EFTA01105365.pdf

FMJ Draft v1.0, #1914611.1 - 10/17/2014 STOCK PURCHASE AGREEMENT AMONG ZYLEX, LLC ("Purchaser"), JEGE, Inc. (the "Company"), AND [Jeffrey Epstein] ("Seller") October , 2014 EFTA01105365  TABLE OF CONTENTS Article 1 DEFINITIONS 1 1.1 "Adjustment Amount" 1 1.2 "Aircraft" 1 1.3 "Business" 1 1.4 "Certificate" 1 1.5 "ClS" 1 1.6 "Closing Date" 2 1.7 "Code" 2 1.8 "Company" 2 1.9 "Company Statements" 2 1.10 "Contemplated Transactions" 2 1.11 "Contracts" 2 1.12 "Delivery Conditions" 2 1.13 "Encumbrance" 2 1.14 "Equipment" 2 1.15 "Escrow Agreement" 2 1.16 "Goodwill" 3 1.17 "Interim Statements" 3 1.18 "M" 3 1.19 "llia." 3 1.20 "Key Personnel" 3 1.21 "Liabilities and Obligations" 3 1.22 "Noncompetition Agreements" 3 1.23 "Real Estate" 3 1.24 "Securities Act" 3 1.25 "Seller Release" 3 1.26 "Shares" 3 1.27 "Tax" or "Taxes" 3 1.28 "Tax Return" 3 Article 2 PURCHASE AND SALE OF THE SHARES 4 2.1 Purchase and Sale of the Shares from the Seller 4 2.2 Further Assurances 4 2.3 The Closing 4 2.4 Actions at the Closing 4 2.5 Purchase Price for the Shares 4 2.6 Adjustment Amount 5 2.7 Adjustment Procedure 5 2.8 Post Closing Escrow 6 2.9 Non-Compete and Consulting Agreement 6 Article 3 AIRCRAFT 6 3.1 Inspection 6 3.2 Test Flight 7 3.3 Aircraft Condition 7 EFTA01105366 Article 4 REAL ESTATE MATTERS 7 4.1 Delivery of Documents 7 4.2 Inspection 8 Article 5 INVESTIGATION 8 Article 6 REPRESENTATIONS AND WARRANTIES OF THE SELLER 9 6.1 Title to Shares 9 6.2 The Company 9 6.3 Authority: No Conflict 9 6.4 Capitalization 10 6.5 Financial Statements 11 6.6 Interim Statements 11 6.7 No Undisclosed Liabilities 11 6.8 Business Operations 11 6.9 Taxes 11 6.10 Other Operations 12 6.11 Contracts 13 6.12 Condition and Sufficiency of Assets 14 6.13 Accounts Receivable 14 6.14 Inventory 15 6.15 Equipment 15 6.16 Insurance 15 6.17 Real Estate 17 6.18 Assets Complete. Etc 19 6.19 Litigation 19 6.20 Compliance with Laws 19 6.21 Intellectual Property 19 6.22 Labor Relations; Compliance 20 6.23 Employee Benefits 20 6.24 Changes in Suppliers 26 6.25 Conduct of Business 26 6.26 Employees 27 6.27 Certain Payments 28 6.28 Licenses and Permits 28 6.29 Suppliers 29 6.30 Related Parties 29 6.31 Material Change 29 6.32 Disclosure 29 Article 7 REPRESENTATIONS AND WARRANTIES BY PURCHASER 29 7.1 Organization and Standing 30 7.2 No Conflict 30 7.3 Authority 30 7.4 Certain Proceedings 30 Article 8 COVENANTS OF THE SELLER 30 EFTA01105367  8.1 Action by the Company or the Seller 30 8.2 Fees 30 8.3 Further Assurances 30 8.4 Best Efforts 30 8.5 No Shop 31 8.6 Notification of Breaches or Potential Breaches 31 8.7 Non-Compete Agreement; Consulting Agreement 31 Article 9 NO BROKERS OR FINDERS 31 Article 10 CONDITIONS PRECEDENT OF PURCHASER 31 10.1 Accuracy of Representations 32 10.2 Seller's Performance 32 10.3 Consents 32 10.4 No Proceedings 32 10.5 No Claim Regarding Stock Ownership or Sale Proceeds 32 10.6 No Prohibition 32 10.7 fOninion of Seller's Counsel 32 10.8 Casualty 32 10.9 Adverse Development 32 10.10 Non-Compete Agreement 32 10.11 Consulting Agreement 33 10.12 Seller Release 33 10.13 Real Estate 33 10.14 f Financing Error! Bookmark not defined. 10.15 Investigations 33 10.16 Representations and Warranties True at Closing 33 10.17 Seller's Compliance with the Agreement 33 10.18 Officers' Certificate 33 10.19 Injunction 33 Article 11 CONDITIONS PRECEDENT OF THE SELLER 33 11.1 Accuracy of Representations 33 11.2 Purchaser's Performance 34 11.3 Consents 34 11.4 Additional Documents 34 11.5 Representations and Warranties True at Closing 34 11.6 Purchaser's Compliance with the Agreement 34 11.7 Officers' Certificate 34 11.8 Injunction 34 Article 12 Termination 34 12.1 Termination Events 35 12.2 Effect of Termination 35 Article 13 INDEMNIFICATION 35 jjj EFTA01105368 Article 14 NATURE AND SURVIVAL OF REPRESENTATIONS 36 Article 15 MISCELLANEOUS 36 15.1 Notices 36 15.2 Binding Effect 37 15.3 Modification 37 15.4 Conflicts of Interest 37 15.5 Expenses 38 15.6 Assignment 38 15.7 Choice of Law 38 15.8 Exclusive Jurisdiction 38 15.9 Counterparts 38 15.10 Invalidity of Provisions 38 15.11 Headings 38 15.12 Access to Books and Records 39 15.13 Confidentiality 39 15.14 Joint and Several Liability 39 Exhibits: Exhibit A Non-Compete Agreement Exhibit B Consulting Agreement Exhibit C Aircraft Inspection Report Exhibit D Seller Release Exhibit E Escrow Agreement Schedules [Follow Exhibits] iv EFTA01105369  STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT (hereinafter, together with the exhibits and schedules annexed hereto the "Agreement") is made and entered into as of the day of October, 2014, by and among Zylex, LLC, a Florida limited liability company, ("Purchase?) or assigns, JEGE, Inc., a Delaware corporation, (the "Company"), and [Jeffrey Epstein], who are all