EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AGREEMENT entered into as of November 19, 1999, by and among Varner
Technologies, Inc., a Missouri corporation (the "Buyer"), and Certain
Shareholders of Peppermill Corporation Corp. set forth on Schedule A hereto (the
"Sellers"). The Buyer and the Sellers are referred to collectively herein as the
"Parties."
The Sellers in the aggregate own 90.0024% of the combined issued and
outstanding capital stock of Peppermill Capital Corp., a Nevada corporation
("Target").
This Agreement contemplates a transaction in which the Buyer will purchase
from the Sellers, and the Sellers will sell to the Buyer, their entire interest
in Target, which constitutes 90.0024% of the issued and outstanding shares of
the Target in return for cash.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D promulgated
under the U.S. Securities Act of 1933 ("Securities Act").
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the U.S. Securities Exchange Act of 1934 ("Securities Exchange
Act").
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in ss.2 below.
"Closing Date" has the meaning set forth in ss.2 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning businesses and
affairs of the Target that is not already generally available to the public.
"Environmental, Health, and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of
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the environment, including without limitation all those relating to the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"Financial Statement" has the meaning set forth in ss.4 below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indemnified Party" has the meaning set forth in ss.8 below.
"Indemnifying Party" has the meaning set forth in ss.8 below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations- in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptions,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know- how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in ss.4 below.
"Most Recent Fiscal Month End" has the meaning set forth in ss.4 below.
"Most Recent Fiscal Year End" has the meaning set forth in ss.4 below.
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"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Purchase Price" has the meaning set forth in ss.2(b) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors. For the purpose of this Agreement, Subsidiary also includes any
Franchise of the Target.
"Target" has the meaning as set forth in the preface above.
"Target Share" means any share of the Stock or ownership interest of the
Target.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in ss.8 below.
2. Purchase and Sale of Target Shares.
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(a) Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from the Sellers, and the Sellers agree
to sell to the Buyer, all of their Target Shares for the consideration specified
below in this ss.2.
(b) Purchase Price. The Buyer agrees to pay to the Sellers (the "Purchase
Price"), an aggregate of Three Hundred Thousand Dollars ($300,000). The Purchase
Price shall be allocated among the Sellers according to their proportionate
ownership interest in the Target Shares.
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at Atlas, Pearlman, Trop & Borkson,
P.A., commencing at 9:00 a.m. local time on the second business day following
the satisfaction or waiver of all conditions to the obligations of the Parties
to consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) or
such other date as the Buyer and Vickers may mutually determine (the "Closing
Date").
(d) Deliveries at the Closing. At the Closing, (i) the Sellers will deliver
to the Buyer the various certificates, instruments, and documents referred to in
ss.7(a) below, (ii) the Buyer will deliver to the Sellers the various
certificates, instruments, and documents referred to in ss.7(b) below, (iii)
each of the Sellers will deliver to the Buyer stock certificates representing
all of his or its Target Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) the Buyer will deliver to the purchaser
representative of the Sellers the consideration specified in ss.2 above.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Sellers. Each of the Sellers
represents and warrants to the Buyer that the statements contained in this
ss.3(a) are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
ss.3(a)) with respect to himself or itself, except as set forth in any addendum
attached hereto.
(i) Organization of Certain Sellers. If the Seller is a corporation,
the Seller is duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Seller has full power and
authority (including, if the Seller is a corporation, full corporate power
and authority) to execute and deliver this Agreement and to perform his or
its obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with its terms
and conditions. The Seller need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions contemplated
by this Agreement.
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(iii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Seller is subject
or, if the Seller is a corporation, any provision of its charter of bylaws.
(iv) Brokers' Fees. The Seller has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
(v) Target Shares. The Seller holds of record and owns beneficially
all Target Shares, free and clear of any restrictions on transfer (other
than any restrictions under the Securities Act and state securities laws),
Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. The Seller is not a party to
any option, warrant, purchase right, or other contract or commitment that
could require the Seller to sell, transfer, or otherwise dispose of any
capital stock of the Target (other than this Agreement). The Seller is not
a party to any voting trust, proxy, or other agreement or understanding
with respect to the voting of any capital stock of the Target.
