Exhibit 10.1 

 

 

 

STOCK PURCHASE AGREEMENT

 

dated as of March 27, 2020

 

among

 

1847 ASIEN INC.,

 

 

ASIEN’S APPLIANCE, INC.,

 

JOERG CHRISTIAN WILHELMSEN AND SUSAN KAY WILHELMSEN,

AS TRUSTEES OF

THE WILHELMSEN FAMILY TRUST, U/D/T DATED MAY 1, 1992

 

and

 

1847 HOLDINGS LLC

 

 

 

 

 

ARTICLE I DEFINITIONS 1 1.1   Certain Definitions. 1 ARTICLE II PURCHASE AND
SALE OF THE SHARES 5 2.1   Purchase and Sale of the Shares. 5 2.2   Adjustments
to Purchase Price. 5 2.3   Closing. 6 2.4   Transactions to be Effected at the
Closing. 7 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER 7
3.1   Authority and Enforceability. 7 3.2   Noncontravention. 7 3.3   The
Shares. 8 3.4   Brokers’ Fees. 8 ARTICLE IV REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY 8 4.1   Organization, Qualification and Corporate Power;
Authority and Enforceability. 8 4.2   Subsidiaries. 9 4.3   Capitalization. 9
4.4   Noncontravention. 10 4.5   Financial Statements. 10 4.6   Taxes. 10
4.7   Compliance with Laws and Orders; Permits. 11 4.9   Tangible Personal
Assets. 11 4.10   Real Property. 11 4.11   Intellectual Property. 13
4.12   Absence of Certain Changes or Events. 14 4.13   Contracts. 15
4.14   Litigation. 15 4.15   Employee Benefits. 16 4.16   Labor and Employment
Matters. 16 4.17   Environmental. 16 4.18   Insurance. 16 4.19   Inventory. 17
4.20   Notes and Accounts Receivable. 17 4.21   Powers of Attorney. 17
4.22   Product Warranty. 17 4.23   Product Liability. 17 4.24   Brokers’ Fees.
17 4.25   Certain Business Relationships with the Company. 17 4.26   Disclosure.
18 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER 18 5.1   Organization.
18 5.2   Authorization. 18 5.3   Noncontravention. 18

 

 

 

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BUYER PARENT 19
6.1   Organization. 19 6.2   Authorization. 19 6.3   Noncontravention. 19
6.4   Capitalization. 19 6.5   Brokers’ Fees. 20 ARTICLE VII COVENANTS 20
7.1   Consents. 20 7.2   Operation of the Company’s Business. 20 7.3   Access.
21 7.4   Transfer of Cash and Cash Equivalents. 21 7.5   Notice of Developments.
21 7.6   No Solicitation. 22 7.7   Taking of Necessary Action; Further Action.
22 7.8   Covenant not to Compete. 22 7.10   Financial Information. 23
7.11   Disclosure Schedule. 23 ARTICLE VIII CONDITIONS TO OBLIGATIONS TO CLOSE
23 8.1   Conditions to Obligation of the Buyer. 23 8.2   Conditions to
Obligation of the Seller. 24 ARTICLE IX TERMINATION; AMENDMENT; WAIVER 25
9.1   Termination of Agreement. 25 9.2   Effect of Termination. 26
9.3   Amendments. 26 9.4   Waiver. 26 ARTICLE X INDEMNIFICATION 27
10.1   Survival. 27 10.2   Indemnification by Seller. 27 10.3   Indemnification
by Buyer. 27 10.4   Indemnification Procedure. 27 10.5   Failure to Give Timely
Notice. 28 10.6   Limited on Indemnification Obligation. 28 10.7   Payments. 29
ARTICLE XI MISCELLANEOUS 29 11.1   Press Releases and Public Announcement. 29
11.2   No Third-Party Beneficiaries. 29 11.3   Entire Agreement. 29
11.4   Succession and Assignment. 29 11.5   Construction. 29 11.6   Notices. 29
11.7   Governing Law. 31 11.8   Consent to Jurisdiction and Service of Process.
31 11.9   Headings. 31 11.10   Severability. 31 11.11   Expenses. 32
11.12   Incorporation of Exhibits and Schedules. 32 11.13   Specific
Performance. 32 11.14   Counterparts. 32

 

 

 

STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT, dated as of March 27, 2020 (the “Agreement”), among
1847 Asien Inc., a Delaware corporation (the “Buyer”), Asien’s Appliance, Inc. a
California (the “Company”), Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen,
as Trustees of the Wilhelmsen Family Trust, U/D/T dated May 1, 1992 (the
“Seller”), and 1847 Holdings LLC, a Delaware limited liability company (“Buyer
Parent”).

BACKGROUND

The Seller is the record and beneficial owner of 34,902 shares (the “Shares”) of
Common Stock of the Company (the “Common Stock”). The Shares constitute 100% of
the issued and outstanding shares of Common Stock of the Company. The Seller
desires to sell all of the Shares to the Buyer, and the Buyer desires to
purchase all of the Shares from the Seller, upon the terms and subject to the
conditions set forth in this Agreement (such sale and purchase of the Shares,
the “Acquisition”).

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the respective
representations and warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

ARTICLE I
DEFINITIONS

1.1              Certain Definitions.

(a)               When used in this Agreement, the following terms will have the
meanings assigned to them in this Section 1.1(a):

“Action” means any claim, action, suit, inquiry, hearing, proceeding or other
investigation.

“Affiliate” means, with respect to a Person, any other Person that, directly or
indirectly, through one or more intermediaries, Controls, is Controlled by or is
under common Control with, such Person. For purposes of this definition,
“Control” (including the terms “Controlled by” and “under common Control with”)
means possession of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of stock, as trustee or
executor, by Contract or otherwise.

“Benefit Plan” means any “employee benefit plan” as defined in ERISA Section
3(3), including any (a) nonqualified deferred compensation or retirement plan or
arrangement which is an Employee Pension Benefit Plan (as defined in ERISA
Section 3(2)), (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan (as defined in ERISA Section 3(37)), (d)
Employee Welfare Benefit Plan (as defined in ERISA Section 3(1)) or material
fringe benefit plan or program, or (e) stock purchase, stock option, severance
pay, employment, change-in-control, vacation pay, company award, salary
continuation, sick leave, excess benefit, bonus or other incentive compensation,
life insurance, or other employee benefit plan, contract, program, policy or
other arrangement, whether or not subject to ERISA, under which any present or
former employee of the Company has any present or future right to benefits
sponsored or maintained by the Company or any ERISA Affiliate.

 

 

 

“Business Day” means a day other than a Saturday, Sunday or other day on which
banks located in New York, NY are authorized or required by Law to close.

“Closing Working Capital” means the Net Working Capital as reflected on the
Closing Date Balance Sheet determined in accordance with GAAP.

“Code” means the Internal Revenue Code of 1986, as amended.

“Contract” means any written agreement, contract, commitment, arrangement or
understanding.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any Person who is, or at any time was, a member of a
“controlled group of corporations” within the meaning of Section 414(b) or (c)
of the Code and, for the purpose of Section 302 of ERISA and/or Section 412,
4971, 4977, 4980D, 4980E and/or each “applicable section” under Section
414(f)(2) of the Code, within the meaning of Section 412(n)(6) of the Code that
includes, or at any time included, the Company or any Affiliate thereof, or any
predecessor of any of the foregoing.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“GAAP” means United States generally accepted accounting principles.

“Governmental Entity” means any entity or body exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to United States federal, state or local government or foreign, international,
multinational or other government, including any department, commission, board,
agency, bureau, official or other regulatory, administrative or judicial
authority thereof.

“Independent Accounting Firm” means any nationally recognized independent
registered public accounting firm which has not represented the Company or the
Seller or any of their Affiliates for the past five years as will be agreed by
the Company and the Buyer in writing.

“IRS” means the Internal Revenue Service.

“Knowledge of the Seller” or any similar phrase means the actual knowledge of
each Seller, in each case without obligation of inquiry.

 

 

 

“Law” means any statute, law, ordinance, rule, regulation of any Governmental
Entity.

“Liability” means all indebtedness, obligations and other liabilities and
contingencies of a Person, whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due.

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, hypothecation or other encumbrance in respect of such
property or asset.

“Material Adverse Effect” means any material adverse effect on the assets,
properties, condition (financial or otherwise), operations of the Company and
any of its Subsidiaries, taken as a whole.

“Net Working Capital” means (i) good and collectible accounts receivable; plus
(ii) good and merchantable inventory; plus (iii) prepaid expenses and other
current assets that have an economic benefit to the Company post-Closing; less
(iv) current accounts payable, accrued Liabilities and outstanding checks and
other current Liabilities.

“Net Working Capital Target” is equal to $250,000.

“Order” means any award, injunction, judgment, decree, order, ruling, subpoena
or verdict or other decision issued, promulgated or entered by or with any
Governmental Entity of competent jurisdiction.

“Permit” means any authorization, approval, consent, certificate, license,
permit or franchise of or from any Governmental Entity of competent jurisdiction
or pursuant to any Law.

“Person” means an individual, a corporation, a partnership, a limited liability
company, a trust, an unincorporated association, a Governmental Entity or any
agency, instrumentality or political subdivision of a Governmental Entity, or
any other entity or body.

“Preliminary Working Capital” means the Net Working Capital as reflected on the
Preliminary Balance Sheet, determined in accordance with GAAP.

