Current Report — Form 8-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 8-K Current Report 41 176K
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 17 115K
Liquidation or Succession
3: EX-10.2 Material Contract 16 51K
4: EX-10.3 Material Contract 9 36K
5: EX-10.4 Material Contract 9 36K
6: EX-10.5 Material Contract 7 31K
7: EX-10.6 Material Contract 7 31K
8: EX-10.7 Material Contract 7 31K
EX-2.1 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
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STOCK PURCHASE AGREEMENT
BY
AND
AMONG
SPORTAN UNITED INDUSTRIES, INC.,
A TEXAS CORPORATION,
JASON G. OTTESON,
PHARMAFRONTIERS, CORP.,
A TEXAS CORPORATION,
WARREN C. LAU,
AND
OTHER PHARMAFRONTIERS STOCKHOLDERS
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made effective as of
May 05, 2004, by and between SPORTAN UNITED INDUSTRIES, INC., a Texas
corporation ("SPORTAN"), JASON G. OTTESON ("SPORTAN SHAREHOLDER"),
PHARMAFRONTIERS CORP., a Texas corporation ("COMPANY"), WARREN C. LAU ("COMPANY
SHAREHOLDER"), and PharmaFrontiers shareholders listed on the signature page are
collectively referred to as the "STOCKHOLDERS").
RECITALS
WHEREAS, the Stockholders are the record and beneficial owner of 6,266,439
shares of common stock of the Company, which represents all of the issued and
outstanding common stock of Company ("Company Stock");
WHEREAS, the Stockholders desires to sell and Sportan desires to purchase
from Stockholders all of the Company Stock upon the terms and subject to the
conditions hereinafter set forth.
WHEREAS, the respective Boards of Directors of Sportan and the Company have
determined that the exchange is fair to, and in the best interests of, such
entities and have duly approved and adopted this Agreement and the transactions
contemplated herein;
NOW, THEREFORE, in consideration of the premises and the mutual promises
made herein, and in consideration of the representations, warranties, and
covenants contained herein, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
As used in this Agreement, the following terms have the meanings indicated:
1.01. Closing: The consummation of the transactions contemplated by
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this Agreement.
1.02. Closing Date shall mean the time and date that the Closing
-------------
occurs.
1.03. Company Financial Statements shall consist of an audited balance
-----------------------------
sheet, statement of income, statement of cash flows, and
statement of stockholder's equity of PharmaFrontiers Corp. for
the calendar years ended December 31, 2002 and 2003, and an
unaudited balance sheet, statement of income, statement of cash
flows, and statement of stockholder's equity for the three months
ended March 31, 2003 and 2004.
1.04. Company Last Balance Sheet Date shall mean the period ended March
-------------------------------
31, 2004.
1.05. Company Stock shall mean all of the outstanding shares of capital
-------------
stock of the Company.
1.06. GAAP: Generally accepted accounting principles.
----
1.07. Government shall mean any federal, state, local, municipal, or
----------
foreign government or any department, commission, board, bureau,
agency, instrumentality, unit, or taxing authority thereof.
1.08. Intellectual Property means all (a) licenses (including the
---------------------
License Agreement), patents, patent applications, patent
disclosures, and improvements hereto, (b) trademarks, service
marks, trade dress, logos, trade names, and corporate and company
names and registrations and applications for registration
thereof, (c) copyrights and registrations and applications for
registration thereof, (d) computer software, data, code sources
and documentation, and improvements thereto, (e) trade secrets
and confidential business information (including ideas, formulas,
compositions, inventions whether patentable or unpatentable and
whether or not reduced to practice, know-how, processes and
techniques, plans, proposals, technical data, copyrightable
works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and
supplier lists and
1
information), (f) other proprietary rights, (g) copies and
tangible embodiments thereof (in whatever form or medium), and
(h) other intellectual and intangible property rights, including
all registrations and applications therefore, and all
continuations, continuations in part, and divisional
applications.
1.09. Knowledge means knowledge after a diligent and reasonable
---------
investigation.
1.10. License Agreement shall mean the agreement between the University
-----------------
of Chicago ("UNIVERSITY") and PharmaFrontiers Corp., effective
February 20, 2004 for the licensing of certain rights in
inventions conceived or first reduced to practice by the
University as Operator of Argonne National Laboratory (ANL) in
the performance of work under its U.S. Department of Energy (DOE)
Prime Contract No. W-31-109-ENG-38 and any rights appurtenant
thereto.
1.11. Material Adverse Effect shall mean any change in the financial
-------------------------
condition or operation of the business that would materially
affect the Company's business adversely, including, but not
limited to, material changes to management, business conditions,
or financial condition.
1.12. Patent Application means U.S. Provisional Application No.
-------------------
60/424,442, filed November 7, 2002 by a particular University
which invention generally relates to methods of isolating,
culturing, propogating, and differentiating adult stem cells
derived from a subset of cultured peripheral blood monocytes.
1.13. SEC shall mean the Securities and Exchange Commission.
---
1.14. SEC Filing shall mean the following: (a) 10-KSB filed February
-----------
26, 2002, (b) 10-QSB filed April 24, 2002, (c) 10-QSB filed May
23, 2002, (d) 10-QSB/A filed July 15, 2002, (e) 10-QSB filed
August 15, 2002, (f) 10-KSB filed January 2, 2003, (g) 10-QSB
filed February 19, 2003, (h) 10-QSB filed May 20, 2003, (i)
10-QSB filed August 19, 2003, (j) 10-QSB/A filed August 20, 2003,
(k) 10-KSB/A filed January 13, 2004, (l) 10-KSB filed January 13,
2004, (m) 10-QSB filed February 13, 2004, (n) 10-KSB/A filed
March 01, 2004, and (o) DEFR 14C filed March 24, 2004.
ARTICLE II
----------
EXCHANGE
On the basis of the representations, warranties, covenants, and agreements
contained in this Agreement and subject to the terms and conditions of this
Agreement:
2.01. Exchange. The Stockholders shall assign, transfer and convey at
--------
the Closing shares of Company Stock to Sportan in exchange for shares of Sportan
common stock to be issued in the denominations as set forth in Schedule 2.01.
2.02. Purchase Price. The purchase price in consideration of the sale
---------------
of all the Company shares of common stock shall be shares of Sportan common
stock as Scheduled in Section 2.01.
2.03. Lock-Up/Leak-Out Agreement. As part of the consideration for
---------------------------
entering into this Agreement and as a condition of Closing, Messrs. Lau,
Mackler, Fritzsche, Jarkesy, Klausmeyer, Strawn and Gow agree to enter a
lock-up/leak-out agreement with Sportan in the form attached hereto as Schedule
5.07. As part of the consideration for entering into this Agreement and as a
condition of Closing, Jason Otteson, George Jarkesy, and Brewer & Pritchard,
P.C. agree to enter a lock-up/leak-out agreement with Sportan in the form
attached hereto as Schedule 6.07.7.
