THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into this ____ day of _____, 20_, by and between [BUYER] (the “Buyer”), and [SELLER] (the “Seller”).
R E C I T A L S:
WHEREAS, the Buyer is a [ENTITY TYPE] organized and existing under the laws of the State of _____________, with its principal office located at _______________, _________;
WHEREAS, the Seller is a [ENTITY TYPE] organized and existing under the laws of the State of _____________, with its principal office located at _______________, _________
WHEREAS, [NAME OF COMPANY] (the “Company”) is a corporation organized and existing under the laws of the State of _______, maintains its principal office at _______, ________ and is engaged in the business of _____________________________________;
WHEREAS, the Seller owns ____________ (__) shares (the “Shares”) of the common stock, no par value per share (the “Company Common Stock”), of the Company, which Shares constitute _______ percent (__ %) of the issued and outstanding shares of the Company Common Stock; and
WHEREAS, the Seller desires to sell and transfer to the Buyer, and the Buyer desires to purchase and accept from the Seller all of the Shares upon the terms and subject to the conditions stated herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.1. Definitions. The capitalized terms used in this Agreement have the meanings set forth below.
“Affiliate” means, with respect to any person, any other person controlling, controlled by or under common control with such person. For purposes of this definition and this Agreement, the term “control” means [______________________________________________________].
“Applicable Laws” means, with respect to a party, all laws, statutes, rules, regulations, ordinances, judgments, orders, decrees, injunctions, and writs of any Governmental Entity having jurisdiction over such party.
“Articles of Incorporation” means the Articles of Incorporation of the Company filed with the Secretary of State of the State of _______________________________________.
“Assets” shall mean all assets or properties of every kind, nature, character and description, including all tangible, intangible, personal, real or mixed of the Company.
“Buyer” has the meaning set forth in the first paragraph of this Agreement and includes its permitted successors and assigns.
[“Buyer Indemnified Costs” means (a) all Buyer Indemnified Representation Costs, (b) all Buyer Indemnified Liabilities (c) all Buyer Indemnified Tax Costs, (d) all damages, losses, claims, liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable legal fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Buyer Indemnified Parties incurs and that arise out of any breach by the Seller of any other covenants or agreements under this Agreement or any other Transaction Document executed in connection herewith, and (e) [INSERT ADDITIONAL CUSTOMIZED COSTS].]
[“Buyer Indemnified Liabilities” means (a) accounts payable incurred other than in the Ordinary Course of Business, (b) accounts payable not paid in the Ordinary Course of Business, (c) obligations with respect to the period after the Closing under any contractual commitments, whether oral or written, not listed in the Schedules to this Agreement, and (d) [INSERT ADDITIONAL CUSTOMIZED LIABILITIES].]
[“Buyer Indemnified Parties” means Buyer and [_______________]. After the Closing, the Company shall be deemed to be one of the Buyer Indemnified Parties.]
[“Buyer Indemnified Representation Costs” means any and all damages, losses, claims, liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable legal fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Buyer Indemnified Parties incurs and that arise out of any breach or default by the Seller of any of the representations or warranties under this Agreement or any agreement or document executed in connection herewith.]
[“Buyer Indemnified Tax Costs” means any and all Taxes together with any costs, expenses, losses or damages (including court and administrative costs and reasonable legal fees and expenses incurred in investigating and preparing for any audit, litigation or other proceeding) arising out of or incident to the determination, assessment or collection of such Taxes (a) imposed on the Company in respect of its income, business, property or operations or for which it may otherwise be liable for any taxable period or portion thereof ending on or prior to the Closing Date, (b) imposed on or with respect to the Seller for any taxable period or portion thereof ending on or prior to the Closing Date, (c) resulting from the breach of the representations and warranties set forth in Section 4.13 (without regard to materiality or knowledge qualifiers that may be contained therein) or covenants set forth in Section 6.2, (d) of any member of an affiliated, consolidated, combined or unitary group of which the Company or any subsidiary (or any predecessor) is or was a member on or prior to the Closing Date by reason of the liability of the Company or any subsidiary pursuant to Treasury Regulation §1.1502-6(a) or any analogous or similar state, local or foreign law, (e) of any other person for which the Company may be liable as a transferee or successor, by contract or otherwise, or (f) imposed on Buyer, the Company or any subsidiary of the Company under Code Section 1374 with respect to any taxable period or portion thereof ending on or prior to the Closing Date including any such Tax resulting from transactions contemplated by the Transaction Documents; provided, however, that any such Tax shall not be a Buyer Indemnified Tax Cost to the extent such Tax was specifically reserved for in the Most Recent Balance Sheet.]
“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.).
“Claim” means any action, suit, claim, lawsuit, charge, complaint, demand, inquiry, hearing, investigation, notice of violation or noncompliance, litigation, proceeding, arbitrations, appeal or other dispute, whether civil, criminal, administrative or otherwise.
“Closing” has the meaning set forth in Section 3.1.
“Closing Date” has the meaning set forth in Section 3.1.
“Code” shall mean the United States Internal Revenue Code of 1986, as amended. All references to the Code, U.S. Treasury regulations or other governmental pronouncements shall be deemed to include references to any applicable successor regulations or amending pronouncement.
“Commonly Controlled Entity” has the meaning set forth in Section 4.20(b).
“Company” has the meaning set forth in the recitals.
“Company Activities” means (a) [[manufacturing] [distributing] [designing] [selling] [installing] [making] [_______________]] that are competitive with those [[manufactured] [distributed] [designed] [sold] [installed] [made] [___________] by Buyer, the Company or their Affiliates, or (b) engaging in any other business activities which are conducted, offered or provided by Buyer, the Company or any of their Affiliates, in each case during the [TIME PERIOD] period beginning on the Closing Date.
“Company Adjusted Pre-Tax Income” means the Company’s net income before deducting income taxes or year-end distributions to the shareholder for the year ended _____, 200_.
“Company Common Stock” has the meaning set forth in the recitals.
“Consents” means all governmental consents and approvals, and all consents and approvals of third parties, in each case that are necessary in order to transfer the Shares, or the control of the Company and its properties and assets, to Buyer and otherwise to consummate the transactions contemplated hereby.
“Contracts” means, with respect to a party, all agreements, contracts, or other binding commitments, arrangements or plans, written or oral (including any amendments and other modifications thereto), to which such party is a party or is otherwise bound.
“Employee Benefit Plans” means all employee benefit plans as defined in Section 3(3) of ERISA and all bonus, stock option, stock purchase, stock appreciation right, restricted stock, phantom stock, incentive, deferred compensation, medical, disability or life insurance, cafeteria benefit, dependent care, disability, director or employee loan, fringe benefit, sabbatical, supplemental retirement, severance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements sponsored, maintained, contributed to or agreed to by the Company for the benefit of employees, former employees, independent contractors or agents of the Company.
