from that reflected in the Financial Statement for the period ending July
31, 2004 (the "Current Financial Statement"), except changes in the ordinary
course of business that have not been, individually or in the aggregate,
materially adverse. Except to the extent reflected or reserved against or noted
in the Current Financial Statement, Seller had, as of the date thereof, no
material liabilities or obligations of any nature, whether accrued, absolute,
contingent or otherwise, including without limitation tax liabilities, whether
incurred in respect to or measured by Seller's income for any period prior to
the date of such Current Financial Statement, or arising out of transactions
entered into, or any set of facts existing prior thereto. There exists no basis
for the assertion against Seller or the Business as of the date hereof or as of
the date of the Current Financial Statement, of any material liability of any
nature or in any amount not fully reflected or reserved against or noted in the
Current Financial Statement.
2.5. Title. Seller has good and marketable title to all of the Assets,
free and clear of all liens, assignments, security interests, claims, mortgages,
encumbrances or charges of any kind or nature ("Liens"). As of the Effective
Time, Purchaser shall acquire good and marketable title to all of the Assets
free and clear of all Liens. The Assets constitute all of the assets (tangible
and intangible, and including, but not limited to, all intellectual property
assets) necessary to operate the Business in the manner presently operated by
Sellers and each of the Assets and the Premises is in good operating condition
and repair, normal wear and tear excepted. Without limitation the Assets include
all of Seller's right, title, and interest in and to the following (in each case
except for the Excluded Assets), wherever located:
4
2.5.1 All of Seller's motor vehicles and emissions testing
equipment (collectively, the "Equipment"), including, without limitation, the
Equipment disclosed in Schedule 2.5.1.
2.5.2 All inventories of Seller and all goods and supplies, in
each case to the extent used directly or indirectly in or otherwise relating
primarily to the Business (the "Inventory"). All items included in the Inventory
consist of a quality and quantity usable and, with respect to finished goods,
saleable, in the ordinary course of business of Seller except for obsolete items
and items of below-standard quality, all of which have been written off or
written down to net realizable value in the Financial Statements, as the case
may be.
2.5.3 All goodwill, customer lists, trade names, trademarks,
service marks, logos, patents, copyrights, know-how, inventions and telephone
number, relating to or used in connection with the conduct of the Business.
2.5.4 All contracts, agreements, licenses, commitments,
arrangements, and permissions, whether written or oral, entered into in
connection with or otherwise relating to the Business, including all
non-competition, non-solicitation, work-for-hire, confidentiality and similar
types of covenants and agreements with Seller's current and former employees.
2.5.5 All business and marketing records, including accounting and
operating records, asset ledgers, inventory records, reports, budgets, personnel
and payroll records of employees of Seller to be employed by Purchaser, customer
lists, supplier lists, information and data respecting leased or owned
equipment, correspondence and mailing lists, advertising materials and
brochures, and other business records used directly or indirectly in or
otherwise relating primarily to the Business or the Assets, in whatever form
they exist.
2.5.6 All governmental approvals, authorizations, certifications,
consents, variances, permissions, licenses, and permits to or from, or filings,
notices, or recordings to or with, federal, state, and/or local governmental
authorities as well as states and jurisdictions outside of the U.S. directly or
indirectly relating primarily to the Business, to the extent assignable.
2.5.7 All claims Seller may have against any person relating to or
arising from the Assets or the Business, including rights to recoveries for
damages or defective goods and to refunds.
2.6. Material Contracts. Other than the Premises Lease, Seller is not a
party to any contract under which Seller (a) paid $10,000 or more during the 12
month period ending July 31, 2004, (b) received $10,000 or more during the 12
month period ending July 31, 2004, or (c) would, absent this Agreement and the
Contemplated Transactions, reasonably expect to pay or receive $10,000 or more
for the 12 month period immediately following the Effective Time. Neither the
Seller nor the Shareholder is subject to any contract: (i) that contains
covenants limiting the freedom of Seller or the Shareholder to compete in any
line of business in any geographic area; (ii) that requires Seller to share any
profits, or requires any payments or other distributions based on profits,
revenues or cash flows; (iii) pursuant to which third parties have been provided
with products that can be returned to Seller in the event they are not sold and
which could involve products valued at $10,000 or more (invoice price) in the
aggregate; or (iv) that has had or, assuming that Purchaser complies with its
obligations thereunder, may in the future have a material adverse effect upon
the business, earnings, financial condition, or prospects of Purchaser.