(b) Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Sellers that the statements contained in this ss.3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date.
(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions. The Buyer
need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(iii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyer is subject or
any provision of its charter or bylaws or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
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create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or by which
it is bound or to which any of its assets is subject .
(iv) Brokers' Fees. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any Seller could
become liable or obligated.
(v) Investment. The Buyer is not acquiring the Target Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
4. Representations and Warranties Concerning the Target. Brent Vickers
("Vickers") represents and warrants to the Buyer that the statements contained
in this ss.4 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this ss.4).
(a) Organization, Qualification, and Corporate Power. Target is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of Nevada. Target is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where such qualification
is required. Target has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on the businesses in which it is
engaged and in which it presently proposes to engage and to own and use the
properties owned and used by it. The Sellers have delivered to the Buyer correct
and complete copies of the charter and bylaws of Target (as amended to date).
The minute books (containing the records of meetings of the stockholders, the
board of directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of Target is correct and complete.
The Target is not in default under or in violation of any provision of its
charter or bylaws.
(b) Capitalization. The entire authorized capital stock of the Target
consists of 200,000,000 Target Shares, of which 11,239,700 Target Shares are
issued and outstanding and no Target Shares are held in treasury. All of the
issued and outstanding Target Shares have been duly authorized, are validly
issued, fully paid, and nonassessable, and 10,116,000 are held of record by the
respective Sellers and have been disclosed to Buyer in Exhibit A. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require the Target to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to the Target. There are no voting trusts, proxies, or other agreements
or understandings with respect to the voting of the capital stock of the Target.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution,
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statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
the Target is subject or any provision of the charter or bylaws of the Target or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Target is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets). The Target does not
need to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. The Target has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to Assets. The Target has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by them, located on
their premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet.
(f) Subsidiaries. Target has no subsidiaries.
(g) Financial Statements. Attached hereto as Exhibit B are financial
statements (collectively the "Financial Statements"). The Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby, present fairly the
financial condition of the Target as of such dates and the results of operations
of the Target for such periods, are correct and complete, and are consistent
with the books and records of the Target (which books and records are correct
and complete).
(h) Events Subsequent to Most Recent Fiscal Year End. Since December 31,
1998, there has not been any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of the Target.
(i) Undisclosed Liabilities. The Target has no Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet contained in the Target's 10-QSB at September 30, 1999
(rather than in any notes thereto) and (ii) Liabilities which have arisen after
(September 30, 1999 the Most Recent Fiscal Month End) in the Ordinary Course of
Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).
(j) Legal Compliance. The Target and its Affiliates have complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies
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thereof), and no action, suit, proceeding, hearing, investigation, charge
complaint, claim, demand, or notice has been filed or commenced against any of
them alleging any failure so to comply.
(k) Tax Matters.
(i) The Target has filed all Tax Returns that its was required to
file. All such Tax Returns were correct and complete in all respects. All
Taxes owned by the Target (whether or not shown on any Tax Return) have
been paid. The Target is not currently the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Target does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of the Target that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) The Target has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(iii) No Seller or director or officer (or employee responsible for
Tax matters) of the Target expects any authority to assess any additional
Taxes for any period for which Tax Returns have been filed. There is no
dispute or claim concerning any Tax Liability of the Target either (A)
claimed or raised by any authority in writing or (B) as to which any of the
Sellers and the directors and officers (and employees responsible for Tax
matters) of the Target has Knowledge based upon personal contact with any
agent of such authority.
(iv) The Target has not waived any statute of limitation in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency.
(l) Real Property.
(i) Target owns no real property.
(ii) The Sellers have delivered to the Buyer correct and complete
copies of all leases and subleases. With respect to each lease and
sublease:
(A) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(B) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby;
(C) no party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would
constitute a
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breach or default or permit termination, modification, or acceleration
thereunder;
(D) with respect to each sublease, the representations and
warranties set forth above are true and correct with respect to the
underlying lease; and
(E) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have
been operated and maintained in accordance with applicable laws,
rules, and regulations.