2.04. Tax Consequences. Each party shall be responsible for
------------------
ascertaining and resolving its own tax consequences resulting from the
transaction. No party shall make any representation as to any possible tax
consequences arising as the result of the transaction. However, it is intended
that the transaction contemplated hereby will qualify as a tax-free
reorganization.
2.05. Consideration. The Company Stock referred to in Section 2.01 and
-------------
the consideration to be paid by Sportan referred to in Sections 2.02 shall
constitute all of the consideration to be paid in connection with the
transactions contemplated by this Agreement.
2
2.06. The Closing. The "Closing" of the transactions contemplated by
------------
this Agreement shall be negotiated and concluded between Sportan, the Company,
and the Stockholders on or before May 28, 2004 (the "Closing Date"), at the
offices of Brewer & Pritchard, P.C., Three Riverway, Suite 1800, Houston, Texas
77056. The Stockholders will transfer to Sportan all of its right, title and
interest in and to the Company now held or hereafter acquired by them in
exchange for the consideration set forth herein. Such ownership interest in and
to the Company will be transferred by the Stockholders to Sportan free and clear
of any liens, encumbrances or other obligations.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE COMPANY SHAREHOLDER
The Company and Company Shareholder hereby agree, represent, and warrant to
Sportan, on the date of this Agreement and on the Closing Date, as follows:
3.01. Organization and Qualification.
--------------------------------
(a) The Company is a Texas corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation, with all requisite power and authority to conduct its business
and is not in breach of, or in default with respect to, any term of its Articles
of Incorporation, Bylaws or other organizational documents, except where such
breach would not have a Material Adverse Effect. As of the date hereof, the
Company has 6,266,439 shares of common stock outstanding which includes shares
issued pursuant to several debt conversions. The Company anticipates a debt
conversion resulting in 120,000 shares being issued prior to closing, as set
forth in Schedule 2.01. The Company has obtained all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits of and
from, and declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals, to own, lease,
license, and use its properties and assets and to carry on the business in which
it is now engaged, except where the failure to do so would not have a Material
Adverse Effect. The Company is duly qualified to transact the business in
which it is engaged in every jurisdiction in which its ownership, leasing,
licensing, or use of property or assets or the conduct of its business makes
such qualification necessary, except where the failure to do so would not have a
Material Adverse Effect.
(b) The Company does not have and has never had any subsidiaries and
does not directly or indirectly own any equity interest in, or any interest
convertible into or exchangeable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
3.02. Capitalization. The Stockholders collectively own one hundred
--------------
(100%) percent of the issued and outstanding shares of common stock of the
Company, which constitutes all of the outstanding capital stock of Company. The
Company Stock is not owned or held in violation of any preemptive right of any
other person or entity, is validly authorized, validly issued, fully paid and
non-assessable, and is owned of record and beneficially by the Stockholder. The
shares of Company Stock held by the Stockholders are free and clear of all
liens, security interests, pledges, charges, encumbrances, voting agreements,
and voting trusts. Except as set forth in Schedule 3.02, there is no
commitment, plan, or arrangement to issue, and no outstanding option, warrant,
convertible debt agreement or other right calling for the issuance of, any
shares of capital stock of the Company or any security or other instrument
convertible into, exercisable for, or exchangeable for capital stock of the
Company.
3.03. Due Authorization; Third Party Consents. The Company has the
------------------------------------------
right, power, legal capacity, and authority to enter into and perform its
obligations under this Agreement, and no approval or consent of any person other
than the Company is necessary in connection with the execution, delivery, or
performance of this Agreement. The execution, delivery, and performance of this
Agreement by the Company has been duly authorized by its board of directors and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the consummation of the transactions contemplated
hereby. This Agreement constitutes a legal and binding obligation of the
Company, and is valid and enforceable against the Company in accordance with its
terms.
3.04. Litigation. There is not any suit, action, arbitration, or
----------
legal, administrative, or other proceeding or governmental investigation (formal
or informal), pending or to the best of Company's or Company Shareholder's
Knowledge threatened (or any basis therefor known to the Company or the Company
Shareholder), with respect to the Company or the Stockholders (as it relates to
the business of the Company), including but not limited to any action or claim
under any federal,
3
state, local or other governmental act, rule, regulation, or any interpretations
thereof, relating to environmental matters or the protection of the safety and
health of persons connected with the Company's business (including but not
limited to the transportation, treatment, storage, recycling, disposal, or
release into the environment of hazardous or toxic materials or waste), or any
basis on which any proceeding or investigation against the Company or the
Stockholders might reasonably be undertaken or brought. The Company is not
presently engaged in any legal action to recover monies due to the Company, for
damages sustained by the Company, or amounts owed to the Company. During the
five year period immediately preceding the Closing, the Company has neither
received nor been a party to any written notice of violations, orders, claims,
citations, complaints, penalties, assessments, court, or other proceedings,
administrative, civil or criminal, at law or in equity.
3.05. Employees. The Company does not have or contribute to any
---------
pension, profit-sharing, option, other incentive plan, or other Employee Benefit
Plan (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974), or have any obligation to or customary arrangement with employees for
bonuses, incentive compensation, vacations, severance pay, insurance, or other
benefits except as set forth in Schedule 3.05. Schedule 3.05 is a list of each
employee and consultant and the compensation paid to each employee and
consultant.
3.06. No Violation of Employee Contracts. No current or prior
--------------------------------------
employee, consultant or Stockholder of the Company has any employment or
consulting agreement with the Company, except as set forth in Schedule 3.06. To
the knowledge of the Company and the Company Shareholder, no employee of the
Company is in violation of any term of any contract, non-competition agreement,
or any other contract or agreement or any restrictive covenant with, or any
other common law obligation to, a former employer relating to the right of any
such employee to be employed by the Company because of the nature of the
business conducted by the Company or of the use of trade secrets or proprietary
information of others. There is neither pending nor, to the Knowledge of the
Company or the Company Shareholder, threatened, any actions, suits, proceedings,
or claims with respect to any contract, agreement, covenant, or obligation
referred to in the preceding sentence.
3.07. Contracts, Agreements and Instruments. Schedule 3.07 includes
----------------------------------------
the following documents of the Company:
3.07.01. True and correct copies of all material contracts,
agreements and other instruments of the Company (including but not limited
to the License Agreement), as well as verbal understandings, involving an
obligation on the part of the Company to pay or to render services,
individually or in the aggregate, in excess of $10,000 per year or to
receive payments in excess of $10,000 per year.
3.07.02. True and correct copies of all verbal and written
contracts, arrangements, and understandings with officers, directors, and
five percent or greater shareholders.
