Stock Purchase Agreement by and among Cerberus Cyber Sentinel Corporation, Atlantic Technology Systems, Inc., Atlantic Technology Enterprises, Inc., and James Montagne and Miriam Montagne as sole shareholders, dated October 1, 2021

EX-10.1 2 ex10-1.htm

 

Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

by and among

 

CERBERUS CYDER SENTINEL CORPORATION,

 

ATLANTIC TECHNOLOGY ENTERPRISES, INC.

 

ATLANTIC TECHNOLOGY SYSTEMS, INC.

 

and

 

JAMES AND MIRIAM MONTAGNE

 

dated as of October 1, 2021

 

 

TABLE OF CONTENTS

 

		Page
ARTICLE I PURCHASE AND SALE; CLOSING		1
Section 1.1	Purchase and Sale	1
Section 1.2	Purchase Price	1
Section 1.3	Closing	1
ARTICLE II REPRESENTATIONS AND WARRANTIES OF CERBERUS		2
Section 2.1	Organization	2
Section 2.2	Capitalization	2
Section 2.3	Authority Relative to this Agreement	2
Section 2.4	Non-Contravention	3
Section 2.5	Governmental Approvals	3
Section 2.6	Financial Statements	3
Section 2.7	Absence of Undisclosed Liabilities	3
Section 2.8	Absence of Certain Changes	3
Section 2.9	Compliance with Laws	4
Section 2.10	Legal Proceedings	4
Section 2.11	Brokerage Fees	4
Section 2.12	No Other Representations or Warranties	4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ATS AND ATLANTIC		4
Section 3.1	Organization	4
Section 3.2	Capitalization	5
Section 3.3	Authority Relative to this Agreement	5
Section 3.4	Non-Contravention	5
Section 3.5	Subsidiaries	6
Section 3.6	Governmental Approvals	6
Section 3.7	Financial Statements	6
Section 3.8	Absence of Undisclosed Liabilities	6
Section 3.9	Absence of Certain Changes	6
Section 3.10	Compliance with Laws	6
Section 3.11	Tax Matters	7
Section 3.12	Legal Proceedings	7
Section 3.13	Brokerage Fees	8
Section 3.14	Permits	8
Section 3.15	Insurance	8
Section 3.16	Employees	8
Section 3.17	Agreements, Contracts and Commitments	8
Section 3.18	Benefit Plans	9
Section 3.19	Regulatory Agencies	10
Section 3.20	Intellectual Property	10
Section 3.21	Investment Representations	10
Section 3.22	Independent Evaluation	10
Section 3.23	No Other Representations or Warranties	10
ARTICLE IV COVENANTS		11
Section 4.1	Confidentiality	11
Section 4.2	Non-competition; Non-solicitation	11

 

 

TABLE OF CONTENTS (continued)

 

		Page
ARTICLE V INDEMNIFICATION		12
Section 5.1	Survival.	12
Section 5.2	Indemnification By ATS AND ATLANTIC	12
Section 5.3	Indemnification By Cerberus	13
Section 5.4	Indemnification Procedures	13
Section 5.5	Payments	15
Section 5.6	Exclusive Remedy; Fraud	15
Section 5.7	Limitations on Indemnification	15
Section 5.8	Tax Treatment of Indemnification Payments	16
Section 5.9	Effect of Investigation	16
ARTICLE VI MISCELLANEOUS		16
Section 6.1	Waiver, Etc	16
Section 6.2	Assignment	16
Section 6.3	Counterparts	17
Section 6.4	Entire Agreement; No Third-Party Beneficiaries	17
Section 6.5	Governing Law; Jurisdiction; Waiver of Jury Trial.	17
Section 6.6	Specific Enforcement.	18
Section 6.7	Notices	18
Section 6.8	Severability	19
Section 6.9	Interpretation	19
Section 6.10	Non-Recourse	19

 

ANNEXES
Annex 1	Definitions
Annex 2	Lock up Agreement

 

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (this “Agreement”), is entered into as of October 1, 2021, by and among Cerberus Cyber Sentinel Corporation, a Delaware corporation (“Cerberus”), ATLANTIC TECHNOLOGY SYSTEMS, INC., a New Jersey corporation (“ATS”), AND ATLANTIC TECHNOLOGY ENTERPRISES, INC. , a New Jersey corporation (“ATLANTIC”), and James Montagne the sole shareholder of ATS, AND James Montagne and Miriam Montagne as the sole shareholders of ATLANTIC (James Montagne and Miriam Montagne, together referred to herein as the “Shareholder”). Each of Cerberus, ATS AND ATLANTIC and Shareholder are referred to herein as a” “and together as “Parties.” Certain terms used in this Agreement are defined in Annex 1.

 

RECITALS

 

WHEREAS, the Board of Directors of Cerberus has determined that it is in the best interests of Cerberus to enter into this Agreement pursuant to which ATS and ATLANTIC would become wholly owned by Cerberus, upon the terms and subject to the conditions set forth herein; and

 

WHEREAS, Shareholder, ATS and ATLANTIC have determined that it is in the best interests of Shareholder, to enter into this Agreement, upon the terms and subject to the conditions set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to be legally bound hereby, the Parties agree as follows:

 

ARTICLE I

Purchase and Sale: Closing

 

Section 1.1 Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, Shareholder shall sell to Cerberus, and Cerberus shall purchase from Shareholder, all of the ATS and ATLANTIC Shares, free and clear of all Encumbrances, for the consideration specified herein. Notwithstanding anything to the contrary contained in this Agreement, the Parties acknowledge and agree that Cerberus shall not be purchasing or acquiring, and the following are specifically excluded from this transaction, any real property (including specifically 386 State Route 94 South, Newton, New Jersey, which is owned by the Shareholder), and any and all equipment, materials and tools used in connection with the operations, management and/or maintenance of the real property, and/or personal property of Shareholder.

 

Section 1.2 Purchase Price. The aggregate purchase price for the ATS and ATLANTIC Shares shall be 200,000 shares of Cerberus common stock, par value $0.00001 (the “Cerberus Stock”) to be given to Shareholders on the Closing Date, and an additional 100,000 shares of Cerberus common stock, par value $0.00001 if the “Parties” “Party” mutually operate ATS and ATLANTIC to generate generates $1 million dollars of revenue while maintaining the furtherance of a positive EBITDA within 12 months of the “Closing”, and $75,000 in cash to be paid on the Closing Date and an additional $150,000 in cash to be paid to Shareholders upon the uplist to Nasdaq.

 

Section 1.3 Closing. The closing of the transactions contemplated hereby (the “Closing”) shall take place on the date hereof (the “Closing Date”). At the Closing,

 

(a) Cerberus shall deliver to Shareholder the Cerberus Stock by delivery of certificates or registration on the books of Cerberus’ transfer agent in book-entry format; and

 

(b) Shareholder shall deliver to Cerberus one or more certificates evidencing the ATS and ATLANTIC Shares, duly endorsed or accompanied by stock powers or other instruments of transfer in form acceptable to Cerberus.

 

 

ARTICLE II

Representations and Warranties of Cerberus

 

represents and warrants to Shareholder that:

 

Section 2.1 Organization. Cerberus is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Cerberus has full corporate power and authority to carry on its business as presently conducted. Cerberus is duly qualified and in good standing to do business as a foreign entity in each jurisdiction in which the conduct or nature of its business or the ownership, leasing, holding or operating of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, would not have a Material Adverse Effect on Cerberus. Cerberus has made available to Shareholder accurate and complete copies of all Cerberus Organizational Documents.

 

Section 2.2 Capitalization.

 

(a) The authorized capital stock of Cerberus consists of 250,000,000 shares of Cerberus Stock. All of the outstanding shares of Cerberus Stock have been duly authorized and validly issued in accordance with the Certificate of Incorporation and are fully paid and non-assessable, and have been issued in compliance with all applicable Laws and are not subject to any pre-emptive rights. Immediately prior to the Closing Date, there are 117,729,971 issued and outstanding shares of Cerberus Stock.

