EX 99.10.1
STOCK PURCHASE AGREEMENT, dated as of December 31, 2004, among ACL
SEMICONDUCTORS, INC., a Delaware corporation with executive offices located at
B24-B27, 1/F., Block B, Proficient Industrial Centre, 6 Xxxx Xxxx Road, Kowloon,
Hong Kong (the "PURCHASER"); CLASSIC ELECTRONICS LTD., a Hong Kong corporation
with executive offices located at B6-B8, 1/F., Block B, Proficient Industrial
Centre, 6 Xxxx Xxxx Road, Kowloon, Hong Kong ("CLASSIC"), and the HOLDERS OF THE
CAPITAL STOCK OF CLASSIC IDENTIFIED IN SCHEDULE A HERETO (the "SELLERS").
INTRODUCTION
The Purchaser desires to acquire from the Sellers, and the Sellers desire
to sell to the Purchaser, all of the outstanding shares of capital stock of
Classic (the "CLASSIC CAPITAL STOCK"), in exchange for 12,000,000 shares (the
"PURCHASER PAYMENT SHARES") of common stock, par value $0.001 per share (the
"PURCHASER COMMON STOCK"), plus the cancellation of an aggregate of $4.0 million
of indebtedness owed by the Sellers to Classic (the "SELLERS' DEBT"), plus $1.0
million previously paid by Purchaser to Classic on December 29, 2003 as a
non-refundable deposit towards the consummation of the sale of Classic to the
Purchaser through cancellation of accounts receivable then payable by Classic to
Purchaser.
The parties hereto, intending to be legally bound, hereby agree as
follows:
I. DEFINITIONS
"ACCRUED BENEFITS" shall include the value of disability, pre-retirement,
death benefits, and all supplements, subsidized, ancillary, and optional forms
of benefits.
"ACCRUED LIABILITIES" shall include a pro rata contribution to each
Employee Benefit Plan or with respect to each such obligation or arrangement for
that portion of a plan year or other applicable period which commences prior to,
and ends after, the date of the Closing and Accrued Liabilities for any portion
of a plan year or other applicable period shall be determined by multiplying the
liability for the entire such year or period by a fraction, the numerator of
which is the number of days preceding the Closing Date in such year or period
and the denominator of which is the number of days in such year or period, as
the case may be.
"CLOSING" shall have the definition assigned thereto in Section 2.02
hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CLASSIC" shall have the definition assigned thereto in the introductory
paragraph hereto.
"CLASSIC COMMON STOCK" shall mean the common stock, of HK$1 per share, of
Classic.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, including the rules and regulations of the SEC thereunder.
"HAZARDOUS SUBSTANCE" shall mean any hazardous waste, as defined by 42
U.S.C. ss.6903(5), any hazardous substance, as defined by 42 U.S.C. ss.9601(14),
any pollutant or contaminant, as defined by 42 U.S.C. ss.9601(33), and all toxic
substances, hazardous materials, or other chemical substances regulated by any
other law, rule, or regulation.
"INTANGIBLES" shall mean any patent, patent application, trademark,
trademark application, service xxxx, copyright, copyright application,
franchise, trade secret, computer program (in object or source code or
otherwise), or other intangible property or asset.
"LAST CLASSIC BALANCE SHEET" shall mean the balance sheet included in the
Last Classic Financial Statements.
"LAST CLASSIC BALANCE SHEET DATE" shall mean March 31, 2004.
"LAST CLASSIC FINANCIAL STATEMENTS" shall mean the balance sheet,
statement of income, and statement of cash flows, and the notes thereto, of
Classic as of the Last Classic Balance Sheet Date.
"LAST PURCHASER BALANCE SHEET" shall mean the consolidated balance sheet,
and the notes thereto, of Purchaser as of the Last Purchaser Balance Sheet Date.
"LAST PURCHASER BALANCE SHEET DATE" shall mean September 30, 2004.
"LAST PURCHASER FINANCIAL STATEMENTS" shall mean the consolidated
financial statements of the Purchaser at and for the nine months ended September
30, 2004.
"PENSION PLAN" shall have the definition assigned thereto in Section 3(2)
of ERISA.
"PURCHASER" shall have the definition assigned thereto in the
introductory paragraph hereto.
"PURCHASER INDEMNITEES" shall mean the Purchaser, the Purchaser
Subsidiaries, and their respective officers, directors, employees, counsel,
agents, and stockholders, in each case past, present, or as they may exist at
any time after the date of this Agreement, and each person, if any, who
controls, controlled, or will control any of them within the meaning of Section
15 of the Securities Act or Section 20(a) of the Securities Exchange Act.
"PURCHASER PAYMENT SHARES" shall have the definition assigned thereto in
the introductory paragraph hereto.
"PURCHASER SEC DOCUMENTS" shall mean the Annual Report on Form 10-K for
the year ended December 31, 2003, the Quarterly Reports on Form 10-Q for the
periods ended March 31, 2004, June 30, 2004, and September 30, 2004, all Current
Reports on Form 8-K filed during the period commencing on January 1, 2004 and
terminating at the Closing, and all other filings made by the Purchaser with the
SEC pursuant to the Exchange Act during the period from January 1, 2004 and
terminating on the date of the Closing.
"PURCHASER SUBSIDIARIES" shall have the definition assigned thereto in
Section 3.01 hereof.
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"RELEASE" shall have the meaning set forth in 42 U.S.C. ss.9601(22).
"RELEASE TIME" shall have the definition assigned thereto in Section 5.05
hereof.
"SEC" shall mean the United States Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLERS" shall have the definition assigned thereto in the introductory
paragraph hereto.
"TAKEOVER PROPOSAL" shall have the definition assigned thereto in Section
5.10 hereof.
"TAX RETURNS" shall mean any return, report, document, statement, or form
required to be filed (whether on a consolidated, combined, separate, or unitary
basis) with respect to any Taxes (including any schedules required to be
attached thereto), including, without limitation, information returns, claims
for refund, amended returns, and declarations of estimated Tax.
"TAXES" shall mean all taxes, charges, fees, levies, penalties, or other
assessments imposed by any United States federal, state, local, or foreign
taxing authority, including any interest, penalties, or additions thereto.
II. THE EXCHANGE
SECTION 2.01. TERMS OF THE EXCHANGE.
On the basis of the representations, warranties, covenants, and
agreements contained in this Agreement and subject to the terms and conditions
of this Agreement, each Seller shall sell, assign, transfer, and convey to the
Purchaser at the Closing all of the issued and outstanding shares of Classic
Common Stock set forth opposite his, her, or its respective name in Schedule A
hereto, such shares of Classic Common Stock collectively representing all of the
issued and outstanding capital stock thereof; and, in consideration therefor,
the Purchaser shall issue and deliver at the Closing to the Sellers (or at the
direction of each Seller its respective designee or designees) the Purchaser
Payment Shares in proportion to the shares of Classic Common Stock set forth
opposite their respective names in Schedule A hereto. Simultaneously with, and
as a condition to, such issuance and delivery, Classic shall cancel the Sellers'
Debt in proportion to the shares of Classic Common Stock set forth opposite the
Sellers' respective names in Schedule A hereto.
SECTION 2.02. THE CLOSING.
The closing of the transactions contemplated by Section 2.01 shall take
place at the offices of Reitler Xxxxx & Xxxxxxxxxx LLC, counsel to the
Purchaser, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
a.m., local time, on the fifth business day after the date the conditions in
Articles VII and VIII have been satisfied. The closing may occur at such
different place, such different time, or such different date or a combination
thereof as the Purchaser and Sellers agree in writing. The closing of the
transactions contemplated by Section 2.01, is referred to as the "CLOSING". If
the Closing shall not take place by December 31, 2004, then the parties not
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at fault shall, in addition to all other rights and remedies available at law or
in equity against the defaulting parties, have the right to cancel and terminate
this Agreement.
SECTION 2.03. TRANSACTIONS AT CLOSING.
(a) The following transactions shall take place at the Closing:
(i) each Seller shall deliver or cause to be delivered
to the Purchaser stock certificates of Classic Common Stock owned beneficially
or of record thereby, such shares of Classic Common Stock collectively
representing all of the issued and outstanding capital stock thereof, registered
in the name of the Purchaser;
(ii) the Purchaser shall deliver to each Seller
certificates representing the number of Purchaser Payment Shares determined in
accordance with Section 2.01 hereof.
(b) The shares of capital stock of Classic to be delivered by
the Sellers to the Purchaser, and the Purchaser Payment Shares, shall be
"RESTRICTED SECURITIES" as defined in paragraph (a) of Rule 144 under the
Securities Act.
(c) Certificates representing the shares of the aforementioned
shares capital stock of Classic and the certificates representing the Purchaser
Payment Shares shall bear a restrictive legend in substantially the following
form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED FOR SALE, SOLD, OR
OTHERWISE DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO
AN EXEMPTION FROM SUCH REGISTRATION PROVISIONS, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
SECTION 2.04. INDEMNITY AGAINST LIABILITIES.
The Sellers, jointly and severally, agrees to indemnify and hold harmless
the Purchaser Indemnitees against any and all losses, liabilities, damages, and
expenses whatsoever (which shall include for all purposes of this Section 2.04,
but not be limited to, reasonable counsel fees and any and all expenses
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with
(a) any breach of any representation, warranty, covenant, or
agreement of Seller contained in this Agreement; and
(b) if the Closing takes place, any act, alleged act, omission,
or alleged omission occurring at or prior to the Closing (including without
limitation any which arise out of, are based upon, or are in connection with any
of the transactions contemplated hereby.
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The foregoing agreement to indemnify shall be in addition to any liability the
Sellers may otherwise have, including liabilities arising under this Agreement.
III. REPRESENTATIONS AND WARRANTIES OF SELLER AND CLASSIC
The Seller and Classic, jointly and severally, represents and warrants
to, and agrees with, the Purchaser as follows:
SECTION 3.01. ORGANIZATION AND QUALIFICATION.
Other than as set forth in Schedule 3.01 hereto, Classic has no
subsidiaries or affiliated corporation or owns any interest in any other
enterprise (whether or not such enterprise is a corporation). Classic is a
corporation duly organized, validly existing, and in good standing under the
laws of Hong Kong, with all requisite power and authority, and all necessary
consents, authorizations, approvals, orders, licenses, certificates, and permits
of and from, and declarations and filings with, all federal, state, local, and
other governmental authorities and all courts and other tribunals, to own,
lease, license, and use its properties and assets and to carry on the businesses
in which it is now engaged and the businesses in which it contemplates engaging.
Classic is duly qualified to transact the businesses in which it is engaged and
is in good standing as a foreign corporation in every jurisdiction in which its
ownership, leasing, licensing, or use of property or assets or the conduct of
its businesses makes such qualification necessary.
SECTION 3.02. CAPITALIZATION.
The authorized capital stock of Classic consists of 3,000,000 shares of
Classic Common Stock, of which 3,000,000 shares are outstanding. Each of such
outstanding shares of Classic Common Stock is duly authorized, validly issued,
fully paid, and nonassessable, has not been issued and is not owned or held in
violation of any preemptive or similar right of stockholders, and is owned of
record and beneficially by stockholders identified in Schedule 3.02A, in each
case free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts. Except as set forth
in Schedule 3.02B hereto, (a) there is no commitment, plan, or arrangement to
issue, and no outstanding option, warrant, or other right calling for the
issuance of, any share of capital stock of Classic or any security or other
instrument convertible into, or exercisable or exchangeable for, capital stock
of Classic, and (b) there is outstanding no security or other instrument
convertible into, or exercisable or exchangeable for, capital stock of Classic.
SECTION 3.03. FINANCIAL CONDITION.
Seller and Classic have delivered to the Purchaser true and correct
copies of the following: unaudited balance sheet of Classic as of March 31,
2004; the unaudited statement of income and statement of retained earnings, and
statement of cash flows of Classic for the year ended March 31, 2004. Such
balance sheet presents fairly the financial condition, assets, liabilities, and
stockholders' equity of Classic as of its date; such statement of income and
statement of retained earnings presents fairly the results of operations of
Classic for the period indicated; and each such statement of cash flows presents
fairly the information purported to be shown therein. The financial statements
referred to in this Section 3.03 have been prepared in accordance with
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generally accepted accounting principles in the United States consistently
applied throughout the periods involved and are in accordance with the books and
records of Classic (including the subsidiaries thereof, if any). Except as set
forth in Schedule 3.03 hereto, since Last Classic Balance Sheet Date:
(a) There has at no time been a material adverse change in the
financial condition, results of operations, business, properties, assets,
liabilities, or, to the best knowledge of the Sellers and Classic, future
prospects of Classic; and Classic has operated consistently in all material
respects with the results of operations referred to in Last Classic Financial
Statements;
(b) Classic has not authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its capital stock or
any direct or indirect redemption, purchase, or other acquisition of any stock
of Classic.