“Representatives” means, with respect to any Person, the respective directors,
officers, employees, counsel, accountants and other representatives of such
Person.

“Subsidiary” means, with respect to any Person, 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,
more than 50% of the 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 a non-corporate Person.

“Taxes” means all federal, state, local and foreign income, profits, franchise,
gross receipts, environmental, customs duty, capital stock, severance, stamp,
payroll, sales, transfer, employment, unemployment, disability, use, property,
withholding, excise, production, value added, occupancy and other taxes, duties
or assessments of any nature whatsoever.

 

 

 

“Taxing Authority” means any Governmental Entity having or purporting to
exercise jurisdiction with respect to any Tax.

“Tax Returns” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

“Transaction Proposal” means any unsolicited written bona fide proposal made by
a third party relating to (i) any direct or indirect acquisition or purchase of
all or substantially all assets of the Company, (ii) any direct or indirect
acquisition or purchase of a majority of the combined voting power of the
Shares, (iii) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company.

“Transfer Taxes” means sales, use, transfer, recording, documentary, stamp,
registration and stock transfer Taxes and any similar Taxes.

“$” means United States dollars.

(b)               For purposes of this Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires: (i) the meaning
assigned to each term defined herein will be equally applicable to both the
singular and the plural forms of such term and vice versa, and words denoting
any gender will include all genders as the context requires; (ii) where a word
or phrase is defined herein, each of its other grammatical forms will have a
corresponding meaning; (iii) the terms “hereof”, “herein”, “hereunder”, “hereby”
and “herewith” and words of similar import will, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement; (iv) when a reference is made in this Agreement to
an Article, Section, paragraph, Exhibit or Schedule without reference to a
document, such reference is to an Article, Section, paragraph, Exhibit or
Schedule to this Agreement; (v) a reference to a subsection without further
reference to a Section is a reference to such subsection as contained in the
same Section in which the reference appears, and this rule will also apply to
paragraphs and other subdivisions; (vi) the word “include”, “includes” or
“including” when used in this Agreement will be deemed to include the words
“without limitation”, unless otherwise specified; (vii) a reference to any party
to this Agreement or any other agreement or document will include such party’s
predecessors, successors and permitted assigns; (viii) a reference to any Law
means such Law as amended, modified, codified, replaced or reenacted as of the
date hereof, and all rules and regulations promulgated thereunder as of the date
hereof; and (ix) all accounting terms used and not defined herein have the
respective meanings given to them under GAAP.

 

 

 

ARTICLE II
PURCHASE AND SALE OF THE SHARES

2.1              Purchase and Sale of the Shares. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing the Seller will sell,
transfer and deliver, and the Buyer will purchase from the Seller, all of the
Shares for an aggregate purchase price of Two Million, Five Hundred Thousand
Dollars ($2,500,000) (the “Purchase Price”), subject to adjustment as described
in Section 2.2, consisting of: (i) One Million, Six Hundred Seventy Thousand
Dollars ($1,670,000) in cash (the “Cash Portion”) and (ii) the Buyer Shares (as
defined below).

(a)               At the Closing, the Buyer will deliver to Seller the Cash
Portion (subject to any adjustment pursuant to Section 2.2 hereof) in
immediately available funds to an account designated by the Seller prior to the
Closing.

(b)               At the Closing, the Buyer will issue to the Seller 415,000
common shares of the Buyer Parent that, in aggregate, have a value as mutually
agreed upon by the parties that is equal to Eight Hundred Thirty Thousand
Dollars ($830,000) (the “Buyer Shares”), by causing the Buyer Parent’s transfer
agent to issue to the Seller the Buyer Shares. As soon as practicable following
the Closing, the Buyer Parent will file a registration statement on Form S-1 for
the purpose of registering for resale under the Securities Act of 1933, as
amended, the Buyer Shares and will use commercially reasonable efforts to cause
such registration statement to be declared effective by the Securities and
Exchange Commission as soon as reasonably practicable. The Seller will cooperate
with the Buyer Parent and provide any requested information and complete any
necessary selling security holder questionnaires as Buyer Parent may require in
order to register the Buyer Shares in accordance with this Section 2.1(b). In
addition, upon the request of the Seller from to time to time, Buyer Parent
shall be responsible (at its cost) for promptly supplying to Buyer Parent’s
transfer agent and the Seller a customary legal opinion letter of its counsel to
the effect that the resale of the Buyer Shares by the Seller or its affiliates,
successors and assigns is exempt from the registration requirements of the
Securities Act pursuant to Rule 144 (provided the requirements of Rule 144 are
satisfied and provided the Buyer Shares are not then registered under the
Securities Act for resale pursuant to an effective registration statement).

(c)               At the Closing, the Seller will deliver to the Buyer a
certificate or certificates representing the Shares, if certificated, duly
endorsed or accompanied by stock powers duly endorsed in blank.

2.2              Adjustments to Purchase Price.

(a)               Working Capital Adjustment.

(i)                 At the Closing, the Seller shall deliver to the Buyer an
unaudited balance sheet of the Company (the “Preliminary Balance Sheet”) as at
the Closing together with a certificate of the Seller stating that the
Preliminary Balance Sheet was prepared in accordance with GAAP so as to present
fairly in all material respects the financial condition of Company as of such
date.

(ii)              As soon as practicable following the Closing Date (but not
later than seventy-five (75) days after the Closing Date), the Buyer shall cause
its auditor to prepare and deliver to the Seller an audited balance sheet of the
Company (the “Closing Date Balance Sheet”) as of the Closing Date. The Closing
Date Balance Sheet shall be prepared in accordance with GAAP in a manner
consistent with the Preliminary Balance Sheet so as to present fairly in all
material respects the financial condition of the Company.

 

 

 

(iii)            If the Closing Working Capital exceeds the Preliminary Working
Capital, then the Buyer (or, at the Buyer’s direction, the Company) shall pay
promptly (and, in any event, within seven (7) days) to the Seller an amount in
cash that is equal to the excess. If the Preliminary Working Capital exceeds the
Closing Working Capital, then the Seller shall pay promptly (and, in any event,
within seven (7) days) to the Buyer an amount in cash that is equal to such
excess; provided, however, that the Seller may, at its option, in lieu of paying
such excess in cash, deliver and transfer to the Buyer a number of Buyer Shares
that is equal to such excess divided by $2.00. Any such adjustment shall be
treated as an adjustment to the Purchase Price.

(iv)             In the event the Seller does not agree with the Closing Working
Capital as reflected on the Closing Date Balance Sheet, the Seller shall so
inform the Buyer in writing within fifteen (15) days of the Seller’s receipt
thereof, such writing to set forth the objections of the Seller in reasonable
detail. If the Seller and the Buyer cannot reach agreement as to any disputed
matter relating to the Closing Working Capital within fifteen (15) days after
notification by the Seller to the Buyer of a dispute, they shall forthwith refer
the dispute to an Independent Accounting Firm mutually agreeable to the Seller
and the Buyer for resolution, with the understanding that such firm shall
resolve all disputed items within twenty (20) days after such disputed items are
referred to it. If the Buyer and the Seller are unable to agree on the choice of
an Independent Accounting Firm, they shall select an Independent Accounting Firm
by lot (after excluding their respective regular outside accounting firms). The
Seller, on the one hand, and the Buyer, on the other hand, shall bear one-half
of the costs of such accounting firm. The decision of the accounting firm with
respect to all disputed matters relating to the Closing Working Capital shall be
deemed final and conclusive and shall be binding upon the Seller and the Buyer.
In addition, if the Seller does not object to the Closing Working Capital within
the 15-day period referred to above, the Closing Working Capital, as reflected
on the Closing Date Balance Sheet as so prepared, shall be deemed final and
conclusive and binding upon the Seller and the Buyer.

(v)               The Seller shall be entitled to have access to the books and
records of the Company and the Buyer’s work papers prepared in connection with
the Closing Date Balance Sheet and shall be entitled to discuss such books and
records and work papers with the Buyer and those persons responsible for the
preparation thereof.

(b)               Target Working Capital Adjustment. If the Net Working Capital
Target exceeds the Net Working Capital as set forth on the Preliminary Balance
Sheet, then the Purchase Price shall be reduced at the Closing by an amount
equal to such difference. If the Net Working Capital as set forth on the
Preliminary Balance Sheet exceeds the Net Working Capital Target at Closing, the
Purchase Price shall be increased at the Closing by an amount equal to such
difference.

(c)               Adjustment for Outstanding Indebtedness. The Purchase Price
shall be decreased by the amount of any outstanding indebtedness of the Company
existing as of the Closing Date and the deducted amount shall be utilized to pay
off such outstanding indebtedness.

 

 

 

2.3              Closing. The consummation of the Acquisition (the “Closing”)
will take place by the reciprocal delivery of closing documents by electronic
mail, regular mail, fax or any other means mutually agreed upon by the parties
hereto on a date that is no later than two (2) Business Days immediately
following the day on which the last of the conditions to closing contained in
Article VIII (other than any conditions that by their nature are to be satisfied
at the Closing) is satisfied or waived in accordance with this Agreement or at
such other location or on such other date as the Buyer and the Company may
mutually determine (the date on which the Closing actually occurs is referred to
as the “Closing Date”).