“Environmental Laws” means all federal, state and local laws relating to public health, or to pollution or protection of the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) including, without limitation, the Clean Air Act, as amended, CERCLA, the RCRA, the Toxic Substances Control Act, the Federal Water Pollution Control Act, as amended, the Safe Drinking Water Act, as amended, the Hazardous Materials Transportation Act, as amended, the Oil Pollution Act of 1990, any state laws implementing the foregoing federal laws, and all other Applicable Laws relating to or regulating (a) emissions, discharges, releases, or cleanup of pollutants, contaminants, chemicals, polychlorinated biphenyls (PCB’s), oil and gas exploration and production wastes, brine, solid wastes, or toxic or Hazardous Substances or wastes (collectively, the “Polluting Substances”), (b) the generation, processing, distribution, use, treatment, handling, storage, disposal, or transportation of Polluting Substances, or (c) environmental conservation or protection.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Escrow Fund” has the meaning set forth in Section 2.3.
“Escrow Agreement” has the meaning set forth in Section 2.4.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Financial Statements” has the meaning set forth in Section 4.7.
“GAAP” means generally accepted accounting principles in the United States of America.
“Guarantee” means any guarantee or other contingent liability (other than any endorsement for collection or deposit in the Ordinary Course of Business), direct or indirect with respect to any obligations of another person, through a Contract or otherwise, including, without limitation, (a) any endorsement or discount with recourse or undertaking substantially equivalent to or having economic effect similar to a guarantee in respect of any such obligations and (b) any Contract (i) to purchase, or to advance or supply funds for the payment or purchase of, any such obligations, (ii) to purchase, sell or lease property, products, materials or supplies, or transportation or services, in respect of enabling such other person to pay any such obligation or to assure the owner thereof against loss regardless of the delivery or non delivery of the property, products, materials or supplies or transportation or services or (iii) to make any loan, advance or capital contribution to or other Investment in, or to otherwise provide funds to or for, such other person in respect of enabling such person to satisfy an obligation (including any liability for a dividend, stock liquidation payment or expense) or to assure a minimum equity, working capital or other balance sheet condition in respect of any such obligation.
“Governmental Entity” means any governmental department, commission, board, bureau, agency, court or other instrumentality of the United States or any state, county, parish or municipality, jurisdiction, or other political subdivision thereof.
“Hazardous Substances” means any substance or material which if present in the environment would under Applicable Law require assessment, remediation, or corrective action including, without limitation, chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products which are classified as hazardous, toxic, radioactive, dangerous or otherwise regulated by or form the basis for liability under any Environmental Law, whether or not identified as hazardous wastes under the RCRA or hazardous substances under CERCLA.
“Indemnified Costs” means the Buyer Indemnified Costs or the Seller Indemnified Costs, as the case may be.
“Indemnified Parties” means the Buyer Indemnified Parties or the Seller Indemnified Parties, as the case may be.
“Indemnified Representation Costs” means the Buyer Indemnified Representation Costs or the Seller Indemnified Representation Costs, as the case may be.
“Indemnifying Party” means any person who is obligated to provide indemnification hereunder.
“Intangible Rights” has the meaning set forth in Section 4.18.
“Investment” means (a) any direct or indirect ownership, purchase or other acquisition by a person of any notes, obligations, instruments, capital stock, options, warrants, securities or ownership interests (including partnership interests and joint venture interests) of any other person, and (b) any capital contribution or similar obligation by a person to any other person.
“IRS” means the Internal Revenue Service of the United States of America.
“Knowledge” means, with respect to a specified party hereto, the actual knowledge of such party (including, but not limited to, the actual knowledge of any officers, directors, employees, consultants or counsel of such party), [together with ________________________].
“Liens” means all liens, pledges, voting agreements, voting trusts, proxy agreements, claims, security interests, restrictions, mortgages, deeds of trust, tenancies and other possessory interests, conditional sale or other title retention agreements, assessments, easements, rights of way, covenants, restrictions, rights of first refusal, defects in title, encroachments, and other burdens, options or encumbrances of any kind.
“Material Adverse Effect” means a material adverse effect on the business, operations, properties, condition (financial or otherwise), results of operations or assets, liabilities or prospects of the Company, except for [_____________________________________________].
“Material Contract” has the meaning set forth in Section 4.15.
“Material Leases” shall mean any lease or sublease of real or personal property of or by the Company involving a term of more than ___ months and payment obligations exceeding ______________ dollars ($___________) per year.
“Maximum Loss” has the meaning set forth in Section 7.5(a).
“Minimum Loss” has the meaning set forth in Section 7.5(a).
“Most Recent Balance Sheet” has the meaning set forth in Section 4.7.
“Order” means any writ, decree, order, judgment, injunction, rule, ruling, Lien, voting right, consent of or by a Governmental Entity.
“Ordinary Course of Business” means the ordinary course of the operations of the Company consistent with past practices since the earliest time covered by the Financial Statements.
“Person” means an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, or other entity.
“Policy” means any Contract that insures (a) the Company’s properties, plant and equipment for loss or damage, or (b) the Company or its officers, directors, employees or agents against any liabilities, losses or damages (or lost profits) for any reason or purpose.
“Protected Area” means any jurisdiction in the United States in which Buyer, the Company, or any Affiliate of either of them, conducts or conducted, as the case may be, Company Activities at any time during the period beginning _____________ and ending on the _____ anniversary of the Closing Date.
“Purchase Price” means the consideration payable by Buyer as provided in Section 2.2.
“RCRA” means the Resource Conservation and Recovery Act of 1976, as amended.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Seller Indemnified Costs” means (a) all Seller Indemnified Representation Costs, and (b) any and all damages, losses, claims, liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable legal fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Seller Indemnified Parties incurs and that arise out of any breach by Buyer of any of the covenants or agreements under this Agreement or any other Transaction Documents.
“Seller Indemnified Parties” means each of the Seller and each Affiliate of the Seller.
“Seller Indemnified Representation Costs” means any and all damages, losses, claims, liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable legal fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Seller Indemnified Parties incurs and that arise out of any breach or default by Buyer of any of its representations or warranties under this Agreement or any agreement or document executed in connection herewith.
“Seller” has the meaning set forth in the first paragraph of this Agreement.
“Shares” has the meaning set forth in the recitals.
“Subsidiary” or “Subsidiaries” of any person means any corporation, partnership, joint venture or other legal entity of which such person (either alone or through or together with any other subsidiary), owns, directly or indirectly, 50% or more of the capital stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.