5
2.7. Litigation. There are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Seller Parties, threatened
against or affecting the Assets or the operation of the Business before any
foreign, federal, state, local or other governmental authority or agency.
2.8. Compliance with Laws. The operation of the Business and the Assets
conform to the requirements of all applicable laws, rules, orders, ordinances,
decrees and regulations of all governmental regulatory agencies, whether
national, state or local, having jurisdiction thereover, and no material claim
alleging nonconformity or noncompliance with respect to such matters has been
made or threatened against Seller and/or the Assets or, to the Seller Parties'
knowledge, may in the foreseeable future be made by any such agency.
2.9. Employee Benefit Plans. Seller has no formal or informal health,
dental, vision, life, retirement, profit sharing, deferred compensation,
pension, stock options, sick leave or sick time employee benefit plans in
effect.
2.10. Employee Matters.
2.10.1 List of Personnel. Schedule 2.10.1 contains a true and
complete list of the names and current compensation levels of all active
employees involved in the Business. Since July 31, 2004, there has been no
increase in the compensation of the employees of Seller.
2.10.2 Employee Relations. There is no labor strike, dispute,
slowdown, stoppage, or similar activity pending or, to the knowledge of the
Seller Parties, threatened against Seller pertaining to the Business or the
employees involved in the Business. There are no charges, investigations,
administrative proceedings, or formal complaints of discrimination (including
discrimination based upon sex, age, marital status, race, national origin,
sexual preference, handicap or veteran status) pending or, to the knowledge of
the Seller Parties, threatened before the Equal Employment Opportunity
Commission or any federal, state, or local agency or court against Seller or the
Shareholder pertaining to the Business or the employees of the Business, and, to
the knowledge of the Seller Parties, no basis for any such charge,
investigation, administrative proceeding, or complaint exists.
2.10.3 No Liabilities or Obligations. Except as reflected on the
Financial Statements, Seller has no liabilities or obligations to any
beneficiaries, governmental authorities, or any other parties arising out of or
relating to any employee claims.
6
2.10.4 Worker's Compensation Insurance Coverage and Claims Seller
has in full force and effect worker's compensation coverage in each jurisdiction
in which Seller is required to maintain such coverage by applicable state law.
Seller has paid or accrued all workers' compensation premiums required to be
paid in each jurisdiction in which Seller is required to maintain such coverage
by applicable state law.
2.11. Taxes. The Seller Parties have filed all required tax returns in
connection with the Assets and the operation of the Business. All tax returns
filed by Seller or the Shareholder in connection with the Assets and the
operation of the Business are true, correct, and complete. The Seller Parties
have paid, or made provision for the payment of, all taxes that have or may have
become due pursuant to tax returns that are or were required to be filed by
Seller or the Shareholder in connection with the Assets and the operation of the
Business, or pursuant to any assessment received by Seller or the Shareholder.
There exists no proposed tax assessment against Seller or any shareholder of the
Seller in connection with the Assets and the operation of the Business. All
taxes that Seller or the Shareholder is required to withhold or collect in
connection with the operation of the Assets and the Business have been duly
withheld or collected and, to the extent required, have been paid to the proper
governmental body or other person.
2.12. Environmental Matters. Seller has duly complied with, and the
Business, the Premises and all Assets are in compliance in all Environmental
Laws (hereinafter defined); there have been no citations, notices or orders of
noncompliance issued to Seller under any such Environmental Laws. For the
purposes of this Agreement, "Environmental Law" means any applicable law, order,
regulation, decree, permit, license, ordinance or other federal. State, county,
provincial, local or foreign governmental requirements in effect as of the
Effective Time relating to pollution, the protection of human health and the
environment, or the spill of any hazardous substance in the environment.
Environmental laws include, but are not limited to, the following statutes (and
their implementing regulations);Comprehensive Environmental Response,
compensation and Liability Act (42 U.S.C. 9601, et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. 6901, et seq.), the Federal Water
Pollution Control Act (33 U.S.C. 1251, et seq.), the clean Air Act (42 U.S.C.