2.4              Transactions to be Effected at the Closing.

(a)               At the Closing, the Buyer will (i) pay to the Seller the
Purchase Price, adjusted in accordance with subsection 2.2(b) above and less the
amounts paid pursuant to subsection 2.2(c) above by paying such sum to the
Seller by transfer of immediately available funds in accordance with
instructions provided by the Seller, (ii) deliver to the Seller a certificate or
certificates representing the Buyer Shares duly endorsed or accompanied by stock
powers duly endorsed in blank and (iii) deliver to the Seller all other
documents, instruments or certificates required to be delivered by the Buyer at
or prior to the Closing pursuant to this Agreement.

(b)               At the Closing, the Seller will deliver to the Buyer (i) a
certificate or certificates representing the Shares duly endorsed or accompanied
by stock powers duly endorsed in blank and (ii) all other documents, instruments
or certificates required to be delivered by the Seller at or prior to the
Closing pursuant to this Agreement.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Buyer that each statement contained in
this Article III is true and correct as of the date hereof, except as set forth
in the disclosure schedule to be delivered to the Buyer in accordance with
Section 7.11 hereof (the “Disclosure Schedule”). in sections corresponding to
the Sections of this Article III and Article IV.

3.1              Authority and Enforceability. The Seller has the requisite
legal capacity to execute and deliver this Agreement, to perform the Seller’s
obligations hereunder and to consummate the Acquisition and the other
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Seller and, assuming the due authorization, execution and
delivery by each other party hereto, constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms, except as limited by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar Laws relating to creditors’
rights generally and (b) general principles of equity, whether such
enforceability is considered in a proceeding in equity or at Law.

 

 

 

3.2              Noncontravention.

(a)               Neither the execution and the delivery of this Agreement nor
the consummation of the Acquisition or the other transactions contemplated by
this Agreement will, with or without the giving of notice or the lapse of time
or both, (i) assuming compliance with the filing and notice requirements set
forth in Section 3.2(b)(i), violate any Law applicable to the Seller or (ii)
violate any Contract to which the Seller is a party, except to the extent that
any such violation would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

(b)               The execution and delivery of this Agreement by the Seller
does not, and the performance of this Agreement by the Seller will not, require
any consent, approval, authorization or Permit of, or filing with or
notification to, any Governmental Entity, except for (i) the filings set forth
in Section 3.2(b) of the Disclosure Schedule or (ii) where the failure to take
such action would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

3.3              The Shares.

(a)               The Seller holds of record and owns beneficially all of the
issued and outstanding shares of capital stock of the Company free and clear of
all Liens, other than (a) Liens for current real or personal property Taxes that
are not yet due and payable or that are being contested in good faith,
(b) statutory Liens of landlords and workers’, carriers’ and mechanics’ or other
like Liens incurred in the or that are being contested in good faith, (c) Liens
earising under this Agreement, (f) Liens created by or through the Buyer, and
(g) Liens set forth on Section 3.3(a) of the Disclosure Schedule (the “Permitted
Liens”).

(b)               Except as set forth in this Agreement, the Seller is not party
to any Contract obligating the Seller to vote or dispose of any shares of the
capital stock of, or other equity or voting interests in, the Company.

3.4              Brokers’ Fees. Except as set forth in Section 3.4 of the
Disclosure Schedule, the Seller does not have any Liability to pay any fees or
commissions to any broker, finder or agent with respect to this Agreement, the
Acquisition or the transactions contemplated by this Agreement.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY 

The Seller represents and warrants to the Buyer that each statement contained in
this Article IV is true and correct as of the date hereof, except as set forth
in the Disclosure Schedule.

 

 

 

4.1              Organization, Qualification and Corporate Power; Authority and
Enforceability.

(a)               The Company is a corporation duly organized, validly existing
and in good standing under the Laws of California, and has all requisite
corporate power and authority, directly or indirectly, to own, lease and operate
its properties and assets and to carry on its business as it is now being
conducted. The Company is duly qualified or licensed as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the character
of its properties or assets owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.

(b)               The Company has the requisite power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Company, and no other action is necessary on
the part of the Company to authorize this Agreement or to consummate the
Acquisition or the other transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by each other party hereto, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as limited by (a) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
Laws relating to creditors’ rights generally and (b) general principles of
equity, whether such enforceability is considered in a proceeding in equity or
at Law.

4.2              Subsidiaries. The Company does not have any Subsidiaries.

4.3              Capitalization.

(a)               The authorized capital stock of the Company is as set forth in
Section 4.3(a) of the Disclosure Schedule, of which 34,902 shares are issued and
outstanding. No other capital stock of the Company is authorized, issued or
outstanding.

(b)               There are no outstanding options, warrants or other securities
or subscription, preemptive or other rights convertible into or exchangeable or
exercisable for any shares of capital stock or other equity or voting interests
of the Company and there are no “phantom stock” rights, stock appreciation
rights or other similar rights with respect to the Company. There are no
Contracts of any kind to which the Company is a party or by which the Company is
bound, obligating the Company to issue, deliver, grant or sell, or cause to be
issued, delivered, granted or sold, additional shares of capital stock of, or
other equity or voting interests in, or options, warrants or other securities or
subscription, preemptive or other rights convertible into, or exchangeable or
exercisable for, shares of capital stock of, or other equity or voting interests
in, the Company, or any “phantom stock” right, stock appreciation right or other
similar right with respect to the Company, or obligating the Company to enter
into any such Contract.

(c)               There are no securities or other instruments or obligations of
the Company, the value of which is in any way based upon or derived from any
capital or voting stock of the Company or having the right to vote (or
convertible into, or exchangeable or exercisable for, securities having the
right to vote) on any matters on which the Company’s stockholders may vote.

 

 

 

(d)               There are no Contracts, contingent or otherwise, obligating
the Company to repurchase, redeem or otherwise acquire any shares of capital
stock of, or other equity or voting interests in, the Company. There are no
voting trusts, registration rights agreements or stockholder agreements to which
the Company is a party with respect to the voting of the capital stock of the
Company or with respect to the granting of registration rights for any of the
capital stock of the Company. There are no rights plans affecting the Company.

(e)               Except as set forth in Section 4.3(e) of the Disclosure
Schedule, there are no bonds, debentures, notes or other indebtedness of the
Company.

4.4              Noncontravention.

(a)               Neither the execution and delivery of this Agreement nor the
consummation of the Acquisition and the other transactions contemplated by this
Agreement will, with or without the giving of notice or the lapse of time or
both, (i) violate any provision of the articles of incorporation or bylaws (or
comparable organization documents, as applicable) of the Company, (ii) assuming
compliance with the filing and notice requirements set forth in Section
4.4(b)(i), violate any Law applicable to the Company on the date hereof or (iii)
except as set forth in Section 4.4(a) of the Disclosure Schedule, violate any
Contract to which the Company is a party, except in the case of clauses (ii) and
(iii) to the extent that any such violation would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

(b)               The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or Permit of, or filing with or
notification to, any Governmental Entity, except for (i) the filings set forth
in Section 4.4(b) of the Disclosure Schedule or (ii) where the failure to take
such action would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

4.5              Financial Statements. Section 4.5 of the Disclosure Schedule
contains true and complete copies of (i) the unaudited balance sheet of the
Company as of December 31, 2019 and December 31, 2018 and the related unaudited
statements of income and cash flows for the two years ended December 31, 2019
and December 31, 2018 (the “Annual Financial Statements”) and (ii) the unaudited
balance sheet of the Company as of February 29, 2020 and the related statements
of income and cash flows for the two-month period ended February 29, 2020 (the
“Interim Financial Statements” and, together with the Annual Financial
Statements, the “Financial Statements”). The Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and, on that
basis, fairly present, in all material respects, the financial condition,
results of operations and cash flows of the Company as of the indicated dates
and for the indicated periods (subject, in the case of the Interim Financial
Statements, to normal year-end adjustments and the absence of notes).

 

 

 

4.6              Taxes.

(a)               All material Tax Returns required to have been filed by the
Company have been filed, and each such Tax Return

(b)               T the Knowledge of the Seller, there is no audit pending
against the Company in respect of any Taxes. There are no Liens on any of the
assets of the Company that arose in connection with any failure (or alleged
failure) to pay any Tax, other than Liens for Taxes not yet due and payable.

(c)               The Company has withheld and paid or accrued for all material
Taxes required to have been withheld and paid or accrued for in connection with
amounts paid or owing to any third party.

(d)               The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.

(e)               The Company is not a party to any Tax allocation or sharing
agreement.

4.7              Compliance with Laws and Orders; Permits.

(a)               The Company is in compliance with all Laws and Orders to which
the business of the Company is subject, except where such failure to comply
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

(b)               The Company owns, holds, possesses or lawfully uses in the
operation of its business all Permits that are necessary for it to conduct its
business as now conducted, except where such failure to own, hold, possess or
lawfully use such Permit would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

4.8              No Undisclosed Liabilities. The Company does not have any
Liability, except for (i) Liabilities set forth on the Interim Financial
Statements (rather than in any notes thereto) and (ii) Liabilities which have
arisen since the date of the Interim Financial Statements in the ordinary course
of business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).

4.9              Tangible Personal Assets.

(a)               The Company has good title to, or a valid interest in, all of
its tangible personal assets, free and clear of all Liens, other than (i)
Permitted Liens or (ii) Liens that, individually or in the aggregate, do not
materially interfere with the ability of the Company thereof to conduct its
business as currently conducted and do not adversely affect the value of, or the
ability to sell, such personal properties and assets.

(b)               The Company’s tangible personal assets are in good operating
condition, working order and repair, subject to ordinary wear and tear, free
from defects (other than defects that do not interfere with the continued use
thereof in the conduct of normal operations) and are suitable for the purposes
for which they are currently being used.