Except for matters which, in the aggregate, would not have a Material Adverse
Effect or are otherwise disclosed in the Schedules attached hereto or in the
Agreement, to the Knowledge of the Company and the Company Shareholder, no other
party to any such contract, agreement, instrument, leases, or license is now in
violation or breach of, or in default with respect to complying with, any
material provision thereof, and each such contract, agreement, instrument,
lease, or license contained in the Schedules hereto is in full force and effect
and is the legal, valid, and binding obligation of the Company and is
enforceable as to them in accordance with its terms. Neither the Company nor
the Company Shareholder has Knowledge that any other party to any such contract
listed in Schedule 3.07 has given notice of termination or taken any action
inconsistent with the continuance of such arrangement or understanding, except
for matters which, in the aggregate, would not have a Material Adverse Effect;
and the execution, delivery, and performance of this Agreement will not
prejudice any such arrangement or understanding in any way contained in the
Schedules hereto, except for matters which, in the aggregate, would not have a
Material Adverse Effect. The Company is not a member of a customer or user
organization or of a trade association which relationship would be materially
affected by the execution and performance of this Agreement.
3.08. Consents and Approvals; No Violation. The execution and delivery and
-------------------------------------
performance of this Agreement by the Company will not (a) conflict with or
result in any breach of any provision of the Articles of Incorporation, Bylaws
or other organization documents of the Company, (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority (as defined herein), or where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not in the aggregate have a Material Adverse Effect, (c)
result in a material default (with or without due notice or lapse of time or
both) (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, contract, license (including the License Agreement), agreement or
other instrument or obligation to which the Company is a party or by which the
Company or any of its assets may be bound, except for such defaults (or rights
of termination, cancellation or
4
acceleration) as to which requisite waivers or consents have been requested, (d)
result in the creation or imposition of any lien, charge or other encumbrance on
the assets of the Company, or (e) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its assets.
3.09. Financial Statements. The Company has delivered to Sportan the
----------------------
Company Financial Statements. The Company Financial Statements fairly presents
in all material respects the financial position of the Company to which it
relates as of its date, and each of the related consolidated statements of
operations and retained earnings and cash flows or equivalent statements in the
Company Financial Statements (including any related notes and schedules) in
accordance with generally accepted accounting principles. The accounts
receivable and any other contingent asset reflected on the latest balance sheet
of the Company arose from bona fide transactions in the ordinary course of
business, and, to the best of the Company's Knowledge, are not subject to any
offset or counterclaim.
3.10. Undisclosed Liabilities. There are no undisclosed and/or
------------------------
contingent liabilities that may bear upon the value of the Company's business
and its financial condition.
3.11. Permits and Licenses. The Company has all permits, licenses, and
--------------------
other similar authorizations necessary for the conduct of its business as now
being conducted by it, and it is not in default in any respect under any such
permits, licenses, or authorizations, except for the absence of which would not
have a Material Adverse Effect. Such permits, licenses, and other similar
authorizations of the Company are as set forth in Schedule 3.11. Except as set
forth in Schedule 3.11, no royalties, commissions, or fees are payable by the
Company to any person by reason of the ownership or use of any intangible
property. The Company is the sole and exclusive owner of all of its assets,
does not use any of its assets by the consent of any other person and is not
required to and does not make any payments to others with respect thereto.
Except as set forth in Schedule 3.11, there are no material licenses,
sub-licenses, or agreements relating to the use of any intangible property of
the Company now in effect, and the Company and the Company Shareholder have no
Knowledge that any intangible property of the Company is being infringed by
others. No claim that would have a Material Adverse Effect on the business of
the Company is pending or, to the Knowledge of the Company, threatened, or has
been made since the Company's inception to the effect that, nor does the Company
have any Knowledge that, the operation of the Company's business or any method,
process, part, or material that the Company employs, conflicts in any material
way with, or infringes in any material way upon any rights of the type
enumerated above, owned by others.
3.12. Properties. The Company has good and valid title to all
----------
properties and assets used in its business or owned by it, free and clear of all
liens, mortgages, security interests, pledges, charges, and encumbrances (except
for liens for current taxes not yet due or disclosed on the Company's Last
Balance Sheet).
3.12.01. Attached as Schedule 3.12 is a true and complete list
of all properties and assets owned, leased, or licensed by the Company,
including with respect to such properties and assets leased or licensed by
the Company, a description of such lease or license. All such properties
and assets owned by the Company are reflected on the Company Last Balance
Sheet. All properties and assets owned, leased, or licensed by the Company
are in good and usable condition (reasonable wear and tear, which is not
such as to have a Material Adverse Effect on the operation of the business
of the Company, excepted).
3.12.02. The properties and assets owned, leased, or licensed by
the Company constitute all such properties and assets which are necessary
to the business of the Company as presently conducted.
3.13. Hazardous Materials. The Company is not in the business of
---------------------
possession, transportation, or disposal of hazardous materials. If and to the
extent that the Company's business has involved the possession, transportation,
or disposal of hazardous materials, to the best of the Company's and the Company
Shareholder's Knowledge, the Company has complied with any and all applicable
laws, ordinances, rules, and regulations. To the Knowledge of the Company and
the Company Shareholder, no employee of the Company has been exposed to
hazardous materials such that exposure could cause damage to such employee.
3.14. Interest in Competitors. Except as set forth in Schedule 3.14,
-------------------------
no shareholder, officer or director of the Company, nor any spouse or child of
any shareholder, officer or director with authority to enter into contracts on
behalf of the Company, has any direct or indirect interest in any competitor,
supplier, or customer of the Company or in any person from whom or to whom the
Company leases any real or personal property, or in any other person with whom
the Company is doing business.
5
3.15. Tax and Other Liabilities. The Company does not have any present
--------------------------
liability of any nature, accrued or contingent, of the type required to be
reflected on a balance sheet or in appropriate footnotes prepared in accordance
with GAAP, including, without limitation, liabilities for federal, state, local,
or foreign taxes and liabilities to customers or suppliers, which could have a
Material Adverse Effect upon the Company, other than the following:
i. Liabilities for which full provision has been made on the
Company's Last Balance Sheet; and
ii. Other liabilities arising since the date of the Company's Last
Balance Sheet and prior to the Closing in the ordinary course of
business which are not inconsistent with the representations and
warranties of the Company or any other provision of this
Agreement.
Without limiting the generality of the foregoing, the amounts set forth as
provisions for taxes on the Company Last Balance Sheet are sufficient for all
accrued and unpaid taxes of the Company, whether or not due and payable and
whether or not disputed, under tax laws, as in effect on the date of the
Company's Last Balance Sheet or now in effect, for the period ended on such date
and for all fiscal years prior thereto. The Company has filed all applicable
tax returns required to be filed by it or has obtained applicable extensions and
are not delinquent with respect to such extensions; have paid (or have
established on the Company Last Balance Sheet a reserve for) all taxes,
assessments, and other governmental charges payable or remittable by it or
levied upon it or its properties, assets, income, or franchises, which are due
and payable and have delivered to Sportan a true and correct copy of any report
as to adjustments received by the Company from any taxing authority during the
past five years and a statement as to any litigation, governmental or other
proceeding (formal or informal), or investigation pending.