(m) Intellectual Property.
(i) The Target owns and has the right to use pursuant to license,
sublicense, agreement or permission all Intellectual Property necessary for
the operation of the businesses of the Target as presently conducted. Each
item of Intellectual Property owned or used by the Target immediately prior
to the Closing hereunder will be owned or available for use by the Target
on identical terms and conditions immediately subsequent to the Closing
hereunder.
(ii) The Target has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties.
(n) Tangible Assets. The Target owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of their
businesses as presently conducted. Each such tangible asset is free from defects
(patent and latent), has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used.
(o) SEC Documents. Target has filed with the SEC all documents to be filed
under the Securities Act of 1933 and the Securities Exchange Act of 1934. As of
their respective dates, the Target's SEC documents complied in all material
respects with the requirements of the Securities Act and Exchange Act, as the
case may be, and none of the Target's SEC documents contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein are necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
As of their respective dates, the financial statements of Target included
in the Target SEC documents complied in all material respects with the
applicable accounting requirements and the published rules and regulations of
the Securities and Exchange Commission with respect thereto, were prepared in
accordance with GAAP applied on a consistent basis during the periods involved
and present fairly the financial position of Target as at the dates thereof and
the operations and statements of cash flow for the periods then ended.
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(p) Contracts. Sellers have disclosed the following contracts and other
agreements to which Target is a party:
(i) any material agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments:
(ii) any material agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year or
result in a loss to Target;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with any of the Sellers and their Affiliates (other
than the Target);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(viii) any collective bargaining agreement;
(ix) any material agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation; or
(x) any agreement under which it has advanced or loaned any amount to
any of its directors, officers, and employees outside the Ordinary Course
of Business.
(q) Litigation. Sellers have set forth each instance in which the Target
(i) is subject to any outstanding injunction, judgment, order, decree, ruling,
or charge or (ii) is a party or to the Knowledge of any of the Sellers and the
directors and officers (and employees with responsibility for litigation
matters) of the Target, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations could result in any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of the Target. None of the Sellers and the directors and officers (and
employees with responsibility for litigation matters) of the Target has any
reason to believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Target.
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(r) Employees. The Target is not a party to or bound by any collective
bargaining agreement, nor has Target experienced any strikes, grievances, claims
of unfair labor practices, or other collective bargaining disputes.
(s) Employee Benefits. Sellers have disclosed each Employee Benefit Plan
that the Target maintains or to which the Target contributes or has any
obligation to contribute.
(t) Guaranties. The Target is not a guarantor or otherwise is liable for
any Liability or obligation (including indebtedness) of any other Person.
(u) Environmental, Health, and Safety Matters. The Target has complied and
is in compliance with all Environmental, Health, and Safety Requirements.
(v) Certain Business Relationships with the Target. None of the Sellers and
their Affiliates has been involved in any business arrangement or relationship
with the Target within the past 12 months.
(w) Disclosure. The representations and warranties contained in this ss.4
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this ss.4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts to take
all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in ss.7
below).
(b) Notices and Consents. The Sellers will cause the Target to give any
notices to third parties, and will cause the Target to use its reasonable best
efforts to obtain any third party consents, that the Buyer reasonably may
request in connection with the matters referred to in ss.4 above. Each of the
Parties will (and the Sellers will cause the Target to) give any notices to,
make any filings with, and use its best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to Sections 3 and 4 above.
(c) Operation of Business. The Sellers will not cause or permit the Target
to engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the generality of the
foregoing, the Sellers will not cause or permit the target to (i) declare, set
aside, or pay any dividend or make any distribution with respect to its capital
stock or redeem, purchase, or otherwise acquire any of its capital stock.
(d) Full Access. Each of the Sellers will permit, and the Sellers will
cause the Target to permit, representatives of the Buyer to have full access to
all premises, properties,
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personnel, books records (including Tax records), contracts, and documents of or
pertaining to the Target.