(c) The operations and business of Classic have been conducted
in all respects only in the ordinary course of business consistent with past
practices.
(d) There has been no accepted purchase order or quotation,
arrangement, or understanding for future sale of the products or services of
Classic which in the reasonable expectation of the Sellers or Classic will not
be profitable.
(e) Classic has not suffered an extraordinary loss (whether or
not covered by insurance) or waived any right of substantial value.
(f) Classic has not paid or incurred any tax, other liability,
or expense resulting from the preparation of, or the transactions contemplated
by, this Agreement, it being understood that the Sellers shall have paid or will
pay all such taxes applicable thereto resulting from the transactions
contemplated hereby and in connection therewith.
There is no fact known to any Seller or Classic which materially adversely
affects or in the future (as far as any Seller or Classic can foresee) may
materially adversely affect the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of Classic;
provided, however, that Sellers and Classic express no opinion as to political
or economic matters of general applicability.
SECTION 3.04. TAX AND OTHER LIABILITIES.
Classic has no liability of any nature, accrued or contingent, including
without limitation, liabilities for Taxes and liabilities to customers or
suppliers, other than the following:
(a) Liabilities for which full provision has been made on the
balance sheet included in the Last Classic Balance Sheet; and
(b) Other liabilities arising since the Last Classic Balance
Sheet Date and prior to any Closing in the ordinary course of business (which
shall not include liabilities to customers on account of defective products or
services) which are not inconsistent with the representations and warranties of
Classic or any other provision of this Agreement.
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Without limiting the generality of the foregoing, the amounts, if any, set up as
provisions for Taxes on the Last Classic Balance Sheet are sufficient for all
accrued and unpaid Taxes of Classic, whether or not due and payable and whether
or not disputed, under tax laws, as in effect on the Last Classic Balance Sheet
Date or now in effect, for the period ended on such date and for all fiscal
periods prior thereto. The execution, delivery, and performance of this
Agreement by Classic will not cause any Taxes to be payable (other than those
that may possibly be payable by the Sellers as a result of the sale of the
shares of capital stock of Classic) or cause any lien, charge, or encumbrance to
secure any Taxes to be created either immediately or upon the nonpayment of any
Taxes other than on the properties or assets of the Sellers. The Inland Revenue
Department of Hong Kong has audited and settled or the statute of limitations
has run upon all federal income tax returns of Classic and the Seller for all
taxable years up to and including the taxable year of assessment 2002/2003. Each
of the Sellers and Classic has filed all local tax returns required to be filed
by it; has delivered to the Purchaser a true and correct copy of each such
return which was filed in the past six years; has paid (or has established on
the Last Classic Balance Sheet a reserve for) all Taxes, assessments, and other
governmental charges payable or remittable by it or levied upon it or its
properties, assets, income, or franchises which are due and payable; and has
delivered to the Purchaser a true and correct copy of any report as to
adjustments received by it from any taxing authority during the past six years
and a statement as to any litigation, governmental or other proceeding (formal
or informal), or investigation pending, threatened, or in prospect with respect
to any such report or the subject matter of such report. Each Seller and Classic
has paid all taxes payable thereby due on or prior to the date hereof. Except as
disclosed in Schedule 3.04, (i) no agreement extending the time for assessment
of any Taxes has been granted that currently is in effect, (ii) no protests are
pending with respect to any Taxes, and (iii) there are no liens for Taxes (other
than for Taxes that are not yet due and payable). All liabilities of Classic are
set forth in Schedule 3.04.
SECTION 3.05. LITIGATION AND CLAIMS.
Except as described in Schedule 3.05, there is no litigation,
arbitration, claim, governmental or other proceeding (formal or informal), or
investigation pending or, to the best of the knowledge of each of the Sellers
and Classic, threatened, or in prospect (or any basis therefor known to any
Seller or Classic) with respect to Classic or any of its businesses, properties,
or assets. Classic is not affected by any present or threatened strike or other
labor disturbance nor to the knowledge of any Seller or Classic, is any union
attempting to represent any employee of Classic as collective bargaining agent.
Classic is not in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree; nor is any Seller or Classic required to
take any action in order to avoid such violation or default.
SECTION 3.06. PROPERTIES.
Classic has good and marketable title in fee simple absolute to all real
properties and good title to all other properties and assets used in its
business or owned by it (except such real and other properties and assets as are
held pursuant to leases or licenses described in Schedule 3.07 or Schedule 3.09
hereto), free and clear of all liens, mortgages, security interests, pledges,
charges, and encumbrances, except such as are listed in Schedule 3.06 hereto.
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(a) All accounts and notes receivable reflected on the Last
Classic Balance Sheet, or arising since the Last Classic Balance Sheet Date,
have been collected, or are and will be good and collectible, in each case at
the aggregate recorded amounts thereof without right of recourse, defense,
deduction, return of goods, counterclaim, offset, or set off on the part of the
obligor, and, if not collected, can reasonably be anticipated to be paid within
180 days of the date incurred.
(b) Classic has not caused or permitted its businesses,
properties, or assets to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose of, transfer, produce, or process any Hazardous
Substance, except in compliance with all applicable laws, rules, regulations,
orders, judgments, and decrees, and has not caused or permitted the Release of
any Hazardous Substance on or off the site of any property of Classic or any
affiliated person or entity.
(c) Attached as Schedule 3.06(c) is a true and complete list of
all real and other properties and assets owned by Classic or leased or licensed
by Classic from or to a third party (including inventory, but not including
Intangibles), including with respect to such properties and assets leased or
licensed by Classic, a description of such lease or license. All such real and
other properties and assets (including Intangibles) owned by Classic are
reflected on the Last Classic Balance Sheet (except for acquisitions subsequent
to the Last Classic Balance Sheet Date and prior to the Closing which are either
noted in Schedule 3.06(c) or are approved in writing by the Purchaser). All real
and other tangible properties and assets owned, leased, or licensed by Classic
are in good and usable condition (reasonable wear and tear which is not such as
to affect adversely the operation of the business of Classic excepted).
(d) No real property owned, leased, or licensed by Classic lies
in an area which is, or to the knowledge of any Seller or Classic will be,
subject to zoning, use, or building code restrictions which would prohibit, and
no state of facts relating to the actions or inaction of another person or
entity or its ownership, leasing, licensing, or use of any real or personal
property exists or will exist which would prevent, the continued effective
ownership, leasing, licensing, or use of such real property in the business in
which Classic is now engaged or the business in which it contemplates engaging.
(e) The real and other properties and assets (including
Intangibles) owned by Classic or leased or licensed by Classic from a third
party constitute all such properties and assets which are necessary to the
business of Classic as presently conducted or as it contemplates conducting.
SECTION 3.07. CONTRACTS AND OTHER INSTRUMENTS.
Schedule 3.07 accurately and completely sets forth all contracts,
agreements, instruments, leases, licenses, arrangements, or understandings with
respect to Classic. Seller has furnished to the Purchaser (a) the certificate of
incorporation or formation (or other charter document) and by-laws of Classic
and all amendments thereto, as presently in effect and (b) the following: (i)
true and correct copies of all contracts, agreements, and instruments referred
to in Schedule 3.07; (ii) true and correct copies of all leases and licenses
referred to in Schedule 3.06 or Schedule 3.08; and (iii) true and correct
written descriptions of all supply, distribution, agency, financing, or other
arrangements or understandings referred to in Schedule 3.07. Neither Classic
nor, to the
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knowledge of any Seller or Classic, any other party to any such contract,
agreement, instrument, lease, or license is now or expects in the future to be
in violation or breach of, or in default with respect to complying with, any
material term thereof, and each such contract, agreement, instrument, lease, or
license is in full force and is the legal, valid, and binding obligation of the
parties thereto and is enforceable as to them in accordance with its terms. Each
such supply, distribution, agency, financing, or other arrangement or
understanding is a valid and continuing arrangement or understanding; neither
any Seller or Classic, nor any other party to any such arrangement or
understanding has given notice of termination or taken any action inconsistent
with the continuance of such arrangement or understanding; and the execution,
delivery, and performance of this Agreement will not prejudice any such
arrangement or understanding in any way. Classic enjoys peaceful and undisturbed
possession under all leases and licenses under which it is operating. Classic is
not party to or bound by any contract, agreement, instrument, lease, license,
arrangement, or understanding, or subject to any charter or other restriction,
which has had or, to the knowledge of any Seller, or Classic, may in the future
have a material adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities, or future prospects of
Classic or the Purchaser. Classic has not engaged within the last five years in,
is not engaging in, and does not intend to engage in any transaction with, and
has not had within the last five years, does not now have, and does not intend
to have any contract, agreement, instrument, lease, license, arrangement, or
understanding with, any stockholder, any director, officer, or employee of
Classic (except for employment agreements listed in Schedule 3.07 and employment
and compensation arrangements described in Schedule 3.08(a), in each case with
such directors, officers, and employees who are not relatives or affiliates
described in the next clause), any relative or affiliate of any stockholder or
of any such director, officer, or employee, or any other corporation or
enterprise in which any stockholder, any such director, officer, or employee, or
any such relative or affiliate then had or now has a 5% or greater equity or
voting or other substantial interest, other than those listed and so specified
in Schedule 3.07. The stock ledgers and stock transfer books and the minute book
records of Classic relating to all issuances and transfers of stock thereby and
all proceedings of the stockholders and the Board of Directors and committees
thereof of Classic since its incorporation made available to the Purchaser's
counsel are the original stock ledgers and stock transfer books and minute book
records of Classic or exact copies thereof. Classic is not in violation or
breach of, or in default with respect to, any term of its certificate of
incorporation or other charter document or by-laws. Classic is not a member of a
customer or user organization or of a trade association.
SECTION 3.08. EMPLOYEES.
(a) Classic does not have, or contribute to, any pension,
profit-sharing, option, other incentive plan, or any other type of Employee
Benefit Plan or has any obligation to or customary arrangement with employees
for bonuses, incentive compensation, vacations, severance pay, sick pay, sick
leave, insurance, service award, relocation, disability, tuition refund, or
other benefits, whether oral or written, except as set forth in Schedule
3.08(a). Classic has furnished to Purchaser true and correct copies, of all
documents evidencing plans, obligations, or arrangements referred to in Schedule
3.08(a) (or true and correct written summaries of such plans, obligations, or
arrangements to the extent not evidenced by documents) and true and correct
copies of all documents evidencing trusts, summary plan descriptions, and any
other summaries or descriptions relating to any such plans.
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(b) Schedule 3.08(b) contains a true and correct statement of
the names, relationship with Classic, present rates of compensation (whether in
the form of salary, bonuses, commissions, or other supplemental compensation now
or hereafter payable), and aggregate compensation for the fiscal year ended
March 31, 2004 of (i) each director, officer, or other employee of Classic whose
aggregate compensation for the fiscal year ended March 31, 2004 exceeded
US$100,000 or whose aggregate compensation presently exceeds the rate of
US$100,000 per annum and (ii) all sales agents, dealers, or distributors of
Classic. Since March 31, 2004, Classic has not changed the rate of compensation
of any of its directors, officers, employees, agents, dealers, or distributors,
nor has any Employee Benefit Plan or program of Classic been instituted or
amended to increase benefits thereunder.
(c) Classic has not extended or maintained credit, arranged for
the extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer (or equivalent
thereof) thereof.
SECTION 3.09. PATENTS, TRADEMARKS, ET CETERA.