3.16. Changes or Events. Since the Company Last Balance Sheet Date:
-------------------
3.16.01. There has been no event or condition affecting the
Company which would have a Material Adverse Effect on the Company.
3.16.02. The Company has not authorized, declared, paid or
effected any dividend or liquidation or other distribution in respect of
the Company Stock or other equity interest or any direct or indirect
redemption, purchase or other acquisition of any equity interest of the
Company.
3.16.03. The Company has not had any changes in its condition
(financial or otherwise), liabilities, assets, or business or in any of its
business relationships, including relationships with suppliers or
customers, that, when considered individually or in the aggregate, might
reasonably be expected to have a Material Adverse Effect.
3.16.04. The Company has not experienced any destruction of,
damage to, or loss of any asset (regardless of whether covered by
insurance) that, when considered individually or in the aggregate, might
reasonably be expected to have a Material Adverse Effect.
3.16.05. The Company has not experienced any labor disputes
that, when considered individually or in the aggregate, might reasonably be
expected to have a Material Adverse Effect.
3.16.06. The Company has not made any changes in accounting
methods or practices (including, without limitation, any change in
depreciation or amortization policies or rates), except for any such
changes as were required by law.
3.16.07. The Company has not accepted a purchase order or
quotation, arrangement or understanding for future sale of the products or
services of the Company out of the ordinary course of business, which the
Company expects will not be profitable.
3.16.08. Other than in the ordinary course of business, the
Company has not increased the salary or other compensation payable or to
become payable by the Company to any employee, or the declaration, payment,
or commitment or obligation of any kind for the payment by the Company of a
bonus or other additional salary or compensation to any such person.
3.16.09. The Company has not sold, leased, transferred, or
assigned any of their assets, tangible or
6
intangible, other than for a fair consideration in the ordinary course of
business;
3.16.10. No party has accelerated, terminated, modified or
cancelled any agreement, contract, lease or license (or series of related
agreements, contracts, leases and licenses) involving more than $5,000 to
which the Company is a party;
3.16.11. The Company has not made any loans to any person or
entity, or guaranteed any loan;
3.16.12. The Company has not waived or released any right or
claim of the Company;
3.16.13. To the Knowledge of the Company or the Stockholders, the
Company has not suffered any loss or any threatened loss of any permit,
license, qualification, special charter or certificate of authority held or
enjoyed or formerly held or enjoyed by the Company which loss has had or
upon occurrence might reasonably be expected to have a Material Adverse
Effect;
3.16.14. The Company has operated its business in the ordinary
course and consistent with past practices so as to preserve its business
organization intact, to retain the services of its employees and to
preserve its goodwill and relationships with suppliers, creditors,
customers, and others having business relationships with it;
3.16.15. The Company has not issued any note, bond or other debt
security or created, incurred or assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligations;
3.16.16. The Company has not delayed or postponed the payment of
accounts payable and other liabilities outside the ordinary course of
business;
3.16.17. The Company has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property owned or licensed
by the Company;
3.16.18. 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; and
3.16.19. The Company has not made any agreement to do any of the
things described in the preceding clauses 3.16.01 through 3.16.18.
3.17 Intellectual Property. The Company does not own or have pending,
----------------------
nor has it licensed, any Intel-
lectual Property, other than as described in Schedule 3.17 (the "Company
Intellectual Property"). The Company Intellectual Property has not been the
subject of any interference, opposition or cancellation proceedings. No
Stockholder, employee of the Company or affiliate of the Stockholders, nor any
other partnership or enterprise in which the Stockholders, any employee, or any
relative or affiliate had or now has a 5% or greater ownership interest or other
substantial interest, possesses any Intellectual Property which is used by the
Company pursuant to any agreement or arrangement with such person. The Company
has not received any written notice or written claim of infringement by the
Company of the Intellectual Property of any third party. There is no
infringement by others of the Intellectual Property of the Company. In
addition, the Company has not defaulted on the License Agreement.
3.18. NoDefaults. The consummation of the transactions contemplated
----------
by this Agreement will not result in or constitute any of the following: (i) a
breach of any term or provision of any other agreement of the Company that will
not be waived or released at Closing; (ii) a default or an event that will not
be waived or released at Closing, and that, with notice or lapse of time or
both, would be a default, breach, or violation of the Articles of Incorporation
or Bylaws of the Company or of any lease, license (including the License
Agreement), promissory note (including the 8% Convertible Subordinated
Promissory Note), conditional sales contract, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument, any Intellectual Property, or
arrangement to which the Company is a party or by which the Company or its
assets are bound; (iii) an event that will not be waived or released at Closing
and that would permit any party to terminate any agreement or to accelerate the
maturity of any indebtedness or other obligation of the Company; (iv) the
creation or imposition of any lien, charge, or encumbrance on any of the
Company's assets; or (v) a violation of any law or any rule or regulation of any
administrative agency or governmental body unrelated to the business or any
order, writ, injunction or decree of any court, administrative agency or
governmental body to which the Company is subject.
7
3.19. No Prohibited Payments. Neither the Company nor any employee, or
----------------------
agent of the Company, has made or authorized any payment of funds of the Company
or on behalf of the Company prohibited by law and no funds of the Company have
been set aside to be used for any payment prohibited by law.
3.20. Insurance. The Company represents that it has no insurance
---------
policies.
3.21. Completeness of Disclosure. No representation or warranty in
----------------------------
this Agreement and no Appendix, Schedule, Exhibit, or certificate prepared by
the Company pursuant hereto and no statement made or other document prepared by
the Company and furnished to Sportan by the Company contains any untrue
statement of a material fact or omits or will omit any material fact necessary
in order to make the statements contained therein not misleading.
Each of the Stockholders represents and warrants the following:
3.22. Restricted Stock. Each Stockholder understands and acknowledges
-----------------
that all of the shares of the common stock of Sportan to be issued to them shall
be issued under an exemption from registration provided for under Section 4(2)
of the Securities Act of 1933, as amended (the "Act"). Consequently, the
Stockholders understand and acknowledge that such common stock will be
"restricted stock" as that term is defined in Rule 144 promulgated under the
Act, and that (a) appropriate legends will be imprinted upon all certificates
for the shares of common stock of Sportan to be issued to the Stockholders, and
(b) appropriate stop transfer orders will be entered in the stock transfer
records of Sportan. In addition, the Stockholders represent his/her intention
to acquire the shares of Sportan for his/her own account, for investment
purposes only, and not with a view to any subsequent resale or distribution
thereof.
3.23. Authorization. All action on the part of the individual
-------------
Stockholders necessary for the authorization, execution and delivery of this
Agreement by the Stockholders and the Company have been taken.
