EXHIBIT 10.5

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A.           Shareholder is the sole shareholder and owner of all of the issued and outstanding capital stock of TTS.

B.           Purchaser desires to acquire from Shareholder all of the outstanding capital stock of TTS and Shareholder wishes to sell the Shares to Purchaser, all in accordance with the terms and conditions of this Agreement.

C.           Each of the parties to this Agreement desires to make certain representations, warranties and agreements in connection with the purchase and sale of the Shares and also to prescribe various conditions thereto.

Now, therefore, in consideration of the foregoing Recitals and the mutual covenants, agreements, representations and warranties herein made, the parties agree as follows:

ARTICLE I

1.1           Sale of Shares.  Subject to the terms and conditions set forth in this Agreement, and in consideration for the Purchase Price set forth in Section 1.2, Shareholder will sell and deliver to Purchaser at the time of Closing, a total of One Hundred (100) shares, no par value per share, of the common stock of TTS (the “Shares”), constituting all of the issued and outstanding capital stock of TTS.  Shareholder will deliver to Purchaser at Closing a duly endorsed stock certificate for all of the Shares accompanied by an executed assignment separate from the certificate.

 

1.2           Purchase Price.  The purchase price for the Shares shall be Two Million Three Hundred Thousand and no/100 U.S. Dollars ($2,300,000.00) (“Purchase Price”) payable pursuant to a promissory note as set forth in Sections 1.2(a) and 1.2(b) below, subject, however, to adjustment pursuant to Section 1.3 below.

(a)           Common Stock.  Purchaser shall issue to Seller at Closing Three Million (3,000,000) shares of Visualant’s common stock (the “Common Shares”) as additional consideration to Seller. The Common Shares will not be issued under a registered offering with the U.S. Securities and Exchange Commission (the “SEC”) and will be restricted shares.  Therefore, any resale of the Common Shares must comply with SEC Rule 144, qualify under an exemption from registration or the Common Shares shall be registered by Purchaser as provided in this Agreement. The parties agree that the value of the shares in this transaction is two cents (0.02 ) per share but such additional consideration shall not be included in the Purchase Price.

 

 

 

 

(b)           Promissory Note.  At Closing, Purchaser shall issue to Seller a Promissory Note (the “Note”) substantially in the form attached hereto as Exhibit A in the amount of Two Million Three Hundred Thousand U.S. Dollars ($2,300,000.00), plus interest at the rate of Three and one-half percent (3.5%) per annum, from the date of the Note, but subject to adjustment pursuant to Section 1.3 below.  The Note shall be secured by a security interest in the stock of TTS as set forth in Section 1.4 below and a security interest in the assets of TTS as set forth in Section 1.5 below, and shall be payable over a period of three (3) years as follows:

 

(i)           The sum of Six Hundred Fifty Thousand U.S. Dollars ($650,000.00) plus the amount of any accrued interest due on the Bonderson Debt (as defined below), plus interest on the unpaid balance, shall be paid to Seller on the earlier of: (A) the one (1) year anniversary of the Closing Date; or (B) on the closing of Two Million Five Hundred Thousand U.S. Dollars ($2,500,000.00) or more in aggregate financing (whether debt, equity or some combination thereof) after the Closing Date;

(ii)           The sum of Six Hundred Fifty Thousand U.S. Dollars ($650,000.00) plus the amount of any accrued interest due on the Bonderson Debt, plus interest on the unpaid balance shall be paid to Seller on the earlier of: (A) the two (2) year anniversary of the Closing Date; or (B) on the closing of Five Million U.S. Dollars ($5,000,000.00) or more in aggregate financing (whether debt, equity or some combination thereof) after the Closing Date; and

(iii)           The remaining balance of the Note, plus interest thereon shall be paid to Seller on the earlier of: (A) the three year anniversary of the Closing Date; or (B) on the closing of Seven Million Five Hundred Thousand U.S. Dollars ($7,500,000.00) or more in aggregate financing (whether debt, equity or some combination thereof) after the Closing Date.

1.3           Adjustment of Purchase Price.  The amount of the Purchase Price and therefore, the amount of the Note in Section 1.2(b) above, shall be subject to adjustment at Closing as follows: (a) in the event the total amount of the outstanding liability (including all accrued and unpaid interest) due by Seller to The Bonderson Family Living Trust under the Secured Promissory Note dated June 30, 2006, and the Secured Line of Credit Agreement dated June 5, 2008 (collectively, the “Bonderson Debt”), exceeds the sum of Six Hundred Thousand U.S. Dollars ($600,000.00) as of the Closing Date, the Purchase Price shall be incr eased by the difference between the amount of the Bonderson Debt and $600,000; and (b) in the event the total amount of the Bonderson Debt outstanding as of the Closing Date is less than $600,000, the Purchase Price shall be decreased by the difference between $600,000 and the amount of the Bonderson Debt.  This adjustment in the Purchase Price shall be reflected by a corresponding increase or decrease, as applicable, in the amount of the Note set forth in Section 1.2(b) above.  In addition, the Purchase Price (and accordingly, the amount of the Note) shall be adjusted to account for the amount of accrued interest due on the outstanding balance of the Bonderson Debt as of the date of each installment payment under Sections 1.2(b)(i) and (ii) above, and the amount of such accrued interest due on the Bonderson Debt shall be added to the installment amount to be paid under Sections 1.2(b)(i) and (ii). In addition, in the event the Purchaser shall sell (a) to any single entity (including any affiliates) more than a 50% ownership interest in TTS, or (b) a majority of the assets of TTS, in each case within 36 months of the Closing Date, then the Purchaser shall pay to the Seller, in addition to any payments to Seller as provided herein five percent (5%) of any proceeds received by the Purchaser above $2,300,000, unless the Seller has previously been paid in full under the terms of this agreement prior to any offer or expression of interest by any potential purchaser..