Classic does not own or have pending, and is not licensed or otherwise
permitted to use, Intangibles, other than as described in Schedule 3.09. Each
Intangible is validly issued and is currently in force and uncontested in all
jurisdictions in which it is used or in which such use is contemplated. Schedule
3.09 contains a true and correct listing of: (a) all Intangibles which are owned
(either in whole or in part), used by, or licensed to Classic or which otherwise
relate to the businesses of Classic, and a description of each such Intangible
which identifies its owner, registrant, or applicant; (b) all contracts,
agreements, instruments, leases, and licenses and identification of all parties
thereto under which Classic owns or uses any Intangible (whether or not under
license from third parties), together with the identification of the owner,
registrant, or applicant of each such Intangible; (c) all contracts, agreements,
instruments, leases, and licenses and identification of all parties thereto
under which Classic grants the right to use any Intangible; (d) all validity,
infringement, right-to-use, or other opinions of counsel (whether in-house or
outside) which concern the validity, infringement, or enforceability of any
Intangible owned or controlled by a party other than Classic which relates to
the businesses, properties, or assets of Classic. Except as specified in
Schedule 3.09, to the knowledge of the Seller and Classic: (e) Classic is the
sole and exclusive owner or licensee of, and (other than those exclusively
licensed by Classic to a third party) has the right to use, all Intangibles; (f)
no Intangible is subject to any order, judgment, decree, contract, agreement,
instrument, lease, or license restricting the scope of the use thereof; (g)
during the last five years, neither the Seller nor Classic has been charged
with, or has charged others with, unfair competition, infringement of any
Intangible, or wrongful use of confidential information, trade secrets, or
secret processes; and (h) Classic is not using any patentable invention,
confidential information, trade secret, or secret process of others. There is no
right under any Intangible necessary to the businesses of Classic as presently
conducted or as it contemplates conducting, except such as are so designated in
Schedule 3.09. Except as described in Schedule 3.09, Classic has not infringed,
is not infringing, and has not received notice of infringement in respect of the
Intangibles or asserted Intangibles of others, nor has Classic been advised by
counsel or others that it is infringing or may infringe the Intangibles or
asserted Intangibles of others if any currently contemplated business activity
is effectuated. To the knowledge of the Seller and Classic, there is no
infringement by others of Intangibles of Classic.
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As far as the Seller and Classic can reasonably foresee, there is no Intangible
or asserted Intangible of others that may materially adversely affect the
financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of Classic. All material contracts, agreements,
instruments, leases, and licenses pertaining to Intangibles to which Classic is
a party, or to which any of its businesses, properties, or assets are subject,
are in compliance in all material respects with all laws, rules, regulations,
orders, judgments, and decrees binding on Classic or to which any of its
businesses, properties, or assets are subject. Except as set forth in Schedule
3.09, Classic did not register any trademark, tradename or service xxxx, design,
or name used by Classic to identify its products, businesses, or services.
Neither any stockholder of Classic, any director, officer, or employee of
Classic, any relative or affiliate of any stockholder of Classic, any Seller,
any such director, officer, or employee, nor any other corporation or enterprise
in which any stockholder of Classic, any such director, officer, or employee, or
any such relative or affiliate had or now has a 5% or greater equity or voting
or other substantial interest, possesses any Intangible which relates to the
businesses of Classic.
SECTION 3.10. QUESTIONABLE PAYMENTS.
Neither any Seller, Classic, any director, officer, agent, employee, or
other person associated with or acting on behalf of any Seller or Classic, nor
any stockholder of Classic has, directly or indirectly: 0 used any corporate
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made any false
or fictitious entry on the books or records of any Seller or Classic; made any
bribe, rebate, payoff, influence payment, kickback, or other unlawful payment;
given any favor or gift which is not deductible for federal income tax purposes;
or made any bribe, kickback, or other payment of a similar or comparable nature,
whether lawful or not, to any person or entity, private or public, regardless of
form, whether in money, property, or services, to obtain favorable treatment in
securing business or to obtain special concessions, or to pay for favorable
treatment for business secured or for special concessions already obtained.
SECTION 3.11. COMPLIANCE WITH LAW AND GOVERNMENT REGULATIONS.
Classic is in compliance with, and is not in violation of, applicable
local or foreign statutes, laws and regulations (including without limitation,
any applicable building, zoning or other law, ordinance or regulation) affecting
its properties or the operation of its business. Classic is not subject to any
order, decree, judgment or other sanction of any court, administrative agency or
other tribunal.
SECTION 3.12. LEGAL PROCEEDINGS AND HISTORY.
Except as otherwise disclosed in Schedule 3.12, no officer, director or
affiliate of Classic, has been, within the five years ending on the Closing Date
a party to any bankruptcy petition against such person or against any business
of which such person was affiliated; convicted in a criminal proceeding or
subject to a pending criminal proceeding (excluding traffic violations and
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other minor offenses); subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting their involvement in any type of business, securities or
banking activities; or found by a court of competent jurisdiction in a civil
action, by the SEC or the Commodity Futures Trading Commission (or the
equivalent of either of the foregoing in any other jurisdiction) to have
violated a federal, state, or other securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
SECTION 3.13. OTHER INFORMATION.
Neither any Seller nor Classic knows of any material adverse information
regarding the current or prospective operations of Classic which has not been
disclosed herein or in a schedule hereto.
SECTION 3.14. AUTHORITY.
(a) Each Seller is an individual who has reached the age
majority in his state of residence and has all requisite power and authority to
execute, deliver, and perform this Agreement. All necessary proceedings of each
Seller have been duly taken to authorize the execution, delivery, and
performance by such Seller of this Agreement. This Agreement has been duly
authorized, executed, and delivered by each Seller, constitutes the legal,
valid, and binding obligation of each Seller, and is enforceable as to each
Seller in accordance with its terms.
(b) Classic has all requisite power and authority to execute,
deliver, and perform this Agreement. All necessary corporate proceedings of
Classic have been duly taken to authorize the execution, delivery, and
performance thereby of this Agreement. This Agreement has been duly authorized,
executed, and delivered by Classic, constitutes the legal, valid, and binding
obligation of Classic, and is enforceable as to Classic in accordance with its
terms.
(c) Except as otherwise set forth in this Agreement, no
consent, authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or other
governmental authority or any court or other tribunal is required by any Seller
or Classic for the execution, delivery, or performance of this Agreement
thereby. No consent of any party to any material contract, agreement,
instrument, lease, license, arrangement, or understanding to which any Seller or
Classic is a party, or to which it or any of his, her, or its respective
businesses, properties, or assets are subject, is required for the execution,
delivery, or performance of this Agreement (except such consents referred to in
Schedule 3.07); and the execution, delivery, and performance of this Agreement
will not (if the aforementioned consents are obtained prior to the Closing)
violate, result in a breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate or call a
default under, entitle any party to receive rights or privileges that such party
was not entitled to receive before this Agreement was executed under, or create
any obligation on the part of any Seller or Classic to which it was not subject
immediately before this Agreement was executed under, any term of any such
material contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of the certificate
of incorporation (or equivalent charter document) or by-laws (or equivalent
charter document) of Classic, or (if the provisions of this
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Agreement are satisfied) violate, result in a breach of, or conflict with any
law, rule, regulation, order, judgment, or decree binding on any Seller or
Classic or to which any of its respective businesses, properties, or assets are
subject
SECTION 3.15. STATUS OF SHARES.
The shares of capital stock of Classic to be acquired by Purchaser from
the Sellers are validly authorized and validly issued, fully paid, and
nonassessable and have not been issued, owned or held in violation of any
preemptive or similar right of stockholders.
SECTION 3.16. INSURANCE.
All policies of fire and other insurance against casualty and other
losses and public liability insurance carried by Classic are described in
Schedule 3.16 (including the risks covered and limits of such policies) and are
in full force and effect. All premiums in respect of such policies for which
premium notices have been received have been paid in full as the same become due
and payable. Classic has not failed to give any notice or present any claim
under any insurance policy in due and timely fashion. There are no actual claims
or claims threatened in writing against Classic which could come within the
scope of such coverage nor are any such policies currently threatened with
cancellation. There are no outstanding requirements or recommendations by any
insurance company that issued a policy with respect to any of the respective
assets, the businesses, or operations of Classic or by governmental authority
other body requiring or recommending any repairs or other work to be done on, or
with respect to, any of the assets of Classic or requiring or recommending any
equipment or facilities to be installed on any premises from which the
businesses of Classic is conducted or in connection with any of the respective
assets thereof. Neither any Seller nor Classic has any knowledge of any material
proposed increase in applicable insurance rates or of any conditions or
circumstances applicable to the businesses thereof that might result in such
increases. No such policy is terminable by virtue of the transactions
contemplated by this Agreement.
SECTION 3.17. OWNERSHIP STATUS.
The shares of capital stock of Classic to be acquired by Purchaser from
the Sellers are owned of record and beneficially solely by respective Seller as
described in Schedule A hereto, free and clear of any security interest, pledge,
mortgage, lien (including, without limitation, environmental and tax liens),
charge, encumbrance, adverse claim, preferential arrangement or restriction of
any kind, including, without limitation, any restriction on the use, voting,
transfer (except as otherwise provided herein), receipt of income or other
exercise of any attributes of ownership. Such shares are not subject to any
options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character relating to interests therein.
There are no voting trusts, member agreements, proxies, or other agreements or
understandings in effect with respect to the voting or transfer of any of the
shares of capital stock of Classic.
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SECTION 3.18. ACQUISITION HISTORY.
Each Seller acquired the shares of capital stock of Classic to be
acquired by Purchaser from such Seller from Classic in a transaction not
involving a public offering and, on the date of the acquisition thereof, such
Seller paid the full purchase price therefor.
SECTION 3.19. NON-DISTRIBUTIVE INTENT; RESTRICTED SECURITIES.
Each Seller is acquiring the Purchaser Payment Shares for his, her, or
its own respective account (and not for the account of others) for investment
and not with a view to the distribution or resale thereof in violation of the
Securities Act. Each Seller understands that he, she, or it may not sell or
otherwise dispose of such the Purchase Payment Shares, or any securities
issuable in respect thereof, in the absence of either an effective registration
statement under the Securities Act or an exemption from the registration
provisions of the Securities Act. Each Seller acknowledges being informed that
the Purchase Payment Shares acquired thereby shall be unregistered, shall be
"RESTRICTED SECURITIES" as defined in paragraph (a) of Rule 144 under the
Securities Act, and must be held indefinitely unless (a) they are subsequently
registered under the Securities Act, or (b) an exemption from such registration
is available. Each Seller further acknowledges that the Purchaser does not have
an obligation to currently register such securities for the account of such
Seller.
SECTION 3.20. ACCESS TO INFORMATION.
By virtue of each Seller's position, he, she, or it has access to the
same kind of information which would be available in a registration statement
filed under the Securities Act. Each Seller acknowledges that he, she, or it has
been afforded access to all material information which they have requested
relevant to their decision to acquire the Purchaser Payment Shares and to ask
questions of the Purchaser's management and that, except as set forth herein,
neither Purchaser nor anyone acting on behalf of Purchaser, has made any
representations or warranties to any Seller which have induced, persuaded, or
stimulated any Seller to acquire such Purchaser Payment Shares.
SECTION 3.21. SOPHISTICATION.
Either alone, or together with their investment advisor(s), each Seller
has the knowledge and experience in financial and business matters to be capable
of evaluating the merits and risks of the prospective investment in the
Purchaser Payment Shares, and each Seller is and will be able to bear the
economic risk of the investment in such Purchaser Payment Shares.
SECTION 3.22. COMPLETENESS OF DISCLOSURE.
No representation or warranty by any Seller or Classic in this Agreement
contains or, and at the Closing Date will contain, an untrue statement of
material fact or omits or, at such date, will omit to state a material fact
required to be stated therein or necessary to make the statements made not
misleading.
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IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to, and agrees with, the
Sellers:
SECTION 4.01. ORGANIZATION AND QUALIFICATION.
The Purchaser owns, either directly or through one or more wholly-owned
subsidiaries, all the outstanding shares of capital stock of the corporations
listed in Schedule 4.01 hereto (the "PURCHASER SUBSIDIARIES"). Other than the
Purchaser Subsidiaries, neither Purchaser nor any Purchaser Subsidiary has a
subsidiary or affiliate corporation or owns any interest in any other enterprise
(whether or not such enterprise is a corporation). Schedule 4.01 also correctly
sets forth as to the Purchaser and as to each Purchaser Subsidiary its place of
incorporation or formation, principal place of business, jurisdictions in which
it is qualified to do business, and the business which it presently conducts and
which it contemplates conducting; and as to each Purchaser Subsidiary its
authorized capitalization, its shares of capital stock outstanding, and the
record and beneficial owner of those shares. The Purchaser and each of the
Purchaser Subsidiaries is a corporation duly organized, validly existing, and in
good standing under the laws of its respective jurisdiction of incorporation,
with all requisite power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits of and
from, and declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and tribunals, to own, lease, license,
and use its properties and assets and to carry on the business in which it is
now engaged and the business in which it contemplates engaging. The Purchaser
and each of the Purchaser Subsidiaries is duly qualified to transact the
business in which it is engaged and is in good standing as a foreign corporation
in every jurisdiction in which its ownership, leasing, licensing, or use of
property or assets or the conduct of its business makes such qualification
necessary.
SECTION 4.02. CAPITALIZATION.