3.24. Title to the Shares. Each of the Stockholders owns, and is
----------------------
transferring to Sportan at the Closing, good, valid and marketable title to the
number of shares of Company Stock set forth opposite the name of the
Stockholders on the signature page hereof, free and clear of all liens, claims,
options and encumbrances whatsoever. Each Stockholder represents that there are
no outstanding options, warrants or rights to purchase or acquire any of the
Company Stock of the individual Stockholders nor is the Company Stock owned by
each Stockholder subject to any voting agreements, pledges, shareholders
agreement or lock-up agreement, or rights of first refusals. Each of the
Stockholders represents that the shares of Company Stock being transferred
represent all the Company securities, of any kind, held by such Stockholder.
3.25. Purchase Entirely for His Own Account. The Sportan securities
----------------------------------------
will be acquired for investment for each of the Stockholders' own account, not
as a nominee or agent, and not with the view to the resale or distribution of
any part thereof, and each of the Stockholders has no present intention of
selling, granting any participation in, or otherwise distributing the Sportan
securities. Each of the Stockholders have no contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participation to such
person with respect to any of the securities of Sportan.
3.26. Disclosure of Information. Each of the Stockholders has reviewed
-------------------------
the SEC Filings and has had the opportunity to ask questions of, and receive
answers from, representatives of Sportan to obtain additional information
regarding Sportan.
3.27. Accredited Investor. Each Stockholder hereby represents that
--------------------
he/she/it is an "accredited investor" as defined in Rule 501 of Regulation D of
the Securities Act of 1933.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF SPORTAN AND SPORTAN SHAREHOLDER
Sportan and the Sportan Shareholder hereby agree, represent, and warrant to
the Company, on the date of this Agreement and on the Closing Date, as follows:
4.01. Organization. Sportan (a) is a corporation (i) duly organized,
------------
validly existing and in good standing under the laws of the State of Texas, and
(ii) duly qualified and in good standing as a foreign corporation in each state
in which it does
8
business, except where the failure to so qualify would not have a Materially
Adverse Effect on its business or assets, and (b) has the corporate power and
authority to own its properties and to carry on its business as now being
conducted.
4.02 SEC Document. Sportan has made all of its SEC Filings that it has
------------
been required to make under the Act, and the Securities Exchange Act of 1934, as
amended ("Exchange Act"). As of their respective dates, each of the SEC
Filings complied substantially in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC promulgated
thereunder. As of the Closing Date, the financial statements included in or
incorporated by reference into the SEC Documents, including the related notes
and schedules, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, are substantially
correct and complete in all respects, and are consistent with the books and
records of Sportan.
4.03. Authority, Binding Agreement. This Agreement has been approved
-------------------------------
by the Board of Directors of Sportan. No consents, authorizations or approvals,
whether of a governmental agency or instrumentality or otherwise, are necessary
in order to enable Sportan to enter into and perform this Agreement. This
Agreement constitutes legal, valid and binding obligations of Sportan and is
enforceable against Sportan in accordance with its terms.
4.04. Completeness of Disclosure. No representation or warranty in
----------------------------
this Agreement and no Schedule prepared by Sportan pursuant hereto contains any
untrue statement of a material fact or omits or will omit any material fact
necessary in order to make the statements contained therein not misleading.
4.05. Capitalization. The authorized capital stock of Sportan consists
--------------
of 50,000,000 shares of common stock and 10,000,000 shares of preferred stock,
of which 1,030,339 shares of common stock are outstanding, and no shares of
preferred stock are outstanding. Additionally, we reserved 31,700 shares
underlying convertible debt, options, and warrants outstanding. All issued and
outstanding Shares are validly issued, fully paid, non-assessable and free of
preemptive rights. Except as set forth in Schedule 4.05, (i) there are no
options, warrants, convertible debentures or any other obligation that require
Sportan to issue additional shares of capital stock and (ii) none of the holders
of Sportan common stock have anti-dilution rights, rights of first refusals,
subscription rights or rights to purchase issuances of additional shares.
4.06. Tax and OtherLiabilities. Except as set forth in Schedule 4.06,
-------------------------
Sportan does not have any present liability of any nature, accrued or
contingent, of the type required to be reflected on a balance sheet or in
appropriate footnotes prepared in accordance with GAAP, including, without
limitation, liabilities for federal, state, local, or foreign taxes and
liabilities to customers or suppliers, which could have a Material Adverse
Effect upon Sportan, other than the following:
i. Liabilities for which full provision has been made on Sportan's
balance sheet for the period ended December 31, 2003; and
ii. Other liabilities arising since the date of Sportan's balance
sheet for the period ended December 31, 2003 and prior to the
Closing in the ordinary course of business which are not
inconsistent with the representations and warranties of Sportan
or any other provision of this Agreement.
Without limiting the generality of the foregoing, the amounts set forth as
provisions for taxes on Sportan's last balance sheet are sufficient for all
accrued and unpaid taxes of Sportan, whether or not due and payable and whether
or not disputed, under tax laws, as in effect on the date of Sportan's last
balance sheet or now in effect, for the period ended on such date and for all
fiscal years prior thereto. Sportan has filed all applicable tax returns
required to be filed by it or has obtained applicable extensions and are not
delinquent with respect to such extensions; have paid (or have established on
Sportan's last balance sheet a reserve for) all taxes, assessments, and other
governmental charges payable or remittable by it or levied upon it or its
properties, assets, income, or franchises, which are due and payable and have
delivered to the Company a true and correct copy of any report as to adjustments
received by Sportan from any taxing authority during the past five years and a
statement as to any litigation, governmental or other proceeding (formal or
informal), or investigation pending.
4.07. Monies Owed to Sportan Shareholder. Except as set forth in
--------------------
Schedule 4.07, Sportan Shareholder is owed no additional monies from Sportan
under the Settlement and Release Agreement, and Sportan Shareholder has no
right, option, or warrant to purchase Sportan common stock. In addition,
Sportan Shareholder represents and warrants that his family members are owed no
monies from Sportan and have no right, option, or warrant to purchase Sportan
common stock. Except as set forth in Schedule 4.07, Sportan Shareholder is owed
no monies for any loans, expenses, or claims that Sportan Shareholder has with
Sportan.
9
ARTICLE V
---------
CONDITIONS TO OBLIGATIONS OF SPORTAN
The obligations of Sportan under this Agreement are subject, at the option
of Sportan, to the following conditions:
5.01. Accuracy of Representations and Compliance with Conditions. All
-----------------------------------------------------------
representations and warranties of Company or the Stockholders contained in this
Agreement shall be accurate when made and, in addition, shall be materially
accurate as of the Closing as though such representations and warranties were
then made by Company or such Stockholders on the part of Company or any of the
Stockholders. As of the Closing, the Company and the Stockholders shall have
performed and complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by any of them at or
before such time by this Agreement.