 

 

 

1.4           Security Interest in Shares and Continuing Control of TTS by Seller.  Immediately following the Closing, Purchaser shall grant to Seller a security interest in the Shares to secure Purchaser’s obligations under the Note referenced in Section 1.2(b) above, and shall execute a Stock Pledge Agreement substantially in the form attached hereto as Exhibit B.  Purchaser agrees that following Closing, TTS shall remain and be operated as a separate, wholly-owned subsidiary of Purchaser, with separate revenue, profit and loss responsibilities and allocations a nd shall be controlled and operated solely by Seller in Seller’s sole discretion in accord with the terms of the Stock Pledge Agreement.  Purchaser shall not transfer its legal or beneficial interest in the Shares and shall retain all of the TTS assets within TTS (except for sales, transfers and other dispositions made in the ordinary course of business with the approval of Seller, in accord with the terms of the Stock Pledge Agreement) until such time as the Note and other Obligations  have been fully repaid or otherwise satisfied by Purchaser.

1.5           Security Interest in the Assets of TTS.  Immediately following the Closing, TTS shall grant to Seller a first security interest in the assets of TTS, subject only to the liens of record on the Closing Date, to secure Purchaser’s obligations under the Note referenced in Section 1.2(b) above, and shall execute a Security Agreement substantially in the form attached hereto as Exhibit C.  Purchaser agrees that following Closing, TTS shall remain and be operated as a separate, wholly-owned subsidiary of Purchaser, with separate revenue, profit and lo ss responsibilities and allocations and shall be controlled and operated by Seller in accord with the terms of the Stock Pledge Agreement.  The Purchaser acknowledges and agrees that under the terms of the Stock Pledge Agreement, Seller has all voting rights in the Shares.  Until all Obligations are paid in full, satisfied and fulfilled, unless otherwise agreed in writing by the Seller,  to the extent that Purchaser has any legal or beneficial interest in the Shares, Purchaser shall cooperate with Seller to cause TTS (i) to operate the business and dispose of its inventory only in the ordinary course of business; (ii) not to sell, transfer, lease or otherwise dispose of any TTS assets or any interest therein, or permit or suffer any other person to acquire any interest in any TTS asset; and (iii) to keep the assets of TTS free and clear of all liens except of record on the Closing Date.

 

1.6           Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Seller’s legal counsel, Brownstein, Rask Sweeney, Kerr Grim, DeSyliva & Hay LLP, 1200 SW Main Street, Portland Oregon, at ___:___ a.m. local time, on or before June 8, 2010, or at such other time and place and on such other date as Purchaser and Seller shall agree (the “Closing Date”).

 

 

 

 

2.1           Employment Agreements.  At or prior to the Closing, each of James M. Gingo, Jeff Kruse (“Kruse”) and Steve Waddle (“Waddle”) of TTS, shall enter into and execute an Employment Letter Agreement (collectively, the “Employment Agreements”) with Purchaser.  The Employment Agreements shall include, among other things, non-competition covenants and shall be substantially in the form attached hereto as Exhibits D, E and F respectively, with such additional terms and conditions as may be mutually agreed to by the parties thereto.  Under the terms of Kruse’s and WaddleR 17;s Employment Agreements, Purchaser will grant to each Kruse and Waddle, , One Hundred Thousand (100,000) restricted shares of Visualant’s common stock.

2.2           Other Agreements.  At or prior to the Closing, the Shareholder shall execute all other customary agreements required by Purchaser to be executed by its officers and/or directors.  All of the agreements to be executed by Shareholder pursuant to this Article II are collectively referred to hereafter as the “Ancillary Agreements.”

 

2.3           Board of Directors.  At or immediately following the Closing, Purchaser will facilitate the appointment or election of James M. Gingo and Paul Bonderson to the Board of Directors of Visualant.  Following the Closing, the Board of Directors of Visualant shall be comprised of nine (9) members.  Purchaser will grant to Paul Bonderson, as compensation for his service as a member of the Board of Directors, Six Hundred Thousand (600,000) restricted shares of Visualant’s common stock, subject, however, to adjustment in the number of shares to be granted based upon the amount of the outstanding Bonderson Debt at time of Closing.

 

ARTICLE III

3.1           General Statement.  The parties make the representations and warranties to each other which are set forth in this Article III.  The survival of all such representations and warranties shall be in accordance with Section 6.6 hereof.  All representations and warranties of the parties are made subject to the exceptions which are noted in the respective schedules delivered by the parties to each other concurrently herewith and identified, as in the case of Section 3.2, the “Purchaser Disclosure Schedule,” and in the case of Section 3.3, the “Seller Disclosure Schedule.”

3.2           Representations and Warranties of Purchaser.  Purchaser represents and warrants to Shareholder that each of the statements contained in this Section 3.2 are true, complete and correct, as of the date of this Agreement and will be true, complete and correct at the Closing Date, as follows:

 

(a)           Organization.  Purchaser is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada.

(b)           Authority.  Purchaser has the requisite corporate power and authority to enter into this Agreement and to carry out its obligations hereunder.  At the Closing, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, shall have been duly authorized by Purchaser’s Board of Directors and if required, its shareholders, and no other corporate proceeding on the part of Purchaser is necessary to authorize its officers to perform this Agreement and the transactions contemplated herein.

 

 

 

 

(c)           Binding Obligation.  When executed and delivered by Purchaser, this Agreement shall constitute the valid and binding obligation of such entity enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws from time to time in effect which affect creditors’ rights generally and by legal and equitable limitations on the availability of specific remedies.

 

(d)           Noncontravention.  The execution and delivery of this Agreement by Purchaser and the consummation of the transactions contemplated by this Agreement, do not: (i) require the approval or consent of any governmental authority having jurisdiction over the business of Purchaser; (ii) violate any provision of its Articles of Incorporation or Bylaws; or (iii) conflict with, result in a breach of, or constitute a default under any agreement, contract, or instrument to which Purchaser is a party or by which Purchaser is bound except where such violation, conflict, breach, or default would not have a material adverse effect on the ability of Purchaser to consummate the transactions contemplated by this Agreement.

 

(e)           No Broker’s Fee.  Except as set forth in Section 3.2(e) of the Purchaser Disclosure Schedule, Purchaser has not employed any broker, finder or agent, nor otherwise become in any way obligated for any broker's or finder's fee, or similar fee with respect to the transactions contemplated by this Agreement.

(f)           Qualification and Registration.  Purchaser is duly qualified and registered to transact business and is in good standing in each of the jurisdictions in which it does business.  No other jurisdiction has demanded, requested or otherwise indicated that Purchaser is required to so qualify on account of the ownership or leasing of any of its properties and assets or the conduct of its business.