“Tax” (or “Taxes”) means (a) any net income, alternative or add-on minimum, gross income, gross receipts, sales, use, transfer, franchise, profits, license, withholding on amounts paid by the Company, payroll, employment, excise, production, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest and/or any penalty, addition to tax or additional amount imposed by any taxing authority, (b) any liability of the Company for the payment of any amounts of the type described in clause (a) as a result of being a member of an affiliated or consolidated group or arrangement whereby liability of the Company for the payment of such amounts was determined or taken into account with reference to the liability of any other person for any period and (c) liability of the Company with respect to the payment of any amounts of the type described in clause (a) or (b) as a result of any express or implied obligation to indemnify any other person.
“Tax Return” means any return, declaration, report, statement, estimate, information return and statement required to be filed by or with respect to the Company in respect of any Taxes, including, without limitation, (a) any consolidated federal income Tax return in which the Company is included and (b) any state, local or foreign income Tax returns filed on a consolidated, combined or unitary basis (for purposes of determining tax liability) in which the Company is included.
“Third Party Claim” has the meaning set forth in Section 7.3.
“Total Cost of Sales” means the total cost of sales of the Company determined in accordance with GAAP on a basis consistent with the Financial Statements.
“Total Sales” means the total sales of the Company determined in accordance with GAAP on a basis consistent with the Financial Statements.
“Transaction Documents” means this Agreement, and all other documents to be executed by any of the Seller or Buyer in connection with the consummation of the transactions contemplated in this Agreement.
Purchase and Sale of Shares
2.1. Purchase and Sale. Upon the terms and subject to the conditions of this Agreement, at the Closing (as defined in Section 3.1), the Seller shall sell to Buyer, and Buyer shall purchase from the Seller, all right, title and interest in and to the Shares, free and clear of all Liens.
2.2. Purchase Price. The aggregate purchase price payable to the Seller in consideration for the sale of the Shares (the “Purchase Price”) shall be an amount equal to ___________ dollars ($___________), or ___________ dollars ($___________) per share.
2.3. Payment of Purchase Price. At the Closing, the Buyer shall pay an amount equal to the Purchase Price less _____________ ($__________) (the “Escrow Fund”) to the Seller by wire transfer of immediately available funds to an account designated by the Seller.
2.4. Escrow Fund. At the Closing the Buyer shall deposit the Escrow Fund into an escrow account pursuant to the terms and provisions set forth in an escrow agreement (the “Escrow Agreement”) dated as of the Closing Date in a form to be mutually agreed upon by the parties. The Escrow Fund shall be used to satisfy the obligations of the Seller to indemnify the Buyer and the Company pursuant to Article VII hereof.
3.1. Closing. The sale and delivery of the Shares to Buyer, the payment of the Purchase Price to the Seller, and the consummation of the other respective obligations of the parties contemplated by this Agreement (the “Closing”) shall take place at the offices of ____________, in _________, _______, at ____ _.m. on _______, 200_, or at such other earlier time and place as may be mutually agreed upon (the “Closing Date”).
3.2. Closing Deliveries of Buyer. At the Closing:
(a) Buyer will pay the Purchase Price in accordance with Section 2.3.
(b) The Buyer shall deliver to the Seller a certificate by the secretary of Buyer certifying the Articles of Incorporation and Bylaws of Buyer, the resolutions adopted by the directors of Buyer in connection with this Agreement, and the incumbency of each officer of Buyer who is required to sign this Agreement or any of the Transaction Documents.
(c) [INSERT ADDITIONAL CLOSING DELIVERIES]
3.3. Closing Deliveries of the Seller. At the Closing:
(a) The Seller will deliver or cause to be delivered to Buyer the certificates representing the Shares duly endorsed in blank or together with duly executed stock powers in favor of Buyer.
(b) The Seller shall furnish Buyer with evidence satisfactory to Buyer of the consent or approval of each person that is a party to a Material Contract (including evidence of the payment or any required payment) and whose consent or approval shall be required to permit the consummation of the transactions contemplated hereby or to prevent a breach of such Contract or the creation of a right to terminate such Contract, and such consent or approval shall be in form and substance reasonably satisfactory to Buyer.
(c) The Seller shall deliver to Buyer a certificate of the secretary of the Company certifying the Articles of Incorporation and Bylaws of the Company, any resolutions adopted by the directors or shareholder of the Company in connection with this Agreement, the incumbency of each officer of the Company who is required to sign this Agreement or any of the Transaction Documents.
(d) The Seller shall deliver to Buyer certificates issued by the appropriate Governmental Entities evidencing the valid existence and/or the good standing of the Company as a corporation organized under the laws of the state or as a foreign corporation authorized to do business under the laws of the jurisdictions listed in the schedules hereto.
(e) The Seller shall furnish Buyer with such other documents and certificates, including certificates of the Company’s officers and others, as Buyer shall reasonably request to consummate the transactions contemplated by this Agreement.
(f) [INSERT ADDITIONAL CLOSING DELIVERIES]
Representations and Warranties of the Seller
The Seller represents and warrants to Buyer as of the date hereof as follows:
4.1. Organization and Authority.
(a) The Company is validly existing as a corporation under the laws of the State of _________ and has all power and authority to own and operate its properties and to carry on its business as currently conducted, and is duly qualified and in good standing in every jurisdiction where the failure to be so qualified would have a Material Adverse Effect on the Company. The Seller has delivered to Buyer true and complete copies of the Articles of Incorporation, Bylaws, minute books and stock issuance and transfer records of the Company.
(b) Seller has the requisite capacity and authority to enter into this Agreement and to perform its obligations hereunder. Seller has full right, capacity and authority to enter this Agreement and perform its respective obligations without the consent, authorization, release or waiver of any party. This Agreement constitutes a valid and binding obligation of Seller, enforceable in accordance with its terms, except to the extent limited by general principles of equity and public policy and by bankruptcy, insolvency, reorganization, liquidation, moratorium, readjustment of debt or other laws of general application relating to or affecting the enforcement of creditors’ rights.
4.2. Subsidiaries. [The Company does not own, directly or indirectly, any subsidiaries or own or have the right, or obligation, pursuant to a contract or otherwise, to acquire any capital stock, equity interest or other similar investment in any corporation, partnership, joint venture, association, limited liability company, trust or other entity.]
4.3. Capital Structure. The authorized capital stock of the Company consists solely of ___________ shares of Common Stock of the Company, _______ of which are issued and outstanding. All of the outstanding shares of Company Common Stock are owned by the Seller and are validly issued, fully paid and non-assessable. There is no authorized or outstanding option, subscription, warrant, right (preemptive or other), commitment or other agreement obligating the Company to repurchase, issue or transfer any shares of Company Common Stock or any securities convertible into or exchangeable for any shares of Company Common Stock.