 

(b) The Cerberus Stock to be issued pursuant to this Agreement has been duly authorized in accordance with the Certificate of Incorporation and when issued and delivered pursuant to this Agreement in accordance with the terms hereof, will be validly issued, fully paid and non-assessable.

 

(c) There are no preemptive rights to purchase any shares of Cerberus Stock. There are no outstanding options, warrants or other rights to purchase, agreements, or other obligations to issue, or rights to convert any obligations into or exchange any securities for, shares of Cerberus Stock.

 

Section 2.3 Authority Relative to this Agreement. Assuming the accuracy of the representations set forth in ARTICLE III, (a) Cerberus has the full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby; (b) the execution, delivery and performance by Cerberus of this Agreement, and the consummation by it of the transactions contemplated hereby, have been duly authorized, and no other corporate proceedings on the part of Cerberus are necessary to authorize the execution, delivery and performance by Cerberus of this Agreement and the consummation of the transactions contemplated hereby; and (c) this Agreement has been duly executed and delivered by Cerberus and, assuming the due authorization, execution and delivery of the other Parties, constitutes, and each other agreement, instrument or document executed or to be executed by Cerberus in connection with the transactions contemplated hereby has been, or when executed will be, duly executed and delivered by Cerberus and, assuming the due authorization, execution and delivery of the other parties, constitutes, or when executed and delivered will constitute, a valid and legally binding obligation of Cerberus enforceable against Cerberus in accordance with their respective terms, except that such enforceability may be limited by (A) applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and (B) equitable principles that may limit the availability of certain equitable remedies (such as specific performance) in certain instances (collectively, “Creditor Rights”).

 

 

Section 2.4 Non-Contravention. The execution, delivery and performance by Cerberus of this Agreement and the consummation by Cerberus of the transactions contemplated hereby do not and will not (a) conflict with or result in a violation of any provision of the Cerberus Organizational Documents or the organizational documents of any Subsidiary of Cerberus, (b) conflict with or result in a violation of any provision of, or constitute (with or without the giving of notice or the passage of time or both) a default under, or give rise (with or without the giving of notice or the passage of time or both) to any right of termination, cancellation or acceleration under, any bond, debenture, note, mortgage, indenture, lease, contract, agreement or other instrument or obligation to which Cerberus or any of its Subsidiaries is a party or by which Cerberus, any of its Subsidiaries or any of their properties may be bound, (c) result in the creation or imposition of any Encumbrance upon the properties of Cerberus or any of its Subsidiaries, except for Permitted Encumbrances or (d) violate any applicable Law binding upon Cerberus or any of its Subsidiaries, except, in the case of clauses (b), (c) and (d) above, for any such conflicts, violations, defaults, terminations, cancellations, accelerations or Encumbrances which would not, individually or in the aggregate, have a Material Adverse Effect on Cerberus.

 

Section 2.5 Governmental Approvals. No material consent, approval, Order or authorization of, or declaration, filing or registration with, any Governmental Authority is required to be obtained or made by Cerberus or any Cerberus Subsidiary in connection with the execution, delivery or performance by Cerberus of this Agreement or the consummation by it of the transactions contemplated hereby, other than any such consent, approval, Order, authorization, registration, filing, or permit the failure to obtain or make has not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Cerberus.

 

Section 2.6 Financial Statements. The financial statements of Cerberus and Cerberus’ subsidiaries, as of December 31, 2020 filed with Cerberus’ Annual Report on Form 10-K (the “Cerberus Financial Statements”) (a) were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto); and (b) accurately and fairly presented in all material respects the financial position of Cerberus at the dates thereof and the results of Cerberus’ operations and cash flows for the periods indicated therein, subject, in the case of unaudited interim financial statements, to normal and year-end audit adjustments as permitted by GAAP.

 

Section 2.7 Absence of Undisclosed Liabilities. Neither Cerberus nor any of its Subsidiaries has any material liability or obligation of any nature (whether accrued, absolute, contingent, unliquidated or otherwise) that would be required to be set forth on a balance sheet of Cerberus prepared in accordance with GAAP, except (i) liabilities reflected in the Cerberus Financial Statements or described in the notes accompanying the Cerberus Financial Statements, (ii) liabilities which have arisen since the date of the Cerberus Financial Statements in the ordinary course of business and (iii) liabilities arising under executory provisions of contracts entered into in the ordinary course of business.

 

Section 2.8 Absence of Certain Changes. Since the date of the Cerberus Financial Statements, (i) there has not been any change, event or condition that would reasonably be expected to result in any Material Adverse Effect on Cerberus, (ii) the business of Cerberus has been conducted only in the ordinary course consistent with past practice, (iii) Cerberus has not incurred any material liability, engaged in any material transaction or entered into any material agreement outside the ordinary course of business consistent with past practice with respect to its business and assets and (iv) Cerberus has not suffered any Loss, damage, destruction or other casualty to any of its assets (whether or not covered by insurance) that would result in a Material Adverse Effect on Cerberus.

 

 

Section 2.9 Compliance with Laws. To the Knowledge of Cerberus, Cerberus has complied in all material respects with all applicable Laws relating to any aspect of the business of Cerberus. Cerberus has not received any written notice from any Governmental Authority relating to any aspect of the business of Cerberus or alleging that Cerberus is not in compliance with or is in default or violation of any applicable Law, in each case that would be material to Cerberus. Cerberus has not been charged or, to the Knowledge of Cerberus, threatened with, or under investigation with respect to, any material violation of any applicable Law relating to any aspect of the business of Cerberus.

 

Section 2.10 Legal Proceedings. There are no material Proceedings pending or, to the Knowledge of Cerberus, threatened against or involving Cerberus, any of its Subsidiaries or any of their respective properties or assets.

 

Section 2.11 Brokerage Fees. Neither Cerberus nor any Affiliate has retained any financial advisor, broker, agent or finder or paid or agreed to pay any financial advisor, broker, agent or finder on account of this Agreement, any transaction contemplated hereby or any other transaction.

 

Section 2.12 Independent Evaluation. In entering into this Agreement, Cerberus acknowledges and affirms that it has relied and will rely solely on the terms of this Agreement and upon its independent analysis, evaluation and investigation of, and judgment with respect to, the business, economic, legal, Tax or other consequences of this transaction.

 

Section 2.13 No Other Representations or Warranties. Neither Cerberus nor any other Person makes (and ATS and ATLANTIC and Shareholder agree that they are not relying upon) any other express or implied representation or warranty with respect to Cerberus (including the value, condition or use of any asset) or the transactions contemplated by this Agreement, and Cerberus disclaims any other representations or warranties not contained in this Agreement, whether made by Cerberus, any Affiliate of Cerberus or any of their respective officers, directors, managers, employees or agents. Except for the representations and warranties contained in this Agreement and those that may be determined to have been false or intentionally misleading, Cerberus disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement or information made, communicated or furnished (orally or in writing) to ATS and ATLANTIC and Shareholder or any of their Affiliates or any of its officers, directors, managers, employees or agents (including any opinion, information, projection or advice that may have been or may be provided to ATS and ATLANTIC and Shareholder by any director, officer, employee, agent, consultant or representative of Cerberus or any of its Affiliates).

 

ARTICLE III

Representations and Warranties of ATS AND ATLANTIC and Shareholders

 

ATS AND ATLANTIC and Shareholder represents and warrants to Cerberus that:

 

Section 3.1 Organization. ATS and ATLANTIC are corporations, duly organized, validly existing and in good standing under the Laws of the State of New Jersey. ATS and ATLANTIC has full power and authority to carry on its business as presently conducted. To the best of their knowledge, ATS and ATLANTIC are duly qualified and in good standing to do business in each jurisdiction in which they conduct its business or the ownership, leasing, holding or operating of its properties makes such qualification necessary, except such jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, would not have a Material Adverse Effect on ATS and ATLANTIC. ATS and ATLANTIC has made available to Cerberus accurate and complete copies of all ATS and ATLANTIC Organizational Documents.

 

 

Section 3.2 Capitalization.