5.02. Other Closing Documents. Company and the Stockholders shall have
-----------------------
delivered to Sportan at or prior to the Closing such other documents as Sportan
may reasonably request in order to enable Sportan to determine whether the
conditions to their obligations under this Agreement have been met and otherwise
to carry out the provisions of this Agreement.
5.03. Review of Proceedings. All actions, proceedings, instruments,
-----------------------
and documents required to carry out this Agreement, or any agreement incidental
thereto and all other related legal matters shall be subject to the reasonable
approval of counsel to Sportan, and the Company shall have furnished such
counsel for Sportan such documents as such counsel may have reasonably requested
for the purpose of enabling them to pass upon such matters.
5.04. Legal Action. There shall not have been instituted or threatened
------------
any legal proceeding relating to, or seeking to prohibit or otherwise
challenging the consummation of, the transactions contemplated by this Agreement
or related agreements or to obtain substantial damages with respect thereto.
5.05. No Governmental Action. There shall not have been any action
------------------------
taken, or any law, rule, regulation, order, or decree proposed, promulgated,
enacted, entered, enforced, or deemed applicable to the transactions
contemplated by this Agreement by any federal, state, local, or other
governmental authority or by any court or other tribunal, including the entry of
a preliminary or permanent injunction, which, in the reasonable judgment of
Sportan:
5.05.01. Makes any of the transactions contemplated by this
Agreement illegal;
5.05.02. Results in a delay which affects the ability of Sportan
to consummate any of the transactions contemplated by this Agreement; or
5.05.03. Otherwise prohibits, restricts, or delays consummation
of any of the transactions contemplated by this Agreement or impairs the
contemplated benefits to Sportan of the transactions contemplated by this
Agreement.
5.06. Contractual Consents Needed. The parties to this Agreement shall
---------------------------
have obtained at or prior to the
Closing all consents required for the consummation of the transactions
contemplated by this Agreement from any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which any of them
is a party, or to which any of their respective businesses, properties, or
assets are subject, except where the failure would not have a Material Adverse
Effect.
5.07. Deliveries by Company and Stockholders:
-------------------------------------------
5.07.1. The Company shall deliver a Certificate of President of
Company in the form of Schedule 5.07.1.
5.07.2. Each Stockholder shall deliver a Certificate of
Stockholders in the form attached hereto as Schedule 5.07.2.
5.07.3. Company shall deliver Company Financial Statements
compliant with Regulation S-B.
10
5.07.4. Messrs. Lau, Mackler, Fritzsche, Jarkesy, Klausmeyer,
Strawn and Gow shall deliver a Lock-Up/Leak-Out Agreement in the form of
Schedule 5.07.4.
5.07.5. The Company shall deliver an intellectual property
legal opinion in the form attached hereto as Schedule 5.07.5.
5.07.6. Each stockholder shall deliver certificates owned by
each shareholder and duly executed stock powers in denomination set forth
in Schedule 2.01.
5.07.7. Company Shareholder shall deliver a signed Escrow
Agreement as set forth in Schedule 5.07.7.
5.07.8. Pursuant to the Escrow Agreement, Company Shareholder
shall deliver a Sportan stock certificate in the amount of 100,000 shares
of Sportan common as set forth in Schedule 5.07.8.
5.07.9. Company shall deliver Assumption Agreements (assuming
the Employee Agreements and Director Agreements) as set forth in Schedule
5.07.9.
5.07.10. Company shall deliver Signature Pages of each
Stockholder.
5.07.12. The Company shall deliver signed debt-to-equity
conversion agreements where $248,000 dollars of debt will convert into
620,000 shares of Company Stock in the form of agreement attached hereto as
Schedule 5.07.12.
5.07.13. Robert H. Gow shall deliver his Employment Termination
Letter.
5.07.14. George R. Jarkesy, Jr. Conflict Letter
ARTICLE VI
----------
CONDITIONS TO OBLIGATIONS OF THE
COMPANY AND THE STOCKHOLDER
The obligations of the Company and the Stockholders under this Agreement
are subject, at the option of the Company and the Stockholders, to the following
conditions:
6.01. Accuracy of Representations and Compliance with Conditions. All
-----------------------------------------------------------
representations and warranties of Sportan contained in this Agreement shall be
accurate when made and, in addition, shall be materially accurate as of the
Closing as though such representations and warranties were then made by Sportan
on the part of Sportan. As of the Closing, Sportan shall have performed and
complied with all covenants and agreements and satisfied all conditions required
to be performed and complied with at or before such time by this Agreement.
6.02. Other Closing Documents. Sportan shall have delivered to the
-------------------------
Company, at or prior to the Closing, such other documents as the Company may
reasonably request in order to enable the Company to determine whether the
conditions to its obligations under this Agreement have been met and otherwise
to carry out the provisions of this Agreement.
6.03. Review of Proceedings. All actions, proceedings, instruments,
-----------------------
and documents required to carry out this Agreement, or any agreement incidental
thereto and all other related legal matters shall be subject to the reasonable
approval of counsel to the Company and Sportan shall have furnished such counsel
such documents as such counsel may have reasonably requested for the purpose of
enabling them to pass upon such matters.
6.04. Legal Action. There shall not have been instituted or threatened
------------
any legal proceeding relating to, or seeking to prohibit or otherwise
challenging the consummation of, the transactions contemplated by this Agreement
or related agreements set forth as an exhibit hereto, or to obtain substantial
damages with respect thereto.
6.05. No Governmental Action. There shall not have been any action
------------------------
taken, or any law, rule, regulation, order, or
11
decree proposed, promulgated, enacted, entered, enforced, or deemed applicable
to the transactions contemplated by this Agreement by any federal, state, local,
or other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of the Company:
6.05.01. Makes any of the transactions contemplated by this
Agreement illegal;
6.05.02. Results in a delay which affects the ability of the
Company to consummate any of the transactions contemplated by this
Agreement;
6.05.03. Otherwise prohibits, restricts, or delays consummation
of any of the transactions contemplated by this Agreement or impairs the
contemplated benefits to the Company or the Stockholder of the transactions
contemplated by this Agreement.
6.06. Other Agreements. Agreements set forth as exhibits or schedules
-----------------
to this Agreement shall have been duly authorized, executed, and delivered by
the Parties thereto at or prior to the Closing, shall be in full force, valid
and binding upon the Parties thereto, and enforceable by them in accordance with
their terms at the Closing, and no party thereto at any time from the execution
thereof until immediately after the Closing shall have been in violation of or
in default in complying with any material provision thereof.
6.07. Deliveries by Sportan:
------------------------
6.07.1. Sportan shall deliver a Certificate of President of
Sportan in the form of Schedule 6.07.1.
6.07.2. Sportan shall deliver shares of Sportan stock in
denominations as set forth in Schedule 2.01.
6.07.3. Sportan shall deliver a Hold Harmless Letter as set
forth in Schedule 6.07.3.