7401, et seq.), the Toxic Substance Control Act (15 U.S.C. 2601, et seq.), the
Emergency Planning Community Right to Know Act (42 U.S.C. 11001, et seq.), and
the Occupational Safety and Health Act of 1970. "Hazardous Substance" means any
petroleum, petroleum by-products, polychlorinated biphenyl and any other
chemicals, materials, substances or wastes which are currently defined or
regulated as "hazardous substances, "hazardous materials," "hazardous wastes,"
"extremely hazardous wastes," "restricted hazardous wasted," "toxic substances,"
"toxic pollutants," "toxic air pollutants," "hazardous air pollutants,"
"pollutants," or "contaminants" under any Environmental Law.
2.13. Broker's or Finder's Fees. Neither of the Seller Parties has
incurred, nor will either of them incur, directly or indirectly, any liability
for brokerage or finders' fees or any similar charges in connection with this
Agreement or the Contemplated Transactions.
2.14. Material Misstatements or Omissions. No representations or
warranties by the Seller Parties in this Agreement, nor any document, exhibit,
statement, certificate or schedule furnished to Purchaser pursuant hereto,
contains, or with respect to other documents to be delivered by the Seller
Parties at Closing, will contain any untrue statement of a material fact, or
omits to state any material fact necessary to make the statements or facts
contained therein not misleading.
7
2.15. Information; Suitability. The Seller Parties, along with their
advisors have such knowledge and experience in financial and business matters
that the Seller Parties are capable of evaluating the merits and risks of the
Purchase Price consideration and the Contemplated Transactions. The Seller
Parties are aware that CPMAS has represented only the interests of Purchaser in
connection with this Agreement and the Contemplated Transactions and the Seller
Parties have sought such accounting, legal and tax advice as the Seller Parties
have considered necessary to make an informed decision with respect to the
Contemplated Transactions and have determined that the Purchase Price
Consideration and other terms and conditions of the Contemplated Transaction are
fair and reasonable to the Seller Parties.
2.16. Intention. The Seller Parties have not entered into this
Agreement or agreed to complete the Contemplated Transactions with the actual
intent to hinder, delay, or defraud any creditor of the Seller Parties.
2.17. Value of Assets. The Seller Parties have received reasonably
equivalent value in exchange for the obligations to be undertaken pursuant to
the Contemplated Transactions. Giving effect to the Contemplated Transactions,
the fair market value of the Seller's assets exceeds the Sellers' total
liabilities, whether accrued, absolute, contingent or otherwise. Giving effect
to the Contemplated Transactions, the fair market value of the assets of the
Seller exceeds total liabilities, whether accrued, absolute, contingent or
otherwise. The Seller's assets do not and, immediately following the
Contemplated Transactions, will not, constitute unreasonably small capital to
carry out the Seller's business as conducted or as proposed to be conducted. The
assets of the shareholders or equity owners of the Seller do not and,
immediately following the Contemplated Transactions, will not, constitute
unreasonably small capital to carry out the business of the shareholders of the
Seller as conducted or as proposed to be conducted.
2.18. No Bankruptcy. No petition in bankruptcy has been filed against
either the Seller or the Shareholder or any affiliate of either of them during
the last seven years, and neither the Seller, the Shareholder nor any affiliate
of either of them in the last seven years has ever made an assignment for the
benefit of creditors or taken advantage of any insolvency act for the benefit of
debtors. Neither the Seller Parties nor any affiliate of the Seller Parties is
contemplating the filing of a petition under any state or federal bankruptcy or
insolvency laws. None of the Seller Parties has any knowledge of any person
contemplating the filing of any such petition against it or an affiliate of the
Seller Parties.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to Sellers as follows:
3.1. Organization and Power. Purchaser is a duly organized and validly
existing Texas corporation. Purchaser has the power and authority to carry on
its business as now being conducted and to own, operate and lease its properties
in the places where such business is now conducted and where such properties are
now owned, leased or operated.
8
3.2. Authorization. The execution, delivery and performance of this
Agreement by Purchaser and the consummation of the Contemplated Transactions by
the Purchaser have been duly authorized by the Purchaser. This Agreement
constitutes the legal, valid and binding obligation of Purchaser, enforceable in
accordance with its terms.