the shareholders (collectively, the "Seller") of the Company. WHEREAS, the Company owns and operates a business (the "Business") that includes operations under Part 125 charter operation certified by the Federal Aviation Association ("FAA"), operating a Boeing 727-100 aircraft (as defined further below, the "Aircraft"). WHEREAS, Seller owns the number of issued and outstanding shares of common stock, [S 1 par value, of the Company ("Common Shares") and the number of issued and outstanding shares of [preferred stock], [$ 1 par value, of the Company ("Preferred Shares")) set forth opposite his, her or its name on Schedule I attached hereto, which Common Shares and Preferred Shares in the aggregate represent all of the issued and outstanding shares of capital stock of the Company as of the date hereof (the Common Shares and the Preferred Shares referred to hereinafter as the "Shares"). WHEREAS, the Seller desire to sell, and Purchaser desire to purchase, all of the issued and outstanding shares (the "Shares") of capital stock of the Company, for the consideration and on the terms set forth in this Agreement. NOW, THEREFORE, in consideration of the purchase and sale of the Shares and the mutual promises, covenants and conditions hereinafter set forth, Company and Seller, jointly and severally, and Purchaser, hereby agree as follows: ARTICLE 1 DEFINITIONS As used herein, the following terms shall have the meanings set forth below, and where said meanings are intended, said terms shall be capitalized: 1.1 "Adjustment Amount"» has the meaning set forth in Section 2.6. 1.2 "Aircraft"» means that certain Boeing 727-100 aircraft, bearing manufacturer's serial number 20115, and currently registered with the United States Federal Aviation Agency as N908JE, together with said aircraft's two Pratt and Whitney JT8D-219 engines and one Pratt and Whitney JT8D-7B engine, as further described on Schedule 3.1. 1.3 "Business"» has the meaning set forth in the second "Whereas" clause above. 1.4 "Certificate"» means that certain Certificate No. issues by the FAA for Aircraft operations for hire of the Business. 1.5 "Closing"» means the closing of the transactions contemplated by this 1 EFTA01105370 Agreement. 1.6 "Closing Date"» means the date on which the Closing hereunder is held. The Closing shall be held at 10:00 then current Eastern Standard time, on 2014, or at such other time or date as the parties may mutually agree upon in writing, unless delayed by a party for failure to satisfy conditions precedent to said party's obligations hereunder, in which case Closing shall be held as soon as practicable after such conditions are satisfied. 1.7 "Code"» means the Internal Revenue Code of 1986, as amended, and shall include all of the rules and regulations promulgated thereunder. 1.8 "Company"» means JEGE, Inc., a Delaware corporation, and all subsidiaries thereof. 1.9 "Company Statements"» means the balance sheets of the Company as of December 31, 2013 and statements of income and retained earnings of the Company for the fiscal years ending on said dates, [audited and certified by certified public accountants,) copies of which have been provided to Purchaser. 1.10 "Contemplated Transactions"» means all of the transactions contemplated by this Agreement, including: (a) the sale of the Shares by Seller to Purchaser; (b) the execution, delivery, and performance of the Promissory Note, the Consulting Agreements, the Noncompetition Agreements, the Seller Release, and the Escrow Agreement; (c) the performance by Purchaser and Seller of their respective covenants and obligations under this Agreement; and (d) Purchaser's acquisition and ownership of the Shares and exercise of control over the Company. 1.11 "Contracts"» means any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding. 1.12 "Delivery Conditions"» has the meaning set forth in Section 3.3. 1.13 "Encumbrance"» means any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership. 1.14 "Equipment"» means all of the Company's tangible assets, other than the Inventory and the Real Estate, including but not limited to furniture, machinery, equipment, tooling, computers and the software utilized therewith, and vehicles. 2 EFTA01105371  1.15 "Escrow Agreement"» means an escrow agreement substantially in the form attached as Exhibit E. 1.16 "Goodwill"» means all goodwill and business of the Company. 1.17 "Interim Statements"» means the unaudited balance sheet of the Company as of the end of the quarter [June 30, 2014], and related unaudited statements of income and retained earnings of the Company for the fiscal period ending on said date, compiled by the Company, copies of which have been provided to the Purchaser. 