(g)           Corporate Documents.  True, correct, and complete copies of the Articles of Incorporation and Bylaws of Purchaser, including all amendments thereto, and true copies of the minutes of all directors’ and shareholders’ meetings of said corporation, have been furnished to Shareholder prior to Closing.

(h)           Capitalization of Purchaser.  The authorized capital stock of Purchaser consists of (200,000,000) shares of common stock, no par value per share, of which 33,462,707 shares are issued and outstanding, and 166,537,293 shares are held in treasury and 100,000,000 shares of preferred.  Purchaser has all requisite authority to sell the Common Shares to Shareholder.  All of the outstanding shares of Purchaser’s common stock have been duly authorized and validly issued in compliance with applicable state and federal laws concerning the issuance of securities, and are fully paid and non-assessable.  There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion privileges or other agreements (including rights of first refusal) or understandings obligating Purchaser to issue any additional shares of capital stock of any class or to issue any other debt or equity securities of any kind, or giving or granting to any person any rights to purchase or otherwise acquire stock or any equity securities of Purchaser other than as set forth in the Purchaser’s public filings.  There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to Purchaser other than as set forth in the Purchaser’s public filings.

 

 

 

(i)           Title to Stock and Assets.  All of the issued and outstanding shares of Purchaser are free and clear of all liens, claims and encumbrances of any kind (including but not limited to, any claims by any of the shareholders' spouses).  Except as set forth in Section 3.2(i) of the Purchaser Disclosure Schedule, Purchaser has good and marketable title to all of its assets and properties, free and clear of any and all liens, security interests, or other encumbrances or restrictions thereon.

(j)           Compliance with Law; Litigation.  To the knowledge of Purchaser, Purchaser is in material compliance with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and charges thereunder) of all federal, state, local or other governmental authority or regulatory body (each a “Governmental Body” and collectively, “Governmental Bodies”).  Purchaser has not received notice that there is any action, suit or proceeding pending in or before any court, tribunal or any Governmental Body, and to the best of Purchaser’s knowledge, no investigation is pending or in progress and there is no threat thereof again st or relating to Purchaser, or any of Purchaser’s properties, assets or business, nor, to the knowledge of Purchaser, is there any basis for any such claim, suit or other proceeding.  Purchaser has not received notice that there is any suit, action, or other proceeding commenced, pending, or to the knowledge of Purchaser, threatened against or affecting Purchaser in any Governmental Body, in which it is sought to restrain, prohibit or otherwise adversely affect the ability of Purchaser to perform any or all of the obligations required of it under this Agreement or the consummation of the transactions contemplated by this Agreement.

(k)           Shareholder Claims.  No shareholder, and to the knowledge of Purchaser no officer, member, employee or consultant of Purchaser has any claim or claims against Purchaser, and to the knowledge of Purchaser, Purchaser is not obligated or liable to any such persons in any way or for any amounts except compensation due to employees in the ordinary course of business and except as disclosed in the Financial Statements.

(l)           Financial Statements.

(i)           Section 3.2(l) of the Purchaser Disclosure Schedule are the following financial statements for TTS (collectively the “Financial Statements”): (A) audited balance sheets, income statements and cash flow statements for each of the two (2) years ended, December 31, 2008 and December 31, 2009; and (B) unaudited interim balance sheet items reflecting billed and unbilled accounts receivable of Purchaser as of March 31, 2010.  The Financial Statements have been prepared on a consistent basis throughout the periods covered thereby and present fairly the revenues related to the business of Purchaser as of such dates; provided, however, the unaudited interim balance sheet referenced in Section 3.2(l)(i)(B) above, is subject to the absence of footnote disclosure, off balance sheet activity, related party activity and year-end adjustments.

 

 

 

 

(ii)           Purchaser has no liabilities associated with any of its assets or business, contingent or otherwise, that are not reflected on the Financial Statements.  Except as reflected on the Financial Statements, and except as set forth on Section 3.2(l) of the Purchaser Disclosure Schedule, Purchaser has no indebtedness for money borrowed or for the deferred purchase price of property or services, capital lease obligations, conditional sale or other title retention agreements relating to any of its assets or its business.  Except as set forth on Section 3.2(l) of the Purchaser Disclosure Schedule, Purchaser is not a guarantor or otherwise liable for any liability or obligation of any other person or entity for any matter which relates to or affects or shall affect the assets or the business of Purchaser.

(m)           Insolvency.  No insolvency proceedings of any character, including bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the business or any assets of Purchaser are pending or to the knowledge of Purchaser are threatened, and Purchaser has not made any assignment for the benefit of creditors, or taken any other action which would constitute the basis for the institution of such insolvency proceedings.

 

(n)           Taxes and Tax Returns.

(i)           Purchaser has filed when due, within the time and in the manner prescribed by law, all tax returns, declarations, reports, estimates, information returns and statements (collectively, “Returns”) required to be filed by them with the appropriate federal, state and local governmental authorities, and to the knowledge of Purchaser, such returns are true, correct and complete in all material respects and accurately reflect the taxes payable.  All material federal, state, county and local franchise, sales, use, excise, ad valorem, property, payroll and employment, income, and other taxes which are due and payable have been duly paid; and no reserves for unpaid taxes have been set up or are required on the basis of the facts and in accordance with pas t accounting practices, consistently applied, except as reflected in the Financial Statements or that have arisen after the date of the Financial Statements, in the ordinary course of business.

(ii)           There are no unpaid assessments or to the knowledge of Purchaser proposed assessments of federal income taxes pending against Purchaser; no deficiency for any taxes has been proposed, asserted or assessed Purchaser which has not been resolved and paid in full; there are no liens for taxes upon the assets of Purchaser, except for taxes not yet due and payable; and there are no federal, state or local tax audits or other administrative proceedings or court proceedings pending or, to the knowledge of Purchaser threatened against Purchaser with respect to any taxes or Returns.

(iii)           There are no outstanding waivers or comparable consents regarding the application of the statute of limitations with respect to any taxes or Returns that have been given by Purchaser.

(iv)           To the knowledge of Purchaser, Purchaser does not have any tax liabilities (whether due or to become due) with respect to the income, property and operations of Purchaser that relate to any pre-closing tax period, except for tax liabilities that have arisen after December 31, 2009, in the ordinary course of business.