6.07.4. Sportan shall deliver a signed Escrow Agreement as set
forth in Schedule 6.07.4.
6.07.5. Pursuant to the Escrow Agreement, Sportan Shareholder
shall deliver a Sportan stock certificate in the amount of 10,000 shares of
Sportan common as set forth in Schedule 6.07.5.
6.07.6. Sportan shall deliver Board of Directors resolutions
acknowledging that its officers and directors will resign and be replaced
by Company officers and directors.
6.07.7. Jason Otteson, George Jarkesy, and Brewer & Pritchard,
P.C. shall deliver a Lock-Up/Leak-Out Agreement in the form of Schedule
6.07.7. Sportan shall enter a registration rights agreement with George
Jarkesy, Jason Otteson, and Brewer & Pritchard, P.C. in the form of Exhibit
"A" to Schedule 6.07.7.
6.07.8. Sportan Shareholder shall deliver his Expiration of
Employment Agreement Acknowledgement.
ARTICLE VII
-----------
COVENANTS AND AGREEMENTS OF THE COMPANY
The Company covenants and agrees as follows:
7.01 Public Statements. Before the Company shall release any
------------------
information concerning this Agreement or the transactions contemplated by this
Agreement which is intended for or may result in public dissemination thereof,
the Company shall cooperate with Sportan, shall furnish drafts of all documents
or proposed oral statements to Sportan for comment, and shall not release any
such information without the written consent of Sportan. Nothing contained
herein shall prevent the Company from furnishing any information to any
governmental authority if required to do so by law.
7.02. Information. The Company agrees that it will not, and will cause
-----------
it representatives not to, use any
12
information obtained pursuant to this Agreement, as well as any other
information obtained prior to the date hereof in connection with its
consideration of the transactions contemplated hereby and the entering into of
this Agreement, for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. The Company shall keep
confidential, and shall cause its representatives to keep confidential, all
information and documents obtained pursuant to this Agreement), as well as any
other information obtained prior to the date hereof in connection with its
consideration of the transactions contemplated hereby and the entering into of
this Agreement, unless such information (i) was already known to the Company,
(ii) is disclosed with the prior written approval of the party to which such
information pertains, (iii) is already present in the public domain, or (iv) is
required to be disclosed by law. In the event that this Agreement is terminated
or the transactions contemplated hereby shall otherwise fail to be consummated,
the Company shall promptly cause all copies of documents or extracts thereof
containing information and data as to Sportan to be returned to Sportan.
7.03. No Adverse Actions. Sportan agrees that it will not take any
--------------------
action from the date hereof to the Closing inconsistent with its
representations, warranties, and covenants contained herein.
ARTICLE VIII
------------
COVENANTS AND AGREEMENTS OF SPORTAN
Sportan covenants and agrees as follows:
8.01. Public Statements. Before Sportan shall release any information
------------------
concerning this Agreement or the transactions contemplated by this Agreement
which is intended for or may result in public dissemination thereof, Sportan
shall cooperate with the Company, shall furnish drafts of all documents or
proposed oral statements to the Company for comment, and shall not release any
such information without the written consent of the Company. Nothing contained
herein shall prevent Sportan from furnishing any information to any governmental
authority if required to do so by law.
8.02. Information. Sportan agrees that it will not, and will cause it
-----------
representatives not to, use any information obtained pursuant to this Agreement,
as well as any other information obtained prior to the date hereof in connection
with its consideration of the transactions contemplated hereby and the entering
into of this Agreement, for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Sportan shall keep confidential,
and shall cause its representatives to keep confidential, all information and
documents obtained pursuant to this Agreement), as well as any other information
obtained prior to the date hereof in connection with its consideration of the
transactions contemplated hereby and the entering into of this Agreement, unless
such information (i) was already known to Sportan, (ii) is disclosed with the
prior written approval of the party to which such information pertains, (iii) is
already present in the public domain, or (iv) is required to be disclosed by
law. In the event that this Agreement is terminated or the transactions
contemplated hereby shall otherwise fail to be consummated, the Company shall
promptly cause all copies of documents or extracts thereof containing
information and data as to the Company to be returned to the Company.
8.03. No Adverse Actions. Sportan agrees that it will not take any
--------------------
action from the date hereof to the closing of this Agreement which would
adversely affect Sportan.
ARTICLE IX
----------
INDEMNIFICATION
9.01. Indemnification by the Company Shareholder. The Company
----------------------------------------------
Shareholder shall indemnify, defend and hold harmless Sportan against any
damage, loss, claim, liability, cost or expense, including reasonable fees and
disbursements of counsel, accountants, experts and other consultants
(collectively, "Damages"), resulting from, arising out of, or based upon any
-------
misstatement or omission from any representation by, or any breach of warranty,
covenant or agreement of the Company or the Company Shareholder contained herein
("Other Liabilities"). The maximum amount of indemnification shall be the
lesser of 100,000 shares of Sportan common stock or $300,000. Company
Shareholder agrees that upon the date of the signing of this Agreement, Company
Shareholder shall deliver to escrow agent shares of Sportan common stock as
provided in Section 5.07.8.
13
9.02. Indemnification by Sportan Shareholder. The Sportan Shareholder
---------------------------------------
shall indemnify, defend and hold harmless Sportan from and against any Damages
resulting from, arising out of, based upon or occasioned by any misstatement or
omission from any representations by, or any breach of warranty, covenant or
agreement of, Sportan Shareholder contained herein. The maximum amount of
indemnification shall be the lesser of 10,000 shares of Sportan common stock or
$100,000. Sportan Shareholder agrees that upon the date of the signing of this
Agreement, Sportan Shareholder shall deliver to escrow agent shares of Sportan
common stock as provided for in Section 6.07.5.