 

(a) The authorized equity securities of ATS and ATLANTIC are wholly owned by James and Miriam Montagne (the “ATS AND ATLANTIC Shares”) and none are held in treasury. All of the ATS and ATLANTIC Shares have been duly authorized, are validly issued, fully paid, and nonassessable, and have been issued in compliance with all applicable Laws and are not subject to any pre emptive rights. ATS has 2,500 shares without par value authorized and issued with James Montagne as sole shareholder. ATLANTIC has 100 shares without par value authorized and issued with James Montagne as 51% shareholder and Miriam Montagne as 49% shareholder.

 

(b) There are no preemptive rights to purchase any Securities of ATS and ATLANTIC. There are no outstanding options, warrants or other rights to purchase, agreements or other obligations to issue, or rights to convert any obligations into or exchange any securities for, ATS and ATLANTIC Shares or other Securities of ATS and ATLANTIC.

 

(c) ATS and ATLANTIC does not own, directly or indirectly, any capital stock, membership, interest, partnership interest, joint venture interest or other interest in any Person.

 

Section 3.3 Authority Relative to this Agreement. Assuming the accuracy of the representations set forth in Article II above, (a) ATS and ATLANTIC has full power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby; (b)the execution, delivery and performance by ATS and ATLANTIC of this Agreement, and the consummation of the transactions contemplated hereby, have been duly authorized, and no other proceedings on the part of ATS and ATLANTIC are necessary to authorize the execution, delivery and performance by ATS and ATLANTIC of this Agreement and the consummation of the transactions contemplated hereby; and (c) this Agreement has been duly executed and delivered by ATS and ATLANTIC and Shareholder and, assuming the due authorization, execution and delivery of the other Parties, constitutes, and each other agreement, instrument or document executed or to be executed by ATS and ATLANTIC and Shareholder in connection with the transactions contemplated hereby has been, or when executed will be, duly executed and delivered by ATS and ATLANTIC and Shareholder and, assuming the due authorization, execution and delivery of the other parties, constitutes, or when executed and delivered will constitute, a valid and legally binding obligation of ATS and ATLANTIC and Shareholder enforceable against ATS and ATLANTIC and Shareholder in accordance with their respective terms, except that such enforceability may be limited by Creditor Rights.

 

Section 3.4 Non-Contravention. The execution, delivery and performance by ATS and ATLANTIC and Shareholder of this Agreement and the consummation by it and of the transactions contemplated hereby, do not and will not (a) conflict with or result in a violation of any provision of its articles of organization or other governing instruments of ATS and ATLANTIC, (b) to the best of their knowledge, conflict with or result in a violation of any provision of, or constitute (with or without the giving of notice or the passage of time or both) a default under, or give rise (with or without the giving of notice or the passage of time or both) to any right of termination, cancellation or acceleration under, any bond, debenture, note, mortgage, indenture, lease, contract, agreement or other instrument or obligation to which ATS and ATLANTIC or any of its Subsidiaries is a party or by which ATS and ATLANTIC may be bound, (c) to the best of their knowledge, result in the creation or imposition of any Encumbrance upon any property of ATS and ATLANTIC, except for Permitted Encumbrances, or (d) assuming compliance with the matters referred to in Section IIl.6, violate any applicable Law binding upon ATS and ATLANTIC, except, in the case of clauses (b), (c) and (d) above, for any such conflicts, violations, defaults, terminations, cancellations, accelerations or Encumbrances which would not, individually or in the aggregate, have a Material Adverse Effect on ATS and ATLANTIC.

 

 

Section 3.5 Subsidiaries. ATS and ATLANTIC does not have any Subsidiaries.

 

Section 3.6 Governmental Approvals. No material consent, approval, Order or authorization of, or declaration, filing or registration with, any Governmental Authority is required to be obtained or made by ATS and ATLANTIC in connection with the execution, delivery or performance by it of this Agreement or the consummation by it of the transactions contemplated hereby, other than any such consent, approval, Order, authorization, registration, filing, or permit the failure to obtain or make has not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on ATS and ATLANTIC.

 

Section 3.7 Financial Statements. ATS and ATLANTIC has delivered to Cerberus (a) the consolidated balance sheets of ATS and ATLANTIC as of December 31, 2020 and 2019 and the related statements of income for the years then ended, and the notes and schedules thereto (the “Annual ATS and ATLANTIC Financial Statements”), and (b) the unaudited consolidated balance sheet of ATS and ATLANTIC as of August 6, 2021, and the related statement of income for the six (6) months then ended (the “Interim ATS and ATLANTIC Financial Statements” and together with the Annual ATS AND ATLANTIC Financial Statements, the “ATS and ATLANTIC Financial Statements”). The ATS and ATLANTIC Financial Statements (i) have been prepared from the books and records of ATS and ATLANTIC consistent with past practice throughout the periods involved, and (ii) accurately and fairly present in all material respects the consolidated financial position of ATS and ATLANTIC as of the respective dates thereof and its income for the periods then ended.

 

Section 3.8 Absence of Undisclosed Liabilities. ATS and ATLANTIC has no material liability or obligation of any nature (whether accrued, absolute, contingent, unliquidated or otherwise) that would be required to be set forth on a balance sheet of ATS and ATLANTIC prepared in accordance ATS and ATLANTIC past practices, except (a) liabilities reflected in the Interim ATS and ATLANTIC Financial Statements, (b) liabilities which have arisen since the date of the Interim ATS and ATLANTIC Financial Statements in the ordinary course of business (none of which is a material liability for breach of contract, tort or infringement), (c) liabilities arising under executory provisions of contracts entered into in the ordinary course of business (none of which is a material liability for breach of contract).

 

Section 3.9 Absence of Certain Changes. Since the date of the Interim ATS and ATLANTIC Financial Statements, (a) there has not been any change, event or condition that would reasonably be expected to result in any Material Adverse Effect on ATS and ATLANTIC, (b) the business of ATS and ATLANTIC has been conducted only in the ordinary course consistent with past practice, (c) ATS and ATLANTIC has not incurred any material liability, engaged in any material transaction or entered into any material agreement outside the ordinary course of business consistent with past practice with respect to its business and assets and (d) ATS and ATLANTIC has not suffered any Loss, damage, destruction or other casualty to any of its assets (whether or not covered by insurance) that would result in a Material Adverse Effect on ATS and ATLANTIC.

 

Section 3.10 Compliance with Laws. To the Knowledge of ATS and ATLANTIC, ATS and ATLANTIC has complied in all material respects with all applicable Laws relating to any aspect of the business of ATS and ATLANTIC. ATS and ATLANTIC has not received any written notice from any Governmental Authority relating to any aspect of the business of ATS and ATLANTIC or alleging that ATS and ATLANTIC is not in compliance with or is in default or violation of any applicable Law. ATS and ATLANTIC has not been charged or, to the Knowledge of ATS and ATLANTIC, threatened with, or under investigation with respect to, any material violation of any applicable Law relating to any aspect of the business of ATS and ATLANTIC.

 

 

Section 3.11 Tax Matters.

 

(a) All material Tax Returns of ATS and ATLANTIC have been timely filed (taking into account applicable extensions of time to file) with the appropriate Taxing Authority and all such Tax Returns are true, correct and complete in all material respects. All material Taxes due and owing by ATS and ATLANTIC have been paid and all such Taxes incurred but not yet due and owing have either been paid or properly accrued on the books and records of ATS and ATLANTIC in accordance with GAAP.

 

(b) ATS and ATLANTIC has been a disregarded entity for federal (and, as applicable, state and local) income Tax purposes from inception and through the Effective Date, except as may otherwise been disclosed in the financial documents provided to Cerberus.

 

(c) All material Taxes required to be withheld or collected by ATS and ATLANTIC with respect to any employee, independent contractor, purchaser or other third party, to the best of Shareholder’s knowledge, have been withheld or collected, and have been timely paid to the appropriate Taxing Authority or properly accrued.