4.4. No Conflict or Violations. The execution and delivery of this Agreement by the Seller does not, and the performance by the Seller of its obligations hereunder will not (a) conflict with or violate in any material respect any term or provision of any Applicable Law or any writ, judgment, decree or injunction applicable to the Company or to the Seller or by which any of their properties is bound or subject, (b) conflict with or result in a violation or breach of any of the provisions of the Articles of Incorporation or the Bylaws of the Company, or (c) conflict with or result in a material breach of, or constitute a default under, any Material Contract to which the Company is a party or by which any of its properties is bound or subject.
4.5. Consents. [Other than as set forth on Schedule 4.5,] the execution and delivery by the Seller of this Agreement do not, and the consummation of the transactions contemplated hereby will not, require the Consent of any person.
4.6. Title to Shares. The Seller owns, beneficially and of record and free and clear of any Lien, all of the Shares. Upon the sale of the Shares to Buyer at the Closing, Buyer will acquire the good and marketable title to all of the Shares free and clear of any Lien.
4.7. Financial Statements. The Seller has delivered to Buyer the unaudited balance sheet and statements of operation and cash flows of the Company as of [DATE] and [DATE] and for the 12-month periods then ended, and the Company’s unaudited balance sheet as of [DATE] (the “Most Recent Balance Sheet”) and the Company’s unaudited statements of operations and cash flow for the three-month period then ended (collectively, the “Financial Statements”). The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved (except to the extent required by changes in GAAP) and the Financial Statements present fairly in all material respects the financial condition and operating results and cash flows of the Company in accordance with GAAP as of the dates, and for the periods, indicated in the Agreement, subject in the case of the [DATE] statements to normal year-end audit adjustments.
4.8. Absence of Undisclosed Liabilities. There are no liabilities or obligations of any nature (known or unknown, fixed, absolute, accrued, contingent or otherwise) of the Company except (a) those reflected in the Most Recent Balance Sheet, and (b) those incurred in the Ordinary Course of Business since the date of the Most Recent Balance Sheet, which individually or in the aggregate have not resulted in or could not reasonably be expected to result in a Material Adverse Effect.
4.9. Absence of Changes. Since the date of the Most Recent Balance Sheet, the Company has conducted its business only in the Ordinary Course of Business and there has not been:
(a) any event or circumstance that has had or could reasonably be expected to have a Material Adverse Effect on the Company,
(b) any material change by the Company in its accounting methods, principles or practices,
(c) any entry by the Company or the Seller into any commitment or transaction material to the Company, except in the Ordinary Course of Business or except in connection with the negotiation and execution and delivery of this Agreement and the other Transaction Documents,
(d) any declaration, setting aside or payment of any dividend or distribution in respect of any capital stock of the Company or any redemption, purchase or other acquisition of any of the Company’s securities,
(e) any material increase in, amendment to, or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option, stock purchase or other employee benefit plan,
(f) granted any increase in compensation, bonus or other benefits payable to the employees of the Company, except for increases occurring in the Ordinary Course of Business,
(g) paid any bonus to the directors, officers or employees of the Company except for bonuses accrued on the Most Recent Balance Sheet,
(h) any incurrence, assumption or guaranty of any indebtedness by the Company, or the grant of any Lien on the material Assets of the Company to secure any indebtedness,
(i) any sale or transfer of any material Assets of the Company other than in the Ordinary Course of Business, or
(j) any loan, advance or Investment in any person by the Company (excluding any loan, advance or capital contribution to, or investment in, the Company).
4.10. [Accounts Receivable; Inventories and Equipment. The accounts receivable of the Company are valid and genuine, have arisen solely out of bona fide sales and deliveries of goods, performance of services or other business transactions in the Ordinary Course of Business, and are not subject to valid defenses, set-offs or counterclaims. The allowances for collection losses associated with such accounts receivable reflected on the Company’s books have been determined in accordance with GAAP and are consistent with past practice. The inventories reflected on the Most Recent Balance Sheet and held by the Company on the date hereof do not include any items that are not usable or saleable in the Ordinary Course of Business of the Company or are obsolete or discontinued items. Such inventories have been reflected on the Most Recent Balance Sheet at the lower of cost or market value (taking into account the usability or salability thereof) in accordance with GAAP. Since the date of the Most Recent Balance Sheet, inventories of raw materials, supplies and products have been purchased by the Company in the Ordinary Course of Business, and the volumes of purchases thereof and orders therefor have not been changed in anticipation of the transactions contemplated by this Agreement. The Seller does not have any Knowledge of any conditions materially affecting the supply of materials or products available to the Company, and, to the Knowledge of the Seller, the consummation of the transactions contemplated hereby will not adversely affect any such supply. The machinery and equipment owned or leased by and used in the Company’s business are in good operating condition, have been and are being maintained and repaired in the Ordinary Course of Business so as to preserve their usefulness and value and are reflected on the financial statements in accordance with GAAP.]
4.11. Litigation. Since [DATE], no Orders involving the Company have been issued. There is no Claim pending, or to the Knowledge of the Seller, threatened against the Company nor is there any reasonable basis therefor.
4.12. Compliance. The Company has complied in all material respects with all Applicable Laws and no Claim has been made or, to the Knowledge of the Seller, threatened against the Company alleging any failure so to comply.
(a) (i) All Tax Returns required to be filed by the Company have been duly and timely filed and all such Tax Returns are true, correct and complete in all material respects, (ii) none of such Tax Returns are now under audit or examination by any Governmental Entity, (iii) all Taxes owed by the Company that are or have become due have been timely paid in full, (iv) there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any such Tax Return or the assessment or collection of any such Tax, (v) no penalty, interest or other charge is or will become due with respect to the late filing of any such Tax Return or late payment of any such Tax, (vi) there is no Claim pending or, to the Knowledge of the Seller, threatened by any Governmental Entity in connection with any such Tax, (vii) all Tax withholding and deposit requirements imposed on the Company have been satisfied in full in all respects, and (viii) there are no Tax allocation, indemnity or sharing agreements or arrangements affecting the Company.
(b) The Company will not be required to include any amount in income for any taxable period (or portion thereof) beginning after the Closing Date as a result of a change in accounting method for any taxable period beginning on or before the Closing Date. The Company will not be required to include in any taxable period (or portion thereof) beginning after the Closing Date any income that accrued on or prior to the Closing Date but was not recognized prior to the Closing Date as a result of the installment method of accounting, the completed contract method of accounting, the long-term contract method of accounting or the cash method of accounting,
4.14. Environmental Matters. To the Knowledge of the Seller, (a) the Company is in compliance in all material respects with all applicable Environmental Laws; (b) the Company has not received any written notices, demand letters or requests for information from any Governmental Entity or other person indicating that it may be in violation of, or liable under, any Environmental Law; (c) no reports have been filed by the Company concerning the release of any Hazardous Substance or the threatened or actual violation of any Environmental Law; (d) no Hazardous Substance has been disposed of, released or transported by the Company in violation of any applicable Environmental Law; (e) there have been no environmental studies or audits regarding compliance or noncompliance with any Environmental Law conducted by or which are in the possession of the Company relating to the activities of the Company or any of the real property used by the Company that have not been delivered to Buyer; and (f) the Company is not subject to any liabilities or expenditures relating to any suit, settlement, court order, administrative order, regulatory requirement, judgment or claim asserted or arising under any Environmental Law.