The authorized capital stock of Purchaser consists of 50,000,000 shares
of Purchaser Common Stock, of which 27,829,936 shares are outstanding, par value
$0.001 per share. Each of such outstanding shares of Purchaser Common Stock and
each outstanding share of capital stock (or other equity interest) of each
Purchaser Subsidiary is and authorized, validly issued, fully paid, and
nonassessable, has not been issued and is not owned or held in violation of any
preemptive or similar right of stockholders. Except as set forth in the
Purchaser SEC Documents, hereto, (a) there is no commitment, plan, or
arrangement to issue, and no outstanding option, warrant, or other right calling
for the issuance of, any share of capital stock of Purchaser or of any Purchaser
Subsidiary or any security or other instrument convertible into, or exercisable
or exchangeable for, capital stock of Purchaser or of any Purchaser Subsidiary,
and (b) there is outstanding no security or other instrument convertible into,
or exercisable or exchangeable for, capital stock of Purchaser or of any
Purchaser Subsidiary.
SECTION 4.03. FINANCIAL CONDITION.
Purchaser has delivered to the Seller true and correct copies of the
following: audited consolidated balance sheet of Purchaser and the Purchaser
Subsidiaries as of December 31, 2002
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and 2003 the audited consolidated statement of income and consolidated statement
of retained earnings, and consolidated statement of cash flows of Purchaser and
the Purchaser Subsidiaries for the years ended December 31, 2001, 2002, and
2003, the unaudited consolidated balance sheet of Purchaser and the Purchaser
Subsidiaries at March 31, 2004, June 30, 2004, and September 30, 2004; and the
unaudited consolidated statement of income of Purchaser and the Purchaser
Subsidiaries for the three, six, and nine months then ended. Each such
consolidated balance sheet presents fairly the financial condition, assets,
liabilities, and stockholders' equity of Purchaser and the Purchaser
Subsidiaries as of its date; each such consolidated statement of income and
consolidated statement of retained earnings presents fairly the results of
operations of Purchaser and the Purchaser Subsidiaries for the period indicated;
and each such consolidated statement of cash flows presents fairly the
information purported to be shown therein. The financial statements referred to
in this Section 4.03 have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved and
are in accordance with the books and records of Purchaser and the Purchaser
Subsidiaries. Except as set forth in Schedule 4.03 hereto, since Last Purchaser
Balance Sheet Date:
(a) There has at no time been a material adverse change in the
financial condition, results of operations, business, properties, assets,
liabilities, or, to the best knowledge of the Purchaser, future prospects of
Purchaser and the Purchaser Subsidiaries; and Purchaser and the Purchaser
Subsidiaries has operated consistently in all material respects with the results
of operations referred to in Last Purchaser Financial Statements;
(b) Neither Purchaser nor any Purchaser Subsidiary has
authorized, declared, paid, or effected any dividend or liquidating or other
distribution in respect of its capital stock or any direct or indirect
redemption, purchase, or other acquisition of any stock of Purchaser or any
Purchaser Subsidiary.
(c) The operations and business of Purchaser and the Purchaser
Subsidiaries have been conducted in all respects only in the ordinary course of
business consistent with past practices.
(d) There has been no accepted purchase order or quotation,
arrangement, or understanding for future sale of the products or services of
Purchaser or any Purchaser Subsidiaries which in the reasonable expectation of
the Seller or Purchaser will not be profitable.
(e) Neither Purchaser nor any Purchaser Subsidiary has suffered
an extraordinary loss (whether or not covered by insurance) or waived any right
of substantial value.
(f) Neither Purchaser nor any Purchaser Subsidiary has paid or
incurred any tax, other liability, or expense resulting from the preparation of,
or the transactions contemplated by, this Agreement, it being understood that
the Seller shall have paid or will pay all such taxes applicable thereto
resulting from the transactions contemplated hereby and in connection therewith.
There is no fact known to the Purchaser which materially adversely
affects or in the future (as far as Purchaser can foresee) may materially
adversely affect the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of Purchaser; provided,
however, that
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Purchaser expresses no opinion as to political or economic matters of
general applicability.
SECTION 4.04. TAX AND OTHER LIABILITIES.
Purchaser has no liability of any nature, accrued or contingent,
including without limitation, liabilities for Taxes and liabilities to customers
or suppliers, other than the following:
(a) Liabilities for which full provision has been made on the
balance sheet included in the Last Purchaser Balance Sheet; and
(b) Other liabilities arising since the Last Purchaser Balance
Sheet Date and prior to any Closing in the ordinary course of business (which
shall not include liabilities to customers on account of defective products or
services) which are not inconsistent with the representations and warranties of
Purchaser or any other provision of this Agreement.
Without limiting the generality of the foregoing, the amounts, if any, set up as
provisions for Taxes on the Last Purchaser Balance Sheet are sufficient for all
accrued and unpaid Taxes of Purchaser, whether or not due and payable and
whether or not disputed, under tax laws, as in effect on the Last Purchaser
Balance Sheet Date or now in effect, for the period ended on such date and for
all fiscal periods prior thereto. The execution, delivery, and performance of
this Agreement by Purchaser will not cause any Taxes to be payable (other than
those that may possibly be payable by the Seller as a result of the sale of the
shares of capital stock of Classic) or cause any lien, charge, or encumbrance to
secure any Taxes to be created either immediately or upon the nonpayment of any
Taxes other than on the properties or assets of the Seller. The Internal Revenue
Service has audited and settled or the statute of limitations has run upon all
federal income tax returns of Purchaser for all taxable years up to and
including the taxable year ended December 31, 1997. Purchaser and each Purchaser
Subsidiary has filed all federal, state, local, and foreign tax returns required
to be filed by it; has delivered to the Seller a true and correct copy of each
such return which was filed in the past six years; has paid (or has established
on the Last Purchaser Balance Sheet a reserve for) all Taxes, assessments, and
other governmental charges payable or remittable by it or levied upon it or its
properties, assets, income, or franchises which are due and payable; and has
delivered to the Seller a true and correct copy of any report as to adjustments
received by it from any taxing authority during the past six years and a
statement as to any litigation, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or in prospect with respect to
any such report or the subject matter of such report. The Purchaser has paid all
taxes payable thereby due on or prior to the date hereof. Except as disclosed in
the Purchaser SEC Documents or Schedule 4.04, (i) no agreement extending the
time for assessment of any Taxes has been granted that currently is in effect,
(ii) no protests are pending with respect to any Taxes, and (iii) there are no
liens for Taxes (other than for Taxes that are not yet due and payable).
SECTION 4.05. LITIGATION AND CLAIMS.
Except as described in the Purchaser SEC Documents, there is no
litigation, arbitration, claim, governmental or other proceeding (formal or
informal), or investigation pending or, to the best of the knowledge of
Purchaser, threatened, or in prospect (or any basis therefor known to Purchaser)
with respect to Purchaser, any Purchaser Subsidiary or any of its respective
businesses,
17
properties, or assets. Neither Purchaser nor any Purchaser Subsidiary is
affected by any present or threatened strike or other labor disturbance nor to
the knowledge of the Purchaser, is any union attempting to represent any
employee of Purchaser or any Purchaser Subsidiary as collective bargaining
agent. Neither Purchaser nor any Purchaser Subsidiary is in violation of, or in
default with respect to, any law, rule, regulation, order, judgment, or decree
which violation or default would have a material adverse effect on Purchaser and
the Purchaser Subsidiaries taken as a whole; nor is the Purchaser or any
Purchaser Subsidiary required to take any action in order to avoid such
violation or default.
SECTION 4.06. PROPERTIES.
Purchaser and each of the Purchaser Subsidiaries has good and marketable
title in fee simple absolute to all material real properties and good title to
all other material properties and assets used in its respective business or
owned by it (except such real and other properties and assets as are held
pursuant to leases or licenses described in the Purchaser SEC Documents), free
and clear of all liens, mortgages, security interests, pledges, charges, and
encumbrances, except such as are described in the Purchaser SEC Documents.
(a) All accounts and notes receivable reflected on the Last
Purchaser Balance Sheet, or arising since the Last Purchaser Balance Sheet Date,
have been collected, or are and will be good and collectible, in each case at
the aggregate recorded amounts thereof without right of recourse, defense,
deduction, return of goods, counterclaim, offset, or set off on the part of the
obligor, and, if not collected, can reasonably be anticipated to be paid within
180 days of the date incurred.
(b) Neither Purchaser nor any Purchaser Subsidiary has caused
or permitted its businesses, properties, or assets to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose of, transfer,
produce, or process any Hazardous Substance, except in compliance with all
applicable laws, rules, regulations, orders, judgments, and decrees, or has
caused or permitted the Release of any Hazardous Substance on or off the site of
any property of Purchaser or any affiliated person or entity.
(c) Attached as Schedule 4.06(c) is a true and complete list of
all real and other properties and assets owned by Purchaser or any Purchaser
Subsidiary or leased or licensed by Purchaser or any Purchaser Subsidiary from
or to a third party (including inventory, but not including Intangibles), and,
with respect to such properties and assets leased or licensed by Purchaser or
any Purchaser Subsidiary, a description of such lease or license. All such real
and other properties and assets (including Intangibles) owned by Purchaser or
any Purchaser Subsidiary are reflected on the Last Purchaser Balance Sheet
(except for acquisitions subsequent to the Last Purchaser Balance Sheet Date and
prior to the Closing which are either noted in Schedule 4.06(c) or are approved
in writing by the Purchaser). All real and other tangible properties and assets
owned, leased, or licensed by Purchaser or any Purchaser Subsidiary are in good
and usable condition (reasonable wear and tear which is not such as to affect
adversely the operation of the business of Purchaser and the Purchaser
Subsidiaries excepted).
(d) No real property owned, leased, or licensed by Purchaser or
any Purchaser Subsidiary lies in an area which is, or to the knowledge of
Purchaser will be, subject to zoning, use,
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or building code restrictions which would prohibit, and no state of facts
relating to the actions or inaction of another person or entity or its
ownership, leasing, licensing, or use of any real or personal property exists or
will exist which would prevent, the continued effective ownership, leasing,
licensing, or use of such real property in the business in which Purchaser and
the Purchaser Subsidiaries are now engaged or the business in which they
contemplates engaging.
(e) The real and other properties and assets (including
Intangibles) owned by Purchaser and each Purchaser Subsidiary or leased or
licensed by Purchaser or such Purchaser Subsidiary from a third party constitute
all such properties and assets which are necessary to the business of Purchaser
or such Purchaser Subsidiary as presently conducted or as it contemplates
conducting.
SECTION 4.07. CONTRACTS AND OTHER INSTRUMENTS.
Set forth in the Purchaser SEC Documents is a description, true and
correct in all material respects, of all material contracts, agreements,
instruments, leases, licenses, arrangements, or understandings with respect to
Purchaser and the Purchaser Subsidiaries. Purchaser has furnished to the Seller
the certificate of incorporation or formation (or other charter document) and
by-laws (or other charter document) of Purchaser and each Purchaser Subsidiary
and all amendments thereto, as presently in effect. Neither Purchaser nor, to
the knowledge of Purchaser, any other party to any such material contract,
agreement, instrument, lease, or license is now or expects in the future to be
in violation or breach of, or in default with respect to complying with, any
material term thereof, and each such contract, agreement, instrument, lease, or
license is in full force and is the legal, valid, and binding obligation of the
parties thereto and is enforceable as to them in accordance with its terms. Each
such material supply, distribution, agency, financing, or other arrangement or
understanding is a valid and continuing arrangement or understanding; neither
Purchaser or any Purchaser Subsidiary, nor any other party to any such
arrangement or understanding has given notice of termination or taken any action
inconsistent with the continuance of such arrangement or understanding; and the
execution, delivery, and performance of this Agreement will not prejudice any
such arrangement or understanding in any way. Purchaser and each Purchaser
Subsidiary enjoy peaceful and undisturbed possession under all leases and
licenses under which it is operating. Neither Purchaser nor any Purchaser
Subsidiary is party to or bound by any contract, agreement, instrument, lease,
license, arrangement, or understanding, or subject to any charter or other
restriction, which has had or, to the knowledge of Purchaser, or Purchaser, may
in the future have a material adverse effect on the financial condition, results
of operations, business, properties, assets, liabilities, or future prospects of
Purchaser or any Purchaser Subsidiary. Neither Purchaser nor any Purchaser
Subsidiary has engaged within the last five years in, is engaging in, or intends
to engage in any transaction with, and has not had within the last five years,
does not now have, and does not intend to have any contract, agreement,
instrument, lease, license, arrangement, or understanding with, any stockholder,
any director, officer, or employee of Purchaser (except for employment
agreements described in the Purchaser SEC Documents and employment and
compensation arrangements described in the Purchaser SEC Documents in each case
with such directors, officers, and employees who are not relatives or affiliates
described in the next clause), any relative or affiliate of any stockholder
or of any such director, officer, or employee, or any other corporation or
enterprise in which any stockholder, any such director, officer, or employee,
or any such relative or affiliate then had or now has a 5% or
19
greater equity or voting or other substantial interest, other than those
described in the Purchaser SEC Documents. The stock ledgers and stock transfer
books and the minute book records of Purchaser and each Purchaser Subsidiary
relating to all issuances and transfers of stock thereby and all proceedings of
the stockholders and the Board of Directors and committees thereof of Purchaser
and the Purchaser Subsidiaries since its respective incorporation made available
to the Seller's counsel are the original stock ledgers and stock transfer books
and minute book records of Purchaser and the Purchaser Subsidiaries or exact
copies thereof. Neither Purchaser nor any Purchaser Subsidiary is in violation
or breach of, or in default with respect to, any term of its certificate of
incorporation or other charter document or by-laws (or equivalent charter
document). Neither Purchaser nor any Purchaser Subsidiary is a member of a
customer or user organization or of a trade association.