 

 

 

 

(o)           Intellectual Property.  Section 3.2(o) of the Purchaser Disclosure Schedule sets forth a list and description of all of the intellectual property (patents, trademarks, service marks, copyrights, trade secrets, and all other proprietary assets and rights, whether or not registered) of Purchaser. Specifically, Purchaser has developed a revolutionary patent-pending technology providing spectral-based pattern file creation and matching which is a material inducement to Seller to enter into this Agreement.  Patterns of a light spectrum signature, from near ultr a-violet through the visible spectrum and into the near infra-red, are collected from Purchaser’s proprietary sensing devices.  The pattern files can be created from any material or object.  Such pattern files are then matched against baseline pattern files in the Purchaser’s database.  As a consequence, the Purchaser’s technology can serve as:  an authenticator to guard against and detect identity crime, forgery, counterfeiting, and other frauds; a diagnostic device with application in medical, agricultural and environmental diagnostics; and a reliable information source and provides accurate and rapid detection for a range of critical applications, including national security, forgery/fraud prevention, brand protection, and product-tampering protection.  Except as set forth herein and on Section 3.2(o) of the Purchaser Disclosure Schedule, Purchaser has no patents, patent rights, licenses, trademarks, trademark rights, trade names, trade name rights, service mark, service mark rights, copyrights or other proprietary or similar rights (“Intellectual Property”), and Purchaser does not require any such Intellectual Property in connection with the conduct of its business as presently conducted.  With respect to all of the Intellectual Property disclosed above and as listed on Section 3.2(o) of the Purchaser Disclosure Schedule:  (i) Purchaser owns and possesses all right, title and interest in and to such Intellectual Property; (ii) no claim by any third party contesting the validity, enforceability, use or ownership of any of the Intellectual Property has been made, or is currently outstanding; (iii) Purchaser has not received any notice of, nor is Purchaser aware of, any facts which would indicate a likelihood of any infringement or misappropriation by or conflict with, any third party of any such Intellectual Property owned by Purchaser; (iv) Purchaser has not received any notice from a third party alleging any infringement, misappropriation or conflict with the intellectual property rights of any such third party, including, without limitation, any demand, request or offer that Purchaser license rights from a third party; (v) the Intellectual Property constitutes all intellectual property necessary for the operation of Purchaser’s business as currently conducted, and Purchaser is not aware of any infringement, misappropriation or conflict which will occur as a result of the continued operation of the business as currently conducted; and (vi) the Intellectual Property is free and clear of all liens, claims, security interests or other encumbrances of any kind.

(p)           Insurance.  All insurance policies under which Purchaser, and any of its respective assets, officers, directors and employees are insured are listed in Section 3.2(p) of the Purchaser Disclosure Schedule.  All premiums payable under all such policies have been fully and timely paid, and to the knowledge of Purchaser, Purchaser is otherwise in compliance with the terms of all such policies, and all such policies are currently in effect and enforceable.  With respect to all such policies, Purchaser has not received notice of: (i) any refusal of cov erage or any notice that a defense will be afforded with reservation of rights, or (ii) any cancellation or any other indication that an insurance policy is no longer in full force or effect, or will not be renewed, or that the insurer of any policy is not willing or able to perform its obligations thereunder.

 

 

 

 

(q)           Absence of Certain Events.  Since December 31, 2009, Purchaser has not: (a) incurred any obligation or liability, whether absolute or contingent, except obligations and liabilities incurred in the ordinary course of its business; (b) discharged or satisfied any lien or encumbrance or paid any obligation or liability, whether absolute or contingent, other than current liabilities having become due and payable since December 31, 2009 in the ordinary course of its business; (c) made or agreed to make any wage, salary, or employee benefit increases for full-time employees; (d) made any loans or guarantees to or for the benefit of any of its officers, directors, employees, or any members of their immediate family; (e) sold or transferred any of its tangible or intangible assets or canceled any debts or claims, except, in each case, in the ordinary course of business; (f) sold, assigned, or transferred any trademark or trade name; (g) suffered any material losses or waived any right of substantial value other than in the ordinary course of business; (h) suffered any loss, damage, or destruction to any of its properties due to fire or other casualty whether or not insured, which loss, damage, or destruction materially and adversely affects its business, properties or operations; (i) issued or sold or agreed to issue or sell any shares of its capital stock or any other securities or reclassified or agreed to reclassify its capital stock; (j) mortgaged, pledged, or subjected to lien, charge or other encumbrance any of its tangible or intangible assets, except the lien of current real and personal property taxes not yet due and payable, or purchase money or similar liens incurred in the ordinary course of business; (k) made or agreed to make capital expenditures in excess of $50,000; (l) declared or paid a dividend or transferred property or loaned any money or agreed to loan money to any of its directors or officers, except as disclosed in Section 3.2(q) of the Purchaser Disclosure Schedule; (m) amended its Articles of Incorporation or Bylaws; (n) conducted its business otherwise than in its ordinary and usual manner; or (o) become aware of an event, transaction, or circumstance which does or could materially adversely affect its condition (financial or otherwise), assets, liabilities, earnings, business, or operations.

(r)           Conduct of Business; Licenses.  Except as set forth in Section 3.2(r) of the Purchaser Disclosure Schedule, the conduct of Purchaser's business is not dependent on any governmental or private license, permit or other authorization, and the consummation of the transactions contemplated by this Agreement will not terminate or adversely affect any such license, permit, or authorization.

(s)           Directors and Officers.  Section 3.2(s) of the Purchaser Disclosure Schedule contains a true and complete list as of the date of this Agreement showing all of the directors and officers of Purchaser.

(t)           No Broker’s Fee.  Except as set forth in Section 3.2(t) of the Purchaser Disclosure Schedule, Purchaser has not employed any broker, finder or agent, nor otherwise become in any way obligated for any broker's or finder's fee, or any similar fee with respect to the transactions contemplated by this Agreement.

(u)           Books and Records.  To the knowledge of Purchaser, the books and records of Purchaser: (a) are accurate in all material respects; (b) have been maintained in accordance with applicable laws; and (c) at all times have been in the possession of said corporation or under its control.

 

 

 

(v)           Environmental Matters.  To the knowledge of Purchaser, Purchaser has complied in all material respects with and is in material compliance with all federal, state and local statutes, laws, ordinances, regulations, rules, permits, judgments, orders and decrees applicable to it, its business or assets, relating to environmental protection, including standards relating to the generation, storage, transportation, treatment or disposal of hazardous wastes (“Environmental Law”).  Purchaser has not received any written or oral notice, report or other information regarding any actual or alleged violation of any Environmental Law.