 

 

 

4.10          Real Property.

(a)               Owned Real Property. Section 4.10(a)(i) of the Disclosure
Schedule lists and describes briefly all real property that the Company owns.
With respect to each such parcel of owned real property:

(i)                 the Company has good and marketable title to the parcel of
real property, free and clear of any Lien or other restriction, except for
installments of special assessments not yet delinquent and recorded easements,
covenants, and other restrictions which do not impair the current use,
occupancy, or value, or the marketability of title, of the property subject
thereto;

(ii)              there are no pending or, to the Knowledge of the Seller,
threatened condemnation proceedings, lawsuits, or administrative actions
relating to the property or other matters affecting adversely the current use,
occupancy, or value thereof;

(iii)            the legal description for the parcel contained in the deed
thereof describes such parcel fully and adequately, the buildings and
improvements are located within the boundary lines of the described parcels of
land, are not in violation of applicable setback requirements, zoning laws, and
ordinances (and none of the properties or buildings or improvements thereon are
subject to “permitted non-conforming use” or “permitted non-conforming
structure” classifications), and do not encroach on any easement which may
burden the land, and the land does not serve any adjoining property for any
purpose inconsistent with the use of the land, and the property is not located
within any flood plain or subject to any similar type restriction for which any
permits or licenses necessary to the use thereof have not been obtained;

(iv)             all facilities have received all approvals of governmental
authorities (including licenses and permits) required in connection with the
ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;

(v)               there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties the right of
use or occupancy of any portion of the parcel of real property;

(vi)             there are no outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or interest
therein;

(vii)          there are no parties (other than the Company) in possession of
the parcel of real property, other than tenants under any leases disclosed in
Section 4.10(b) of the Disclosure Schedule who are in possession of space to
which they are entitled;

(viii)        all facilities located on the parcel of real property are supplied
with utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary sewer, and
storm sewer, all of which services are adequate in accordance with all
applicable laws, ordinances, rules, and regulations and are provided via public
roads or via permanent, irrevocable, appurtenant easements benefitting the
parcel of real property; and

 

 

 

(ix)             each parcel of real property abuts on and has direct vehicular
access to a public road, or has access to a public road via a permanent,
irrevocable, appurtenant easement benefitting the parcel of real property, and
access to the property is provided by paved public right of way with adequate
curb cuts available.

(b)               Leased Real Property. Section 4.10(b) of the Disclosure
Schedule contains a list of all leases and subleases (collectively, the “Real
Property Leases”) under which the Company is either lessor or lessee (the “Real
Property”). The Seller has heretofore made available to the Buyer true and
complete copies of each Real Property Lease. To the Knowledge of the Seller, (i)
all Real Property Leases are valid and binding Contracts of the Company and are
in full force and effect (except for those that have terminated or will
terminate by their own terms), and (ii) neither the Company or any other party
thereto, is in violation or breach of or default (or with notice or lapse of
time, or both, would be in violation or breach of or default) under the terms of
any such Contract, in each case, except where such default would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

4.11          Intellectual Property.

(a)               “Intellectual Property” means (i) trade secrets, inventions,
confidential and proprietary information, know-how, formulae and processes, (ii)
patents (including all provisionals, reissues, divisions, continuations and
extensions thereof) and patent applications, (iii) trademarks, trade names,
trade dress, brand names, domain names, trademark registrations, trademark
applications, service marks, service mark registrations and service mark
applications (whether registered, unregistered or existing at common law,
including all goodwill attaching thereto), (iv) copyrights, including copyright
registrations, copyright applications and unregistered common law copyrights;
(v) and all licenses for the Intellectual Property listed in items (i) – (iv)
above.

(b)               Section 4.11(b) of the Disclosure Schedule sets forth a list
that includes all material Intellectual Property owned by the Company (the
“Company-Owned Intellectual Property”) that is registered or subject to an
application for registration (including the jurisdictions where such
Company-Owned Intellectual Property is registered or where applications have
been filed, and all registration or application numbers, as appropriate).

(c)               All necessary registration, maintenance and renewal fees have
been paid and all necessary documents have been filed with the United States
Patent and Trademark Office or foreign patent and trademark office in the
relevant foreign jurisdiction for the purposes of maintaining the registered
Company-Owned Intellectual Property.

(d)               Except as set forth on Section 4.11(d) of the Disclosure
Schedule, (i) the Company is the exclusive owner of the Company-Owned
Intellectual Property free and clear of all Liens (other than Permitted Liens);
(ii) to the Knowledge of the Seller no proceedings have been instituted, are
pending or are threatened that challenge the rights of the Company in or the
validity or enforceability of the Company-Owned Intellectual Property; (iii) to
the Knowledge of the Seller, neither the use of the Company-Owned Intellectual
Property as currently used by the Company in the conduct of the Company’s
business, nor the conduct of the business as presently conducted by the Company
infringes, dilutes, misappropriates or otherwise violates in any material
respect the Intellectual Property rights of any Person; and (iv) as of the date
of this Agreement, the Company has made no claim of a violation, infringement,
misuse or misappropriation by any Person, of their rights to, or in connection
with, the Company-Owned Intellectual Property.

 

 

 

(e)               Except as set forth in Section 4.11(e) of the Disclosure
Schedule, the Company has not permitted or licensed any Person to use any
Company-Owned Intellectual Property.

(f)                Section 4.11(f) of the Disclosure Schedule sets forth a
complete and accurate list of all licenses, other than “off the shelf”
commercially available software programs, pursuant to which the Company licenses
from any Person Intellectual Property that is material to and used in the
conduct of the business by the Company.

(g)               the Company is not in default in the performance, observance
or fulfillment of any obligation, covenant or condition contained in any
Contract pursuant to which any third party is authorized to use any
Company-Owned Intellectual Property or pursuant to which the Company is licensed
to use Intellectual Property owned by a third party, except where such default
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

4.12          Absence of Certain Changes or Events. Since the date of the
Interim Financial Statements, no event has occurred that has had, individually
or in the aggregate, a Material Adverse Effect. Without limiting the generality
of the foregoing, since that date:

(a)               the Company has not sold, leased, transferred, or assigned any
of its assets, tangible or intangible, other than for a fair consideration in
the ordinary course of business;

(b)               the Company has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases, and
licenses) either involving more than or outside the ordinary course of business;

(c)               no party (including the Company) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more than to
which the Company is a party or by which any of them is bound;

(d)               the Company has not imposed any Liens upon any of its assets,
tangible or intangible;

(e)               the Company has not made any capital expenditure (or series of
related capital expenditures) either involving more than or outside the ordinary
course of business;

(f)                the Company has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) either involving
more than or outside the ordinary course of business;

 

 

 

(g)               the Company has not transferred, assigned, or granted any
license or sublicense of any rights under or with respect to any Intellectual
Property;

(h)               there has been no change made or authorized in the certificate
of incorporation or bylaws of the Company;

(i)                 the Company has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of its
capital stock;

(j)                 the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees outside
the ordinary course of business;

(k)               the Company has not entered into any employment contract or
modified the terms of any existing such contract or agreement;

(l)                 the Company has not granted any increase in the base
compensation of any of its directors, officers, and employees outside the
ordinary course of business;

(m)             the Company has not committed to any of the foregoing.

4.13          Contracts.

(a)               Except as set forth in Section 4.13(a) of the Disclosure
Schedule, as of the date hereof, the Company is not a party to or bound by any:
(i) Contract not contemplated by this Agreement that materially limits the
ability of the Company to engage or compete in any manner of the business
presently conducted by the Company; (ii) Contract that creates a partnership or
joint venture or similar arrangement with respect to any material business of
the Company; (iii) indenture, credit agreement, loan agreement, security
agreement, guarantee, note, mortgage or other evidence of indebtedness or
agreement providing for indebtedness in excess of $50,000; (iv) Contract that
relates to the acquisition or disposition of any material business (whether by
merger, sale of stock, sale of assets or otherwise) other than this Agreement;
and (v) Contract that involves performance of services or delivery of goods or
materials by or to the Company in an amount or with a value in excess of $50,000
in any 12-month period (which period may extend past the Closing).

(b)               The Seller has heretofore made available to the Buyer true and
complete copies of each of the Contracts set forth in Section 4.13(a) of the
Disclosure Schedule. To the Knowledge of the Seller, (i) all such Contracts are
valid and binding, (ii) all such Contracts are in full force and effect (except
for those that have terminated or will terminate by their own terms), and (iii)
neither the Company nor any other party thereto, is in violation or breach of or
default under (or with notice or lapse of time, or both, would be in violation
or breach of or default under) the terms of any such Contract, in each case,
except where such default would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

 

 

 

4.14          Litigation. Except as set forth in Section 4.14 of the Disclosure
Schedule, there is no Action pending or, to the Knowledge of the Seller,
threatened against the Company that (a) challenges or seeks to enjoin, alter or
materially delay the Acquisition or (b) would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

4.15          Employee Benefits.

(a)               Section 4.15(a) of the Disclosure Schedule includes a list of
all Benefit Plans maintained or contributed to by the Company (the “Company
Benefit Plans”). The Seller has delivered or made available to the Buyer copies
of (i) each Company Benefit Plan, (ii) the most recent summary plan description
for each Company Benefit Plan for which such a summary plan description is
required and (iii) the most recent favorable determination letters from the IRS
with respect to each Company Benefit Plan intended to qualify under Section
401(a) of the Code.