SECTION 4.08. EMPLOYEES.
(a) Neither Purchaser nor any Purchaser Subsidiary has, or
contributes to, any pension, profit-sharing, option, other incentive plan, or
any other type of Employee Benefit Plan or has any obligation to or customary
arrangement with employees for bonuses, incentive compensation, vacations,
severance pay, sick pay, sick leave, insurance, service award, relocation,
disability, tuition refund, or other benefits, whether oral or written, except
as described in the Purchaser SEC Documents. Purchaser has furnished to the
Seller: (i) true and correct copies of all documents evidencing plans,
obligations, or arrangements referred to in the Purchaser SEC Documents (or true
and correct written summaries of such plans, obligations, or arrangements to the
extent not evidenced by documents) and true and correct copies of all documents
evidencing trusts, summary plan descriptions, and any other summaries or
descriptions relating to any such plans; (ii) the two most recent annual reports
(Form 5500's), if any, including all schedules thereto and the most recent
annual and periodic accounting of related plan assets with respect to each
Employee Benefit Plan; (iii) the two most recent actuarial valuations with
respect to each Pension Plan subject to Title IV of ERISA; and (iv) the most
recent determination letter issued by the Internal Revenue Service with respect
to each Pension Plan.
(b) If any Employee Benefit Plan of Purchaser or any Purchaser
Subsidiary were to be terminated on the day prior to the Closing Date, (i) no
liability under Title IV of ERISA would be incurred by Purchaser or any
Purchaser Subsidiary and (ii) all Accrued Benefits to such day prior to the
Closing Date (whether or not vested), would be fully funded in accordance with
the assumptions contained in the regulations of the Pension Benefit Guaranty
Corporation governing the funding of terminated defined benefit plans. All
Accrued Liabilities (for contributions or otherwise) of Purchaser as of the
Closing Date to each Employee Benefit Plan and with respect to each obligation
to, or customary arrangement with, employees for bonuses, incentive
compensation, vacations, severance pay, sick pay, sick leave, insurance, service
award, relocation, disability, tuition refund, or other benefits, whether oral
or written, have been paid or accrued for all periods ending prior to the
Closing Date and no payment to any Employee Benefit Plan or with respect to any
such obligation or arrangement since the Last Purchaser Balance Sheet Date has
been disproportionately large compared to prior payments.
(c) There has been no violation of the reporting and disclosure
requirements imposed either under ERISA or the Code for which a penalty has been
or may be imposed with
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respect to any Employee Benefit Plan of Purchaser or any Purchaser Subsidiary.
There has been no breach of fiduciary duty or responsibility with respect to any
Employee Benefit Plan of Purchaser or any Purchaser Subsidiary. No Employee
Benefit Plan of Purchaser or any Purchaser Subsidiary or related trust has any
liability of any nature, accrued or contingent, including without limitation
liabilities for Taxes, other than for routine payments to be made in due course
to participants and beneficiaries. Neither Purchaser nor any Purchaser
Subsidiary has any formal plan or commitment, whether or not legally binding, to
create any additional or modify any existing Employee Benefit Plan or benefit
obligation or arrangement described in Section 3.08(a)). Each Employee Benefit
Plan of Purchaser or any Purchaser Subsidiary which is a group health plan
within the meaning of Section 5000(b)(1) of the Code is and has been maintained
in full compliance with the applicable requirements of Section 4980B of the
Code. Other than the health care continuation requirements of Section 4980B of
the Code, neither Purchaser nor any Purchaser Subsidiary has any obligation to
provide post-retirement medical benefits or life insurance coverage or any
deferred compensation benefits to any present or former employees. There is no
litigation, arbitration, claim, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or (to the best of the
knowledge of the Purchaser) in prospect (or any basis therefor known to the
Purchaser) with respect to any Employee Benefit Plan of Purchaser or any
Purchaser Subsidiary or related trust or with respect to any fiduciary,
administrator, or sponsor (in its capacity as such) of any Employee Benefit
Plan. No Employee Benefit Plan of Purchaser or any Purchaser Subsidiary or
related trust and no such obligation or arrangement is in violation of, or in
default with respect to, any law, rule, regulation, order, judgment, which
violation or default would have a material adverse effect thereon or decree nor
is Purchaser, any Purchaser Subsidiary, any Employee Benefit Plan of Purchaser
or any Purchaser Subsidiary, or any related trust required to take any action in
order to avoid any such violation or default. No event has occurred, or is (to
the best of the knowledge of the Purchaser) threatened or about to occur, which
would constitute a prohibited transaction under Section 406 of ERISA.
(d) Each Pension Plan maintained for the employees of Purchaser
or any Purchaser Subsidiary has been qualified, from its inception, under
Section 401(a) of the Code and any related trust has been an exempt trust for
such period under Section 501 of the Code. Each Pension Plan has been operated
in accordance with its terms. No Pension Plan which is subject to Title IV of
ERISA has an accumulated or waived funding deficiency within the meaning of
Section 412 of the Code. No investigation or review by the Internal Revenue
Service is currently pending or (to the knowledge of the Purchaser) is
contemplated in which the Internal Revenue Service has asserted or may assert
that any Pension Plan is not qualified under Section 401(a) of the Code or that
any related trust is not exempt under Section 501 of the Code. Neither Purchaser
or any Purchaser Subsidiary, nor any organization to which Purchaser or any
Purchaser Subsidiary is a successor or parent corporation, within the meaning of
Section 4069(b) of ERISA, has divested itself of any entity maintaining or with
an obligation to contribute to any Pension Plan which had an "AMOUNT OF UNFUNDED
BENEFIT LIABILITIES," as defined in Section 4001(a)(18) of ERISA, at the time of
such divestiture. No assessment of any federal taxes with respect to any
Employee Benefit Plan of Purchaser or any Purchaser Subsidiary has been made or
(to the knowledge of the Purchaser) is contemplated against Purchaser, any
Purchaser Subsidiary, or any related trust of any Pension Plan of Purchaser or
any Purchaser Subsidiary, and nothing has occurred which would result in the
assessment of unrelated business taxable income under the Code with respect to
any
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Employee Benefit Plan of Purchaser or any Purchaser Subsidiary. Form 5500's have
been timely filed with respect to all Pension Plans of Purchaser and each
Purchaser Subsidiary. No event has occurred or (to the knowledge of the
Purchaser) is threatened or about to occur which would constitute a reportable
event within the meaning of Section 4043(b) of ERISA. No notice of termination
has been filed by the plan administrator pursuant to Section 4041 of ERISA or
issued by the Pension Benefit Guaranty Corporation pursuant to Section 4042 of
ERISA with respect to any Pension Plan of Purchaser or any Purchaser Subsidiary.
(e) Neither Purchaser nor any Purchaser Subsidiary currently
contributes to, or since September 16, 1980 has effectuated either a complete or
partial withdrawal from, any Multiemployer Pension Plan within the meaning of
Section 3(37) of ERISA.
(f) Set forth in the Purchaser SEC Documents is a true,
accurate, and complete description of all material employee compensation
arrangements of the Purchaser. There is no contract, agreement, plan,
arrangement, or understanding covering any person that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible by Purchaser or any Purchaser Subsidiary by reason of Section 280G of
the Code.
(g) Neither Purchaser nor any Purchaser Subsidiary has extended
or maintained credit, arranged for the extension of credit, or renewed an
extension of credit, in the form of a personal loan to or for any director or
executive officer (or equivalent thereof) thereof.
SECTION 4.09. PATENTS, TRADEMARKS, ET CETERA.
Each material Intangible of the Purchaser and each Purchaser Subsidiary
is validly issued and is currently in force and uncontested in all jurisdictions
in which it is used or in which such use is contemplated. The Purchaser SEC
Documents contain a true and correct description of: (a) all material
Intangibles which are owned (either in whole or in part), used by, or licensed
to Purchaser or any Purchaser Subsidiary or which otherwise relate to the
businesses of Purchaser and the Purchaser Subsidiaries, and a description of
each such Intangible, including, where material, a identification of its
respective owner, registrant, or applicant; (b) all contracts, agreements,
instruments, leases, and licenses and identification of all parties thereto
under which Purchaser or any Purchase Subsidiary owns or uses any material
Intangible (whether or not under license from third parties), together with the
identification of the owner, registrant, or applicant of each such Intangible;
and (c) all contracts, agreements, instruments, leases, and licenses and
identification of all parties thereto under which Purchaser or any Purchaser
Subsidiary grants the right to use any material Intangible. Except as described
in the Purchaser SEC Documents, to the knowledge of the Purchaser: (e) Purchaser
and the Purchaser Subsidiaries are the sole and exclusive owners or licensee of,
and (other than those exclusively licensed by Purchaser or a Purchaser
Subsidiary to a third party) has the right to use, all material Intangibles; (f)
no material Intangible is subject to any order, judgment, decree, contract,
agreement, instrument, lease, or license restricting the scope of the use
thereof; (g) during the last five years, neither the Purchaser nor any Purchaser
Subsidiary has been charged with, or has charged others with, unfair
competition, infringement of any material Intangible, or wrongful use of
confidential information, trade secrets, or secret processes; and (h) neither
Purchaser nor any Purchaser Subsidiary is using any patentable invention,
confidential information, trade secret, or secret process of others without
permission or license.
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There is no right under any material Intangible necessary to the businesses of
Purchaser and the Purchaser Subsidiaries as presently conducted or as it
contemplates conducting, except such as are otherwise described in the Purchaser
SEC Documents. Except as described in the Purchaser SEC Documents, neither
Purchaser nor any Purchaser Subsidiary has infringed, is infringing, and has
received notice of infringement in respect of the Intangibles or asserted
Intangibles of others which alleged infringement, if determined adversely to the
Purchaser or any Purchaser Subsidiary, would have a material adverse effect on
the business, prospects, financial condition, or results of operations of the
Purchaser and the Purchaser Subsidiaries taken as a whole, nor has Purchaser or
any Purchaser Subsidiary been advised by counsel or others that it is infringing
or may infringe the Intangibles or asserted Intangibles of others if any
currently contemplated business activity is effectuated, which alleged
infringement, if determined adversely to the Purchaser or any Purchaser
Subsidiary, would have a material adverse effect on the business, prospects,
financial condition, or results of operations of the Purchaser and the Purchaser
Subsidiaries taken as a whole. To the knowledge of the Purchaser, there is no
infringement by others of material Intangibles of Purchaser or any Purchaser
Subsidiary. As far as the Purchaser can reasonably foresee, there is no
Intangible or asserted Intangible of others that may materially adversely affect
the financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of Purchaser and the Purchaser Subsidiaries
taken as a whole. All material contracts, agreements, instruments, leases, and
licenses pertaining to Intangibles to which Purchaser or any Purchaser
Subsidiary is a party, or to which any of its respective businesses, properties,
or assets are subject, are in compliance in all material respects with all laws,
rules, regulations, orders, judgments, and decrees binding on Purchaser or a
Purchaser Subsidiary, as applicable, or to which any of its respective
businesses, properties, or assets are subject. Except as described in the
Purchaser SEC Documents, neither Purchaser nor any Purchaser Subsidiary has
registered any trademark, tradename or service xxxx, design, or name used by
Purchaser or any Purchaser Subsidiary to identify its products, businesses, or
services. Except as described in the Purchaser SEC Documents, neither any
stockholder of Purchaser or any Purchaser Subsidiary, any director, officer, or
employee of Purchaser or any Purchaser Subsidiary, any relative or affiliate of
any stockholder of Purchaser or any Purchaser Subsidiary, any such director,
officer, or employee, nor any other corporation or enterprise in which any
stockholder of Purchaser or any Purchaser Subsidiary, any such director,
officer, or employee, or any such relative or affiliate had or now has a 5% or
greater equity or voting or other substantial interest, possesses any Intangible
which relates to the businesses of Purchaser and the Purchaser Subsidiaries.