 

(d) There are no waivers or extensions of any statute of limitations currently in effect with respect to Taxes of ATS and ATLANTIC. There are no actions, examinations or audits currently pending or, to ATS and ATLANTIC Knowledge, threatened with respect to ATS and ATLANTIC in respect of any Tax. No issue has been raised by a Taxing Authority in any prior action or examination of ATS and ATLANTIC which, by application of the same or similar principles, could reasonably be expected to result in a proposed deficiency for any subsequent taxable period. No claim has been made in writing by any Governmental Authority in a jurisdiction where ATS and ATLANTIC does not file Tax Returns that ATS and ATLANTIC is, or may be, subject to taxation by that jurisdiction.

 

(e) Except for Permitted Encumbrances, (i) there are no Encumbrances for Taxes on any of the assets of ATS and ATLANTIC, and (ii) there are no Encumbrances for Taxes, other than Encumbrances with respect to current period Taxes not yet due or payable, on any of the assets of ATS and ATLANTIC.

 

(f) ATS and ATLANTIC is not a party to, and ATS and ATLANTIC is not subject to, any Tax allocation, Tax sharing or similar agreement, Tax indemnity obligation or similar agreement, or other agreement or arrangement with respect to Taxes that could affect the Tax liability of ATS and ATLANTIC. ATS and ATLANTIC has no liability for Taxes of any other Person under Treasury Regulation Section 1.1502-6 (or similar provision of state, local or non-U.S. law) as a transferee or successor, by contract or otherwise.

 

(g) No portion of the properties of ATS and ATLANTIC (i) has been contributed to and is currently owned by a tax partnership; (ii) is subject to any form of agreement (whether formal or informal, written or oral) deemed by any federal tax statute, rule or regulation to be or to have created a tax partnership; or (iii) otherwise constitutes “partnership property” (as that term is used throughout Subchapter K of Chapter l of Subtitle A of the Code) of a tax partnership.

 

(h) Neither ATS and ATLANTIC nor any of its shareholder have filed an election on IRS Form 8832, Entity Classification Election, causing ATS and ATLANTIC to be classified as an association taxable as an entity for U.S. federal income tax purposes.

 

Section 3.12 Legal Proceedings. Except as may be specifically disclosed in writing to Cerberbus by ATS and ATLANTIC prior to the execution of this Agreement, there are no material Proceedings pending or, to the Knowledge of ATS and ATLANTIC, threatened against or involving ATS and ATLANTIC or any of its respective properties or assets.

 

 

Section 3.13 Brokerage Fees. ATS and ATLANTIC has retained Everingham and Kerr to broker this deal, and within a reasonable time from the date of closing, not to exceed ten days, $75,000.00 shall be paid to Everingham and Kerr.

 

Section 3.14 Permits. Any Permit obtained by ATS and ATLANTIC as of the date hereof is, to the best of their knowledge, in full force and effect in all material respects, and ATS and ATLANTIC is in material compliance with its Permits. ATS and ATLANTIC has not received any written notice from any Governmental Authority, and no Proceeding is pending or, to the Knowledge of ATS and ATLANTIC, threatened, with respect to any alleged failure by ATS and ATLANTIC to have any material Permit.

 

Section 3.15 Insurance. ATS and ATLANTIC has disclosed a complete and correct list of material insurance policies, as of the date of this Agreement, maintained by or on behalf of ATS and ATLANTIC.

 

Section 3.16 Employees. ATS and ATLANTIC is not a party to, or bound by, any collective bargaining or other agreement with a labor organization. ATS and ATLANTIC is, to the best of their knowledge, in compliance in all material respects with all applicable Laws pertaining to employment and employment practices. There is no pending or, to the Knowledge of ATS and ATLANTIC, threatened Proceeding against or involving ATS and ATLANTIC by or before, and ATS and ATLANTIC is not subject to any judgment, Order, writ, injunction, or decree of or inquiry from, any Governmental Authority in connection with any former employee of ATS and ATLANTIC.

 

Section 3.17 Agreements, Contracts and Commitments.

 

(a) ATS and ATLANTIC is not a party to, as of the date hereof, (i) any collective bargaining agreements or any agreements that contain any severance pay liabilities or obligations, (ii) any Employee Benefit Plans, (iii) any employment agreement, contract or commitment with an employee, or agreements to pay severance, (iv) other than the continuing employment of James Montagne and Miriam Montagne, any agreements between or among ATS and ATLANTIC or one of its Affiliates or with any Related Person of ATS and ATLANTIC, (v) any agreement, indenture or other instrument for borrowed money and any agreement or other instrument which contains restrictions with respect to payment of distributions in respect of any outstanding Securities that has not been disclosed to Cerberus in writing, (vi) any agreement, contract or commitment containing any covenant limiting the freedom of ATS and ATLANTIC to engage or compete in any line of business or with any Person or in any geographic area during any period of time, (vii) any agreement, contract or commitment relating to capital expenditures in excess of $5,000, that has not been disclosed to Cerberus in writing; (viii) any agreement, contract or commitment relating to the acquisition, disposition or voting of assets or capital stock of any business enterprise, including ATS and ATLANTIC, (ix) any contract that requires ATS and ATLANTIC to purchase its total requirements of any product or service from a third party, that has not been disclosed to Cerberus in writing; (x) any contract that provides for the indemnification by ATS and ATLANTIC of any Person for, or the assumption of, any Tax, environmental or other liability of any Person, that has not been disclosed to Cerberus in writing; (xi) any broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising contract to which ATS and ATLANTIC is a party, that has not been disclosed to Cerberus in writing; (xii) except for contracts relating to trade receivables, any contract relating to indebtedness (including guarantees) of ATS and ATLANTIC, that has not been disclosed to Cerberus in writing; (xiii) any contract with any Governmental Authority to which ATS AND ATLANTIC is a party, that has not been disclosed to Cerberus in writing; (xiv) any contract to which ATS AND ATLANTIC is a party that provides for any joint venture, partnership or similar arrangement by ATS AND ATLANTIC, (xv) any tax partnership agreement, (xvi) any agreement that provides for an irrevocable power of attorney that will be in effect after the Closing Date or (xvii) any agreement that constitutes a lease of real property, that has not been disclosed to Cerberus in writing (it being acknowledged by the Parties that the Shareholder owns the real property in which ATS AND ATLANTIC currently operate, and is subject to a Lease Agreement). ATS AND ATLANTIC has made available to Cerberus accurate and complete copies of all written Material Contracts, including all amendments thereto.

 

 

(b) ATS AND ATLANTIC has not materially breached any of the terms or conditions of any lease, contract, agreement, commitment, instrument or understanding (whether written or oral). There is not, to the Knowledge of ATS AND ATLANTIC, under any Material Contract, any default or event which, with notice or lapse of time or both, would constitute a material default on the part of any of the parties thereto, or any notice of termination, cancellation or material modification.

 

(c) Except to the extent the enforceability thereof may be limited by Creditor Rights, each of the Material Contracts (i) constitutes the valid and binding obligation of ATS AND ATLANTIC and constitutes the valid and binding obligation of the other parties thereto, (ii) is in full force and effect and (iii) immediately after the Closing, will continue to constitute a valid and binding obligation of ATS AND ATLANTIC.