(b)               Except as set forth in Section 4.15(b) of the Disclosure
Schedule, (i) none of the Company Benefit Plans is subject to Title IV of ERISA;
(ii) each Company Benefit Plan that is intended to be qualified under Section
401(a) of the Code is subject to a favorable determination letter from the IRS
and, to the Knowledge of the Seller, no event has occurred and no condition
exists that is reasonably likely to result in the revocation of any such
determination; and (iii) each Company Benefit Plan is in compliance with all
applicable provisions of ERISA and the Code, except for instances of
noncompliance that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

4.16          Labor and Employment Matters. Section 4.16 of the Disclosure
Schedule sets forth a list of all written employment agreements that obligate
the Company to pay an annual salary of $50,000 or more and to which the Company
is a party. To the Knowledge of the Seller, there are no pending labor disputes,
work stoppages, requests for representation, pickets, work slow-downs due to
labor disagreements or any actions or arbitrations that involve the labor or
employment relations of the Company. The Company is not party to any collective
bargaining agreement.

4.17          Environmental. Except (i) as set forth in Section 4.17 of the
Disclosure Schedule or (ii) for any matter that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect, (a) the
Company is in compliance with all applicable Laws relating to protection of the
environment (“Environmental Laws”), (b) the Company possesses and is in
compliance with all Permits required under any Environmental Law for the conduct
of its operations and (c) there are no Actions pending against the Company
alleging a violation of any Environmental Law. No property currently or formerly
owned or operated by the Company or has been contaminated with any Hazardous
Substance in a manner that could reasonably be expected to require remediation
or other action pursuant to any Environmental Law. Neither the Seller, nor the
Company has received any written notice, demand, letter, claim or request for
information alleging that the Company or the Seller is in violation of or liable
under any Environmental Law. For purposes of this Agreement, “Hazardous
Substance” means any substance that is: (i) listed, classified, regulated or
defined pursuant to any Environmental Law or (ii) any petroleum product or
by-product, asbestos-containing material, polychlorinated biphenyls or
radioactive material.

 

 

 

4.18          Insurance. Section 4.18 of the Disclosure Schedule sets forth a
list of each insurance policy that covers the Company or its businesses,
properties, assets, directors, officers or employees (the “Policies”). Such
Policies are in full force and effect in all material respects and the Company
is not in violation or breach of or default under any of its obligations under
any such Policy, except where such default would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

4.19          Inventory. The inventory of the Company consists of raw materials
and supplies, manufactured and purchased parts, goods in process, and finished
goods, all of which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is slow moving, obsolete, damaged,
or defective, subject only to the reserve for inventory write down set forth on
the face of the balance sheet included in the Interim Financial Statements
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Company.

4.20          Notes and Accounts Receivable. All notes and accounts receivable
of the Company are reflected properly on their books and records, are valid
receivables subject to no setoffs or counterclaims, are current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts set forth on the face of the balance
sheet included in the Interim Financial Statements (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company.

4.21          Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of any of the Company.

4.22          Product Warranty. Each product manufactured, sold, leased, or
delivered by the Company has been in conformity with all applicable contractual
commitments and all express and implied warranties, and the Company has no
Liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve for product
warranty claims set forth on the face of the balance sheet included in the
Interim Financial Statements (rather than in any notes thereto) as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of the Company. No product manufactured, sold, leased, or delivered
by the Company is subject to any guaranty, warranty, or other indemnity beyond
the applicable standard terms and conditions of sale or lease. Section 4.22 of
the Disclosure Schedule includes copies of the standard terms and conditions of
sale or lease for the Company (containing applicable guaranty, warranty, and
indemnity provisions).

4.23          Product Liability. The Company has no Liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by the Company.

 

 

 

4.24          Brokers’ Fees. Except as set forth in Section 4.24 of the
Disclosure Schedule, which such fees shall be paid prior to or at Closing with
the Company’s cash, the Company has no Liability to pay any fees or commissions
to any broker, finder or agent with respect to this Agreement, the Acquisition
or the transactions contemplated by this Agreement.

4.25          Certain Business Relationships with the Company. Except as set
forth in Section 4.25 of the Disclosure Schedule, neither the Seller, nor any
Affiliate of the Seller, has been involved in any business arrangement or
relationship with the Company within the past 12 months, and neither the Seller,
nor any Affiliate of the Seller, owns any asset, tangible or intangible, which
is used in the Business.

4.26          Disclosure. The representations and warranties contained in this
Article IV do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article IV not misleading.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Seller that each statement contained in
this Article V is true and correct as of the date hereof.

5.1              Organization. The Buyer is a corporation, duly organized,
validly existing and in good standing under the laws of the state of Delaware.

5.2              Authorization. The Buyer has the requisite power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution, delivery and
performance by the Buyer of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly authorized by all necessary
action, and no other action on the part of the Buyer is necessary to authorize
this Agreement or to consummate the transactions contemplated hereby (other than
compliance with the filing and notice requirements set forth in Section
5.3(b)(i)). This Agreement has been duly executed and delivered by the Buyer
and, assuming the due authorization, execution and delivery by each of the other
parties hereto, constitutes a legal, valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms, except as limited by
(a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar Laws relating to creditors’ rights generally and (b) general
principles of equity, whether such enforceability is considered in a proceeding
in equity or at Law.

5.3              Noncontravention.

(a)               Neither the execution and the delivery of this Agreement, nor
the consummation of the Acquisition and the other transactions contemplated by
this Agreement, will, with or without the giving of notice or the lapse of time
or both, (i) violate any provision of the certificate of incorporation or bylaws
(or comparable organization documents, as applicable) of the Buyer, (ii) violate
any Law applicable to the Buyer on the date hereof or (iii) violate any Contract
to which the Buyer is a party, except in the case of clauses (ii) and (iii) to
the extent that any such violation would not reasonably be expected to prevent
or materially delay the consummation of the Acquisition and the other
transactions contemplated by this Agreement.

 

 

 

(b)               The execution and delivery of this Agreement by the Buyer does
not, and the performance of this Agreement by the Buyer will not, require any
consent, approval, authorization or Permit of, or filing with or notification
to, any Governmental Entity, except for (i) the filings set forth in Section
5.3(b)(i) or (ii) where the failure to take such action would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

(c)               Brokers’ Fees. The Buyer has no Liability to pay any fees or
commissions to any broker, finder or agent with respect to this Agreement, the
Acquisition or the transactions contemplated by this Agreement that could result
in any Liability being imposed on the Seller or the Company.

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER PARENT

6.1              Organization. The Buyer Parent is a limited liability company,
duly organized, validly existing and in good standing under the laws of the
State of Delaware.

6.2              Authorization. The Buyer Parent has the requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Buyer Parent of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly authorized
by all necessary action, and no other action on the part of the Buyer Parent is
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than compliance with the filing and notice
requirements set forth in Section 6.3(b)(i)). This Agreement has been duly
executed and delivered by the Buyer Parent and, assuming the due authorization,
execution and delivery by each of the other parties hereto, constitutes a legal,
valid and binding obligation of the Buyer Parent enforceable against the Buyer
Parent in accordance with its terms, except as limited by (a) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
Laws relating to creditors’ rights generally and (b) general principles of
equity, whether such enforceability is considered in a proceeding in equity or
at Law.

6.3              Noncontravention.

(a)               Neither the execution and the delivery of this Agreement, nor
the consummation of the Acquisition and the other transactions contemplated by
this Agreement, will, with or without the giving of notice or the lapse of time
or both, (i) violate any provision of the certificate of incorporation or bylaws
(or comparable organization documents, as applicable) of the Buyer Parent,
(ii) violate any Law applicable to the Buyer Parent on the date hereof or
(iii) violate any Contract to which the Buyer Parent is a party, except in the
case of clauses (ii) and (iii) to the extent that any such violation would not
reasonably be expected to prevent or materially delay the consummation of the
Acquisition and the other transactions contemplated by this Agreement.

 

 

 

(b)               The execution and delivery of this Agreement by the Buyer
Parent does not, and the performance of this Agreement by the Buyer Parent will
not, require any consent, approval, authorization or Permit of, or filing with
or notification to, any Governmental Entity, except for (i) the filings set
forth in Section 5.3(b) (i) or (ii) where the failure to take such action would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

6.4              Capitalization. The authorized capital of Buyer Parent
consists, immediately prior to the Closing of Five Hundred Million (500,000,000)
common shares of the Buyer Parent, 3,165,625 shares of which are issued and
outstanding immediately prior to the Closing. All of the outstanding common
shares of the Buyer Parent have been duly authorized, are fully paid and
nonassessable and were issued in compliance with all applicable federal and
state securities laws. Upon issuance pursuant to this Agreement, the Buyer
Shares will be duly authorized, fully paid and nonassessable and issued in
compliance with all applicable federal and state securities laws. Buyer Parent
holds no common shares in its treasury. The rights, privileges and preferences
of the common shares of Buyer Parent are as stated in Buyer Parent’s Second
Amended and Restated Operating Agreement and as provided by the Delaware Limited
Liability Company Act.

6.6              Brokers’ Fees. 6.7 The Buyer has no Liability to pay any fees
or commissions to any broker, finder or agent with respect to this Agreement,
the Acquisition or the transactions contemplated by this Agreement that could
result in any Liability being imposed on the Seller or the Company.