4.15. Contracts. Except for Contracts terminable upon [NUMBER] days or less notice without penalty, Schedule 4 sets forth all of the following Contracts to which the Company is a party or by which any of its Assets are bound (collectively, the “Material Contracts”): (a) Contracts pertaining to the borrowing of money or indebtedness; (b) Contracts creating Guaranties; (c) Contracts relating to any single capital expenditure in excess of $_________; (d) Contracts for the purchase or sale of real property, any business or line of business or for any merger or consolidation; (e) joint venture, limited liability company or partnership agreements; (f) Material Leases; (g) employment agreements not terminable upon [NUMBER] days’ notice without further severance and involving annual compensation in excess of $________; and (h) other Contracts that individually require by their respective terms after the date hereof the payment or receipt of more than $_________ during any 12-month period or $_________ in the aggregate. The Company has complied in all material respects with all of the terms and conditions of the Material Contracts to which it is a party and has not done or performed any act which would invalidate or impair in any material respect its rights under any Material Contract. To the knowledge of the Company, there are no assertions or claims that the Company has breached, violated or defaulted under any Material Contract in any material respect. True, correct and complete copies of all Material Contracts have been delivered to Buyer.
4.16. Insurance. The Company has Policies in full force and effect that insure the Company against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured against. With respect to each Policy: (a) the Policy is in full force and effect; (b) neither the Company nor, to the Knowledge of the Seller, any party to the Policy is in material breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred that, with notice or the lapse of time, would constitute such a material breach or default, or permit termination, modification, or acceleration under the Policy, and (c) no party to the Policy has repudiated any material provisions thereof nor has the Company, during the last [NUMBER] years been refused any insurance with respect to its Assets or operations, nor has coverage ever been limited by any insurance carrier to which the Company has applied for any Policy or with which it has carried a Policy.
4.17. Assets. The Company owns or leases all material Assets necessary for the conduct of the business of the Company as presently conducted. The Company has good and marketable title to, or an adequate leasehold interest in, all of its material Assets, free and clear of all Liens.
4.18. Intellectual Property. To the Knowledge of the Seller, the Company is not infringing upon or violating in any material respect any intellectual property right, including without limitation any trademark, trade name, domain name, patent, industrial design, trade secret, or copyright or any registration or pending application therefor of any other person (collectively, “Intangible Rights”), and the Seller does not have Knowledge of any pending or threatened claims thereof. To the Knowledge of the Seller, no person is infringing any Intangible Rights of the Company in any material respect.
4.19. Employment Arrangements. The Company has no obligation, contingent or otherwise, under any employment agreement, collective bargaining or other labor agreement, any agreement containing severance or termination pay arrangements, deferred compensation agreement, retainer or consulting arrangements, pension or retirement plan, bonus or profit sharing plan, stock option or purchase plan, or other employee contract or non-terminable arrangement (whether or not that arrangement imposes a penalty for termination), group life, health, medical or hospitalization insurance plan or program, or other employee or fringe benefit plan, including vacation plans or programs and sick leave plans or programs. The Company is not now and for the past [NUMBER] years has not been subject to or involved in or, to the Knowledge of the Seller, threatened with any union elections, petitions therefor or other organizing activities.
4.20. Employee Benefit Plans.
(a) List of Plans. The Seller has delivered to Buyer correct and complete copies of (i) the plan documents and summary plan descriptions for each Employee Benefit Plan, (ii) the most recent determination letter received from the IRS for each Employee Benefit Plan intended to qualify under Section 401 (a) of the Code, (iii) the most recent Form 5500 Annual Report, and (iv) all related trust agreements, insurance contracts, and other funding agreements which implement each Employee Benefit Plan of the Company that have been established, maintained or contributed to by the Company within the past ______ years.
(b) Status of Plans. The Company has not and does not maintain or contribute to any Employee Benefit Plan that is not in substantial compliance with all Applicable Law, including ERISA and the Code, nor has the Company or any Commonly Controlled Entity maintained or contributed to (i) any defined benefit plan, as defined in Section 3(35) of ERISA, (ii) any multiemployer plan, as defined in Section 3(37) of ERISA, or (iii) any other Employee Benefit Plan subject to the minimum funding requirement of Section 412 of the Code, in each case within the past five years. All obligations of the Company and each Commonly Controlled Entity, whether arising by operation of law or by contract, required to be performed under Section 4980B of the Code (or similar state law), including, but not limited to, such obligations that may arise by virtue of the transaction contemplated by this Agreement, have been or will be timely performed. The term “Commonly Controlled Entity” shall mean any corporation, trade, business, or entity under common control with the Company within the meaning of Section 414(b), (c), (m), or (o) of the Code or Section 4001 of ERISA.
(c) Contributions. Full payment has been made of all amounts, which the Company is required, under applicable law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which the Company is a party, to have paid as contributions thereto as of the date hereof. The Company has made adequate provision for reserves in the Financial Statements to meet any contributions that have not been made because they are not yet due under the terms of any Employee Benefit Plan or related agreements.
4.21. Customers and Suppliers. No customer of the Company has advised the Company that it will stop, or decrease the rate of, buying materials, products or services from the Company. No supplier of the Company has advised the Company that it will stop, or decrease the rate of, supplying materials, products, or services to the Company. To the Knowledge of the Seller, the consummation of the transactions contemplated hereby will not have a Material Adverse Effect on the Company’s relationship with any customer or supplier.
4.22. Brokers. No person is entitled to receive any brokerage, finders or financial advisory fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Seller or the Company.
4.23. Dealings with Affiliates. The Company is not a party to any Contract with any one or more of (a) the Seller, (b) the Company’s Affiliates, (c) an Affiliate of the Seller, or (d) any person in which the Seller or an Affiliate of the Company or the Seller has, directly or indirectly, made an Investment. The Company has no ongoing obligations to make any payments, loan or borrow any funds or property or made any credit arrangement or accommodation with the Seller or any Affiliate or employee of the Company, except for the payment of employee salaries and director compensation in the Ordinary Course of Business.
4.24. Disclosure. Neither this Agreement nor any of the schedules, exhibits, attachments or certificates prepared for or supplied to Buyer by or on behalf of the Seller with respect to the transactions contemplated hereby contains any untrue statement of a fact or omits a fact necessary to make each statement contained herein or therein not misleading. The Seller is not aware of any fact or condition which could reasonably be anticipated to have a Material Adverse Effect on the Company.