1.18 "Ittf"» means the Internal Revenue Code of 1986 or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue Code or any successor law. 1.19 "IRS"» means the United States Internal Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury. 1.20 "Key Personnel"» means and 1.21 "Liabilities and Obligations"» means any indebtedness, claim, obligation or liability of any kind or nature whatsoever, whether absolute or contingent, liquidated or unliquidated, due or to become due, accrued or not accrued, or otherwise. 1.22 "Noncompetition Agreements"» has the meaning set forth in Section 2.4(a)(iv). 1.23 "Real Estate"» means the real property owned or leased by the Company and more particularly described on Schedule 6.17 attached hereto, including buildings and improvements located thereon, also as more particularly described on Schedule 6.17. 1.24 "Securities Act"» means the Securities Act of 1933 or any successor law, and regulations and rules issued pursuant to that Act or any successor law. 1.25 "Seller Release"» means a release by Seller in the form attached as Exhibit D. 1.26 "Shares"» has the meaning set forth in the Recitals of this Agreement. 1.27 "Tax" or "Taxes"» shall mean all taxes, charges, fees, levies or other similar assessments or liabilities in the nature of taxes, including income, gross receipts, ad valorem, premium, value-added, excise, real property, personal property, sales, use, transfer, financial transaction, withholding, employment, unemployment, insurance, social security, business license, business organization, environmental, workers compensation, payroll, profits, license, lease, service, service use, severance, stamp, occupation, escheat, windfall profits, customs, duties, franchise, estimated and other taxes imposed by the United States of America or any state, local or foreign government, or any agency thereof, or other political subdivision of the United States or any such government, whether or not disputed, and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any tax or any contest or dispute thereof. 3 EFTA01105372  1.28 "Tax Return"» means any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any governmental body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any legal requirement relating to any Tax. ARTICLE 2 PURCHASE AND SALE OF THE SHARES 2.1 Purchase and Sale of the Shares from the Seller». Subject to and upon the terms and conditions of this Agreement, at the Closing, Seller shall sell, transfer, convey, assign and deliver to the Purchaser, and the Purchaser shall purchase, acquire and accept from Seller, all of the issued and outstanding Shares of the Company immediately prior to the Closing, as set forth opposite such Seller's name on Schedule 2.1 attached hereto. At the Closing, Seller shall deliver to the Purchaser appropriate evidence of the transfer of all of the Shares owned by such Seller to the Purchaser. 2.2 Further Assurances». At any time and from time to time after the Closing, at the Purchaser's request and without further consideration, Seller shall promptly execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation, and take all such other action as the Purchaser may reasonably request, more effectively to transfer, convey and assign to the Purchaser, and to confirm the Purchaser's title to, all of the Shares owned by all Seller immediately prior to the Closing, to put the Purchaser in actual possession and operating control of the assets, properties and business of the Company, to assist the Purchaser in exercising all rights with respect thereto and to carry out the purpose and intent of this Agreement and the transactions contemplated hereby. 2.3 The Closing». The Closing hereunder shall take place at the offices of JEGE, Inc. in West Palm Beach Florida on the Closing Date, or at such other place as may be mutually agreed upon in writing by Purchaser and the Seller. 2.4 Actions at the Closing». At the Closing: (a) the Company and the Seller shall deliver to the Purchaser the various certificates, instruments and documents referred to in Article 11; (b) the Purchaser shall deliver to the Company the various certificates, instruments and documents referred to in Article 10; and (c) Seller shall deliver to the Purchaser all of his, her or its Shares, with appropriate instruments of transfer. 