ARTICLE VII
COVENANTS

7.1              Consents. The Company will use its commercially reasonable
efforts to obtain any required third-party consents to the Acquisition and the
other transactions contemplated by this Agreement in writing from each Person.

7.2              Operation of the Company’s Business. During the period
commencing on the date hereof and ending at the earlier of the Closing and the
termination of this Agreement in accordance with Article IX, the Company, except
(i) as otherwise contemplated by this Agreement, (ii) as required by applicable
Law or (iii) with the prior written consent of the Buyer (which consent will not
be unreasonably withheld or delayed), will use commercially reasonable efforts
to carry on its business in a manner consistent with past practice and not take
any action or enter into any transaction that would result in the following:

(a)               any change in the articles of incorporation, as amended or
bylaws, as amended, of the Company or any amendment of any material term of any
outstanding security of the Company;

(b)               any issuance or sale of any additional shares of, or rights of
any kind to acquire any shares of, any capital stock of any class of the Company
(whether through the issuance or granting of options or otherwise);

(c)               any incurrence, guarantee or assumption by the Company of any
indebtedness for borrowed money other than in the ordinary course of business in
amounts and on terms consistent with past practice;

(d)               any distributions to the Sellers, other than expense
reimbursements consistent with past practice;

 

 

 

(e)                any change in any method of accounting, accounting principle
or accounting practice by the Company which would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect;

(f)                except in the ordinary course of business (i) any adoption or
material amendment of any Company Benefit Plan, (ii) any entry into any
collective bargaining agreement with any labor organization or union, (iii) any
entry into an employment agreement or (iv) any increase in the rate of
compensation to any employee in an amount that exceeds 10% of such employee’s
current compensation; provided, that the Company may (A) take any such action
for employees in the ordinary course of business or pursuant to any existing
Contracts or Company Benefit Plans and (B) adopt or amend any Company Benefit
Plan if the cost to such Person of providing benefits thereunder is not
materially increased;

(g)               except in the ordinary course of business, any cancellation,
modification, termination or grant of waiver of any material Permits or
Contracts to which the Company is a party, which cancellation, modification,
termination or grant of waiver would, individually or in the aggregate, have a
Material Adverse Effect;

(h)               any change in the Tax elections made by the Company or in any
accounting method used by the Company for Tax purposes, where such Tax election
or change in accounting method may have a material effect upon the Tax Liability
of the Company for any period or set of periods, or the settlement or compromise
of any material income Tax Liability of the Company;

(i)                 except in the ordinary course of business, any acquisition
or disposition of any business or any material property or asset of any Person
(whether by merger, consolidation or otherwise) by the Company;

(j)                 any grant of a Lien on any properties and assets of the
Company that would have, individually or in the aggregate, a Material Adverse
Effect;

(k)               any entry into any agreement or commitment to do any of the
foregoing.

7.3              Access. The Company will permit the Buyer and its
Representatives to have reasonable access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of the
Company, to the premises, properties, personnel, books, records (including Tax
records), Contracts and documents of or pertaining to the Company.

7.4              Transfer of Cash and Cash Equivalents. On or prior to the
Closing, the Company and Seller will transfer, or cause to be distributed all
cash and cash equivalents of the Company to, among other things, pay any fees
owed by Company to brokers or advisors (including termination fees under any
advisory agreement) and any indebtedness for borrowed money; provided, however,
that the Company shall have an amount in cash in its corporate bank account and
on hand at its store locations at the Closing that is equal to $1,075,000 in the
aggregate.

7.5              Notice of Developments. The Seller and the Company will give
prompt written notice to the Buyer of any event that would reasonably be
expected to give rise to, individually or in the aggregate, a Material Adverse
Effect or would reasonably be expected to cause a breach of any of its
respective representations, warranties, covenants or other agreements contained
herein. The Buyer will give prompt written notice to the Seller and the Company
of any event that could reasonably be expected to cause a breach of any of its
representations, warranties, covenants or other agreements contained herein or
could reasonably be expected to, individually or in the aggregate, prevent or
materially delay the consummation of the Acquisition and the other transactions
contemplated by this Agreement. The delivery of any notice pursuant to this
Section 7.5 will not limit, expand or otherwise affect the remedies available
hereunder (if any) to the party receiving such notice.

 

 

 

7.6              No Solicitation.

(a)               The Seller and the Company will, and will cause each of their
Representatives to, cease immediately any existing discussions regarding a
Transaction Proposal.

(b)               From and after the date of this Agreement, without the prior
consent of the Buyer, none of the Seller nor the Company will, nor will they
authorize or permit any of their respective Representatives to, directly or
indirectly through another Person to, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action designed
to facilitate any inquiries, proposals or offers from any Person that
constitute, or would reasonably be expected to constitute, a Transaction
Proposal, (ii) participate in any discussions or negotiations (including by way
of furnishing information) regarding any Transaction Proposal or (iii) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to do or seek any of the foregoing.

(c)               In addition, the Seller shall immediately communicate to the
Buyer the terms of any Transaction Proposal received by the Seller or the
Company, or any of their Representatives.

7.7              Taking of Necessary Action; Further Action. Subject to the
terms and conditions of this Agreement, the Seller, the Company and the Buyer
will take all such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Acquisition in accordance with this
Agreement as promptly as practicable.

7.8              Covenant not to Compete. For a period of three years from and
after the Closing (the “Noncompetition Period”), the Seller shall not engage
directly or indirectly in any business that is competitive with the current
business of the Company (the “Business”) within an area of one hundred miles of
any geographic area in which the Business is conducted or in which the Buyer
plans to conduct the Business as of the Closing Date; provided, however, that no
owner of less than 1% of the outstanding stock of any publicly-traded
corporation shall be deemed to engage solely by reason thereof in any of its
businesses. During the Noncompetition Period, the Seller shall not induce or
attempt to induce any customer, or supplier of the Buyer or any affiliate of the
Buyer to terminate its relationship with the Buyer or any Affiliate of the Buyer
or to enter into any business relationship to provide or purchase the same or
substantially the same services as are provided to or purchased from the
Business which might harm the Buyer or any Affiliate of the Buyer. During the
Noncompetition Period, the Seller shall not, on behalf of any entity other than
the Buyer or an Affiliate of the Buyer, hire or retain, or attempt to hire or
retain, in any capacity any Person who is, or was at any time during the
preceding twelve (12) months, an employee or officer of the Buyer or an
Affiliate of the Buyer. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 7.8 is invalid
or unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.

 

 

 

7.10          Financial Information. The Seller shall cooperate with the Buyer
and the Buyer’s independent certified public accounting firm in order to enable
the Buyer to create audited financial statements prepared in accordance with the
GAAP for the two full fiscal years preceding the Closing Date, by making
available the Seller’s records as they are maintained in the ordinary course of
business and answering reasonable questions.

7.11          Disclosure Schedule. The parties acknowledge and agree that (i)
the Seller and the Company have not yet delivered a definitive Disclosure
Schedule to this Agreement to the Buyer, and (ii) the Buyer has not been
provided with copies of, nor had an opportunity to review, the items to be
referred to on the Disclosure Schedule. The Seller shall deliver (and shall
cause the Company to deliver) to the Buyer all of the schedules, including a
definitive Disclosure Schedule to the Agreement, and documents referred to
thereon, in final form within 15 days of the date hereof.  The Buyer shall have
15 days following delivery of such schedules and such documents in which to
terminate this Agreement if the Buyer objects to any information contained in
such schedules or the contents of any such document and Buyer and Seller cannot
agree on mutually satisfactory modifications thereto.

ARTICLE VIII
CONDITIONS TO OBLIGATIONS TO CLOSE

8.1              Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the Acquisition is subject to the satisfaction or waiver by
the Buyer of the following conditions:

(a)               The representations and warranties of the Seller set forth in
this Agreement will be true and correct in all respects as of the date of this
Agreement and as of the Closing Date (except to the extent such representations
and warranties speak as of another date, in which case such representations and
warranties will be true and correct as of such other date), except where the
failure of such representations and warranties to be so true and correct
(without giving effect to any limitation as to “materiality” or “Material
Adverse Effect” set forth therein) does not have, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
The Buyer will have received a certificate signed by the Seller to such effect.

(b)               The Seller and the Company will have performed all of the
covenants required to be performed by it under this Agreement at or prior to the
Closing, except where the failure to perform does not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect or materially adversely affect the ability of the Seller and the
Company to consummate the Acquisition or perform its other obligations
hereunder. The Buyer will have received a certificate signed by the Seller to
such effect.

 

 

 

(c)               The Buyer shall have completed its business, accounting and
legal due diligence review of the Company and the Business, its assets and
liabilities, and the results thereof shall be reasonably satisfactory to the
Buyer.

(d)               There shall not have been any occurrence, event, incident,
action, failure to act, or transaction since the date of the Interim Financial
Statements which has had or is reasonably likely to cause a Material Adverse
Effect.

(e)               All applicable waiting periods (and any extensions thereof)
will have expired or otherwise been terminated, and the parties hereto will have
received all other authorizations, consents and approvals of all Governmental
Entities in connection with the execution, delivery and performance of this
Agreement and the transactions contemplated hereby.

(f)                No temporary, preliminary or permanent restraining Order
preventing the consummation of the Acquisition will be in effect.

(g)               Each party, as appropriate, shall have obtained any required
consents, permits, licenses, approvals or notifications of any lenders, lessors,
suppliers, customers or other third parties for which the Buyer will assume
responsibility for properly completing any and all necessary forms required when
applying for and securing any necessary transfers.