(w)           Absence of Questionable Payments.  Neither Purchaser nor any director, officer, agent, employee or other person acting on behalf of Purchaser, has used, to the knowledge of Purchaser, any of the funds of Purchaser for any improper or unlawful contributions, payments, gifts or entertainment, or made any improper or unlawful expenditures relating to political activity to any government official or other person, in connection with the Purchaser or conduct of the Purchaser’s business.  With respect to the business of the corporation, Purchaser has adequate financial controls to prevent such improper or unlawful contributions, payments, gifts, en tertainment or expenditures.  Neither Purchaser nor any director, officer, agent, employee or other person acting on behalf of the Purchaser, has accepted or received, to the knowledge of Purchaser, any improper or unlawful contributions, payments, gifts or expenditures in connection with the operation or conduct of the business of the Purchaser.

(x)           No Untrue Statements.  No statement by Purchaser contained in this Agreement and no written statement contained in any certificate or other document required to be furnished by Purchaser to Shareholder pursuant to this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary in order to make the statements therein contained not misleading.

3.3           Representations and Warranties of Seller.  Shareholder and TTS, jointly and severally, represent and warrant to Purchaser that each of the statements contained in this Section 3.3 are true, complete and correct as of the date of this Agreement, and will be true, complete and correct as of the Closing Date except as provided on the Seller Disclosure Schedule. Unless the context otherwise requires, all capitalized terms used in the Seller Disclosure Schedules shall have the meanings ascribed to such terms in this Agreement.  Each individual Seller Disclosure Schedule incorporates these terms and conditions by reference.

The purpose of each schedule, and the Seller’s Disclosure Schedule as a whole, is to qualify the warranties and representations of TTS and Shareholder in this Agreement and exclude and disclose certain exceptions to the Warranties and Representations that the Purchaser is accepting as part of the transaction.  TTS and Shareholder shall have no indemnification liability or obligation pursuant to this Agreement, including but not limited to Article VI, Indemnification, for these excluded and disclosed exceptions to the warranties and representations disclosed in the Seller’s Disclosure Schedules.

The disclosure of any matter or document shall not imply any warranty, representation or undertaking not expressly given in the Agreement, nor shall such disclosure of itself be taken as extending the scope of the warranties or representations.

 

 

 

The information in these schedules was not prepared or disclosed with a view to its potential disclosure to others.  Subject to applicable law, this information is disclosed in confidence for the purposes contemplated in this Agreement and is subject to the confidentiality provisions of any other agreements entered into by the parties.  In disclosing this information TTS and Shareholder expressly do not waive any attorney-client privilege associated with such information or any protection afforded by the work-product doctrine with respect to any of the matters disclosed or discussed herein.

All references in the schedules to the enforceability of agreements with third-parties, the existence or nonexistence of third-party rights, the absence or existence of breaches or defaults with respect to rights of third parties, or similar matters or statements, are intended only to allocate rights and risks among the parties to this Agreement and are not intended to be admissions against interest, give rise to any inference or proof of accuracy, be admissible against any party to this Agreement by any Person who is not a party to this Agreement, or give rise to any claim or benefit to any Person who is not a party to this Agreement.  In addition, the disclosure of any matter in any schedule is not to be deemed an admission that any such matter actually constitutes noncompliance with, or a violation of, any law, permit , C ontract, agreement or other topic to which such disclosure is applicable .

The inclusion of any information (including dollar amounts) in any section of any schedule shall not be deemed to be an admission or acknowledgment by TTS or Shareholder that such information is required to be listed in such section or is material to or outside the ordinary course of the business of TTS, nor shall such information be deemed to establish a standard of Materiality (and the actual standard of Materiality may be higher or lower than the matters disclosed by such information).  In addition, matters reflected in schedules are not necessarily limited to matters required by the Agreement to be reflected in schedules.  A disclosure made on any specific schedule is deemed a disclosure on any other applicable schedule to the extent the relevance is apparent on its face.

In addition, the Seller’s Disclosure Schedule incorporates by reference all materials, discussions, documents and information whether oral or written provided to Purchaser or Purchaser’s agents (including Purchaser’s auditors) as due diligence and as part of an audit prior to Closing including but not limited to documents, business plans, information on products, technical data, specifications, documentation, contracts, presentations, know-how, product plans, business methods, product functionality, services, data, customers, markets, competitive analysis, databases, formats, methodologies, applications, developments, inventions, processes, payment, delivery and inspection procedures, or information related to engineering, marketing, or financial information. All such materials, discussions, documents and information shall be deemed disclosed as if fully set forth in the Seller’s Disclosure Schedule.:

(a)           Organization and Authority.  TTS is a corporation duly organized, validly existing and in good standing under the laws of the State of Oregon.  TTS has full corporate power and authority to carry on the business in which it is engaged and to own and use the properties owned and used by it.  TTS and the Shareholder, to the extent applicable, have all requisite corporate power and authority to enter into this Agreement and the Ancillary Agreements, to consummate the transactions contemplated hereby, and to perform all of their respective obligations under this Agreement.  At the Clos ing, the execution and delivery of this Agreement by TTS and Shareholder, and the consummation by TTS and Shareholder of the transactions contemplated by this Agreement, shall have been duly authorized by all requisite corporate action of TTS, including, but not limited to, approval of the transaction by the Board of Directors of the corporation and the shareholders of TTS, and any creditor or other third party whose consent is required by contract or law.  When executed and delivered by TTS and Shareholder, this Agreement and the Ancillary Agreements shall constitute valid and binding obligations of TTS and Shareholder enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws from time to time in effect which affect creditors’ rights generally and by legal and equitable limitations on the availability of specific remedies.

 

 

 

 

(b)           Subsidiaries and Investments.  TTS has two subsidiaries, EZ Identification, LLC (100% of which is owned by TTS), and ID Validation Systems, LLC (51% of which is owned by TTS) (each a “Subsidiary” and collectively, the “Subsidiaries”).  Each of the Subsidiaries is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Oregon.  Other than its ownership in such Subsidiaries, neither TTS nor Shareholder owns, of record or beneficially, any outstanding voting securities or other equity interests in any corporation, partnership, joint venture, or other entity which is involved in or relates to the b usiness of TTS.