(e) Exclusivity. None of the Sellers will (and the Sellers will not cause
or permit the Target to) (i) solicit, initiate, or encourage the submission of
any proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of
the Target (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. None of the Sellers will vote their Target Shares in favor
of any such acquisition structured as a merger, consolidation, or share
exchange. The Sellers will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under ss.8 below).
(b) No Reverse Splits. For a period of six months from the Closing of this
Agreement, Buyer agrees that it will not subdivide the shares of Target's common
stock.
(c) Issuance of Registered Securities. Except for the issuance of
securities in connection with (i) a merger, acquisition or business combination,
(ii) preferred securities issued in connection with any financing transaction,
Company will not seek to cause the registration of any of Target's shares for a
period of six months from the date of Closing of this Agreement.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth inss.3(a) andss.4
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Sellers shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
(iii) the Target shall have procured the necessary third party
consents;
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(iv) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation, (C) affect adversely the right of
the Buyer to own the Target Shares and to control the Target, or (D) affect
adversely the right of the Target to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling or
charge shall be in effect);
(v) Vickers shall have delivered to the Buyer a certificate to the
effect that each of the conditions specified above inss.7(a) is satisfied
in all respects;
(vi) Target and Buyer shall have agreed to enter into a merger
agreement providing for the merger of Buyer into Target in form
satisfactory to Buyer;
(vii) The existing officers and directors of Target shall have
tendered their resignations and shall have appointed such officers and
directors as are directed by Buyer;
(viii) all actions to be taken by the Sellers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyer; and
(ix) such other documents, certificates and agreements as Buyer shall
reasonably request.
The Buyer may waive any condition specified in this ss.7(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of the Sellers
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth inss.3(b) above shall
be true and correct in all material respects at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing; and
(iii) the Buyer shall have delivered to the Sellers a certificate to
the effect that each of the conditions specified above in ss.7(b) is
satisfied in all respects.
Vickers may waive any condition specified in this ss.7(b) if they execute a
writing so stating at or prior to the Closing.
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8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of the Parties contained in this Agreement shall survive the
Closing hereunder and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event Vickers breaches (or in the event any third party
alleges facts that, if true, would mean Vickers has breached) any of the
representations, warranties, and covenants contained herein (other than the
covenants in ss.2(a) above and the representations and warranties in
ss.3(a) above), and, if there is an applicable survival period pursuant to
ss.8(a) above, provided that the Buyer makes a written claim for
indemnification against Vickers within such survival period, then Vickers
agrees to indemnify the Buyer from and against the entirety of any Adverse
Consequences the Buyer may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences the Buyer may
suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach).
(ii) In the event any of the Sellers breaches (or in the event any
third party alleges facts that, if true, would mean any of the Sellers has
breached) any of his or its covenants in ss.2(a) above or any of his or its
representations and warranties in ss.3(a) above, and, if there is an
applicable survival period pursuant to ss.8(a) above, provided that the
Buyer makes a written claim for indemnification against the Seller within
such survival period, then the Seller agrees to indemnify the Buyer from
and against the entirety of any Adverse Consequences the Buyer may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Buyer may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or the alleged breach).
(iii) Vickers agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability
of the Target (x) for any Taxes of the Target with respect to any Tax year
or portion thereof ending on or before the Closing Date (or for any Tax
year beginning before and ending after the Closing Date to the extent
allocable) shown on the face of the Most Recent Balance Sheet, and (y) for
the unpaid Taxes of any Person (other than the Target).
(iv) Vickers agrees to indemnify Buyer from and against the entirety
of any Adverse Consequences the Buyer may suffer resulting from, arising
out of or relating to a breach of the covenants in Section 9 hereof.
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(c) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this ss.8, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in notifying
any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless ( and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within fifteen
(15) days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party from
and against the entirety of any Adverse Consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (C) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third party
Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defense of the Third Party Claim actively
and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with ss.8(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party.