(h)               The Seller shall have obtained releases of any liens, charges
or encumbrances against any of the assets of the Company, at the Seller’s
expense.

(i)                 The Buyer shall have received such pay-off letters and
releases relating to the indebtedness as it shall have requested and such
pay-off letters shall be in form and substance satisfactory to it.

(j)                 The Buyer shall have received from counsel to the Seller an
opinion in form and substance reasonably satisfactory to the Buyer, addressed to
the Buyer and dated as of the Closing Date.

(k)               The Buyer shall have entered into a consulting agreement with
Joerg Christian Wilhelmsen on terms mutually agreed upon.

(l)                 The Company shall have delivered evidence reasonably
satisfactory to the Buyer of the Company’s corporate organization and
proceedings and its existence in the jurisdiction in which it is incorporated,
including evidence of such existence as of the Closing.

(m)             The Buyer shall have obtained on terms and conditions
satisfactory to it all of the financing it needs in order to consummate the
transactions contemplated hereby and fund the working capital requirements of
the Company after the Closing.

(n)               All actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to the Buyer.

 

 

 

8.2              Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the Acquisition is subject to the satisfaction or waiver by
the Seller of the following conditions:

(a)               The representations and warranties of the Buyer set forth in
this Agreement will be true and correct in all respects as of the date of this
Agreement and as of the Closing Date (except to the extent such representations
and warranties speak as of another date, in which case such representations and
warranties will be true and correct as of such other date), except where the
failure of such representations and warranties to be so true and correct does
not adversely affect the ability of the Buyer to consummate the Acquisition and
the other transactions contemplated by this Agreement. The Seller will have
received a certificate signed on behalf of the Buyer by a duly authorized
officer of the Buyer to such effect.

(b)               The Buyer will have performed in all material respects all of
the covenants required to be performed by it under this Agreement at or prior to
the Closing except such failures to perform as do not materially adversely
affect the ability of the Buyer to consummate the Acquisition and the other
transactions contemplated by this Agreement. The Seller will have received a
certificate signed on behalf of the Buyer by a duly authorized officer of the
Buyer to such effect.

(c)               All applicable waiting periods (and any extensions thereof)
will have expired or otherwise been terminated and the parties hereto will have
received all other authorizations, consents and approvals of all Governmental
Entities in connection with the execution, delivery and performance of this
Agreement and the transactions contemplated hereby.

(d)               No temporary, preliminary or permanent restraining Order
preventing the consummation of the Acquisition will be in effect.

(e)               Each party, as appropriate, shall have obtained any required
consents, permits, licenses, approvals or notifications of any Governmental
Entities, lenders, lessors, suppliers, customers or other third parties for
which the Buyer will assume responsibility for properly completing any and all
necessary forms required when applying for and securing any necessary transfers.

(f)                The Buyer shall have entered into a consulting agreement with
Joerg Christian Wilhelmsen on terms mutually agreed upon.

(g)               All actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to the Seller.

ARTICLE IX
TERMINATION; AMENDMENT; WAIVER

9.1              Termination of Agreement. This Agreement may be terminated as
follows:

(a)               by mutual written consent of the Buyer and the Seller at any
time prior to the Closing;

 

 

 

(b)               by either the Buyer or the Seller if any Governmental Entity
will have issued an Order or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by this
Agreement;

(c)               by either the Buyer or the Seller if the Closing does not
occur on or before the date that is the ninetieth (90th) day following the date
that the Seller delivers to the Buyer the Disclosure Schedule as required by
Section 7.11; provided that the right to terminate this Agreement under this
Section 9.1(c) will not be available to any party whose breach of any provision
of this Agreement results in the failure of the Closing to occur by such time;

(d)               by the Buyer if the Seller or the Company has breached their
respective representations and warranties or any covenant or other agreement to
be performed by it in a manner such that the Closing conditions set forth in
Section 8.1(a) or 8.1(b) would not be satisfied; or

(e)               by the Seller if the Buyer has breached its representations
and warranties or any covenant or other agreement to be performed by it in a
manner such that the Closing conditions set forth in Section 8.2(a) or 8.2(b)
would not be satisfied.

9.2              Effect of Termination. In the event of termination of this
Agreement by either the Seller or the Buyer as provided in Section 9.1, this
Agreement will forthwith become void and have no effect, without any Liability
(other than with respect to any suit for breach of this Agreement) on the part
of the Buyer, the Buyer Parent, the Company or the Seller (or any stockholder,
agent, consultant or Representative of any such party); provided, that the
provisions of Sections 11.1, 11.6, 11.7, 11.8, 11.11, 11.13 and this Section 9.2
will survive any termination hereof pursuant to Section 9.1.

9.3              Amendments. This Agreement may not be amended except by an
instrument in writing signed on behalf of the Buyer, the Company and the Seller.

9.4              Waiver. At any time prior to the Closing, the Buyer may
(a) extend the time for the performance of any of the covenants, obligations or
other acts of the Seller and the Company or (b) waive any inaccuracy of any
representations or warranties or compliance with any of the agreements,
covenants or conditions of the Seller or any conditions to its own obligations.
Any agreement on the part of the Buyer to any such extension or waiver will be
valid only if such waiver is set forth in an instrument in writing signed on its
behalf by its duly authorized officer. At any time prior to the Closing, the
Seller and the Company, may (a) extend the time for the performance of any of
the covenants, obligations or other acts of the Buyer or (b) waive any
inaccuracy of any representations or warranties or compliance with any of the
agreements, covenants or conditions of the Buyer or any conditions to their own
obligations. Any agreement on the part of the Seller and the Company to any such
extension or waiver will be valid only if such waiver is set forth in an
instrument in writing signed by the Seller and the Company. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise will not constitute a waiver of such rights. The waiver of any such
right with respect to particular facts and other circumstances will not be
deemed a waiver with respect to any other facts and circumstances, and each such
right will be deemed an ongoing right that may be asserted at any time and from
time to time.

 

 

 

ARTICLE X
INDEMNIFICATION

10.1          Survival. The representations and warranties made herein and in
any certificate delivered in connection herewith shall survive for a period of
twenty-four (24) months following the Closing Date, at which time they shall
expire; provided, however, that (i) the representations and warranties set forth
in Sections  3.1 (Authority and Enforceability), 3.3 (The Shares), 3.4 (Broker’s
Fees), 4.1 (Organization, Qualification and Corporate Power; Authority and
Enforceability), 4.3 (Capitalization), and 4.17 (Environmental) of this
Agreement (the “Fundamental Representations”) shall survive indefinitely and
(ii) the representations and warranties in Section 4.6 (Taxes) of this Agreement
shall survive until the expiration of the applicable statute of limitations. If
written notice of a claim has been given prior to the expiration of the
applicable representations and warranties, then notwithstanding any statement
herein to the contrary, the relevant representations and warranties shall
survive as to such claim, until such claim is finally resolved. Unless a
specified period is set forth in this Agreement (in which event such specified
period will control), all agreements and covenants contained in this Agreement
will survive the Closing and remain in effect indefinitely.

10.2          Indemnification by Seller. From and after the Closing, the Seller
agrees to indemnify, defend and save Buyer and its Affiliates, stockholders,
officers, directors, employees, agents and representatives (each, a “Buyer
Indemnified Party” and collectively, the “Buyer Indemnified Parties”) harmless
from and against any and all liabilities, deficiencies, demands, claims,
Actions, assessments, losses, costs, expenses, interest, fines, penalties and
damages (including fees and expenses of attorneys and accountants and costs of
investigation) (individually and collectively, the “Losses”) suffered, sustained
or incurred by any Buyer Indemnified Party arising out of or otherwise by virtue
of: (a) any breach of any of the representations or warranties of the Seller or
the Company contained in Article III or IV of this Agreement or (b) the failure
of the Seller to perform any of his covenants or obligations contained in this
Agreement.

10.3          Indemnification by Buyer. From and after the Closing, the Buyer
agrees to indemnify, defend and save the Seller and to the extent applicable,
the Seller’s Affiliates, employees, agents and representatives (each, a “Seller
Indemnified Party” and collectively the “Seller Indemnified Parties”) harmless
from and against any and all Losses sustained or incurred by any Seller
Indemnified Party arising out of or otherwise by virtue of: (a) any breach of
any of the representations and warranties of Buyer contained in Article V and VI
of this Agreement or (b) the failure of Buyer to perform any of its covenants or
obligations contained in this Agreement.

10.4          Indemnification Procedure.

(a)               If a Buyer Indemnified Party or a Seller Indemnified Party
seeks indemnification under this Article X, such party (the “Indemnified Party”)
shall give written notice to the other party (the “Indemnifying Party”) of the
facts and circumstances giving rise to the claim. In that regard, if any Action,
Liability or obligation shall be brought or asserted by any third party which,
if adversely determined, would entitle the Indemnified Party to indemnity
pursuant to this Article X (a “Third-Party Claim”), the Indemnified Party shall
promptly notify the Indemnifying Party of such Third-Party Claim in writing,
specifying the basis of such claim and the facts pertaining thereto, and the
Indemnifying Party, if the Indemnifying Party so elects, shall assume and
control the defense thereof (and shall consult with the Indemnified Party with
respect thereto), including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all necessary expenses. If the
Indemnifying Party elects to assume control of the defense of a Third-Party
Claim, the Indemnified Party shall have the right to employ counsel separate
from counsel employed by the Indemnifying Party in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
employed by the Indemnified Party shall be at the expense of the Indemnified
Party unless (i) the Indemnifying Party has been advised by the Indemnifying
Party’s counsel that a reasonable likelihood exists of a conflict of interest
between the Indemnifying Party and the Indemnified Party, or (ii) the
Indemnifying Party has failed to assume the defense and employ counsel; in which
case the fees and expenses of the Indemnified Party’s counsel shall be paid by
the Indemnifying Party. All claims other than Third-Party Claims (a “Direct
Claim”) may be asserted by the Indemnified Party giving notice to the
Indemnifying Party. Absent an emergency or other extenuating circumstance, the
Indemnified Party shall give written notice to the Indemnifying Party of such
Direct Claim prior to taking any material actions to remedy such Direct Claim.