2.5 Purchase Price for the Shares». (a) The aggregate purchase price to be paid by the Purchaser in respect of all of the Shares shall be US $2,900,000, plus the Adjustment Amount if any (the "Purchase Price"). The Purchase Price shall be payable in the manner 4 EFTA01105373  described in Section 2.5(b). (b) At the Closing, the Purchaser shall deliver: (i) to Seller, the portion of the Purchase Price (after reduction of the Purchase Price by the payments specified in (ii) below) due to such Seller, as set forth opposite each such Person's name on Schedule 2.1 attached hereto, via wire transfer of immediately available funds to the account designated by Seller at least five Business Days prior to Closing; (ii) to the Escrow Agent, an amount in cash equal to [$ (such amount, exclusive of all interest and other amounts earned thereon but giving effect to any reductions thereto while held on deposit with the Escrow Agent, in accordance with the Escrow Agreement, referred to herein as the "Escrow Cash") to be held and invested in a segregated account pursuant to the terms of the Escrow Agreement, as a reserve to satisfy any claims by a Purchaser Indemnified Party for indemnity pursuant to Article 13. 2.6 Adjustment Amount». The Adjustment Amount (which may be a positive or negative number) will be equal to (a) the consolidated stockholders' equity of the Company as of the Closing Date determined in accordance with GAAP, minus (b) $ 2.7 Adjustment Procedure». (a) Seller will prepare and will cause , the Company's certified public accountants, to audit consolidated financial statements ("Closing Financial Statements") of the Company as of the Closing Date and for the period from the date of the Company Statements through the Closing Date, including a computation of consolidated stockholders' equity as of the Closing Date. Seller will deliver the Closing Financial Statements to Purchaser within sixty days after the Closing Date. If within thirty days following delivery of the Closing Financial Statements, Purchaser have not given Seller notice of its objection to the Closing Financial Statements (such notice must contain a statement of the basis of Purchaser's objection), then the consolidated stockholders' equity reflected in the Closing Financial Statements will be used in computing the Adjustment Amount. If Purchaser give such notice of objection, then the issues in dispute will be submitted to , certified public accountants (the "Accountants"), for resolution. If issues in dispute are submitted to the Accountants for resolution, (i) each party will furnish to the Accountants such workpapers and other documents and information relating to the disputed issues as the Accountants may request and are available to that party (or its independent public accountants), and will be afforded the opportunity to present to the Accountants any material relating to the determination and to discuss the determination with the Accountants; (ii) the determination by the Accountants, as set forth in a notice delivered to both parties by the Accountants, will be binding and conclusive on the parties; and (iii) Purchaser and Seller will each bear 50% of the fees of the Accountants for such determination. (b) On the tenth business day following the final determination of the 5 EFTA01105374  Adjustment Amount, if the Purchase Price is greater than the aggregate of the payments made pursuant to Sections 2.5(b)(i) and 2.5(b)(ii) and the aggregate principal amount of the Promissory Notes, Purchaser will pay the difference to Seller, and if the Purchase Price is less than such aggregate amount, Purchaser will pay the difference to Seller. All payments will be made together with annual interest at [ °A] calculated on a daily rate basis beginning on and including the Closing Date and ending on and including the date of payment. Payments must be made in immediately available funds. Payments to Seller must be made in the manner and will be allocated in the proportions set forth in Section . Payments to Purchaser must be made by wire transfer to such bank account as Purchaser will specify. 2.8 Post Closing Escrow» At closing, the amount of ($ 1 shall be placed into an escrow account (the "Escrow Account") to be managed by the Escrow Department of the Bank of New York Mellon at 200 Park Avenue, 56'h floor, New York, New York. Purchaser may withdraw from the Escrow Account an amount equal to the costs of the services provided in connection with the Pre-Paids existing as of the Closing Date, and an amount equal to the outstanding liability to the employees for vacation pay as of the Closing Date. Additionally, upon payment of the Negative Working Capital amounts to third parties, Purchaser may withdraw from the Escrow Amount the amount of the Negative Working Capital paid by Purchaser (to the extent that such amounts accrued prior to the Closing Date). The Escrow Account shall be held in an interest bearing account at the Bank of New York Mellon, and any funds remaining in the Escrow Account on the date that is [ Li] months after the Closing Date shall automatically be disbursed to the Seller. At closing, Purchaser and the Seller shall enter into an escrow agreement consistent with the foregoing provisions in a form reasonably acceptable to Purchaser and the Seller. 