9.03 Indemnification Procedures. Promptly after receipt by a party
---------------------------
(the "Indemnitee"), of notice of any action, suit, proceeding, audit, claim or
----------
potential claim (any of which is hereinafter individually referred to as a
"Circumstance"), which could give rise to a right to indemnification for damages
------------
pursuant to Sections 9.01 or 9.02, the Indemnitee shall give the party who may
become obligated to provide indemnification hereunder (the "Indemnitor") written
----------
notice describing the Circumstance in reasonable detail; provided, that failure
--------
of an Indemnitee to give such notice to the Indemnitor shall not relieve the
Indemnitor from any of its indemnification obligations hereunder unless (and
then only to the extent) that the failure to give such notice prejudices the
defense of the Circumstance by the Indemnitee. Such Indemnitor shall have the
right, at its option and upon its acknowledgment to the Indemnitee of
Indemnitor's liability to indemnify Indemnitee in respect of such asserted
liability, to compromise or defend, at its own expense and by counsel selected
by Indemnitor, any such matter involving the asserted liability of the
Indemnitee; provided, that any such compromise (i) shall include as an
--------
unconditional term thereof, the giving by the claimant or the plaintiff to such
Indemnitee of a release from all liability in respect of such claim and (ii)
shall not result in the imposition on the Indemnitee of any remedy other than
monetary damages to be paid in full by the Indemnitor pursuant to this Section
9.03. If any Indemnitor shall undertake to compromise or defend any such
asserted liability, it shall promptly notify the Indemnitee of its intention to
do so, and the Indemnitee agrees to, and to cause its own independent counsel
to, cooperate fully with the Indemnitor and its counsel in the compromise of, or
defense against, any such asserted liability. All reasonable out-of-pocket costs
and expenses incurred by the Indemnitee in connection with such cooperation
(including, without limitation, the reasonable fees and expenses of the
Indemnitee's own independent counsel) shall be borne by the Indemnitor. Under no
circumstances shall the Indemnitee compromise any such asserted liability
without the written consent of the Indemnitor (which consent shall not be
unreasonably withheld), unless the Indemnitor shall have failed or refused to
undertake the defense of any such asserted liability after a reasonable period
of time has elapsed following the notice of a Circumstance received by such
Indemnitor pursuant to this Section 9.03. Alternatively, Indemnitor may satisfy
his indemnity obligation by returning for cancellation his Sportan common stock
held in escrow to Sportan. Promptly after receipt by the Indemnitee of notice of
any Circumstance, Indemnitee shall give Indemnitor and Escrow Agent written
notice describing the Circumstance in reasonable detail. The Indemnitor has the
right to instruct the Agent to deliver to Sportan Indemnitor's shares of Sportan
common stock in the amount necessary to satisfy the value of the claim. Upon
receipt of Indemnitor's shares of Sportan common stock, Sportan shall cancel and
return to treasury the amount of Sportan common stock necessary to satisfy the
indemnification obligation. Sportan's common stock value shall be determined by
the last five days' average sales price prior to the date upon which
indemnification is called. If any shares of Sportan common stock remain, Sportan
shall deliver a new stock certificate with remaining Sportan shares to escrow
agent.
9.04. Termination. Indemnification obligations of the Company
-----------
Shareholder and Sportan Shareholder terminate twelve months after the date of
the signing of this Agreement provided, however, that the escrow period will be
extended if there is a claim made during the twelve-month period.
ARTICLE X
---------
MISCELLANEOUS
10.01. Expenses. Sportan and the Company shall each be solely
--------
responsible for and bear all of its own respective expenses, including, without
limitation, expenses of legal counsel, accountants, financial and other
advisors, incurred at any time in connection with pursuing or consummating the
definitive agreements and the Transaction contemplated herein.
10.02. Brokerage and Other Fees. Each party shall be responsible for
---------------------------
the fees of their respective brokers and/or professionals (including, without
limitation, legal and accounting fees) engaged to assist in the preparation,
negotiation and counseling with respect, and relating, to this Agreement and
consummation of the transactions contemplated herein, as well as their
respective out-of-pocket expenses.
10.03. Further Actions. At any time and from time to time, the parties
---------------
agree, at their expense, to take such actions and to execute and deliver such
documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
14
10.04. Understanding and Advice of Counsel. The Company, the
----------------------------------------
Stockholders, and Sportan have had the assistance of separate counsel
(including, without limitation, tax counsel) in carefully reviewing, discussing
and considering all terms of this Agreement; and, with the benefit of such
advice by counsel, who has read and considered this Agreement, have agreed to
execute the same. This Agreement shall not be construed against or unfavorably
to any party because of such party's involvement in the preparation or drafting
of this Agreement.
10.05. Modification. The Agreement and the schedules and exhibits
------------
hereto set forth the entire understanding of the parties with respect to the
subject matter hereof supersede all existing agreements among them concerning
such subject matter, and may be modified only by a written instrument duly
executed by the Parties.
10.06. Notices. Any notice or other communication required or permitted
-------
to be given hereunder shall be in writing and shall be delivered by personal
delivery or by overnight delivery or mailed by certified mail, return receipt
requested (or by the most nearly comparable method if mailed from or to a
location outside of the United States), or delivered against receipt to the
party to whom it is to be given at the address of such party set forth on the
signature page to this Agreement. Any notice or other communication given by
certified mail (or by such comparable method) shall be deemed given at the time
of receipt thereof.
10.07. Waiver. Any waiver by any party of a breach of any provision of
------
this Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing
and, in the case of a corporate party, be authorized by a resolution of the
Board of Directors or by an officer of the waiving party.
10.08. Binding Effect. The provisions of this Agreement shall be
---------------
binding upon and inure to the benefit of each party's respective successors,
assigns, heirs, and personal representatives.
10.09. No Third-Party Beneficiaries. This Agreement does not create,
------------------------------
and shall not be construed as creating, any rights enforceable by any person not
a party to this Agreement.
10.10. Severability. If any provision of this Agreement is invalid,
------------
illegal, or unenforceable, the balance of this Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
10.11. Headings. The headings of this Agreement are solely for
--------
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
10.12. Counterparts, GoverningLaw;Venue. This Agreement may be executed
--------------------------------
in any number of counterparts (facsimile signatures are sufficient), each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without giving effect to
conflict of laws. Venue of any dispute concerning this Agreement shall be
exclusively in Harris County, Texas.
10.13.1. Survival of Representations and Warranties. All representations,
------------------------------------------
warranties, covenants and agree-
ments made by any party to this Agreement shall survive for a period of twelve
months after the Closing, and upon expiration of such period, such
representations and warranties shall expire.
10.14. Entire Agreement; Assignment. This Agreement (a) constitutes the
----------------------------
entire agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof and
(b) shall not be assigned by operation of law or otherwise.
10.15. Post-Closing. The parties agree to execute, deliver, and take
------------
action post-closing as necessary to effectuate any transaction herein
contemplated.
15
IN WITNESS WHEREOF, the parties have duly executed this Agreement effective
as of the date written in the preamble of this Agreement.
SPORTAN UNITED INDUSTRIES, INC., A TEXAS PHARMAFRONTIERS CORP., A TEXAS
CORPORATION CORPORATION
By: By:
---------------------------------------- --------------------------------
Jason G. Otteson, President Warren C. Lau, President
Address: 3170 Old Houston Rd. Address: 10211 Silver Leaf Lane
Huntsville, TX 77340 Tomball, TX 77375
SPORTAN STOCKHOLDER: COMPANY SHAREHOLDER:
------------------------------------------- -----------------------------------
Jason G. Otteson Warren C. Lau
Number of Shares of Sportan Stock _________ Number of Shares of Company Stock:
_____________
Address: _____________________________ Address: 12011 Silver Leaf Lane
_____________________________ Tomball, TX 77375
STOCKHOLDER:
_______________________________________
Print Name: __________________________
Address: _____________________________
16
Dates Referenced Herein and Documents Incorporated by Reference
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