 

 

 

(b)               In no event shall the Indemnified Party pay or enter into any
settlement of any claim or consent to any judgment with respect to any
Third-Party Claim without the prior written consent of the Indemnifying Party
(which consent shall not be unreasonably withheld, conditioned or delayed) if
such settlement or judgment would require the Indemnifying Party to pay any
amount. The Indemnifying Party may enter into a settlement or consent to any
judgment without the consent of the Indemnified Party so long as (i) such
settlement or judgment involves monetary damages only and (ii) a term of the
settlement or judgment is that the Person or Persons asserting such Third-Party
Claim unconditionally release all Indemnified Parties from all liability with
respect to such claim; otherwise the consent of the Indemnified Party shall be
required in order to enter into any settlement of, or consent to the entry of a
judgment with respect to, any Third-Party Claim, which consent shall not be
unreasonably withheld, conditioned or delayed.

10.5          Failure to Give Timely Notice. A failure by an Indemnified Party
to provide notice as provided in Section 10.4 will not affect the rights or
obligations of any Person except and only to the extent that, as a result of
such failure, any Person entitled to receive such notice was damaged as a result
of such failure to give timely notice. Nothing contained in this Section 10.4
shall be deemed to extend the period for which Seller’s representations and
warranties will survive Closing as set forth in Section 10.1 above.

10.6          Limited on Indemnification Obligation.

Notwithstanding anything in this Agreement to the contrary, the liability of the
Seller to the Buyer Indemnified Parties with respect to claims for
indemnification pursuant to Section 10.2(a) (but not with respect to the
Fundamental Representations for which recovery shall not be so limited) is
subject to the following limitations:

(a)               The Seller shall not, in the aggregate, be liable to the Buyer
Indemnified Parties for Losses arising under Section 10.2(a) (other than with
respect to acts of fraud or the Fundamental Representations for which recovery
shall not be so limited) to the extent that the amounts otherwise indemnifiable
for such breaches exceeds the Purchase Price.

(b)               The Seller shall not be liable to the Buyer Indemnified
Parties for Losses arising under Section 10.2(a) (other than with respect to
acts of fraud or Fundamental Representations for which recovery shall not be so
limited) until and unless the aggregate amounts indemnifiable for such breaches
exceeds $25,000. In the event the Buyer Indemnified Parties’ claim for Losses,
in the aggregate, exceed $25,000, the Buyer Indemnified Parties shall be
entitled to the entire amount of such Losses back to the first dollar.

 

 

 

(c)               The Seller shall not be liable to the Buyer Indemnified
Parties for Losses arising under Section 10.2 unless the claim therefor is
asserted in writing on or prior to the expiration of the applicable
representations and warranties.

(d)               Losses otherwise subject to indemnity hereunder will be
calculated after application of any received insurance proceeds actually
received by the Indemnitee (net of costs of recovery).

10.7          Payments. Payments of all amounts owing by an Indemnifying Party
under this Article X shall be made promptly upon the determination in accordance
with this Article X that an indemnification obligation is owing by the
Indemnifying Party to the Indemnified Party.

ARTICLE XI
MISCELLANEOUS

11.1          Press Releases and Public Announcement. Neither the Buyer on the
one hand, nor the Seller or the Company on the other, will issue any press
release or make any public announcement relating to this Agreement, the
Acquisition or the other transactions contemplated by this Agreement without the
prior written approval of the other party; provided, however, that the Buyer may
make regulatory filings referring to this Agreement or attaching a copy hereof
as may be required by applicable law.

11.2          No Third-Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns.

11.3          Entire Agreement. This Agreement (including the Exhibits and the
Schedules hereto) constitutes the entire agreement among the parties hereto and
supersedes any prior understandings, agreements or representations by or among
the parties hereto, written or oral, to the extent they related in any way to
the subject matter hereof.

11.4          Succession and Assignment. This Agreement will be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party hereto may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written
approval, in the case of assignment by the Buyer, by the Seller, and, in the
case of assignment by the Seller or the Company, the Buyer.

11.5          Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement, and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the parties, and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.

 

 

 

11.6          Notices. All notices and other communications that are required or
permitted to be given to the parties under this Agreement shall be sufficient in
all respects if given in writing and delivered in person, by electronic mail, by
telecopy, by overnight courier, or by certified mail, postage prepaid, return
receipt requested, to the receiving party at the address specified below or to
such other address as such party may have given to the other by notice pursuant
to this Section. Notice shall be deemed given on the date of delivery, in the
case of personal delivery, electronic mail, or telecopy, or on the delivery or
refusal date, as specified on the return receipt in the case of certified mail
or on the tracking report in the case of overnight courier.

If to the Buyer:
1847 Asien Inc.
c/o 1847 Holdings LLC
590 Madison Avenue, 21st Floor
New York, NY 10022
Attn: Ellery W. Roberts, CEO
Email:

 

If to the Buyer Parent:
1847 Holdings LLC
590 Madison Avenue, 21st Floor
New York, NY 10022
Attn: Ellery W. Roberts, CEO
Email:

with a copy to:
Bevilacqua PLLC
1050 Connecticut Avenue, NW
Suite 500
Washington, DC 20036
Attn: Louis A. Bevilacqua
Email:
Facsimile:

 

If to the Company:
Asien’s Appliance, Inc.
1801 Piner Road
Santa Rosa, CA 94501
Attn: Joerg Christian Wilhelmsen
Email:

with a copy to:
KENT LAW
575 Lincoln Avenue, Suite 205
Napa, CA 94558
Attn: Clayton W. Kent, Esq.
Email:
Facsimile:

 

If to the Seller:

Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as Trustees

of the Wilhelmsen Family Trust, U/D/T dated May 1, 1992

______________

______________

Attn:

Email:

 

 

 

Any party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other parties
notice in the manner set forth herein.

11.7          Governing Law. This Agreement will be governed by, and construed
in accordance with, the Laws of the State of California without giving effect to
any choice of Law or conflict of Law provision or rule that would cause the
application of the Laws of any jurisdiction other than the State of California.

11.8          Consent to Jurisdiction and Service of Process. EACH OF THE
PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE STATE OF CALIFORNIA AND IRREVOCABLY AGREES THAT ALL ACTIONS
OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE ACQUISITION OR THE OTHER
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT MAY BE LITIGATED IN SUCH COURTS.
EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION
OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NONAPPEALABLE JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT, THE ACQUISITION OR THE OTHER
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT THE ADDRESS
SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 CALENDAR DAYS
AFTER SUCH MAILING. NOTHING HEREIN WILL IN ANY WAY BE DEEMED TO LIMIT THE
ABILITY OF ANY PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN
JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OTHER
PARTY HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE
PERMITTED BY ANY APPLICABLE LAW.

11.9          Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and will not affect in any way the
meaning or interpretation of this Agreement.

11.10      Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law (a) such
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms of such illegal, invalid or unenforceable provision as may be possible.

11.11      Expenses. Except as otherwise provided in this Agreement, whether or
not the Acquisition is consummated, all expenses incurred in connection with
this Agreement and the transactions contemplated hereby will be paid by the
party incurring such expenses. As used in this Agreement, “expenses” means the
out-of-pocket fees and expenses of the financial advisor, counsel and
accountants incurred in connection with this Agreement and the transactions
contemplated hereby.

 

 

 

11.12      Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

11.13      Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties will be
entitled to specific performance of the terms hereof in addition to any other
remedy at Law or equity.

11.14      Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Counterparts may be
delivered via facsimile, electronic mail (including pdf or any electronic
signature complying with the U.S. federal ESIGN Act of 2000, e.g.,
www.docusign.com) or other transmission method and any counterpart so delivered
shall be deemed to have been duly and validly delivered and be valid and
effective for all purposes.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

BUYER:

 

1847 Asien Inc.

 

 

By: /s/ Ellery W. Roberts

Name: Ellery W. Roberts

Title: CEO

 

BUYER PARENT:

 

1847 Holdings LLC

 

 

By: /s/ Ellery W. Roberts

Name: Ellery W. Roberts

Title: CEO

 

COMPANY:

 

Asien’s Appliance, Inc.

 

 

By: /s/ Joerg Christian Wilhelmsen

Name: Joerg Christian Wilhelmsen

Title: President/CEO

 

SELLER:

 

Joerg Christian Wilhelmsen and Susan Kay Wilhelmsen, as Trustees of the
Wilhelmsen Family Trust, U/D/T dated May 1, 1992

 

 

By: /s/ Joerg Christian Wilhelmsen

Name: Joerg Christian Wilhelmsen

Title: Trustee

 

 

By: /s/ Susan Kay Wilhelmsen

Name: Susan Kay Wilhelmsen

Title: Trustee