3.3. Broker's or Finder's Fees. Purchaser has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
any similar charges in connection with this Agreement or the Contemplated
Transactions.
4. COVENANTS.
4.1. Non-Compete Agreement. The Seller Parties covenant and agree that
for a period of two years following the Effective Time, the Seller Parties shall
not individually or through any other Person or Affiliate of the Sellers
Parties, engage directly or indirectly in any Competitive Business anywhere in
the Restricted Territory, whether such engagement be as an employer, officer,
director, owner, investor, employee, partner, consultant or other participant in
any Competitive Business. For purposes of this Agreement, "Person" shall mean a
corporation, partnership, trust, limited liability company, association, or
other business entity or an individual. "Affiliate" shall mean another Person
controlled by, controlling, or under common control with the Seller Parties.
"Competitive Business" means any business that is similar to the Business.
"Restricted Territory" shall mean the 13 county Georgia trade area for emissions
testing as defined by the Georgia Clean Air Force which is where Seller's
facilities and employees and the majority of the Seller's customers are located.
The Seller Parties acknowledge and agree that, given the nature of Seller's
business, the restrictions set forth in this Section 4 are necessary and
reasonable in terms of the activities restricted, as well as the geographic and
temporal scope of such restrictions. The Seller Parties further acknowledge and
agree that if any of the provisions of this Section 4 shall ever be deemed to
exceed the time, activity, geographic, or other limitations permitted by
applicable law, then such provisions shall be and hereby are reformed to the
maximum time, activity, geographic, or other limitations permitted by applicable
law.
4.2. Non-Solicitation. For a period of two years following the
Effective Time (a) the Seller Parties shall not individually or through any
other Person or Affiliate of the Seller Parties, solicit for employment or hire
any employee of the Purchaser without the prior written consent of the
Purchaser, or (b) solicit Competitive Business from any entity who was an active
or prospective customer of the Purchaser during the first two years following
the Effective Time.
4.3. Confidentiality. The Seller Parties shall not divulge or
appropriate for its or their own use any Trade Secrets of the Purchaser or the
Seller, during or after the Effective Time, for as long as the information
remains a Trade Secret, and shall not make any unauthorized disclosure of
Confidential Information about the Purchaser or Seller for a period of three
years after the Effective Time. Notwithstanding the foregoing, (a) the Seller
may make any copies of, distribute, or use any such Confidential Information as
necessary to prepare for the completion of the Contemplated Transactions, and
(b) the Seller may disclose Confidential Information and Trade Secrets to the
extent disclosure is mandated by the legal requirements of the Sellers and to
professional advisors, directors, and senior executives as reasonably necessary.
This Agreement may also be disclosed to third parties if reasonably necessary to
secure consents or approvals to consummate the Contemplated Transactions. "Trade
Secrets" shall mean any information of the Sellers or Purchaser (including but
not limited to technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, or a list or actual or potential
customers or suppliers) which derives economic value, actual or potential, from
not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or
use, and is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy. For purposes of this Agreement, "Confidential
Information" means any valuable, non-public, competitively sensitive information
(other than Trade Secrets) concerning the Seller or the Purchaser's financial
position, results of operations, annual and long-range business plans, product
or service plans, marketing plans and methods, training, educational and
administrative manuals, client lists and employee lists obtained by the Seller
Parties during their employment with the Seller; provided, however, that
Confidential Information shall not include information to the extent that it is
or becomes publicly known or generally utilized (other than because of the
unauthorized disclosure of such information by the Seller Parties or their
affiliates) by others engaged in the same business or activities in which the
Seller or Purchaser utilized, developed or otherwise acquired such information.
9
4.4. Cooperation. The Seller Parties, on the one hand, and Purchaser,
on the other hand, shall cooperate fully with each other and their respective
employees, legal counsel, accountants and other representatives and advisers in
connection with the steps required to be taken as part of their respective
obligations under this Agreement; and shall, at any time and from time to time
after the Effective Time, upon the request of the other, do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney, receipts, acknowledgments, acceptances and assurances as may
be reasonably required to satisfy and perform the obligations of such party
hereunder, and to allow Purchaser to operate the Business after Closing in
substantially the same the manner in which it was operated before the Closing.