SECTION 4.10. QUESTIONABLE PAYMENTS.
Neither Purchaser, any Purchaser Subsidiary, any director, officer,
agent, employee, or other person associated with or acting on behalf of
Purchaser or any Purchaser Subsidiary, nor any stockholder of Purchaser or any
Purchaser Subsidiary, has, directly or indirectly: used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful expenses
relating to political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; made any false or
fictitious entry on the books or records of Purchaser or any Purchaser
Subsidiary; made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment; given any favor or gift which is not deductible for
23
federal income tax purposes; or made any bribe, kickback, or other payment of a
similar or comparable nature, whether lawful or not, to any person or entity,
private or public, regardless of form, whether in money, property, or services,
to obtain favorable treatment in securing business or to obtain special
concessions, or to pay for favorable treatment for business secured or for
special concessions already obtained.
SECTION 4.11. COMPLIANCE WITH LAW AND GOVERNMENT REGULATIONS.
Purchaser and each Purchaser Subsidiary is in compliance in all material
respects with, and is not in violation of, applicable federal, state, local or
foreign statutes, laws and regulations (including without limitation, any
applicable building, zoning or other law, ordinance or regulation) the violation
of which would have a material adverse effect on the business, prospects,
financial condition, or results of operations of the Purchaser and the Purchaser
Subsidiaries taken as a whole. Except as set forth in the Purchaser SEC
Documents, neither Purchaser nor any Purchaser Subsidiary is subject to any
order, decree, judgment or other sanction of any court, administrative agency or
other tribunal.
SECTION 4.12. LEGAL PROCEEDINGS AND HISTORY.
Except as otherwise described in the Purchaser SEC Documents, no officer,
director or affiliate of Purchaser or any Purchaser Subsidiary, has been, within
the five years ending on the Closing Date a party to any bankruptcy petition
against such person or against any business of which such person was affiliated;
convicted in a criminal proceeding or subject to a pending criminal proceeding
(excluding traffic violations and other minor offenses); subject to any order,
judgment or decree, not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting their involvement in any type of business,
securities or banking activities; or found by a court of competent jurisdiction
in a civil action, by the SEC or the Commodity Futures Trading Commission (or
the equivalent of either of the foregoing in any other jurisdiction) to have
violated a federal, state, or other securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
SECTION 4.13. OTHER INFORMATION.
Neither the Purchaser nor any Purchaser Subsidiary knows of any material
adverse information regarding the current or prospective operations of Purchaser
or the Purchaser Subsidiaries which has not been disclosed herein, in a Schedule
hereto, or in the Purchaser SEC Documents.
SECTION 4.14. AUTHORITY TO BUY.
The Purchaser has all requisite power and authority to execute, deliver,
and perform this Agreement. All necessary corporate proceedings of the Purchaser
have been duly taken by the Purchaser to authorize the execution, delivery, and
performance of this Agreement. This Agreement has been duly authorized,
executed, and delivered by the Purchaser, is the legal, valid, and binding
obligation of the Purchaser, and is enforceable as to the Purchaser in
accordance with
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its terms, subject to applicable bankruptcy, insolvency, and other laws
affecting creditors' rights generally. Except as set forth in Article VII, no
consent, authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or other
governmental authority or any court or other tribunal is required by Purchaser
or any Purchaser Subsidiary for the execution, delivery, or performance by
Purchaser of this Agreement. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which Purchaser or
any Purchaser Subsidiary is a party, or to which it or any of its respective
business, properties, or assets are subject, is required for the execution,
delivery, or performance of this Agreement to (except such consents referred to
in Schedule 4.14); and the execution, delivery, and performance of this
Agreement will not (if the consents referred to in Schedule 4.14 are obtained
prior to the Closing) violate, result in breach of, conflict with, or (with or
without the giving of notice or the passage of time or both) entitle any party
to terminate or call a default under, entitle any party to rights and privileges
that such party was not receiving or entitled to receive immediately before this
Agreement was executed under, or create any obligation on the part of Purchaser
or any Purchaser Subsidiary that it was not paying or obligated to pay
immediately before this Agreement was executed under, any term of any such
contract, agreement, instrument, lease, license, arrangement, or understanding,
or (if the conditions in Article VII are satisfied) violate or result in a
breach of any term of the certificate of incorporation (or other charter
document) or by-laws of Purchaser or any Purchaser Subsidiary, or violate,
result in a breach of, or conflict with any law, rule, regulation, order,
judgment, or decree binding on Purchaser or any Purchaser Subsidiary or to which
it or any of its respective businesses, properties, or assets are subject.
SECTION 4.15. STATUS OF SHARES.
The Purchaser Payment Shares to be acquired by Sellers from Purchaser are
validly authorized and validly issued, fully paid, and nonassessable and have
not been issued, owned or held in violation of any preemptive or similar right
of stockholders.
SECTION 4.16. INSURANCE.
All material policies of fire and other insurance against casualty and
other losses and public liability insurance carried by Purchaser are described
in the Purchaser SEC Documents (including the risks covered and limits of such
policies) and are in full force and effect. All premiums in respect of such
material policies for which premium notices have been received have been paid in
full as the same become due and payable. Neither Purchaser nor any Purchaser
Subsidiary has failed to give any notice or present any claim under any
insurance policy in due and timely fashion. There are no material actual claims
or material claims threatened in writing against Purchaser or any Purchaser
Subsidiary which could come within the scope of such coverage nor are any such
policies currently threatened with cancellation. There are no outstanding
requirements or recommendations by any insurance company that issued a policy
with respect to any of the respective assets, the businesses, or operations of
Purchaser or any Purchaser Subsidiary or by any governmental authority or other
body requiring or recommending any repairs or other work to be done on, or with
respect to, any of the assets of Purchaser or any Purchaser Subsidiary or
requiring or recommending any equipment or facilities to be installed on any
premises from which the businesses of Purchaser or any Purchaser Subsidiary is
conducted or in connection with any of the
25
respective assets thereof. Neither the Purchaser nor any Purchaser Subsidiary
has any knowledge of any material proposed increase in applicable insurance
rates or of any conditions or circumstances applicable to the businesses thereof
that might result in such increases. No such policy is terminable by virtue of
the transactions contemplated by this Agreement.
SECTION 4.17. NON-DISTRIBUTIVE INTENT; RESTRICTED SECURITIES.
The Purchaser is acquiring the shares of capital stock of Classic for its
own account (and not for the account of others) for investment and not with a
view to the distribution or resale thereof in violation of the Securities Act.
The Purchaser understands that it may not sell or otherwise dispose of such the
shares, or any securities issuable in respect thereof, in the absence of either
an effective registration statement under the Securities Act or an exemption
from the registration provisions of the Securities Act. The Purchaser
acknowledges being informed that the shares of Classic Common Stock acquired
thereby shall be unregistered, shall be "RESTRICTED SECURITIES" as defined in
paragraph (a) of Rule 144 under the Securities Act, and must be held
indefinitely unless (a) they are subsequently registered under the Securities
Act, or (b) an exemption from such registration is available. The Purchaser
further acknowledges that Classic does not have an obligation to currently
register such securities for the account of the Purchaser.
SECTION 4.18. ACCESS TO INFORMATION.
By virtue of the Purchaser's position, it has access to the same kind of
information which would be available in a registration statement filed under the
Securities Act. The Purchaser acknowledges that it has been afforded access to
all material information which they have requested relevant to their decision to
acquire the shares of Classic Common Stock and to ask questions of Classic's
management and that, except as set forth herein, neither Seller or Classic nor
anyone acting on behalf of the Seller or Classic, has made any representations
or warranties to the Purchaser which have induced, persuaded, or stimulated the
Purchaser to acquire such shares of Classic Common Stock.
SECTION 4.19. SOPHISTICATION.
Either alone, or together with their investment advisor(s), the Purchaser
has the knowledge and experience in financial and business matters to be capable
of evaluating the merits and risks of the prospective investment in the shares
of Classic Common Stock, and the Purchaser is and will be able to bear the
economic risk of the investment in such shares of Classic Common Stock.
SECTION 4.20. COMPLETENESS OF DISCLOSURE.
No representation or warranty by the Purchaser or any Purchaser
Subsidiary in this Agreement contains or, and at the Closing Date will contain,
an untrue statement of material fact or omits or, at such date, will omit to
state a material fact required to be stated therein or necessary to make the
statements made not misleading.
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V. COVENANTS OF THE SELLERS AND CLASSIC
Each Seller and Classic, jointly and severally, covenant and agree that,
unless the Purchaser will otherwise approve in writing:
SECTION 5.01. ENCUMBRANCES.
Until the Release Time, neither any Seller nor Classic shall take any
action which shall cause the shares of Classic Common Stock to become subject to
security interest, pledge, mortgage, lien (including, without limitation,
environmental and tax liens), charge, encumbrance, adverse claim, preferential
arrangement or restriction of any kind, including, without limitation, any
restriction on the use, voting, transfer (except as otherwise provided herein),
receipt of income or other exercise of any attributes of ownership, and shall
take no action to dispose of or otherwise transfer any such securities.
SECTION 5.02. DIVIDENDS AND DISTRIBUTIONS.
Until the Release Time, Classic shall not, and no Seller shall authorize
Classic to, authorize, declare, or pay any dividend or liquidating or other
distribution or stock split in respect of the outstanding shares of Classic
Common Stock.
SECTION 5.03. ISSUANCES OF SECURITIES.
Until the Release Time, no share of capital stock of Classic or warrant
for any such share, right to subscribe to or purchase any such share, or
security convertible into, or exchangeable or exercisable for, any such share,
shall be issued or sold by Classic or any Seller.
SECTION 5.04. MERGERS AND ACQUISITIONS.
Until the Release Time, Classic shall not, and no Seller shall authorize
Classic to, consummate any merger or acquisition of Classic with or by any
person or entity, whether by means of reverse or forward triangular merger, sale
or acquisition of assets, sale-leaseback transaction, license, or otherwise.
SECTION 5.05. ACCESS.
Until the earlier of the Closing and the rightful abandonment or
termination of this Agreement (the "RELEASE TIME"), Classic will, and the
Sellers shall cause Classic to, afford the officers, employees, counsel, agents,
investment bankers, accountants, and other representatives of the Purchaser and
lenders, investors, and prospective lenders and investors free and full access
to the plants, properties, books, and records of Classic, will permit them to
make extracts from and copies of such books, and records and will from time to
time furnish the Purchaser with such additional financial and operating data and
other information as to the financial condition, results of operations,
businesses, properties, assets, liabilities, or future prospects of Classic as
the Purchaser from time to time may reasonably request.
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SECTION 5.06. CONDUCT OF BUSINESS.
Until the Release Time, each Seller and Classic will conduct its
respective affairs so that at the Closing no representation or warranty of any
Seller or Classic will be inaccurate in any respect, no covenant or agreement of
any Seller or Classic will be breached in any respect, and no condition in this
Agreement will remain unfulfilled in any respect by reason of the actions or
omissions of any Seller or Classic. Except as otherwise requested by the
Purchaser in writing, until the Release Time, each Seller will, and will cause
Classic to, use their best efforts to preserve the business operations of
Classic intact, to keep available the services of their present personnel, to
preserve in full force and effect the contracts, agreements, instruments,
leases, licenses, arrangements, and understandings of Classic, and to preserve
the good will of their suppliers, customers, and others having business
relations with any of them. Until the Release Time, each Seller will conduct the
business and operations of Classic in all respects only in the ordinary course.
Until the Release Time, each Seller and Classic shall continue in full force and
effect all policies of insurance and indemnity relating to Classic and the
business and assets thereof.
SECTION 5.07. ADVICE OF CHANGES.
Until the Release Time, each Seller and Classic will immediately advise
the Purchaser in a detailed written notice of any fact or occurrence or any
pending or threatened occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement or a
Schedule or an Exhibit hereto, which (if existing and known at any time prior to
or at the Closing) would make the performance by any party of a covenant
contained in this Agreement impossible or make such performance materially more
difficult than in the absence of such fact or occurrence, or which (if existing
and known at the time of the Closing) would cause a condition to any party's
obligations under this Agreement not to be fully satisfied.
SECTION 5.08. CONFIDENTIALITY.