 

Section 3.18 Benefit Plans. ATS AND ATLANTIC has disclosed a complete and accurate list of all Employee Benefit Plans (a) that ATS AND ATLANTIC sponsors or maintains with respect to its current or former employees, managers, directors of other service providers, (b) to which ATS AND ATLANTIC contributes or has an obligation to contribute with respect to its current or former employees, managers, directors or other service providers, or (c) with respect to which ATS AND ATLANTIC may otherwise have any liability, whether direct or indirect (including any such plan or other arrangement previously maintained by ATS AND ATLANTIC) (each a “ATS AND ATLANTIC Benefit Plan” and collectively referred to as the “ATS AND ATLANTIC Benefit Plans”). To the best of Shareholder’s knowledge, no ATS AND ATLANTIC Benefit Plan is a “defined benefit plan” within the meaning of Section 3(35) of ERISA, a “multiemployer plan,” as defined in Section 3(37) of ERISA, or a plan that is subject to the minimum funding standards of Section 302 of BRISA or Section 412 of the Code, nor has either ATS AND ATLANTIC or any of its ERISA Affiliates ever sponsored, maintained, contributed to or been obligated to contribute to any such plan. To the best of Shareholder’s knowledge, there have been no prohibited transactions (described under Section 406 of ERISA or Section 4975(c) of the Code) or breaches of fiduciary duty or any other breaches or violations of any Law applicable to any of the ATS AND ATLANTIC Benefit Plans, in any such case that would subject ATS AND ATLANTIC to any material Taxes, penalties or other liabilities. To the Knowledge of ATS AND ATLANTIC, there are no investigations or audits of any ATS AND ATLANTIC Benefit Plan by any Governmental Authority currently pending and there have been no such investigations or audits that have been concluded that resulted in any liability to ATS AND ATLANTIC or its ERISA Affiliates that has not been fully discharged. Each ATS AND ATLANTIC Benefit Plan has been operated, in all material respects, in compliance with applicable Law and in accordance with its terms, and all reports, descriptions and filings required by the Code, ERISA or any government agency with respect to each ATS AND ATLANTIC Benefit Plan have, in all material respects, been timely and completely filed or distributed. There are no pending Claims relating to any ATS AND ATLANTIC Benefit Plan (other than ordinary claims for benefits) and none are threatened. No ATS AND ATLANTIC Benefit Plan provides retiree medical or retiree life insurance benefits, except as required under Section 4980B of the Code and subsequent guidance. Each ATS AND ATLANTIC Benefit Plan that is a group health plan within the meaning of Section S000(b)(1) of the Code or similar state Law, is currently in compliance with an has always complied with the applicable continuation requirements of Section 4980B of the Code (as well as its predecessor provision, Section l 62(k) of the Code) and Section 601 through 608, inclusive, of ERISA or similar state applicable Law.ATS AND ATLANTIC has not established or maintained, nor has any liability with respect to, any deferred compensation plan, program, or arrangement (including any “nonqualified deferred compensation plan”) that is not in compliance with the applicable provisions of Section 409A of the Code. Each ATS AND ATLANTIC Benefit Plan is amendable and terminable unilaterally by ATS AND ATLANTIC at any time without liability or expense (other than for benefits accrued through the date of termination or amendment and reasonable administrative expenses related thereto).

 

 

Section 3.19 Regulatory Agencies. All filings heretofore made by ATS AND ATLANTIC with all federal, state and local agencies or commissions were made in material compliance with applicable Laws and the factual information contained therein was true and correct, in each case in all material respects as of the respective dates of such filings.

 

Section 3.20 Intellectual Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on ATS AND ATLANTIC, (a) ATS AND ATLANTIC owns or has the right to use pursuant to a license, sublicense, agreement or otherwise all material items of Intellectual Property required in the operation of its business as presently conducted or planned to be conducted; (b) no third party has asserted in writing delivered to ATS AND ATLANTIC an unresolved claim that ATS AND ATLANTIC are infringing on the Intellectual Property of such third party; and (c) to the Knowledge of ATS AND ATLANTIC, no third party is infringing on the Intellectual Property owned by ATS AND ATLANTIC.

 

Section 3.21 Investment Representations. Shareholder will acquire Cerberus Stock for his/her own account for investment purposes only and not with a view to the distribution thereof. Shareholder is an accredited investor as that term is defined in Regulation D promulgated by the SEC under the Securities Act. Shareholder acknowledges that he/she (a) understands and agrees that the Cerberus Stock has not been registered under the Securities Act or any state securities Laws, and that accordingly, they will not be fully transferable except as permitted under various exemptions contained in the Securities Act and applicable state securities Laws, or upon satisfaction of the registration and prospectus delivery requirements of the Securities Act and applicable state securities Laws, (b) must bear the economic risk of its investment in its Cerberus Stock for an indefinite period of time because they have not been registered under the Securities Act and applicable state securities Laws and therefore cannot be sold unless they are subsequently registered or an exemption from registration is available, (c) understands that absent an effective registration statement under the Securities Act and applicable state securities Laws covering the disposition of the Cerberus Stock, such stockholder will not sell, transfer, assign, pledge, hypothecate or otherwise dispose of any or all of the Cerberus Stock absent a valid exemption from the registration and prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable state securities Laws and (d) understands that the Cerberus Stock will bear a customary legend reflecting the fact that such shares are “restricted securities” as defined in Rule 144 under the Securities Act and subject to the Lock-up Agreement (ANNEX2)

 

Section 3.22 Independent Evaluation. In entering into this Agreement, Shareholder acknowledges and affirms that he/she has relied and will rely solely on the terms of this Agreement and upon his/her independent analysis, evaluation and investigation of, and judgment with respect to, the business, economic, legal, Tax or other consequences of this transaction.

 

Section 3.23 No Other Representations or Warranties. Neither ATS AND ATLANTIC nor any other Person makes (and Cerberus agrees that it is not relying upon) any other express or implied representation or warranty with respect to ATS AND ATLANTIC (including the value, condition or use of any asset) or the transactions contemplated by this Agreement, and ATS AND ATLANTIC disclaims any other representations or warranties not contained in this Agreement, whether made by AND ATLANTIC, any Affiliate of ATS AND ATLANTIC or any of their respective officers, directors, managers, employees or agents. Except for the representations and warranties contained in this Agreement, ATS AND ATLANTIC disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement or information made, communicated or furnished (orally or in writing) to Cerberus or any of its Affiliates or any of its officers, directors, managers, employees or agents (including any opinion, information, projection or advice that may have been or may be provided to Cerberus by any director, officer, employee, agent, consultant or representative of ATS AND ATLANTIC or any of its Affiliates). The disclosure of any matter or item shall not be deemed to constitute an acknowledgment that any such matter is required to be disclosed or is material or that such matter would or would reasonably be expected to result in a Material Adverse Effect on ATS AND ATLANTIC.

 

 

ARTICLE IV

Covenants

 

Section 4.1 Confidentiality. From and after the Closing, Shareholder shall, and shall cause his/her Affiliates to, hold, and shall use their reasonable best efforts to cause its or their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning ATS AND ATLANTIC, except to the extent that Shareholder can show that such information (a) is generally available to and known by the public through no fault of Shareholder, any of his/her Affiliates or their respective Representatives; or (b) is lawfully acquired by Shareholder, any of his Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If Shareholder or any of his/her Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, Shareholder shall promptly notify Cerberus in writing and shall disclose only that portion of such information which Shareholder is advised by its counsel in writing is legally required to be disclosed, provided that Shareholder shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

 

Section 4.2 Non-competition: Non-solicitation.

 

(a) For a period of (2) years commencing on the Closing Date (the “Restricted Period”), Shareholder shall not, and shall not permit any of his/her Affiliates to, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory; (ii) have an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (iii) intentionally interfere in any material respect with the business relationships (whether formed prior to or after the date of this Agreement) between ATS AND ATLANTIC and customers or suppliers of ATS AND ATLANTIC. Notwithstanding the foregoing, Shareholder may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if Shareholder is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own 2% or more of any class of securities of such Person. Furthermore, the above restriction is not applicable to James and Miriam Montagne’s employment with Cerberus or any of its Affiliates.

 

(b) During the Restricted Period, Shareholder shall not, and shall not permit any of his/her Affiliates to, directly or indirectly, solicit any employee of ATS AND ATLANTIC or encourage any such employee to leave such employment, except pursuant to a general solicitation which is not directed specifically to any such employees.

 

(c) During the Restricted Period, Shareholder shall not, and shall not permit any of his Affiliates to, directly or indirectly, solicit or entice, or attempt to solicit or entice, any clients or customers of the Company or potential clients or customers of the Company for purposes of diverting their business or services from the Company.