2.9 Non-Compete and Consulting Agreement». (a) At the closing, Purchaser and the Seller shall enter into a Non-Compete Agreement in the form of Exhibit A attached hereto, pursuant to which Seller will agree not to compete with Purchaser for a period of five years after the Closing. In return for said Agreement, Purchaser shall pay a total of $ , payable as specified on Exhibit A. (b) At Closing, Purchaser and Seller also shall enter into a Consulting Agreement substantially in the form of Exhibit B attached hereto. ARTICLE 3 AIRCRAFT 3.1 Inspection». Purchaser shall have the opportunity to inspect the Aircraft at a reasonable time prior to delivery at Purchaser's expense to determine whether the Aircraft conforms to the Delivery Conditions of this Agreement or is otherwise acceptable. Such inspection shall take place at the facility located at the Airport (J and shall include but not be limited to a visual inspection of the Aircraft, a review of the logbook and Aircraft records, and any other inspections as are reasonably necessary to examine the operation and condition of the Aircraft, including a test flight in compliance with Section 3.2. Purchaser shall complete its inspection of the Aircraft by no later than ten business 6 EFTA01105375 days after Purchaser's satisfactory completion of the test flight. Within two business days of Purchaser's completion of the inspection, Purchaser shall deliver an aircraft inspection report substantially in the form of Exhibit C, whereby Purchaser accepts the aircraft, rejects the Aircraft or accepts the Aircraft subject to the correction of any Discrepancies listed in the Aircraft Inspection Report. "Discrepancies" means any failure of the Aircraft to comply with the Delivery Conditions. Upon delivery of such Aircraft Inspection Report accepting the Aircraft subject to the correction of Discrepancies, Purchaser shall, at its option, elect to either (i) have Seller correct all such Discrepancies at Seller's sole cost and expense, (ii) reduce the Purchase Price by an amount equal to the cost of correcting all the Discrepancies. If the Purchaser rejects the Aircraft for any reason, Purchaser and Seller shall cause the Deposit to be returned to Purchaser by the Escrow Agent, and thereafter this Agreement shall terminate and the parties shall have no further liability hereunder. 3.2 Test Flight». Purchaser shall have the opportunity prior to the completion of the Purchaser's inspection of the Aircraft as set out in Section 3.1 to conduct a test flight with at least two of Purchaser's representatives onboard in order to observe operation of all systems. Seller shall retain operational control of the Aircraft at all times during the test flight, and Seller shall name Purchaser and any Purchaser pilots onboard the Aircraft during the test flight as additional insureds on Seller's applicable liability policy. Purchaser shall be responsible for all fuel and costs of the test flight. During any and all inspections, and test flights conducted pursuant to the Agreement, care, custody and control, and risk of loss of the Aircraft shall remain with Seller. 3.3 Aircraft Condition». Seller covenants and agrees that the Aircraft shall be in the following condition at Closing (the "Delivery Condition"): (a) The Aircraft shall be airworthy, with all equipment, systems and engines shall be functioning in accordance with the manufacturer's tolerances and limitations, with no extensions or deferments. (b) All calendar and hourly inspections shall be in compliance with the manufacturer's recommended maintenance program. The aircraft will be considered maintenance current. (c) The Aircraft shall be in compliance with all known FAA Airworthiness Directives and known Mandatory Service Bulletins and type certificate for such Aircraft. (d) All Aircraft Documents shall be in English and in compliance with Federal Aviation Regulations (FAR) and include applicable STC and FAA Form 337 documentation, and all logbooks will be complete and continuous. (e) The aircraft will be delivered with all loose equipment, spare parts, maintenance manuals, log books, spare parts, and any other items that normally pertain to the Aircraft SIN 750-0276 will be delivered to Purchaser. (f) The Aircraft shall conform to the specifications in Schedule 3.1 with no more than total airframe hours. 7 EFTA01105376  ARTICLE 4 REAL ESTATE MATTERS 4.1 Delivery of Documents». Not less than twenty (20) days before the Closing Date, the Seller will deliver to Purchaser a survey of the Real Estate prepared, at the Seller's expense, by a Registered Land Surveyor which shall be certified to Purchaser and shall show the location of all buildings and parking areas on the Real Estate, all access roads to the Real Estate, any encroachments, and all easements affecting the Real Estate. Said survey shall cover pending and levied special assessments and shall be prepared at the Seller's expense. The survey shall be prepared in accordance with the Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys jointly established by ALTA and ACSM in 1992 and pursuant to the Accuracy Standards (as adopted by ALTA and ACSM for an Urban Survey as defined therein). 