(iv) In the event any of the conditions in ss.8(d)(ii) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against,
and consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it may deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith), (B) the Indemnifying
Parties will reimburse the Indemnified Party promptly and periodically for
the costs of defending against the Third Party Claim
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(including attorneys' fees and expenses), and (C) the Indemnifying Parties
will remain responsible for any Adverse Consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent provided in this
ss.8.
(d) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of , any statutory,
equitable, or common law remedy (including without limitation any such remedy
arising under Environmental, Health, and Safety Requirements) any Party may have
with respect to the Target or the transactions contemplated by this Agreement.
Each of the Sellers hereby agrees that he or it will not make any claim for
indemnification against the Target by reason of the fact that he or it was a
director, officer, employee, or agent of any such entity or was serving at the
request of any such entity as a partner, trustee, director, officer, employee,
or agent of another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyer against such Seller (whether
such action, suit, proceeding, complaint, claim, or demand is pursuant to this
Agreement, applicable law, or otherwise).
9. Shareholders' Representative. Vickers hereby irrevocably acknowledges
that each Seller has appointed Vickers as his agent and representative, an
attorney in fact for all purposes under this Agreement.
Each Seller has authorized Vickers, on behalf in the name of such Sellers,
to (i) receive all notices or documents or to be given to him by Buyer pursuant
hereto; (ii) deliver at Closing the certificates for the shares of each Seller
in exchange for his portion of the purchase price (iii) sign and deliver to
Buyer at the Closing a receipt for his portion of the purchase price and
transmits such purchase price to each Seller; (iv) deliver to Buyer at the
Closing all certificates and documents to be delivered to Buyer by the Sellers
pursuant to this Agreement, together with any other certificates and documents
executed by each Seller and deposited with Vickers for such purpose; and (v)
take such action on behalf of such Sellers as Vickers may deem appropriate
hereof, including, but not limiting to waiving any inaccuracies in the
representations or warranties of Buyer, waiving of any conditions precedent to
the Sellers' obligations hereunder, and all such other matters as Vickers may
deem necessary or appropriate to consummate this Agreement and the transactions
contemplated hereby.
Vickers acknowledges that the appointment as representative is irrevocable
and is deemed coupled with an interest in any action taken by Vickers pursuant
to such authority.
Buyer shall not be obligated to inquire into the authority of Vickers and
Buyer shall be protected in dealing with him.
10. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
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(i) the Buyer and Vickers on behalf of the Sellers may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) a mutual consent of Buyer and Vickers:
(iii) by either Buyer or Vickers if the Closing not has occurred
(other than through the failure of any Party seeking to terminate this
Agreement to fully comply with its obligations under this Agreement) on or
before December 31, 1999, or such later date as the Parties may agree upon;
or
(iv) by Buyer if any conditions in ss.7(a) have not been satisfied or
such a condition is or becomes impossible and Buyer has not waived such
condition.
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to ss.10(a) above, all rights and obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach).
11. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement prior to Closing without the prior written approval of the Buyer and
Vickers; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
insure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Buyer and Vickers; provided, however, that the Buyer may
(i) assign any or all of its rights and interests hereunder to one or more of
its Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
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(f) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Sellers: Copy to:
If to the Buyer: Copy to:
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demand, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Buyer and
the Requisite Sellers. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior to subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(i) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(j) Expenses. Each of the Parties and the Target will bear his or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby. The Sellers agree
that the Target has not borne or will bear any of the Sellers' costs and
expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
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(k) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(l) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement or by other signed agreement
are incorporated herein by reference and made a part hereof.
(m) Legal representation. Each party specifically acknowledges and agrees
that they have been afforded the right to be represented by counsel and Atlas,
Pearlman, Trop & Borkson, P.A. represents the Buyer.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
_______________________.
VARNER TECHNOLOGIES, INC. (BUYER)
By: /s/ Clayton W. Varner
-----------------------------
Title: CEO and President
SELLERS:
/s/ Brent Vickers
----------------------------------
Brent Vickers, individually and as
Shareholders' Representative
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