 

 

(d) Shareholder acknowledges that a breach or threatened breach of this Section IV.2 would give rise to irreparable harm to Cerberus, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Shareholder of any such obligations, Cerberus shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

 

Shareholder acknowledges that the restrictions contained in this Section IV.2 are reasonable and necessary to protect the legitimate interests of Cerberus and constitute a material inducement to Cerberus to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section IV.2 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law. The covenants contained in this Section IV.2 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

 

Section 4.3 Personal Guaranties. Cerberus shall (a) use its best efforts, including but not limited to the substitution of a corporate guaranty by Cerberus, to obtain the release of each personal guaranty by Shareholder of ATS and ATLANTIC’s obligations promptly following the Closing (including without limitation personal guaranties under any ATS and ATLANTIC business credit card agreement), and (b) indemnify, defend and hold harmless Shareholder from any and all liability under any such personal guaranty after the Closing.

 

ARTICLE V

Indemnification

 

Section 5.1 Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is twelve (12) months from the Closing Date; provided, that the representations and warranties in Sections 2.1, 2.2, 2.3, J.J., 3.2, and 3.3 (collectively, “Fundamental Representations”) shall survive indefinitely and the representations and warranties in Sections 3.11 and 3.18 (together (“Special Representations”) shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days. All covenants and agreements of the parties contained herein (other than any covenants or agreements contained in Section IV.2 which are subject to Section IV.2 shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

 

Section 5.2 Indemnification By Shareholder. Subject to the other terms and conditions of this Section IV.3, Shareholder shall indemnify and defend each of Cerberus and its Affiliates (including the ATS and ATLANTIC) and their respective Representatives (collectively, the “Cerberus Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Cerberus Indemnitees based upon, arising out of, with respect to or by reason of:

 

 

(a) any inaccuracy in or breach of any of the representations or warranties of ATS AND ATLANTIC and Shareholder contained in this Agreement or in any certificate or instrument delivered by or on behalf of ATS AND ATLANTIC and Shareholder pursuant to this Agreement; or

 

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by ATS AND ATLANTIC or Shareholder pursuant to this Agreement.

 

Section 5.3 Indemnification By Cerberus. Subject to the other terms and conditions of this Section IV.3, Cerberus shall indemnify and defend each of ATS AND ATLANTIC and its Affiliates and their respective Representatives (collectively, the “ATS AND ATLANTIC Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the ATS AND ATLANTIC Indemnitees based upon, arising out of, with respect to or by reason of:

 

(a) any inaccuracy in or breach of any of the representations or warranties of Cerberus contained in this Agreement or in any certificate or instrument delivered by or on behalf of Cerberus pursuant to this Agreement; or

 

(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Cerberus pursuant to this Agreement.

 

Section 5.4 Indemnification Procedures. The party making a claim under this Section IV.3 is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this Section IV.3 is referred to as the “Indemnifying Party.”

 

(a) Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that if the Indemnifying Party is ATS AND ATLANTIC, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that (x) is asserted directly by or on behalf of a Person that is a supplier or customer of Cerberus or its Affiliates, or (y) seeks an injunction or other equitable relief against the Indemnified Party. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section V.4(a). it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section V.4(a). pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Shareholder and Cerberus shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section IV.I) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

 

 

(b) Settlement of Third-Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section V.4(a). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section V.4fa), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

 

(c) Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have 30 days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Company’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such 30-day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

 

 

(d) Cooperation. Upon a reasonable request by the Indemnifying Party, each Indemnified Party seeking indemnification hereunder in respect of any Direct Claim, hereby agrees to consult with the Indemnifying Party and act reasonably to take actions reasonably requested by the Indemnifying Party in order to attempt to reduce the amount of Losses in respect of such Direct Claim. Any costs or expenses associated with taking such actions shall be included as Losses hereunder.

 

Section 5.5 Payments. Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this Section IV.3, the Indemnifying Party shall satisfy its obligations within 15 Business Days of such final, non-appealable adjudication by one or more of the methods set forth in clause .(ru_, Du and {£1 below. The parties hereto agree that should an Indemnifying Party not make full payment of any such obligations within such 15 Business Day period, any amount payable shall accrue interest from and including the date of agreement of the Indemnifying Party or final, non-appealable adjudication to and including the date such payment has been made at a rate per annum equal to ten percent (I 0%). Such interest shall be calculated daily on the basis of a 365-day year and the actual number of days elapsed. For the matters referred to in Section 5.2, other than breaches of Fundamental Representations or actual fraud of Shareholder, indemnification liability of Shareholder shall be paid and satisfied solely and exclusively by one of the following methods (or a combination of more than one such methods), as selected by Shareholder in Shareholder sole discretion:

 

(a) transfer of shares of Cerberus Stock, to be valued for purposes of satisfying Shareholder’s indemnification liability, at the greater of (i) the most recent reported daily closing price for shares of Cerberus common stock immediate prior to the Closing, or (ii) the mean average of the daily closing prices for shares of Cerberus common stock over the five (5) trading days immediately prior to the transfer of such shares of Cerberus Stock;

 

(b) execution and delivery of a promissory note, accruing interest at a simple rate of 5% per annum, with all principal and accrued interest due and payable upon maturity on the 90th day following the expiration of the “Lock-Up Period” set forth in the Lock-Up Agreement (ANNEX 2), plus the number of days taken by the Company to remove the legend from the Cerberus Stock following Shareholder’s request; or

 

(c) payment by check or wire transfer.

 

Section 5.6 Exclusive Remedy; Fraud. Subject to the last sentence of this Section 5.6, other than the rights of the Parties pursuant to Section 1.2 and Section 1.3 and Section 4.2(d). the rights of Parties under this Section 5.6 shall be the exclusive remedy of the Parties with respect to claims based upon a breach or alleged breach of the representations, warranties, covenants and agreements contained herein or with respect to the transactions consummated pursuant hereto; provided however that nothing in this Section 5.6 shall limit or restrict any of the Cerberus Indemnitees’ rights or ability to maintain or recover any amounts with respect to any actual fraud of Shareholder in connection with this Agreement or the transactions consummated in connection herewith.

 

Section 5.7 Limitations on Indemnification.

 

(a) The amount of Losses which the Cerberus Indemnitees may recover pursuant to Section 5.2(a) shall be determined net of any amounts actually recovered by the Cerberus Indemnitees under any insurance policies or under any third-party contractual indemnification or rights of contribution in connection with respect to such Losses, net of any costs or expenses (including Taxes) incurred in connection with such recovery. The Cerberus Indemnitees shall use commercially reasonable efforts to pursue recovery for Losses under any such available insurance policies and/or contractual indemnification or rights of contribution for any Loss for which a Cerberus Indemnitee seeks indemnification pursuant to this Section 5.7 to the extent reasonably collectable: provided, that the pursuit of any such recovery shall not be a condition or prerequisite to making of a claim for indemnification, or the receipt of indemnification payments, under this Section 5.7.

 

 

(b) The Cerberus Indemnitees shall not be entitled to recover any Losses under Section 5.2(a) (other than with respect to the Fundamental Representations) unless the aggregate amount of all such Losses exceeds on a cumulative basis an amount equal to $10,000, at which time the Buyer Parties shall be entitled to recover the full amount of all Losses in excess of $10,000.

 

(c) In no event shall Shareholder’s aggregate liability under (i) Section 5.2(a) (other than with respect to the Fundamental Representations and Special Representations, which shall be subject only to the limitation in clause (ii)). collectively, exceed $100,000 or (ii) Section 5.2(a) and ill collectively exceed $1,000,000. Notwithstanding anything herein to the contrary, there shall be no maximum liability for Shareholder with respect to any actual fraud of Shareholder in connection with this Agreement or the transactions consummated in connection herewith. Notwithstanding anything herein to the contrary, Shareholder shall not be liable for any actual fraud of any other Person.

 

Section 5.8 Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

 

Section 5.9 Effect of Investigation. The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate.

 

ARTICLE VI

Miscellaneous

 

Section 6.1 Waiver, Etc.. Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Party granting such waiver in any other respect or at any other time. Notwithstanding the foregoing, no failure or delay by any Party in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder.