(c)           Noncontravention.  Neither the execution and delivery of this Agreement or any of the Ancillary Agreements, nor the consummation of the transactions contemplated by such Agreements, shall (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any Governmental Body to which TTS or Shareholder are subject or any provision of the charter or bylaws of TTS or the respective operating agreements of the Subsidiaries; or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agr eement, contract, lease, license, instrument, lien, security interest or other arrangement to which TTS or Shareholder are a party, or by which TTS or Shareholder are bound, or to which any of the assets and/or subsidiaries of TTS or Shareholder are subject.  Except as is otherwise expressly set forth in this Agreement, and to the best of TTS’s and Shareholder’s knowledge, TTS and Shareholder do not need to give any notice to, make any filing with, or obtain any authorization, consent or approval of any Governmental Body in order for the parties hereto to consummate the transactions contemplated by this Agreement.

(d)           Qualification and Registration.  TTS and each Subsidiary is duly qualified and registered to transact business in each of the jurisdictions listed in Section 3.3(d) of the Seller Disclosure Schedule, which jurisdictions are the only ones in which TTS and each Subsidiary is currently conducting business.  No other jurisdiction has demanded, requested or otherwise indicated that TTS or any Subsidiary is required to so qualify on account of the ownership or leasing of any of its properties and assets or the conduct of its business.

 

(e)           Corporate Documents. True, correct, and complete copies of the Articles of Incorporation and Bylaws of TTS, including all amendments thereto, and true copies of the minutes of all directors’ and shareholders’ meetings of said corporation, have been furnished to Purchaser prior to Closing.

 

 

 

 

 

(f)           Capitalization of TTS.  The authorized capital stock of TTS consists of Five Thousand (5,000) shares of common stock, no par value per share, of which 100 shares are issued and outstanding, and 4900 shares are authorized but unissued.  Shareholder is the sole owner of all of the issued and outstanding common stock of TTS, and Shareholder has all requisite authority to sell the Shares to Purchaser.  The Shares being sold to Purchaser hereunder represent all of the issued and outstanding stock of TTS.  All of the outstanding shares of TTS’s common stock have been duly authorized and validly issued in compliance with applicable state and federal laws concerning the issuance of securities, and are fully paid and non-assessable.  There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion privileges or other agreements (including rights of first refusal) or understandings obligating TTS to issue any additional shares of capital stock of any class or to issue any other debt or equity securities of any kind, or giving or granting to any person any rights to purchase or otherwise acquire stock or any equity securities of TTS.  There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to TTS.

 

(g)           Ownership of Subsidiaries.  TTS has acquired and is the sole owner of all of the issued and outstanding units of ownership interest in EZ Identification, LLC.  In addition, TTS has acquired and is the owner of fifty-one percent (51%) of the total issued and outstanding units of ownership interest in ID Validation Systems, LLC.  Except as set forth in Section 3.3(g) of the Seller Disclosure Schedule, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion privileges or other agreements (including rights of first refusal) or understandings obligating EZ Identification, LLC to issue any additional units of membership interest or to issue any other debt or equity securities of any kind, or giving or granting to any person any rights to purchase or otherwise acquire units or any equity securities of EZ Identification, LLC.  Except as set forth in Section 3.3(g) of the Seller Disclosure Schedule, to the best knowledge of TTS and Shareholder, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion privileges or other agreements (including rights of first refusal) or understandings obligating ID Validation Systems, LLC to issue any additional units of membership interest or to issue any other debt or equity securities of any kind, or giving or granting to any person any rights to purchase or otherwise acquire units or a ny equity securities of ID Validation Systems, LLC.

 

(h)           Title to Stock and Assets.  Except as set forth in Section 3.3(h) of the Seller Disclosure Schedule, and except as to the agreed upon existing pledge as may exist with the Bonderson Family Trust, TTS has good and marketable title to all of its assets and properties, free and clear of any and all liens, security interests, or other encumbrances or restrictions thereon.  Each Subsidiary of TTS has good and marketable title to its respective assets, free and clear of any and all liens, security interests, or other encumbrances or restrictions thereon, ex cept as set forth in Section 3.3(h) of the Seller Disclosure Schedule.

(i)           Compliance with Law; Litigation.  To the knowledge of TTS and Shareholder, TTS and each Subsidiary is in material compliance with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and charges thereunder) of all Governmental Bodies.  Neither TTS nor Shareholder has received notice that there is any action, suit or proceeding pending in or before any court, tribunal or any Governmental Body, and to the best of TTS’s and Shareholder’s knowledge, no investigation is pending or in progress and there is no threat thereof against or relating to TTS, Shareholder, any Subsidiary of TTS, or any of TTS’s or its Subsidiaries’ properties, assets or business, nor, to the knowledge of TTS and Shareholder, is there any basis for any such claim, suit or other proceeding.  Neither TTS nor Shareholder has received notice that there is any suit, action, or other proceeding commenced, pending, or to the knowledge of TTS and Shareholder, threatened against or affecting TTS, any Subsidiary, or Shareholder in any Governmental Body, in which it is sought to restrain, prohibit or otherwise adversely affect the ability of TTS or Shareholder to perform any or all of the obligations required of them under this Agreement or the consummation of the transactions contemplated by this Agreement.

 

 

 

 

(j)           Shareholder Claims.  No shareholder, and to the knowledge of TTS and Shareholder, no officer, member, employee or consultant of TTS or any Subsidiary has any claim or claims against TTS or any of its Subsidiaries, and to the knowledge of TTS and Shareholder, TTS is not obligated or liable to any such persons in any way or for any amounts except compensation due to employees in the ordinary course of business and except as disclosed in the Financial Statements.

 

(k)           Financial Statements.

 

(i)           Purchaser acknowledges receipt of the following Financial Statements for TTS: (A) audited balance sheets, income statements and cash flow statements for each of the two years ended December 31, 2008, and December 31, 2009; and (B) unaudited interim balance sheet items reflecting billed and unbilled accounts receivable of TTS as of March 31, 2010.  The Financial Statements have been prepared on a consistent basis throughout the periods covered thereby and present fairly the revenues related to the business of TTS as of such dates; provided, however, the unaudited interim balance sheet referenced in Section 3.3(k)(ii) above, is subject to the absence of footnote disclosure, off balance sheet activity, related party activity and year-end adjustments.