4.2 Inspection». Purchaser shall be allowed ten (10) days after receipt of said survey for the examination thereof and the making of any objections to the marketability of title, such objections to be made in writing or deemed to be waived. Notwithstanding anything contained herein to the contrary, however, Purchaser shall not have the right to raise as objections to title any of the matters listed as "Permitted Encumbrances" on Schedule 4.2 attached hereto. If any objections are so made, the Seller shall be allowed thirty (30) days to make such title marketable. If such defects are cured within said thirty (30) day period, Purchaser shall be notified in writing of the curing of said defects, and Purchaser then shall be allowed ten (10) days after receipt of such notice to perform in accordance with the terms of this Agreement. If such title is not marketable and not made so within said thirty (30) day period and Purchaser do not waive, by written notice given to the Seller within ten days after the end of said thirty (30) day period, the curing of said defects, this Agreement shall be null and void, in which event neither Purchaser nor the Seller shall be liable for damages hereunder to the other. If Purchaser elects to waive said objections, it shall be allowed thirty (30) days after it so notifies the Seller to perform in accordance with the terms of this Agreement. ARTICLE 5 INVESTIGATION From and after the date hereof and through the Closing Date, Company and the Seller shall afford to the officers and representatives of Purchaser free access to the properties and records of the Company in order that Purchaser may have full opportunity to make such investigation at reasonable times as it shall desire of the assets and of the affairs of Company, including, without limitation, inspection of the Aircraft pursuant to Article 3, and Company and the Seller shall provide to Purchaser reasonable assistance in the conduct of said investigation. Without limiting the generality of the foregoing, Purchaser, and its representatives and consultants, shall be permitted access to the Real Estate prior to Closing in order to inspect the same, conduct soil borings, environmental inspections and tests, which environmental inspections and tests may include, without limitation, soil tests, chemical tests, and installation of such monitoring wells as may be appropriate in Purchaser's opinion, and prepare a survey and take measurements. During such access, such personnel shall not cause any unreasonable interference with the Company's operations or damage to its assets, except as may be necessary to conduct an environmental inspection, provided Purchaser shall promptly repair any such 8 EFTA01105377 damage and restore the assets to their condition immediately prior to such damage. As part of such investigations, Purchaser or its representatives or consultants shall be permitted access to the building and other improvements located on the Real Estate. Company and the Seller shall also provide Purchaser originals or reproductions of plans and specifications for the building located on the Real Estate (to the extent the same exist), including any available "as built" drawings, maintenance records, licenses, permits, reports and certificates and such other items relating to the construction, operation or environmental assessment of the Real Estate as may be in the possession of the Company or the Seller. ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE SELLER Seller and the Company, jointly and severally, represent and warrant to Purchaser that, except as specifically set forth on the exhibits and schedules listed below, the following statements are true and correct as of the date of this Agreement and will be true and correct on the Closing Date as if made on said Date: 6.1 Title to Shares». As of the date of this Agreement, Seller holds beneficially and of record and has good and marketable title to the Shares set forth opposite such Seller's name on Schedule I hereto, free and clear of any and all Encumbrances whatsoever, other than restrictions on transferability under the applicable U.S. federal and state securities laws. As of the Closing, Seller shall hold beneficially and of record and shall have good and marketable title to the Shares which are to be transferred to the Purchaser by such Seller pursuant hereto, as set forth