 

Section 6.2 Assignment. Neither this Agreement nor any of the rights, interests or obligations of the Parties hereunder shall be assigned, in whole or in part, by operation of law or otherwise, by any of the Parties without the prior written consent of the other Parties. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and permitted assigns. Any purported assignment not permitted under this Section Vl.2 shall be null and void.

 

 

Section 6.3 Counterparts. This Agreement may be executed in counterparts (each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement) and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

Section 6.4 Entire Agreement: No Third-Party Beneficiaries. This Agreement, including the Annexes hereto and the Confidentiality Agreement, (a) constitutes the entire agreement and understanding of the Parties, and supersedes all other prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter of this Agreement and thereof and (b) shall not confer upon any Person other than the Parties any rights (including third-party beneficiary rights or otherwise) or remedies hereunder, except for, in the case of clause (b), the provisions of Section VI. IO.

 

Section 6.5 Governing Law: Jurisdiction: Waiver of Jury Trial.

 

(a) This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Arizona, applicable to contracts executed in and to be performed entirely within that state, without giving effect to any conflicts of law principles that would result in the application of any applicable Law other than the Law of the State of Arizona.

 

(b) Each of the Parties irrevocably agrees that any legal action or Proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other Parties or their successors or assigns, shall be brought and determined exclusively in the United States District Court for the District of Arizona or, if such court lacks jurisdiction, the state district court of Maricopa County, Arizona. Each of the Parties hereby irrevocably submits with regard to any such action or Proceeding for itself and in respect of its or property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the aforesaid courts. Each of the Parties hereby irrevocably waives, and agrees not to assert as a defense, counterclaim or otherwise, in any action or Proceeding with respect to this Agreement, (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve in accordance with this Section VI.S, (ii) any claim that it or its property is exempt or immune from the jurisdiction of any such court or from any legal process commenced in such court (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by the applicable Law, any claim that (x) the suit, action or Proceeding in such court is brought in an inconvenient forum, (y) the venue of such suit, action or Proceeding is improper or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

 

(c) EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

 

Section 6.6 Specific Enforcement. The Parties hereby agree that irreparable damage would occur and that the Parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and it is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and that the Parties shall be entitled to enforce specifically the terms and provisions of this Agreement, in each case, in accordance with this Section VI.6 in the United States District Court for the District of Arizona or, if such court lacks jurisdiction, the state district court of Maricopa County, Arizona, this being in addition to any other remedy to which any Party is entitled at law or in equity. Each of the Parties agrees that it will not oppose the granting of an injunction, and each Party agrees that it will not oppose the granting of specific performance and other equitable relief as provided herein on the basis that (x) each Party has an adequate remedy at law or (y) an award of specific performance is not an appropriate remedy for any reason at law or equity. Each Party further agrees that no Party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section Vl.6, and each Party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

 

Section 6.7 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given and received (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section VI.7):

 

If to Cerberus, to:

 

Cerberus Cyber Sentinel Corporation

7333 E. Doubletree, Suite D 270

Scottsdale, Arizona 85258

Attn : David G. Jemmett

Email : ***@***

 

with a copy (which shall not constitute notice) to:

 

Gray Reed & McGraw LLP

160 I Elm Street, Ste. 4600

Dallas, Texas 7520 I

Attn: David R. Earhart

E-mail: ***@***

 

If to Shareholder, to:

 

Atlantic Technology Enterprises, Inc.

Atlantic Technology Systems, Inc 386 Rt 94 S

Newton NJ, 07860
Attn: James Montagne

E-Mail: ***@***

 

With a copy (which shall not constitute notice) to:

 

Einhorn, Barbarito, Frost & Botwinick, PC

165 East Main Street

Denville, NJ 07834

Attn: Jason R. Rittie, Esq.

E-Mail: ***@***

 

 

Section 6.8 Severability. If any term or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

 

Section 6.9 Interpretation.

 

(a) When a reference is made in this Agreement to an Article, Section, Annex, Exhibit or Schedule, such reference shall be to an Article of, a Section of, an Annex to, an Exhibit to or a Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” When used in this Agreement, the words “hereof,” “herein,” “hereby” and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns. All references to days mean calendar days unless otherwise provided. The word “or” shall be inclusive and not exclusive.

 

(b) The Parties have participated jointly in the negotiation and drafting of this Agreement with the assistance of legal counsel and other advisors and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement or interim drafts of this Agreement.

 

Section 6.10 Non-Recourse. No past, present or future director, officer, employee, incorporator, member, partner, stockholder, agent, attorney, representative or affiliate of any Party or of any of its respective Affiliates shall have any liability (whether in contract or in tort) for any obligations or liabilities of such Party arising under, in connection with or related to this Agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby; provided, however, that nothing in this Section Vl.10 shall limit any liability of the Parties to this Agreement for breaches of the terms and conditions of this Agreement.

 

[Signature page follows.]

 

 

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

 

	CERBERUS CYBER SENTINEL CORPORATION
	By:	/s/ David Jemmett
	Name:	David Jemmett
	Title:	Chief Executive Officer
	ATLANTIC TECHNOLOGY ENTERPRISES, INC.
	By:	/s/ James Montagne
	Name:	James Montagne
	Title:	Chief Executive Officer
	ATLANTIC TECHNOLOGY SYSTEMS INC.
	By:	/s/ James Montagne
	Name:	James Montagne
	Title:	Chief Executive Officer
	SHAREHOLDERS:
	James Montagne
	By:	/s/ James Montagne
	Miriam Montagne
	By:	/s/ Miriam Montagne

 

 

ANNEX 1

Definitions

 

As used in this Agreement, the following terms have the meanings ascribed thereto below:

 

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.

 

“Agreement” is defined in the preamble.

 

“Articles of Organization” means the articles of organization of ATS AND ATLANTIC as filed with the State of Arizona, as amended.

 

“Audited ATS AND ATLANTIC Financial Statements” is defined in Section 111.7.

 

“Business Day” means a day other than a Saturday, a Sunday or other day on which banks in Phoenix, Arizona are authorized or required by law to be closed.

 

“Cerberus” is defined in the preamble.

 

“Cerberus Financial Statements” is defined in Section 11.6. “Cerberus Indemnitees” is defined in Section V.2.

 

“Cerberus Organizational Documents” means the certificate of incorporation and bylaws of Cerberus as currently in effect.

 

“Cerberus Stock” is defined in Section 1.2.

 

“Claim” means any and all claims, causes of action, demands, lawsuits, suits, information requests, Proceedings, governmental investigations or audits and administrative Orders.

 

“Closing” is defined in Section 1.3. “Closing Date” is defined in Section 1.3.

 

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

 

“Confidentiality Agreement” means the mutual confidentiality agreement, dated as of March 5, 2019, by and between ATS AND ATLANTIC and Cerberus, as amended from time to time.

 

“Contracts” means all leases, contracts, agreements, commitments, instruments and understandings, whether written or oral.

 

“Control” is defined in the definition of the term “Affiliate.” “Creditor Rights” is defined in Section II.3.

 

“Employee Benefit Plan” means (i) all “employee benefit plans” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and (ii) all other compensation or employee benefit plans, programs, policies, agreements or other arrangements, whether or not subject to BRISA, including cash, equity or equity-based, employment, retention, change of control, health, medical, dental, disability, workman’s compensation, accident, life insurance, day or dependent care, legal services, vacation, severance, retirement, pension, savings, or termination.

 

 

“Encumbrance” means liens, charges, pledges, options, rights of first offer or refusal, mortgages, deeds of trust, security interests, claims, restrictions (whether on voting, sale, transfer, disposition or otherwise), easements, lease or sublease, right of way, encroachment and other encumbrances of every type and description, whether imposed by law, agreement, understanding or otherwise.

 

“BRISA” is defined in the definition of the term “Employee Benefit Plan.”

 

“BRISA Affiliate” means, with respect to any entity, trade, or business, any other entity, trade, or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(l) of BRISA that includes the first entity, trade, or business, or that is a member of the same “controlled group” as the first entity, trade, or business pursuant to Section 4001(a)(14) of ERISA.