 

(ii)           TTS has no liabilities associated with any of its assets or business, contingent or otherwise, that are not reflected on the Financial Statements.  Except as reflected on the Financial Statements, and except as set forth on Section 3.3(k) of the Seller Disclosure Schedule, TTS  has no indebtedness for money borrowed or for the deferred purchase price of property or services, capital lease obligations, conditional sale or other title retention agreements relating to any of its assets or its business.  Except as set forth on Section 3.3(k) of the Seller Disclosure Schedule, TTS and/or Shareholder are not guarantors or otherwise liable for any liability or obligation of any other person or entity for any matter which relates to or affects or shall affect the assets or the business of TTS.

 

(l)           Insolvency.  No insolvency proceedings of any character, including bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the business or any assets of TTS or any Subsidiary are pending or to the knowledge of TTS or Shareholder are threatened, and neither TTS nor Shareholder has made any assignment for the benefit of creditors, or taken any other action which would constitute the basis for the institution of such insolvency proceedings.

 

 

 

(m)           Taxes and Tax Returns.

 

(i)           TTS and each Subsidiary have filed when due, within the time and in the manner prescribed by law, Returns required to be filed by them with the appropriate federal, state and local governmental authorities, and to the knowledge of TTS and Shareholder, such returns are true, correct and complete in all material respects and accurately reflect the taxes payable.  All material federal, state, county and local franchise, sales, use, excise, ad valorem, property, payroll and employment, income, and other taxes which are due and payable have been duly paid; and no reserves for unpaid taxes have been set up or are required on the basis of the facts and in accordance with past accounting practices, consistently applied, except as reflected in the Financial Statemen ts or that have arisen after the date of the Financial Statements, in the ordinary course of business.

 

(ii)           There are no unpaid assessments or to the knowledge of TTS and Shareholder proposed assessments of federal income taxes pending against TTS or any Subsidiary; no deficiency for any taxes has been proposed, asserted or assessed against TTS or any Subsidiary which has not been resolved and paid in full; there are no liens for taxes upon the assets of TTS or any Subsidiary, except for taxes not yet due and payable; and there are no federal, state or local tax audits or other administrative proceedings or court proceedings pending or, to the knowledge of TTS and Shareholder threatened against TTS or any Subsidiary with respect to any taxes or Returns.

 

(iii)           There are no outstanding waivers or comparable consents regarding the application of the statute of limitations with respect to any taxes or Returns that have been given by TTS or any Subsidiary.

 

(iv)           TTS and each Subsidiary have complied, and until the Closing Date will continue to comply, with all applicable laws, rules and regulations relating to the payment and withholding of taxes, and have, within the time and in the manner prescribed by law, withheld from employee wages and paid over to the proper governmental authorities, all amounts required to be so withheld and paid over under all applicable laws.

 

(v)           TTS has been a validly electing ‘S’ Corporation within the meaning of Sections 1361 and 1362 of the Internal Revenue Service Code of 1986, as amended (“Code”).  TTS currently has and has always had one class of stock for purposes of Section 1361 of the Code.

 

(vi)           To the knowledge of TTS and Shareholder, TTS does not have any tax liabilities (whether due or to become due) with respect to the income, property and operations of TTS that relate to any pre-closing tax period, except for tax liabilities that have arisen after December 31, 2009, in the ordinary course of business.

 

(n)           Accounts Receivable.  All the accounts receivable of TTS and each Subsidiary reflected in the Financial Statements have been collected or are good and collectible in the aggregate recorded amounts thereof (less a reasonable amount for doubtful accounts as reflected in the Financial Statements) and can reasonably be anticipated to be paid in full after good faith collection efforts, except as such collection may be limited by applicable bankruptcy, insolvency, reorganization or similar laws from time to time in effect which affect creditors’ rights generally and by legal and equitable limitations or availa bility of specific remedies.

 

 

 

 

 

(o)           Inventory.  All of the inventory of TTS and of each Subsidiary reflected in the Financial Statements was in existence as of the date thereof and available for sale thereafter in the ordinary course of business.  All such inventory and all inventory items acquired since December 31, 2009, are of good and merchantable quality and are usable or saleable in the ordinary course of TTS's (or its Subsidiary’s) business except for damage or deterioration adequately covered by insurance or by claims against financially responsible third parties.  Such inventories, excluding obsolete inventory, were valued at the lower of cost or net realizable value and were determined in accordance with generally accepted accounting principles consistently applied.

 

(p)           Intellectual Property.  Schedule 3.3(p) of the Seller Disclosure Schedule sets forth a list and description of all of the intellectual property (patents, trademarks, service marks, copyrights, trade secrets, and all other proprietary assets and rights, whether or not registered) of TTS.  Except as set forth on Schedule 3.3(p) of the Seller Disclosure Schedule, TTS has no Intellectual Property, and TTS does not require any such I ntellectual Property in connection with the conduct of its business as presently conducted.  With respect to all of the Intellectual Property listed on Section 3.3(p) of the Seller Disclosure Schedule: (i) TTS owns and possesses all right, title and interest in and to such Intellectual Property; (ii) no claim by any third party contesting the validity, enforceability, use or ownership of any of the Intellectual Property has been made, or is currently outstanding; (iii) neither TTS nor Shareholder has received any notice of, nor are they aware of, any facts which would indicate a likelihood of any infringement or misappropriation by or conflict with, any third party of any such Intellectual Property owned by TTS; (iv) neither TTS nor Shareholder has received any notice from a third party alleging any infringement, misappropriation or conflict with the intellectual pr operty rights of any such third party, including, without limitation, any demand, request or offer that TTS license rights from a third party; (v) the Intellectual Property constitutes all intellectual property necessary for the operation of TTS’s business as currently conducted, and neither TTS nor Shareholder is aware of any infringement, misappropriation or conflict which will occur as a result of the continued operation of the business as currently conducted; and (vi) the Intellectual Property is free and clear of all liens, claims, security interests or other encumbrances of any kind.