opposite Seller's name on Schedule 2.1 attached hereto, free and clear of any and all Encumbrances, other than restrictions on transferability under the applicable U.S. federal and state securities Laws. 6.2 The Company». The Company is a corporation duly organized and existing and in good standing under the laws of the State of Delaware and is entitled to own or lease its properties and to carry on its business as and in the places where such properties are now owned, leased or operated, or such business is now conducted. The Company is qualified to do business as a foreign corporation in all jurisdictions in which the nature of the Company's business, the location of its assets or other factors require it to be so qualified. The Seller has delivered to Purchaser copies of the organizational documents of the Company, as currently in effect. 6.3 Authority; No Conflict». (a) This Agreement constitutes the legal, valid, and binding obligation of the Seller, enforceable against the Seller in accordance with its terms. Upon the execution and delivery by the Seller of the Escrow Agreement, the Consulting Agreements, the Seller Release, and the Noncompetition Agreements (collectively, the "Seller's Closing Documents"), the Seller's Closing Documents will constitute the legal, valid, and binding 9 EFTA01105378 obligations of the Seller, enforceable against the Seller in accordance with their respective terms. The Seller have the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and the Seller's Closing Documents and to perform their obligations under this Agreement and the Seller's Closing Documents. (b) Except as set forth in Schedule 6.3, neither the execution and delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with, or result in a violation of (A) any provision of the organizational documents of the Company, or (B) any resolution adopted by the board of directors or the stockholders of the Company; (ii) contravene, conflict with, or result in a violation of, or give any governmental body or other person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any legal requirement or any governmental order to which the Company or any Seller, or any of the assets owned or used by the Company, may be subject; (iii) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any governmental body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any governmental authorization that is held by the Company or that otherwise relates to the business of, or any of the assets owned or used by, the Company; (iv) cause Purchaser or the Company to become subject to, or to become liable for the payment of, any tax; (v) cause any of the assets owned by the Company to be reassessed or revalued by any taxing authority or other governmental body; (vi) contravene, conflict with, or result in a violation or breach of any provision of, or give any person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract; or (vii) result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by the Company. (c) Except as set forth in Schedule 6.3, neither the Company nor any Company is or will be required to give any notice to or obtain any consent from any person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions. (d) The Seller is acquiring the Promissory Notes for their own account and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act. Seller is an "accredited investor" as such term is defined in Rule 50I(a) under the Securities Act. 10 EFTA01105379  6.4 Capitalization». The authorized equity securities of the Company consist of shares of common stock, par value $ per share, of which shares are issued and outstanding and constitute the Shares. Seller is and will be on the Closing Date the record and beneficial owners and holders of the Shares, free and clear of all Encumbrances. With the exception of the Shares (which are owned by Seller), all of the outstanding equity securities and other securities of each subsidiary of the Company are owned of record and beneficially by either the Company or a wholly-owned subsidiary of the Company, free and clear of all Encumbrances. No legend or other reference to any purported Encumbrance appears upon any certificate representing equity securities of the Company. All of the outstanding equity securities of the Company have been duly authorized and validly issued and are fully paid and nonassessable. There are no Contracts relating to the issuance, sale, or transfer of any equity securities or other securities of the Company. None of the outstanding equity securities or other securities of the Company was issued in violation of the Securities Act or any other legal requirement. The Company does not own, or have any Contract to acquire, any equity securities or other securities of any Person (other than its subsidiaries) or any direct or indirect equity or ownership interest in any other business. 