Without limiting the foregoing, the Seller Parties agree to work with Purchaser
on a full-time basis for a period of 180 days following the Closing at no cost
to assist with the transition of the Business to Purchaser, and the Shareholder
agrees to work with Purchaser following this 180-day period on a consulting
basis as reasonably agreed to by the Purchaser and the Shareholder.
4.5. Funds Received After Closing. Any and all funds received by Seller
after the Closing in respect of the Business, other than amounts received in
respect of the Retained Assets, shall be remitted to the Purchaser immediately
upon receipt. Any and all funds received by the Purchaser after Closing in
respect of the Retained Assets shall be remitted to the Sellers immediately upon
receipt.
4.6. Emissions Testing Equipment. For a period of two (2) years
following the Effective Time, neither Seller Party shall, directly or
indirectly, not use any operational emission analyzers or dynamometers in the
conduct of any business within the Restricted Territory.
4.7. Liabilities. All liabilities with respect to the operation of the
Business not otherwise provided for herein which are paid or become payable
after the Closing (hereinafter defined) shall be allocated between Purchaser and
Seller according to the accounting period to which they relate. Items relating
to a time prior to the Effective Time shall be paid by Seller and those relating
to a time thereafter shall be paid by Purchaser. Obligations for taxes, rent,
utilities, telephone service and other items which relate to a period prior to
and after the Effective Time, will be prorated as of the Effective Time between
Purchaser and Seller and adjusted between the parties as soon as possible after
the invoices therefore are received.
10
4.8. Certain Employment Related Matters. Prior to the Closing, Seller
will terminate all of its employees and that Purchaser shall have the right, but
not the obligation, to hire any or all of such employees. Each such Employee
that Purchaser elects to employ shall be employed by the Purchaser on an
"at-will" basis and may be terminated at any time with our without cause.
4.9. Tax Matters.
4.9.1 The Seller Parties shall pay all taxes of whatsoever kind or
nature imposed by the United States or by any state, municipality, subdivision
or instrumentality of the United States or by any other tax authority (including
all applicable penalties and interest, "Taxes") arising from or relating to the
Contemplated Transactions if any, due as a result of the purchase, sale or
transfer of the Assets in accordance herewith whether imposed by law on the
Seller Parties or the Purchaser, and the Seller Parties shall indemnify,
reimburse and hold harmless the Purchaser in respect of the liability for
payment of or failure to pay any such Taxes or the filing of or failure to file
any reports required in connection therewith.
4.9.2 The Seller Parties on the one hand, and Purchaser, on the other
hand, agree to furnish or cause to be furnished to each other, upon request,
such information and assistance (including access to books and records) relating
to Seller and the Purchaser as is reasonably necessary for the preparation of
any return, claim for refund or audit, and the prosecution or defense of any
claim, suit or proceeding relating to any proposed adjustment.
5. INDEMNIFICATION.
5.1. Survival of Representations. Each representation, warranty,
covenant and agreement made by any party within this Agreement or pursuant
hereto shall survive the Closing forever. All statements contained herein and in
any certificate, schedule, list and other document described pursuant hereto or
in connection with the transactions contemplated hereby shall be deemed
representations and warranties within the meaning of this Section.
5.2. Indemnification Of Purchaser. Seller and the Shareholder, jointly
and severally, shall indemnify and hold harmless Purchaser against and in
respect of all demands, claims, actions, liabilities, damages, losses,
judgments, assessments, costs and expenses (including without limitation
interest, penalties and attorney fees) (individually a "Claim" and collectively
the "Claims") asserted against, resulting to, imposed upon or incurred by
Purchaser, directly or indirectly, and arising out of or resulting from (a) a
breach of any representation, warranty, covenant or agreement made or to be
performed by Seller or the Shareholder under this Agreement, (b) any requirement
that Purchaser satisfy or perform any Liability of Seller or the Shareholder
that is not an Assumed Liability, (c) any fraud or willful misconduct by the
Seller or the Shareholder in connection with this Agreement or the Contemplated
Transactions or (d) the conduct of the Business prior to the Effective Time.