 

(q)           Employee Benefit Plans.  Except as set forth on Section 3.3(q) of the Seller Disclosure Schedule, TTS does not have any employee benefit plans covering its employees, or any collective bargaining or union agreements to which TTS is a party.  Any qualified pension and/or profit sharing plans adopted or maintained by TTS comply with the provisions of the Employment Retirement Security Act of 1974, as amended (''ERISA''), and TTS has made all contributions required to be made by it to the trusts related thereto.  TTS is not a party to any multi - -employer pension or other employee benefit plan.  No event which constitutes a "reportable event" as defined in Section 4043 of ERISA has occurred with respect to any employee benefit plan maintained by TTS or on behalf of its employees.

 

(r)           Employment Agreements.  Except as identified on Section 3.3(r) of the Seller Disclosure Schedule, neither TTS nor any Subsidiary has any written or oral employment agreements with any of its employees.  TTS and each Subsidiary have timely paid all withholding, FICA and other taxes required to be paid by it on behalf of its employees.

 

 

 

 

(s)           Employment Practices.  Neither TTS nor Shareholder has received notice that TTS is not in substantial compliance with any federal or state law respecting employment or employment practices, terms and conditions of employment, and wages and hours.  TTS has not engaged and is not currently engaged in any unfair labor practice.  There are no collective bargaining agreements which restrict TTS or Shareholder from carrying out the terms of this Agreement and the Ancillary Agreements; and to the knowledge of TTS and Shareholder, TTS does not have any contract with any of its employees which cannot be terminated without penalty on ten (10) days' notice or less.  Any exis ting employment arrangements, including without limitation, any existing employment or consulting agreements with Gingo, Kruse and Waddle, and any other agreements between TTS and Shareholder pertaining to Shareholder’s employment or entitlement to any employment benefits, will be terminated at or prior to Closing.

 

(t)           Material Contracts.  Except contracts, agreements or instruments that can be terminated on notice of thirty (30) days or less without liability to TTS and except contracts, agreements or instruments providing for the future or ongoing purchase, maintenance, acquisition, sale, or furnishing of materials, inventory, supplies, or merchandise for less than $50,000, TTS does not have any material obligations, rights or benefits under, and is not bound by or a party to, any contracts, agreements, or instruments other than those described in Section 3.3(t) of the Seller Disclosur e Schedule.  There is no action, suit, or other litigation proceeding threatened or pending in any court or tribunal or before any Governmental Body with respect to any contract or agreement to which TTS, any Subsidiary and/or Shareholder are a party.  TTS is not in breach of or default in any of its obligations under any contract, agreement, or instrument, or, to the knowledge of Shareholder, is any other party in material default in any of its obligations under any contract, agreement, or instrument materially affecting TTS.  TTS has not waived any material right under or with respect to any contract, agreement, or instrument.  Each contract and agreement is in full force and effect and, except to the extent described in Section 3.3(t) of the Seller Disclosure Schedule, following the Closing, TTS shall continue to exercise all of TT S’s rights under said contracts and agreements to the same extent TTS would have been able to had the transactions contemplated by this Agreement not occurred, and without the payment of any amounts or consideration due to the sale of Shares described in Article I of this Agreement, and without any changes in the rights or obligations to TTS in the contracts and agreements.

 

(u)           Insurance.  All insurance policies under which TTS, any Subsidiary, and any of their respective assets, officers, directors and employees are insured are listed in Section 3.3(u) of the Seller Disclosure Schedule.  All premiums payable under all such policies have been fully and timely paid, and to the knowledge of TTS and Shareholder, TTS is otherwise in compliance with the terms of all such policies, and all such policies are currently in effect and enforceable.  With respect to all such policies, neither TTS nor Shareholder has received notice of: (i) any refusal of coverage or any notice that a defense will be afforded with reservation of rights, or (ii) any cancellation or any other indication that an insurance policy is no longer in full force or effect, or will not be renewed, or that the insurer of any policy is not willing or able to perform its obligations thereunder.

 

 

 

 

(v)           Absence of Certain Events.  Since December 31, 2009, TTS has not: (a) incurred any obligation or liability, whether absolute or contingent, except obligations and liabilities incurred in the ordinary course of its business; (b) discharged or satisfied any lien or encumbrance or paid any obligation or liability, whether absolute or contingent, other than current liabilities having become due and payable since December 31, 2009, in the ordinary course of its business, and obligations and liabilities under contracts referred to in Section 3.3(t) of the Seller Disclosure Sched ule; (c) made or agreed to make any wage, salary, or employee benefit increases for full-time employees; (d) made any loans or guarantees to or for the benefit of any of its officers, directors, employees, or any members of their immediate family; (e) sold or transferred any of its tangible or intangible assets or canceled any debts or claims, except, in each case, in the ordinary course of business; (f) sold, assigned, or transferred any trademark or trade name; (g) suffered any material losses or waived any right of substantial value other than in the ordinary course of business; (h) suffered any loss, damage, or destruction to any of its properties due to fire or other casualty whether or not insured, which loss, damage, or destruction materially and adversely affects its business, properties or operations; (i) issued or sold or agreed to issue or sell any shares of its capital stock or any other securities or reclassified or agreed to reclassify its capital stock; (j) mortgaged, pledged, or subjec ted to lien, charge or other encumbrance any of its tangible or intangible assets, except the lien of current real and personal property taxes not yet due and payable, or purchase money or similar liens incurred in the ordinary course of business; (k) made or agreed to make capital expenditures in excess of $50,000; (l) declared or paid a dividend or transferred property or loaned any money or agreed to loan money to any of its directors or officers, except as disclosed in Section 3.3(v) of the Seller Disclosure Schedule; (m) amended its Articles of Incorporation or Bylaws; (n) conducted its business otherwise than in its ordinary and usual manner; or (o) become aware of an event, transaction, or circumstance which does or could materially adversely affect its condition (financial or otherwise), assets, liabilities, earnings, business, or operations.

 

(w)           No Untrue Statements.  Neither this Agreement nor any of the Schedules or Exhibits annexed hereto contains any untrue statement of any material fact or omits to state any material fact required to be stated herein or therein, or necessary in order to make the statements contained herein or therein not misleading.  To the best knowledge of Shareholder, there is no fact which materially adversely affects, or in the future may materially adversely affect, the business or prospects or condition (financial or otherwise) of TTS, any Subsidiary, or any of their respective properties or assets, which fact has not been set forth herein or in the Schedules or Exhibits annexed hereto.