Representations and Warranties of the Buyer
Buyer represents and warrants to the Seller as follows:
5.1. Organization, Standing and Power. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of _____________ and has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents.
5.2. Authority. The execution and delivery of this Agreement and the other Transaction Documents by Buyer and the performance by Buyer of its obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate action on the part of Buyer. This Agreement and each other Transaction Document has been duly executed and delivered by Buyer and (assuming that this Agreement constitutes a legal, valid, and binding obligation of the Seller) constitutes a legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except to the extent that (a) enforcement may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium, or similar Applicable Laws now or hereafter in effect relating to or limiting creditors’ rights generally and (b) the remedy of specific performance and injunctive and other forms of equitable relief are subject to certain equitable defenses and to the discretion of the court or other similar person before which any proceeding therefor may be brought.
5.3. No Conflicts or Violations. Subject to obtaining the Consents contemplated by Schedule 5.4, the execution and delivery of this Agreement and the other Transaction Documents by Buyer do not, and the performance by Buyer of its obligations hereunder and thereunder will not (a) conflict with or violate in any material respect any term or provision of any Applicable Law or any writ, judgment, decree, or injunction applicable to Buyer; (b) conflict with or result in a violation or breach of the Articles of Incorporation or Bylaws of Buyer; or (c) result in a material breach of, or constitute a default under, any material Contract to which Buyer is a party or by which any of its properties is bound or subject.
5.4. Consents. Except as set forth on Schedule 5.4, the execution and delivery of this Agreement and the other Transaction Documents by Buyer do not, and consummation of the transactions contemplated hereby will not, require Buyer to obtain any Consent except for such Consents the failure of which to be made or obtained could not reasonably be expected to have a material adverse effect on the validity or enforceability of this Agreement.
5.5. Litigation. There are no pending, or to the Knowledge of Buyer, threatened, claims, actions, suits, proceedings, written inquiries or investigations by any Governmental Entity or any other person against Buyer, except such claims, actions, suits, proceedings written inquiries or investigations that could not reasonably be expected to have a material adverse effect on the validity or enforceability of this Agreement.
5.6. Brokers. No person is or will become entitled to receive any brokerage, finders or financial advisory fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made on or on behalf of Buyer.
5.7. Buyer’s Investment Interest. The Buyer is acquiring the Shares for investment purposes only and not with a view to or for resale in connection with any distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Act”), or any other state securities regulation act, including, without limitation, those of the State of __________. The Buyer does not presently intend to divide its participation with others or to resell, assign, transfer, or otherwise dispose of all or any part of the Shares. The Buyer acknowledges that it is acquiring a business, although the vehicle for such purchase is the acquisition of stock, and that Buyer intends to manage and operate the business as a going concern. The Buyer has made an independent investigation of the Company and its business and has not relied upon any representations or warranties of the Company or the Seller, other than as expressly contained in this Agreement. The Buyer has been provided with all information with respect to the Company and the Shares which the Buyer has requested; and the Buyer has read and reviewed such information and has had the opportunity to discuss such information with and ask questions with respect to such information of the officers and the other representatives of the Company. The Buyer has such knowledge and experience in financial and business matters that Buyer is capable of evaluating the merits and risks associated with an investment in the business and in the Shares as contemplated herein. The Buyer is able to bear the economic risk of such an investment, has adequate resources to meet his or her current needs and contingencies, and has no need for liquidity with respect to the purchase contemplated herein. The Buyer understands that the Shares have not been registered under the Act or any state securities regulation act and may be required to be held indefinitely; that such Shares may not be sold, transferred, hypothecated, pledged, or otherwise disposed of except in compliance with the Act and any other applicable state securities regulation act.
Covenants and Agreements
6.1. Notification of Certain Matters. Each of the Seller and Buyer shall give prompt notice to the other parties of the occurrence, or failure to occur, of any event, which occurrence or failure to occur would be likely to cause (a) any representation or warranty contained in this Agreement to be untrue or inaccurate in any respect at any time from the date of this Agreement to the Closing Date, or (b) any failure of the Seller or Buyer, as the case may be, or of any officer, director, employee or agent thereof, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement. Notwithstanding the foregoing, the delivery of any notice pursuant to this Section 6.1 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice.
6.2. Tax Matters. Buyer and the Seller shall cooperate fully, and shall cause the Company to cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Section and any audit or proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Seller further agrees, upon request, to use its best efforts to obtain any certificate or other document from any Governmental Entity or any other person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed on Buyer or the Company (including, but not limited to, with respect to the transactions contemplated hereby). Buyer and the Seller further agree, upon request, to provide the other party with all information regarding the Company that either party may be required to report to any taxing authority.
6.3. Noncompetition: Nonsolicitation.
(a) As additional consideration for Buyer, and as a inducement for Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, the Seller agrees that it shall not, during the [TIME PERIOD] period beginning on the Closing Date, in any manner except in the scope of his employment by the Company, directly or indirectly:
i) Own, engage in, manage, operate, join, control, or participate in the ownership, management, operation, or control of, or be connected as a shareholder, director, officer, employee, agent, partner, joint venturer, member, beneficiary, or otherwise with, any corporation, limited liability company, partnership, sole proprietorship, association, business, trust, or other organization, entity or individual which conducts Company Activities in the Protected Area; provided, however, that the Seller may own, directly or indirectly, securities of any entity traded on any national securities exchange or listed on any National Association of Securities Dealers Automated Quotation System if the Seller does not, directly or indirectly, individually own 1% or more of any class of equity securities, or securities convertible into or exercisable or exchangeable for 1% or more of any class of equity securities, of such entity;
ii) Solicit or attempt to solicit, any business from any customers of Buyer or the Company or any of their Affiliates for purposes of engaging in any Company Activities in any Protected Area;
iii) Recruit or hire away or attempt to recruit or hire away, on his behalf or on behalf of any other organization, entity or person, any employee of Buyer, the Company or any of their Affiliates, or induce or attempt to influence any such employee to terminate his or her employment with Buyer, the Company or any of their Affiliates; or
iv) Interfere with or otherwise attempt to affect Buyer’s or the Company’s relationship with any vendor or customer of Buyer, the Company or any of their Affiliates.
(b) The Seller understands and acknowledges that the Company and Buyer have made substantial investments to develop their respective business interests and goodwill. The Seller agrees that such investments are worthy of protection, and that the Company’s and Buyer’s need for the protection afforded by this Section 6.3 is greater than any hardship the Seller might experience by complying with its terms. The Seller agrees that the limitations as to time, geographic area, and scope of activity to be restrained contained in this Agreement are reasonable and are not greater than necessary to protect the Company Activities and/or the goodwill or other business interests of Buyer and the Company.