6.5 Financial Statements». The Company Statements are true, complete and correct and have been prepared in accordance with generally accepted accounting principles consistently followed throughout the periods indicated. The Company Statements fairly present the financial condition and assets and liabilities (whether accrued, absolute, contingent or otherwise) of the Company as of the dates indicated, and the results of operations of the Company for the periods then ended. 6.6 Interim Statements». The Interim Statements are true, complete and correct, have been prepared in accordance with generally accepted accounting principles, consistently followed, and fairly and accurately present the financial condition and assets and liabilities (whether accrued, absolute, contingent or otherwise) of the Company as of the dates indicated and the results of operations of the Company for the periods then ended. 6.7 No Undisclosed Liabilities». Except as set forth in Schedule 6.7, the Company has no liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise) except for liabilities or obligations reflected or reserved against in the Company Statements or the Interim Statements and current liabilities incurred in the Ordinary Course of Business since the respective dates thereof. 6.8 Business Operations». The Business and its operations do not violate and have not in the past violated in any material respect any provisions of any currently applicable laws or regulations regarding the operation of businesses and there is no claim by or notice from any government instrumentality that the Company has violated or does violate any applicable laws or regulations regarding the operation of businesses. 6.9 Taxes». (a) The Company has filed or caused to be filed (on a timely basis since 1999) all Tax Returns that are or were required to be filed by or with respect to it, either separately or as a member of a group of corporations. The Seller has delivered to Purchaser copies of, II EFTA01105380  and Schedule 6.9 contains a complete and accurate list of, all such Tax Returns filed since January 1, 1999. The Company has paid, or made provision for the payment of, all Taxes that have or may have become due pursuant to those Tax Returns or otherwise, or pursuant to any assessment received by the Company, except such Taxes, if any, as are listed in Schedule 6.9 and are being contested in good faith and as to which adequate reserves (determined in accordance with GAAP) have been provided in the Company Statements and the Interim Statements. (b) The United States federal and state income Tax Returns of the Company have not been audited by the IRS or relevant state tax authorities or are closed by the applicable statute of limitations for all taxable years through 2006. Schedule 6.9 contains a complete and accurate list of all audits of all such Tax Returns, including a reasonably detailed description of the nature and outcome of each audit. All deficiencies proposed as a result of such audits have been paid, reserved against, settled, or, as described in Schedule 6.9, are being contested in good faith by appropriate proceedings. Schedule 6.9 describes all adjustments to the United States federal income Tax Returns filed by the Company or any group of corporations including the Company for all taxable years since and the resulting deficiencies proposed by the IRS. Except as described in Schedule 6.9, no Seller nor the Company has given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other person) of any statute of limitations relating to the payment of Taxes of the Company or for which the Company may be liable. (c) The charges, accruals, and reserves with respect to Taxes on the respective books of the Company are adequate (determined in accordance with GAAP) and are at least equal to that the Company's liability for Taxes. There exists no proposed tax assessment against the Company except as disclosed in the Company Statements or in Schedule 6.9. No consent to the application of Section 341(0(2) of the IRC has been filed with respect to any property or assets held, acquired, or to be acquired by the Company. All Taxes that the Company is or was required to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper governmental body or other person. (d) All Tax Returns filed by (or that include on a consolidated basis) the Company are true, correct, and complete. There is no tax sharing agreement that will require any payment by the Company after the date of this Agreement. [The Company is not, nor within the five-year period preceding the Closing Date has been, an "S" corporation.] [During the consistency period (as defined in Section 338(h)(4)