 

“GAAP” means generally accepted accounting principles in the United States.

 

“Governmental Authority” means any national, state, local, county, parish or municipal government, domestic or foreign, any court, tribunal, arbitrator, regulatory or administrative agency, commission, subdivision, department or other authority or other governmental instrumentality.

 

“Intellectual Property” means all patents, trademarks, copyrights, trade secrets, know-how and other intellectual property.

 

“IRS” means the Internal Revenue Service.

 

“Knowledge” (i) when used with respect to ATS AND ATLANTIC, means the actual knowledge, after reasonable inquiry, of Shareholder and (ii) when used with respect to Cerberus, means the actual knowledge, after reasonable inquiry, of David G. Jemmett.

 

“Law” shall mean any domestic or foreign law, common law, statute, ordinance, rule, regulation, code, judgment, Order, writ, injunction, decree or legally enforceable requirement enacted, issued, adopted, promulgated, enforced, ordered or applied by any Governmental Authority.

 

“Losses” means any and all losses, claims, causes of action, assessments, damages, liabilities and costs and expenses (including reasonable attorneys’ fees and expenses).

 

“Material Adverse Effect” means, with respect to a Person, (a) a material adverse effect on the ability of such Person to perform or comply with any material obligation under this Agreement or to consummate the transactions contemplated hereby in accordance with the terms hereof, or (b) any change, effect, event or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of such Person and its Subsidiaries, taken as a whole; provided, however, that any adverse changes, effects, events or occurrences resulting from or due to any of the following shall be disregarded in determining whether there has been a Material Adverse Effect: (i) changes, effects, events or occurrences generally affecting the United States or global economy, the financial, credit, debt, securities or other capital markets or political, legislative or regulatory conditions or changes in the industries in which such Person operates; (ii) the announcement or pendency of this Agreement or the transactions contemplated hereby or the performance of this Agreement; (iii) any change in the market price or trading volume of ATS AND ATLANTIC Units (it being understood and agreed that the foregoing shall not preclude any other Party to this Agreement from asserting that any facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of Material Adverse Effect should be deemed to constitute, or be taken into account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect); (iv) acts of war or terrorism (or the escalation of the foregoing) or natural disasters or other force majeure events; (v) changes in any applicable Laws or regulations applicable to such Person or applicable accounting regulations or principles or the interpretation thereof; (vi) any Proceedings commenced by or involving any current or former member, partner or stockholder of such Person (on their own or on behalf of such Person) arising out of or related to this Agreement or the transactions contemplated hereby; and (vii) changes, effects, events or occurrences generally affecting the prices of oil, gas, natural gas, natural gas liquids or other commodities; provided, however, that changes, effects, events or occurrences referred to in clauses (i), (iv) and (v) above shall be considered for purposes of determining whether there has been or would reasonably be expected to be a Material Adverse Effect if and to the extent such state of affairs, changes, effects, events or occurrences has had or would reasonably be expected to have a disproportionate adverse effect on such Person and its Subsidiaries, as compared to other companies operating in the industries in which such Person and its Subsidiaries operate.

 

 

“Material Contracts” means all material Contracts to which a Party is a party as of the date hereof and which relate to the conduct of the business of the Party or which, from and after the Closing, will burden the properties of the Party in any material respect.

 

“Order” shall mean any order, judgment, writ, stipulation, award, injunction, decree, arbitration award or finding of any Governmental Authority.

 

“ “or “Parties” is defined in the preamble.

 

“Permit” means all licenses, permits, franchises, consents, approvals and other authorizations of or from any Governmental Authority.

 

“Permitted Encumbrances” means with respect to any Person, (a) statutory Encumbrances for current Taxes not yet due and payable or the amount or validity of which is being contested in good faith by appropriate Proceedings and are adequately reserved in the ATS AND ATLANTIC Financial Statements; (b) mechanics’, carriers’, workers’, repairers’ and similar statutory Encumbrances arising or incurred in the ordinary course of business for amounts which are not delinquent or which are being contested by appropriate Proceedings; (c) zoning, entitlement, building and other land use regulations imposed by Governmental Authorities having jurisdiction over such Person’s owned or leased real property, which are not violated by the current use and operation of such real property; (d) any right of way or easement related to public roads and highways; (e) Encumbrances arising under workers’ compensation, unemployment insurance, social security, retirement and similar legislation; and (f) Encumbrances arising from the terms of the leases and other instruments creating such title or interest.

 

“Person” means an individual, an entity, a limited liability company, a partnership, an association, a trust or any other entity, including a Governmental Authority.

 

“Proceeding” means all proceedings, actions (whether civil, criminal, administrative or otherwise), claims, suits, investigations, arbitrations, mediations or inquiries by or before any arbitrator or Governmental Authority.

 

“Related Person” with respect to any Person, means any Affiliate, officer or director of such Person, or any of their respective family members of such Person any Person in which any of the foregoing has, directly or indirectly, a material interest.

 

“Representatives” means the directors, officers, employees, investment bankers, financial advisors, attorneys, accountants, agents and other representatives of such Person.

 

“Restricted Business” means any business competitive with ATS AND ATLANTIC.

 

 

“Securities” means any class or series of equity interest in a Party, including without limitation, the ATS AND ATLANTIC Shares, Cerberus Stock, the equity interests of each Subsidiary of any Party.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Subsidiary” when used with respect to any Party, means any entity, limited liability company, partnership, association, trust or other entity, the accounts of which would be consolidated with those of such Party in such Party’s consolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any other entity, limited liability company, partnership, association, trust or other entity of which securities or other ownership interests representing more than fifty percent (50%) of the equity or more than fifty percent (50%) of the ordinary voting power (or, in the case of a partnership, more than fifty percent (50%) of the general partnership interests or, in the case of a limited liability company, the managing member) are, as of such date, owned by such Party or one or more Subsidiaries of such Party.

 

“ATS AND ATLANTIC” is defined in the preamble.

 

“ATS AND ATLANTIC Benefit Plan” or “ATS AND ATLANTIC Benefit Plans” is defined in Section 111.18.

 

“ATS AND ATLANTIC Financial Statements” is defined in Section 111.7. “ATS AND ATLANTIC Indemnitees” is defined in Section V.3.

 

“ATS AND ATLANTIC Organizational Documents” means the articles of organization of ATS AND ATLANTIC as currently in effect.

 

“ATS AND ATLANTIC Shares” is defined in Section III.2(a).

 

“Tax Return” means any return, report, declaration, or similar statement or form required to be filed with a Taxing Authority with respect to any Tax (including any attached s and related or supporting information), including any information return, claim for refund, amended return or declaration of estimated Tax, and including any amendment thereof.

 

“Taxes” means (a) any taxes, assessments, fees and unclaimed property and escheat obligations, imposed by any Governmental Authority, including net income, gross income, profits, gross receipts, net receipts, capital gains, net worth, doing business, license, stamp, occupation, premium, alternative or add on minimum, ad valorem, real property, personal property, transfer, real property transfer, value added, sales, use, environmental (including taxes under Code Section 59A), customs, duties, capital stock, stock, stamp, document, filing, recording, registration, authorization, franchise, excise, withholding, social security (or similar), fuel, excess profits, windfall profit, severance, extraction, production, net proceeds, estimated or other tax, including any interest, penalty or addition thereto, whether disputed or not, and any expenses incurred in connection with the determination, settlement or litigation of the Tax liability, (b) any obligations under any agreements or arrangements with respect to Taxes described in clause (a) above, and (c) any transferee liability in respect of Taxes described in clauses (a) and (b) above or payable by reason of assumption, transferee liability, operation of law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law) or otherwise.

 

“Taxing Authority” means, with respect to any Tax, the Governmental Authority that imposes such Tax, and the agency (if any) charged with the collection of such Tax.

 

“Territory” means the Phoenix metro area.

 

“Unaudited ATS AND ATLANTIC Financial Statements” is defined in Section Ill.7.