Each Seller and Classic shall insure that all confidential information
which any Seller, Classic, any of their respective officers, directors,
employees, counsel, agents, investment bankers, or accountants, or any
stockholder of Classic, any of their respective counsel, agents, investment
bankers, or accountants may now possess or may hereafter create or obtain
relating to the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of Classic, the Purchaser,
or any Purchaser Subsidiary, any affiliate of any of them, or any customer or
supplier of any of them or any such affiliate shall not be published, disclosed,
or made accessible by any of them to any other person or entity at any time or
used by any of them except in preparation for the Closing without the prior
written consent of the Purchaser; provided, however, that the restrictions of
this sentence shall not apply (a) as may otherwise be required by law, (b) as
may be necessary or appropriate in connection with the enforcement of this
Agreement, or (c) to the extent such information shall have otherwise become
publicly available. Each Seller shall, and shall cause all other such persons
and entities to, deliver to the Purchaser all tangible evidence of such
confidential information to which the restrictions of the foregoing sentence
apply at the Closing or the earlier rightful termination of this Agreement.
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SECTION 5.09. PUBLIC STATEMENTS.
Before any Seller or Classic shall release any information concerning
this Agreement or any document contemplated thereby or in connection therewith,
or the transactions contemplated thereby or in connection therewith, which is
intended for or may result in public dissemination thereof, it shall cooperate
with the Purchaser, shall furnish drafts of all documents or proposed oral
statements to the Purchaser for comments, and shall not release any such
information without the written consent of the Purchaser. Nothing contained
herein shall prevent any Seller or Classic from releasing any information to any
governmental authority if required to do so by law.
SECTION 5.10. OTHER PROPOSALS.
Until the Release Time, neither any Seller nor Classic shall, or shall
authorize or permit any officer, director, employee, counsel, agent, investment
banker, accountant, or other representative of any Seller or of Classic,
directly or indirectly, to: (a) initiate contact with any person or entity in an
effort to solicit any Takeover Proposal (as such term is defined in this Section
5.10); (b) cooperate with, or furnish or cause to be furnished any non-public
information concerning the business, properties, or assets of any Seller or
Classic to, any person or entity in connection with any Takeover Proposal; (c)
negotiate with any person or entity with respect to any Takeover Proposal; or
(d) enter into any agreement or understanding with the intent to effect a
Takeover Proposal. Seller will immediately give written notice to the Purchaser
of the details of any Takeover Proposal of which any of them becomes aware. As
used in this Section 5.10, "TAKEOVER PROPOSAL" shall mean "any proposal, other
than as contemplated by this Agreement, (e) for a merger, consolidation,
reorganization, other business combination, or recapitalization involving any
Seller or Classic, for the acquisition of a 5% or greater interest in the equity
or in any class or series of capital stock of Classic, for the acquisition of
the right to cast 5% or more of the votes on any matter with respect to Classic,
or for the acquisition of a substantial portion of any of the assets of Classic
other than in the ordinary course of the business of Classic, or (f) the effect
of which may be to prohibit, restrict, or delay the consummation of any of the
transactions contemplated by this Agreement or impair the contemplated benefits
to the Purchaser of any of the transactions contemplated by this Agreement."
SECTION 5.11. CONSENTS WITHOUT ANY CONDITION.
Neither any Seller nor Classic shall make any agreement or reach any
understanding not approved in writing by the Purchaser as a condition for
obtaining any consent, authorization, approval, order, license, certificate, or
permit required for the consummation of the transactions contemplated by this
Agreement.
SECTION 5.12. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY.
Each Seller, and any officers, directors, and employees of Classic and
other persons employed by, or associated with, Seller or Classic as shall be
designated by Purchaser shall execute and deliver to the Purchaser and Classic
the non-competition, non-solicitation, and confidentiality agreement attached
hereto as Exhibit 5.12.
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SECTION 5.13. FUTURE NAME.
No Seller will use or adopt, or cause or give permission to any person or
entity to use or adopt, a name containing any of "Classic" or words similar to
or susceptible of confusion with the word or any combination or abbreviation
thereof.
SECTION 5.14. TAX FILINGS.
Each Seller and Classic shall timely prepare and file any declaration or
filing necessary to comply with any transfer tax statutes that require any such
filing before the Closing.
SECTION 5.15. CERTAIN ACTIONS.
Neither any Seller, Classic, nor any officer, director, employee,
counsel, agent, investment banker, accountant, or other representative of
Classic shall, directly or indirectly, take any action the effect of which may
be to prohibit, restrict, or delay the consummation of the transactions
contemplated by this Agreement or impair the contemplated benefits to the
Purchaser of the transactions contemplated by this Agreement.
VI. COVENANTS OF THE PURCHASER
The Purchaser covenants and agrees that, unless the Sellers will
otherwise approve in writing:
SECTION 6.01. ENCUMBRANCES.
Until the Release Date, the Purchaser shall take any action which shall
cause the Purchaser Payment Shares to become subject to security interest,
pledge, mortgage, lien (including, without limitation, environmental and tax
liens), charge, encumbrance, adverse claim, preferential arrangement or
restriction of any kind, including, without limitation, any restriction on the
use, voting, transfer (except as otherwise provided herein), receipt of income
or other exercise of any attributes of ownership, and shall take no action to
dispose of or otherwise transfer any such securities.
SECTION 6.02. DIVIDENDS AND DISTRIBUTIONS.
Until the Release Date, the Purchaser shall not authorize, declare, or
pay any dividend or liquidating or other distribution or stock split in respect
of the outstanding shares of Purchaser Common Stock.
SECTION 6.03. ACCESS.
Until the Release Time, the Purchaser will, and the Purchaser shall cause
the Purchaser Subsidiaries to, afford the officers, employees, counsel, agents,
investment bankers, accountants, and other representatives of the Sellers, free
and full access to the plants, properties, books, and records of the Purchaser
and the Purchaser Subsidiaries, will permit them to make extracts from and
copies of such books, and records and will from time to time furnish the Sellers
with such additional
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financial and operating data and other information as to the financial
condition, results of operations, businesses, properties, assets, liabilities,
or future prospects of the Purchaser as any Seller from time to time may
reasonably request.
SECTION 6.04. ADVICE OF CHANGES.
Until the Release Date, the Purchaser will immediately advise the Sellers
in a detailed written notice of any material fact or occurrence or any pending
or threatened material occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement or
in a schedule or exhibit hereto, which (if existing and known at any time prior
to or at the Closing) would make the performance by any party of a covenant
contained in this Agreement impossible or make such performance materially more
difficult than in the absence of such fact or occurrence, or which (if existing
and known at the time of the Closing) would cause a condition to any party's
obligations under this Agreement not to be fully satisfied.
SECTION 6.05. CONFIDENTIALITY.
Purchaser and the Purchaser Subsidiaries shall insure that all
confidential information which Purchaser, any Purchaser Subsidiaries, any of
their respective officers, directors, employees, counsel, agents, investment
bankers, or accountants, or any stockholder of Purchaser, any of their
respective counsel, agents, investment bankers, or accountants may now possess
or may hereafter create or obtain relating to the financial condition, results
of operations, business, properties, assets, liabilities, or future prospects of
Seller, any affiliate of any of them (other than Classic following the Closing),
or any customer or supplier of any of them or any such affiliate shall not be
published, disclosed, or made accessible by any of them to any other person or
entity at any time or used by any of them except in preparation for the Closing
without the prior written consent of the Sellers; provided, however, that the
restrictions of this sentence shall not apply (a) as may otherwise be required
by law, (b) as may be necessary or appropriate in connection with the
enforcement of this Agreement, or (c) to the extent such information shall have
otherwise become publicly available. Purchaser shall, and shall cause all other
such persons and entities to, deliver to the Sellers all tangible evidence of
such confidential information to which the restrictions of the foregoing
sentence apply at the Closing or the earlier rightful termination of this
Agreement.
SECTION 6.0. PUBLIC STATEMENTS.
Before the Purchaser shall release any information concerning this
Agreement or any document contemplated thereby or in connection therewith, or
the transactions contemplated thereby or in connection therewith, which is
intended for or may result in public dissemination thereof, it shall cooperate
with the Sellers, shall furnish drafts of all documents or proposed oral
statements to the Sellers for comments, and shall not release any such
information without the written consent of the Sellers. Nothing contained herein
shall prevent the Purchaser from releasing any information to any governmental
authority if required to do so by law.
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SECTION 6.07. CONSENTS WITHOUT ANY CONDITION.
Neither Purchaser nor any Purchaser Subsidiary shall make any agreement
or reach any understanding not approved in writing by the Sellers as a condition
for obtaining any consent, authorization, approval, order, license, certificate,
or permit required for the consummation of the transactions contemplated by this
Agreement.
SECTION 6.08. CONDUCT OF BUSINESS.
Until the Release Date, the Purchaser will conduct its affairs so that on
the Closing Date no representation or warranty of the Purchaser will be
inaccurate, no covenant or agreement of the Purchaser will be breached, and no
condition in this Agreement will remain unfulfilled by reason of the actions or
omissions of the Purchaser.
SECTION 6.09. CERTAIN ACTIONS.
Neither the Purchaser, any Purchase Subsidiary, nor any officer,
director, employee, counsel, agent, investment banker, accountant, or other
representative of Purchaser or any Purchaser Subsidiary, shall, directly or
indirectly, take any action the effect of which may be to prohibit, restrict, or
delay the consummation of the transactions contemplated by this Agreement or
impair the contemplated benefits to the Sellers of the transactions contemplated
by this Agreement.
VII. CONDITIONS TO OBLIGATIONS OF THE SELLERS AND CLASSIC
The obligations of the Sellers and Classic and under this Agreement are
subject, at the option of the Sellers, to the following conditions:
SECTION 7.01. ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS.
All representations and warranties of the Purchaser contained in this
Agreement shall be accurate when made and, in addition, shall be accurate as of
the Closing Date as though such representations and warranties were then made in
exactly the same language by the Purchaser and regardless of knowledge or lack
thereof on the part of the Purchaser or changes beyond its control; as of the
Closing Date, the Purchaser shall have performed and complied with all covenants
and agreements and satisfied all conditions required to be performed and
complied with by it at or before such date, respectively, by this Agreement; and
the Sellers shall have received a certificate executed by the Chief Executive
Officer of the Purchaser, dated such date, to that effect.
SECTION 7.02. SCHEDULES.
Prior to the Closing, Purchaser shall deliver to the Seller and Classic
the Schedules and other documents required to be delivered thereby pursuant to
the terms of this Agreement.
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SECTION 7.03. OTHER CLOSING DOCUMENTS.
The Purchaser shall have delivered to the Sellers at or prior to the
Closing Date such other documents (including certificates of officers of the
Purchaser) as the Sellers may reasonably request in order to enable the Sellers
to determine whether the conditions to their obligations under this Agreement
have been met and otherwise to carry out the provisions of this Agreement.
SECTION 7.04. REVIEW OF PROCEEDINGS.
All actions, proceedings, instruments, and documents required to carry
out this Agreement and each of the documents contemplated thereby or in
connection therewith and all other related legal matters shall be subject to the
reasonable approval of the Sellers and Classic, and Purchaser shall have
furnished such counsel such documents as such counsel may have reasonably
requested for the purpose of enabling them to pass upon such matters.
SECTION 7.05. LEGAL ACTION.
There shall not have been instituted or threatened any legal proceeding
relating to, or seeking to prohibit or otherwise challenge the consummation of,
the transactions contemplated hereby, or any document contemplated thereby or in
connection therewith, or to obtain substantial damages with respect thereto.
SECTION 7.06. NO GOVERNMENTAL ACTION.
There shall not have been any action taken, or any law, rule, regulation,
order, or decree proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by, or in connection with, any of
the Transaction Agreements by any federal, state, local, foreign, or other
governmental authority or by any court or other tribunal, including the entry of
a preliminary or permanent injunction, which, in the sole judgment of the
Sellers in good faith, (a) makes any of the transactions contemplated hereby
illegal, (b) results in a delay in the ability of the Sellers or the Purchaser
to consummate any of the transactions contemplated hereby, (c) requires the
divestiture by the Purchaser of a material portion of the business of either the
Purchaser and the Purchaser Subsidiaries taken as a whole, or of Classic, (d)
imposes material limitations on the ability of the Purchaser effectively to
exercise full rights of ownership with respect to the properties and assets
purported to be sold pursuant to this Agreement, or (e) otherwise prohibits,
restricts, or delays consummation of any of the transactions contemplated hereby
or impairs the contemplated benefits to the Purchaser of any of the transactions
contemplated hereby.
SECTION 7.07. GOVERNMENTAL APPROVAL.
The parties to this Agreement shall have obtained at or prior to the
Closing all required consents and unconditional written approvals of all
federal, state, local, foreign, or other governmental agencies having the legal
or administrative right or obligation to consent to, or approve, this Agreement
and to the execution, delivery, and performance hereof.