(c) Although Buyer and the Seller believe the limitations as to time, geographic area, and scope of activity contained in this Section 6.3 are reasonable and do not impose a greater restraint than necessary to protect the Company Activities, goodwill, and other legitimate business interest of Buyer and the Company, if this is judicially determined not to be the case, Buyer and the Seller specifically request that, notwithstanding Section 8.6, the limitations contained in this Section 6.3 be reformed to the extent necessary to make this Agreement enforceable. It is the express intent of Buyer and the Seller that the terms of this Section 6.3 be enforced to the fullest extent permitted by law.
7.1. Indemnification of Buyer. From and after the Closing and subject to the provisions of this Article 7 and Section 8.2 below, the Seller agrees to indemnify and hold harmless the Buyer Indemnified Parties from and against any and all Buyer Indemnified Costs.
7.2. Indemnification of Seller. From and after the Closing and subject to the provisions of this Article 7 and Section 8.2 below, Buyer agrees to indemnify and hold harmless each of the Seller Indemnified Parties from and against any and all Seller Indemnified Costs.
7.3. Defense of Third-Party Claims. An Indemnified Party shall give prompt written notice to any Indemnifying Party of the commencement or assertion of any Claim by a third party (collectively, a “Third Party Claim”) in respect of which such Indemnified Party shall seek indemnification hereunder. Any failure so to notify an Indemnifying Party shall not relieve such Indemnifying Party from any liability that it may have to such Indemnified Party under this Article 7 except to the extent the failure to give such notice materially and adversely prejudices such Indemnifying Party. The Indemnifying Party shall have the right to assume control of the defense of, settle, or otherwise dispose of such Third-Party Claim on such terms as it deems appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at its own expense, to participate in the defense of such Third-Party Claim (provided, however, that the Indemnifying Parties shall pay the legal fees of the Indemnified Party if (i) the employment of separate counsel shall have been authorized in writing by all Indemnifying Parties in connection with the defense of such Third-Party Claim, (ii) the Indemnifying Parties shall not have employed counsel reasonably satisfactory to the Indemnified Party to defend such Third- Party Claim within ___ days of receipt of notice of such claim, (iii) the Indemnified Party shall have reasonably concluded that there may be defenses available to such Indemnified Party that are different from or additional to those available to the Indemnifying Party, or (iv) the Indemnified Party’s counsel shall have advised the Indemnified Party in writing, with a copy delivered to the Indemnifying Party, that there is a conflict of interest that could reasonably be expected to violate applicable standards of professional conduct to have common counsel);
(b) The Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into or making any settlement, compromise, admission, or acknowledgment of the validity of such Third-Party Claim or any liability in respect thereof if, pursuant to or as a result of such settlement, compromise, admission, or acknowledgment, injunctive or other equitable relief would be imposed against the Indemnified Party or if, in the opinion of the Indemnified Party, such settlement, compromise, admission, or acknowledgment could have a material adverse effect on the Indemnified Party;
(c) No Indemnifying Party shall consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by each claimant or plaintiff to each Indemnified Party of a release from all liability in respect of such Third-Party Claim; and
(d) The Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any Third-Party Claim (i) as to which the Indemnifying Party fails to assume the defense within a reasonable length of time; or (ii) to the extent the Third-Party Claim seeks an order, injunction, or other equitable relief against the Indemnified Party which, if successful, would materially adversely affect the business, operations, assets, or financial condition of the Indemnified Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of any Indemnifying Party without the prior written consent of such Indemnifying Party.
The parties hereto shall extend reasonable cooperation in connection with the defense of any Third-Party Claim pursuant to this Article 7 and, in connection therewith, shall furnish such records, information, and testimony and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably requested.
7.4. Direct Claims. In any case in which an Indemnified Party seeks indemnification hereunder which is not subject to Section 7.3 because no Third-Party Claim is involved, the Indemnified Party shall notify the Indemnifying Party in writing of any Indemnified Costs which such Indemnified Party claims are subject to indemnification under the terms hereof. Subject to the limitations set forth in Sections 7.5 and 8.2, the failure of the Indemnified Party to exercise promptness in such notification shall not amount to a waiver of such claim except to the extent the resulting delay materially prejudices the position of the Indemnifying Party with respect to such claim.
7.5. Limitations. Subject to Section 8.2 hereof, the following provisions of this Section 7.5 shall be applicable after the time of the Closing:
(a) Minimum Loss; Maximum Loss. Except with respect to Buyer Indemnified Tax Costs, Buyer Indemnified Liabilities, Buyer Indemnified Representation Costs arising out of any breach of the representations and warranties contained in Section 5.6 (relating to brokers’ fees), no Indemnifying Party shall be required to indemnify an Indemnified Party for any Indemnified Costs unless and until the aggregate amount of such Indemnified Costs for which the Indemnified Party is otherwise entitled to indemnification pursuant to this Article 7 exceeds $_________ (the “Minimum Loss”). After the Minimum Loss is exceeded, the Indemnified Party shall be entitled to be paid the entire amount of its Indemnified Costs, including the Minimum Loss, subject to the limitations on recovery and recourse set forth in this Section 7.5. Except for Claims for fraud pursuant to Section 8.2, no Indemnifying Party shall be liable for any Indemnified Costs in excess of the Purchase Price (the “Maximum Loss”).
(b) Limitation as to Time. No Indemnifying Party shall be liable for any Indemnified Costs pursuant to this Article 7 unless a written claim for indemnification in accordance with Section 7.3 or 7.4 is given by the Indemnified Party to the Indemnifying Party with respect thereto on or before the __________ month anniversary of the Closing Date, except that this time limitation shall not apply to any (i) Claims for fraud pursuant to Section 8.2; (ii) claims for breaches of the representations and warranties contained in Section 4.3 (relating to capital structure), Section 4.6 (relating to ownership of the Shares) and Section 4.13 (relating to Taxes), which representations and warranties shall survive until the expiration of the applicable statute of limitations.
(c) No Contribution. The Seller shall be liable for any Buyer Indemnified Costs sustained by any Buyer Indemnified Parties subject to the terms, limitations and conditions of this to Article 7. The Seller hereby waives and releases any and all rights that it may have under this Agreement or any other Transaction Document to assert claims of contribution against the Company.
7.6. Set-off Against Escrow Fund. Notwithstanding anything contained herein to the contrary the Buyer shall have the right, at any time and from time to time, to set-off against and apply the entire amount or any portion of the Escrow Fund to satisfy any and all claims for indemnification hereunder that it may have against the Seller; provided that any set-off or application may be made only in accordance with the terms of the Escrow Agreement. Such right of the Buyer shall be available regardless of whether the Seller is defending the Buyer or the Company in good faith against any claim or Loss.