11
5.3. Notification. Purchaser if seeking indemnification hereunder shall
hereinafter be referred to as the "Indemnified Party" and Seller and the
Shareholder shall hereinafter be referred to as the "Indemnifying Parties". The
Indemnified Party shall, upon becoming aware or being put on notice of the
existence of a Claim with respect to which the Indemnified Parties may be
entitled to indemnification pursuant to this Section 5, promptly notify the
Indemnifying Parties in writing of such matter. The failure of the Indemnified
Party to notify the Indemnifying Parties of any Claim with respect to which the
Indemnified Party may be entitled to indemnification hereunder will not relieve
the Indemnifying Parties of any liability that it may have to the Indemnified
Party except to the extent the Indemnifying Parties are materially prejudiced
thereby; provided, that the Indemnified Party shall be deemed to have notified
the Indemnifying Party by giving written notice of any such Claim to the Seller
or the Shareholder.
5.4. Settlement and Defense of Claims. Except as hereinafter provided,
upon receiving notice thereof in accordance with the provisions of Section 5.3
hereof, the Indemnifying Parties shall have the right to settle at its own cost
and expense all Claims which are susceptible of being settled or defended, and
to defend, through counsel of its own choosing and at its own cost and expense,
any third party action which may be brought in connection therewith; provided,
that the Indemnifying Parties shall be required to keep the Indemnified Party
fully and currently informed of all settlement negotiations and of the progress
of any litigation; and provided further that the Indemnified Party shall have
the right to fully participate in the defense or settlement of any Claim at its
own expense, except for its reasonable attorneys fees which shall be paid by the
Indemnifying Parties, if a third legal counsel chosen by the legal counsel of
the Sellers and the Indemnified Party determines that: (a) there are or may be
legal defenses available to such Indemnified Party that are different from or
additional to those available to Indemnifying Parties and which could not be
adequately advanced by counsel chosen by the Indemnified Party, or (b) a
conflict or potential conflict exists between Indemnifying Parties and such
Indemnified Party that would make such separate representation advisable. The
Indemnifying Parties shall not, without the prior written consent of the
Indemnified Party, which consent shall not unreasonably be withheld, settle or
compromise or consent to the entry of any judgment in any pending or the
threatened claim, action or proceeding to which such Indemnified Party is a
party.
5.5. Cooperation of Indemnified Party. The Indemnified Party shall
cooperate with the Indemnifying Parties in connection with the settlement or
defense of any Claim. In addition, except as hereinafter provided, the
Indemnified Party shall not pay or voluntarily permit the determination of any
Claim while the Indemnifying Party is negotiating the settlement thereof or
litigating the Claim, except with the prior written consent of the Indemnifying
Party.
5.6. Assumption by Indemnified Party. Notwithstanding anything
contained herein to the contrary, the Indemnified Party may, by releasing the
Indemnifying Party from liability to him or it with respect to such Claim, take
over and assume the settlement and defense of any Claim.
12
5.7. Purchaser Indemnification. In no event shall the Purchaser have
any liability whatsoever to the Seller Parties in connection with Section 5 of
this Agreement or otherwise.
6. General Provisions.
6.1. Expenses. Each party shall pay its own legal, accounting and other
expenses.
6.2. Headings. Headings are for convenience and are not admissible as
to construction.
6.3. Notices. All notices or other communications required or permitted
to be given pursuant to this Agreement shall be in writing and shall be
considered as properly given or made if hand delivered, mailed from within the
United States by certified or registered mail, or sent by overnight courier or
delivery service or facsimile transmission to the applicable address appearing
in the preamble to this Agreement, or to such other address as either party may
have designated by like notice forwarded to the other party hereto. All notices,
except notices of change of address, shall be deemed given three business days
after they have been mailed by certified of registered mail, one business day if
they have been mailed by overnight courier or delivery service, or immediately
if they have been hand delivered or faxed, and notices of change of address
shall be deemed given when received. Notice shall be sent to the following
addresses, unless otherwise changed as set forth herein:
If to Seller: State Inspections of Texas, Inc.
------------ EMI Mobile ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Purchase : Speedemisisons, Inc.
--------------- Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
6.4. Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.