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SECTION 7.08. CONTRACTUAL CONSENTS NEEDED.
The parties hereto shall have obtained at or prior to the Closing all
consents required for the consummation of the transactions contemplated hereby,
or in connection herewith, from any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which any of them
is a party, or to which any of them or any of their respective businesses,
properties, or assets are subject.
SECTION 7.09. DUE DILIGENCE REVIEW.
The Sellers shall conduct a due diligence review of the Purchaser,
including, without limitation, a review of the schedules delivered by the
Purchaser pursuant hereto and the documents referenced therein delivered prior
to the Closing Date, and shall be reasonably satisfied with the result of such
review.
VIII. CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser and under this Agreement are subject, at
the option of the Purchaser, to the following conditions:
SECTION 8.01. ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH CONDITIONS.
All representations and warranties of the Sellers and Classic contained
in this Agreement shall be accurate when made and, in addition, shall be
accurate as of the Closing Date as though such representations and warranties
were then made in exactly the same language by the Sellers and Classic and
regardless of knowledge or lack thereof on the part of any Seller or Classic or
changes beyond its control; as of the Closing Date, each Seller and Classic
shall have performed and complied with all covenants and agreements and
satisfied all conditions required to be performed and complied with by them at
or before the Closing Date by this Agreement; and the Purchaser shall have
received certificates executed by each Seller and by the chief executive officer
and the chief financial officer of Classic, dated the Closing Date to that
effect.
SECTION 8.02. SCHEDULES.
Prior to the Closing, the Sellers and Classic shall deliver to Purchaser
the Schedules and other documents required to be delivered thereby pursuant to
the terms hereof.
SECTION 8.03. OTHER CLOSING DOCUMENTS.
The Sellers and Classic shall have delivered to the Purchaser at or prior
to the Closing Date such other documents (including certificates of the Sellers
and officers of Classic) as the Purchaser may reasonably request in order to
enable the Purchaser to determine whether the conditions to its obligations
under this Agreement have been met and otherwise to carry out the provisions of
this Agreement.
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SECTION 8.04. REVIEW OF PROCEEDINGS.
All actions, proceedings, instruments, and documents required to carry
out this Agreement and each of the documents contemplated thereby or in
connection therewith and all other related legal matters shall be subject to the
reasonable approval of Reitler Xxxxx & Xxxxxxxxxx LLC, counsel to the Purchaser,
and the Sellers and Classic shall have furnished such counsel such documents as
such counsel may have reasonably requested for the purpose of enabling them to
pass upon such matters.
SECTION 8.05. LEGAL ACTION.
There shall not have been instituted or threatened any legal proceeding
relating to, or seeking to prohibit or otherwise challenge the consummation of,
the transactions contemplated by this Agreement, or any document contemplated
thereby or in connection therewith, or to obtain substantial damages with
respect thereto.
SECTION 8.06. NO GOVERNMENTAL ACTION.
There shall not have been any action taken, or any law, rule, regulation,
order, or decree proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by, or in connection with, this
Agreement by any federal, state, local, foreign, or other governmental authority
or by any court or other tribunal, including the entry of a preliminary or
permanent injunction, which, in the sole judgment of the Purchaser in good
faith, (a) makes any of the transactions contemplated by this Agreement illegal,
(b) results in a delay in the ability of the Seller or the Purchaser to
consummate any of the transactions contemplated hereby, (c) requires the
divestiture by the Purchaser of a material portion of the business of either the
Purchaser and the Purchaser Subsidiaries taken as a whole, or of Classic, (d)
imposes material limitations on the ability of the Purchaser effectively to
exercise full rights of ownership with respect to the properties and assets
purported to be sold pursuant to this Agreement, or (e) otherwise prohibits,
restricts, or delays consummation of any of the transactions contemplated hereby
impairs the contemplated benefits to the Purchaser of any of the transactions
contemplated hereby.
SECTION 8.07. GOVERNMENTAL APPROVAL.
The parties to this Agreement shall have obtained at or prior to the
Closing all required consents and unconditional written approvals of all
governmental agencies having the legal or administrative right or obligation to
consent to, or approve, this Agreement and to the execution, delivery, and
performance thereof.
SECTION 8.08. CONTRACTUAL CONSENTS NEEDED.
The parties hereto shall have obtained at or prior to the Closing all
consents required for the consummation of the transactions contemplated hereby,
or in connection herewith, from any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which any of them
or any Purchaser Subsidiary is a party, or to which any of them or any of their
respective businesses, properties, or assets are subject.
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SECTION 8.09. DUE DILIGENCE REVIEW.
Prior to the date of the Closing, Purchaser shall conduct a due diligence
review of the Sellers and Classic, including a review of the Schedules and the
documents referenced therein of each Seller and Classic delivered prior to the
date hereof and prior to the date of the Closing, and shall be reasonably
satisfied with the result of such review.
SECTION 8.10. PERSONNEL.
The following individuals shall at the Closing be actively engaged in the
performance of their existing duties for Seller and Classic and shall not have
evidenced any intention not to engage in comparable employment with Classic
after the Closing: Xxx Xxxx and Xxxxxxx Lap-Xxx Xxxx.
SECTION 8.11. MATERIAL ADVERSE CHANGES.
There shall not have been any material adverse change in the condition
(financial or otherwise), operations, business, assets, liabilities, earnings or
prospects of Classic since the date hereof.
SECTION 8.12. COMPENSATION ARRANGEMENTS.
Classic shall have paid, cancelled, or terminated deferred compensation,
severance payments, employment agreements to which it is a party, except as
otherwise provided herein and all stock options, warrants or rights to acquire
securities of Classic shall have been terminated.
SECTION 8.13. FAIRNESS OPINION.
The Purchaser shall receive the opinion of an independent business valuer
indicating that the acquisition of the Classic Common Stock contemplated by this
Agreement is fair from a financial point of view.
IX. MISCELLANEOUS
SECTION 9.01. BROKERAGE FEES
No entity is entitled to assert any right to fees, commissions, or other
compensation on account of employment as a broker or finder, or performance of
services as a broker or finder, in connection with or as a result of any of the
transactions contemplated by this Agreement.
SECTION 9.02. FURTHER ACTIONS
At any time and from time to time, each party agrees, at its or his
expense, to take such actions and to execute and deliver such documents as may
be reasonably necessary to effectuate the purposes of this Agreement.
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SECTION 9.03. AVAILABILITY OF EQUITABLE REMEDIES.
Since a breach of the provisions of this Agreement could not adequately
be compensated by money damages, any party shall be entitled, either before or
after the Closing, in addition to any other right or remedy available to it, to
an injunction restraining such breach or a threatened breach and to specific
performance of any such provision of this Agreement, and in either case no bond
or other security shall be required in connection therewith, and the parties
hereby consent to the issuance of such an injunction and to the ordering of
specific performance.
SECTION 9.04. SURVIVAL.
The covenants, agreements, representations, and warranties contained in
or made pursuant to this Agreement shall survive the Closing and any delivery of
the consideration described in Section 2.01 hereof by the parties hereto,
irrespective of any investigation made by or on behalf of any party. The
statements contained in any document executed by any Seller or Classic relating
hereto or thereto or delivered to the Purchaser in connection with the
transactions contemplated hereby or thereby, or in any statement, certificate,
or other instrument delivered by or on behalf of any Seller or Classic, pursuant
hereto or thereto or delivered to the Purchaser in connection with the
transactions contemplated hereby or thereby shall be deemed representations and
warranties, covenants and agreements, or conditions, as the case may be, of any
Seller hereunder for all purposes of this Agreement (including all statements,
certificates, or other instruments delivered pursuant hereto or thereto or
delivered in connection with the transactions contemplated hereby or thereby).
The statements contained in any document executed by the Purchaser relating
hereto or thereto or delivered to any Seller in connection with the transactions
contemplated hereby or thereby, or in any statement, certificate, or other
instrument delivered by or on behalf of the Purchaser, pursuant hereto or
thereto or delivered to any Seller in connection with the transactions
contemplated hereby or thereby shall be deemed representations and warranties,
covenants and agreements, or conditions, as the case may be, of the Purchaser
hereunder for all purposes of this Agreement (including all statements,
certificates, or other instruments delivered pursuant hereto or thereto or
delivered in connection with the transactions contemplated hereby or thereby).
SECTION 9.05. MODIFICATION.
This Agreement and the Schedules and Exhibits hereto set forth the entire
understanding of the parties with respect to the subject matter hereof (except
as provided in Section 9.04), supersede all existing agreements among them
concerning such subject matter, and may be modified only by a written instrument
duly executed by each party with the approval of the Board of Directors or by an
officer of each corporate party.
SECTION 9.06. NOTICES.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested (or by the most nearly comparable method if mailed from or to
a location outside of the United States) or by Federal Express, Express Mail, or
similar overnight delivery or courier service or delivered (in person or by
telecopy, telex, or similar telecommunications equipment) against receipt to the
party to whom it is to
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be given at the address of such party set forth in the preamble to this
Agreement (or to such other address as the party shall have furnished in writing
in accordance with the provisions of this Section 9.06) with a copy to each of
the other parties hereto. Any notice given to any corporate party shall be
addressed to the attention of the Corporate Secretary. Notice to the estate of
any party shall be sufficient if addressed to the party as provided in this
Section 9.06. Any notice or other communication given by certified mail (or by
such comparable method) shall be deemed given at the time of certification
thereof (or comparable act), except for a notice changing a party's address
which will be deemed given at the time of receipt thereof. Any notice given by
other means permitted by this Section 9.06 shall be deemed given at the time of
receipt thereof. A copy of any notice to Purchaser shall simultaneously be
delivered in accordance with this Section 9.06 to Reitler Xxxxx & Xxxxxxxxxx
LLC, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx
Xxxxxx Xxxxx.
SECTION 9.07. WAIVER.
Any waiver by any party of a breach of any term of this Agreement shall
not operate as or be construed to be a waiver of any other breach of that term
or of any breach of any other term of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on one or more
occasions will not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement. Any waiver must be in writing and, in the case of a corporate
party, be authorized by a resolution of the Board of Directors or by an officer
of the waiving party.
SECTION 9.08. BINDING EFFECT.
Except as otherwise provided in this Section 9.08, no party hereto may
sell, assign, transfer, or otherwise convey any of its rights or delegate any of
its duties under this Agreement without the prior written consent of the other,
other than by will or the laws of descent and distribution.
SECTION 9.09. NO THIRD PARTY BENEFICIARIES.
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Section 2.04).
SECTION 9.10. SEPARABILITY.
If any provision of this Agreement is invalid, illegal, or unenforceable,
the balance of this Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.
SECTION 9.11. HEADINGS.
The headings in this Agreement are solely for convenience of reference
and shall be given no effect in the construction or interpretation of this
Agreement.
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SECTION 9.12. COUNTERPARTS; GOVERNING LAW.
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. It shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to principles of
conflict of laws. Any action, suit, or proceeding arising out of, based on, or
in connection with this Agreement or the transactions contemplated hereby may be
brought in the United States District Court or the courts of the State of New
York, in each case located in the City of New York, New York, and each party
covenants and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such action, suit, or proceeding, any claim that it or he is
not subject personally to the jurisdiction of such court, that its or his
property is exempt or immune from attachment or execution, that the action,
suit, or proceeding is brought in an inconvenient forum, that the venue of the
action, suit, or proceeding is improper, or that this Agreement or the subject
matter hereof may not be enforced in or by such court.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ACL SEMICONDUCTORS, INC.
BY: /s/ XXXXX-XXX XXXX
---------------------------------
NAME: XXXXX-XXX XXXX
TITLE: CEO
CLASSIC ELECTRONICS, LTD.
BY: /s/ XXX XXXX
---------------------------------
NAME: XXXX XXX
TITLE: DIRECTOR
/s/ XXX XXXX
------------------------------------
NAME: XXXX XXX
/s/ XXXX XXX KIN
------------------------------------
NAME: XXXX XXX KIN
SCHEDULE A
SELLERS:
MR. XXXX XXX, a Hong Kong resident and whose residential address is situated at
6D Wah Yan Court, Xxx Xxxx Xxxxx, Xxxx Xxxxx, NT, Hong Kong; and
SHARES OWNED BY XX. XXXX 2,999,999 SHARES
XX. XXXX XXX XXX, a Hong Kong resident and whose residential address is situated
at Rm 1822, Xxxx Xxxx House, Heng On Estate, Ma On Shan, NT, Hong Kong
SHARES OWNED BY XX. XXXX: 1 SHARE
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SCHEDULE 3.03
Effective December 31, 2004, Classic forgave the Sellers' Debt.
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