8.1. Survival of Representations, Warranties, and Covenants. Regardless of any investigation at any time made by or on behalf of any party hereto or of any information any party may have in respect thereof, each of the representations and warranties made in this Agreement or any other Transaction Document shall survive the Closing except as provided below. The representations and warranties set forth in this Agreement (other than the representations and warranties contained in Section 4.3 (relating to capital structure), Section 4.6 (relating to ownership of the Shares), and Section 4.13 (relating to Taxes), which representations and warranties shall survive until the expiration of the applicable statute of limitations) or any other Transaction Document shall terminate on the ________ anniversary of the Closing Date. Following the date of termination of a representation or warranty, no claim can be brought with respect to a breach of such representation or warranty, but no such termination shall affect any claim for a breach of a representation or warranty that was asserted in writing pursuant to Section 7.3 or Section 7.4 hereof before the date of termination. To the extent that such are performable after the Closing, each of the covenants and agreements contained in each of the Transaction Documents shall survive the Closing indefinitely.
8.2. No Waiver Relating to Claims for Fraud. The liability of any party under Article 7 shall be in addition to, and not exclusive of, any other liability that such party may have at law or equity based on such party’s acts or omissions which constitute fraud under Applicable Law. None of the provisions set forth in this Agreement, including but not limited to the provisions set forth in Sections 7.5, shall be deemed a waiver by any party to this Agreement of any right or remedy which such party may have at law or equity based on any other party’s acts or omissions which constitute fraud under Applicable Law, nor shall any such provisions limit, or be deemed to limit, (a) the amounts of recovery sought or awarded in any such claim for fraud, (b) the time period during which a claim for fraud may be brought, or (c) the recourse which any such party may seek against another party with respect to a claim for fraud; provided, that with respect to such rights and remedies at law or equity, the parties further acknowledge and agree that none of the provisions of this Section 8.2, nor any reference to this Section 8.2 throughout this Agreement, shall be deemed a waiver of any defenses which may be available in respect of actions or claims for fraud, including but not limited to, defenses of statutes of limitations or limitations of damages.
8.3. Amendment and Modification. This Agreement may not be amended except by an instrument in writing signed by the parties hereto.
8.4. Waiver of Compliance. Any failure of Buyer on the one hand, or the Seller, on the other hand, to comply with any obligation, covenant, agreement, or condition contained herein may be waived only if set forth in an instrument in writing signed by the party or parties to be bound by such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement, or condition shall not operate as a waiver of, or estoppel with respect to, any other failure.
8.5. Specific Performance. The parties recognize that in the event the Seller should refuse to perform under the provisions of this Agreement, monetary damages alone will not be adequate. Buyer shall therefore be entitled, in addition to any other remedies which may be available, including money damages, to obtain specific performance of the terms of this Agreement. In the event of any action to enforce this Agreement specifically, the Seller hereby waives the defense that there is an adequate remedy at law. In no event shall the Seller be entitled to seek specific performance with respect to any of the Buyer’s obligations arising under this Agreement.
8.6. Severability. If any term or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal, or incapable of being enforced under any rule of applicable law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated herein are consummated as originally contemplated to the fullest extent possible.
8.7. Expenses and Obligations. Except as otherwise expressly provided in this Agreement, all costs and expenses incurred by the Company and the Seller, on the one hand, and Buyer, on the other, in connection with this Agreement and the other Transactions Documents shall be borne by each respectively. Provided further that, in the event of a dispute between the parties in connection with this Agreement and the transactions contemplated hereby, each of the parties hereto hereby agrees that the prevailing party shall be entitled to reimbursement by the other party or parties of reasonable legal fees and expenses incurred in connection with any such action or proceeding.
8.8. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied, or mailed by registered or certified mail (return receipt requested), or sent by FedEx or other recognized overnight courier, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
If to the Seller: [ADDRESS, TELEPHONE, EMAIL, FAX]
with a copy to (which copy shall not constitute notice): [NAME, ADDRESS, TELEPHONE, EMAIL, FAX]
If to Buyer, to: [ADDRESS, TELEPHONE, EMAIL, FAX]
with a copy to (which copy shall not constitute notice): [NAME, ADDRESS, TELEPHONE, EMAIL, FAX]
Any of the above addresses may be changed at any time by notice given as provided above; provided, however, that any such notice of change of address shall be effective only upon receipt. All notices, requests or instructions given in accordance herewith shall be deemed received on the date of delivery, if delivered by hand, on the date of receipt, if telecopied, three (3) business days after the date of mailing, if mailed by registered or certified mail, return receipt requested, and one (1) business day after the date of sending, if sent by FedEx or other nationally recognized overnight courier.
8.9. Assignment. Neither this Agreement nor any of the rights, interests, or obligations hereunder shall be assigned by any of the parties hereto, whether by operation of law or otherwise; provided, however, that upon notice to the Seller and without releasing Buyer from any of its obligations or liabilities hereunder Buyer may assign or delegate any or all of its rights or obligations under this Agreement to any Affiliate of Buyer or any person with or into which Buyer or any parent company of Buyer merges or consolidates. In the event of such an assignment, the provisions of this Agreement shall inure to the benefit of and be binding on Buyer’s assigns. Any attempted assignment in violation of this Section 8.9 shall be null and void.
8.10. Counterparts. This Agreement may be executed and delivered in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.
8.11. Entire Agreement. This Agreement (which term shall be deemed to include the exhibits and schedules hereto and the other certificates, documents and instruments delivered hereunder) constitutes the entire agreement of the parties hereto and supersedes all prior agreements, letters of intent and understandings, both written and oral, among the parties with respect to the subject matter hereof. There are no representations or warranties, agreements, or covenants other than those expressly set forth in this Agreement.
8.12. Governing Law; Choice of Forum. This Agreement shall be construed in accordance with and governed by the internal law of the State of __________, without reference to its rules as to conflicts of law. The parties hereby irrevocably submit to the non-exclusive jurisdiction of any state or federal court in _________ County, __________ with respect to any action or proceeding arising out of or relating to this Agreement. The Seller hereby irrevocably waives any right that it otherwise might have (a) to remove such action or proceeding (or any claims within such action or proceeding) to a federal court in the event that Buyer selects a state court forum or (b) to transfer such action or proceeding (or any claims within such action or proceeding) to any court other than the court selected by Buyer. The parties hereby consent to and grant to any such court jurisdiction over the persons of such parties and over the subject matter of any such dispute and agree that delivery or mailing of any process or other papers in the manner provided herein, or in such other manner as may be permitted by law, shall be valid and sufficient service thereof.
8.13. Headings. The headings of this Agreement are for convenience of reference only and are not part of the substance of this Agreement.
8.14. Benefits. Noting in this Agreement, express or implied, is intended to confer upon any person other than the parties hereto and their respective successors and assigns any rights, remedies, obligation or liabilities under or by reason of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written,
[NAME OF BUYER]
[NAME OF SELLER]