6.5. Application of Law. This Agreement, and the application or
interpretation thereof, shall be governed exclusively by its terms and by the
laws of the State of Georgia.
6.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.7. Arbitration. Any controversy or claim arising out of or relating
to this Agreement or any related agreement shall be settled by arbitration in
accordance with the following provisions:
13
6.7.1 The agreement of the parties to arbitrate covers all
disputes of every kind relating to or arising out of this Agreement or any of
the Contemplated Transactions. Disputes include actions for breach of contract
with respect to this Agreement, as well as any claim based upon tort or any
other causes of action relating to the Contemplated Transactions, such as claims
based upon an allegation of fraud or misrepresentation and claims based upon a
federal or state statute. In addition, the arbitrators selected according to
procedures set forth below shall determine the arbitrability of any matter
brought to them, and their decision shall be final and binding on the parties,
and judgment upon the award may be entered in any court of competent
jurisdiction in the United States. The forum for the arbitration shall be
Atlanta, Georgia, and the governing law for the arbitration shall be the law of
the State of Georgia, without reference to its conflicts of laws provisions.
There shall be three arbitrators, unless the parties are able to agree on a
single arbitrator. In the absence of such agreement within 10 days after the
initiation of an arbitration proceeding, Seller shall select one arbitrator and
Purchaser shall select one arbitrator, and those two arbitrators shall then
select, within 10 days, a third arbitrator. If those two arbitrators are unable
to select a third arbitrator within such 10 day period, a third arbitrator shall
be appointed by the commercial panel of the American Arbitration Association.
The decision in writing of at least two of the three arbitrators shall be final
and binding upon the parties. Each party shall bear its own fees and expenses
with respect to the arbitration and any proceeding related thereto and the
parties shall share equally the fees and expenses of the American Arbitration
Association and the arbitrators.
6.7.2 The arbitration shall be administered by the American
Arbitration Association. The rules of arbitration shall be the Commercial
Arbitration Rules of the American Arbitration Association, as modified by any
other instructions that the parties may agree upon at the time, except that each
party shall have the right to conduct discovery in any manner and to the extent
authorized by the Federal Rules of Civil Procedure as interpreted by the federal
courts. If there is any conflict between those rules and the provisions of this
section, the provisions of this section shall prevail.
6.7.3 The arbitrators shall be bound by and shall strictly enforce
the terms of this Agreement and may not limit, expand or otherwise modify its
terms. The arbitrators shall not have power to award damages in connection with
any dispute in excess of actual compensatory damages and shall not multiply
actual damages or award consequential or punitive damages.
6.8 No Third-Party Beneficiaries. Nothing expressed or referred to in
this Agreement will be construed to give any person or entity other than the
parties to this Agreement any legal or equitable right, remedy or claim under or
with respect to this Agreement or any provision of this Agreement.
6.9 Legal Fees and Costs. If a legal action is initiated by any party
to this Agreement against another, arising out of or relating to the alleged
performance or non-performance of any right or obligation established hereunder,
or any dispute concerning the same, each party shall pay its own legal fees and
costs.
14
6.10 Binding Agreements; Non Assignability. Each of the provisions and
agreements herein contained shall be binding upon and inure to the benefit of
the personal representatives, heirs, devisees and successors of the respective
parties hereto; but none of the rights or obligations attaching to either party
hereunder shall be assignable, unless specifically noted.
6.11 Entire Agreement; Waiver. This Agreement of the parties hereto
with respect to the subject matter hereof, and no amendment, waiver,
modification or alteration of the terms hereof shall be binding unless the same
be in writing, dated subsequent to the date hereof and duly approved and
executed by each party. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof of the exercise of any other right, power or privilege. The rights and
remedies herein shall be cumulative and not exclusive of any right or remedies
provided by law.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first above written.
"PURCHASER"
SPEEDEMISSIONS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, President/CEO
"SELLER"
STATE INSPECTIONS OF TEXAS, INC
EMI Mobile Testing Units
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
"SHAREHOLDER"
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
15
LIST OF SCHEDULES
Schedule 1.2 Excluded Assets
Schedule 1.5 Allocation of Purchase Price
Schedule 2.5.2 Equipment, Motor Vehicles, etc.
Schedule 2.10.1 Personnel
16
