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It's CMCA.OB again!!!
How many games did they sell already?
How much does CPYE get for every game sold?
So, why is this p.o.s. falling?
removed from naked short list today!
How much will CPYE receive for every game sold?
14:30 09Jun08 PRN-Greater China Media and Entertainment Corporation Receives US $329,000 for TV series... <GCME.OB>
Greater China Media and Entertainment Corporation Receives US $329,000 for TV series 'Rich Dad, Poor Dad' from Hua Yi
BEIJING, June 9 /Xinhua-PRNewswire/ -- Greater China Media & Entertainment Corporation (OTC Bulletin Board: GCME), an integrated professional media and entertainment company, announced that it has received RMB 2.3 million (approx.
US $329,000), which is the final payment from Beijing Hua Yi Union Cultural Media Investment Company Limited ('Hua Yi') for the TV series "Rich Dad, Poor Dad".
HuaYi is a professional media company engaged in the planning, production and distribution of high-quality motion pictures, TV dramas and documentaries.
On May 18, 2007, the Company, through its subsidiary Beijing Hua Ding Century Media Investment Consultants Limited ("Hua Ding"), entered into a joint production agreement with Hua Yi for the production of "Rich Dad, Poor Dad". The total production costs were roughly RMB 15,000,000 (approx. US $2,143,000). The Company contributed RMB 5,000,000 (approx. US $714,000) while
Hua Yi invested RMB 10,000,000 (approx. US $1,428,000). In December 2007, Hua Ding reached another agreement with Hua Yi whereby Hua Yi consented to purchase Hua Ding's interest and rights in the television series for a total of RMB 5,700,000 (approx. US $814,000). This was to be paid in two installments with RMB 3,400,000 (approx. US $486,000) received on December 28,
2007 and RMB 2,300,000 (approx. US $329,000) received on May 31, 2008.
"I'm very pleased that we are able to secure US $100,000 from our first TV series 'Rich Dad, Poor Dad'. It has received high ratings and positive comments from audiences. We also gained valuable experience and learned a variety of new techniques through its production. In addition, we have built a
sound relationship with Hua Yi. 'Rich Dad, Poor Dad' is a milestone for GCME.
It has further solidified our role as an upcoming and leading media and entertainment company in China," stated Jake Wei, CEO of the Company.
About Greater China Media and Entertainment Corporation:
Greater China Media & Entertainment Corp. ("GCME" or the "Company") is an integrated professional media and entertainment company covering various areas including film and TV production, management, promotion and distribution. The
Company maintains its own film and television production center, promotion agency, audio-visual distribution company, digital network company, talent agency, as well as sales and advertising agencies acquired as a result of recent joint ventures. With its broad range of media and entertainment talents, the Company is capable of making films, TV programs and related projects on a
large scale.
Joint Ventures and Affiliated Entity:
In 2006, the Company formed a joint venture with Beijing Racemind HuaDing International Marketing Consultants Limited (Racemind). Racemind specializes in public relations, media strategy, consulting and event management services.
The Company signed an agreement with Beijing Star King Talent Agency to form a joint venture to carry on business as a talent agency. This joint venture is in process.
In March 2008, the Company obtained control of a local Chinese company called Beijing HuaDing Century International Cultural Limited Corp. ("Beijing HuaDing") to produce movies and TV series.
Milestones:
Movie and TV production and distribution:
-- Signed a trust agreement with Beijing Jin Ying Xiang Media Culture
Limited Corp. to produce 'Rose Thorn', a 24-episode TV series. The
series is now in production.
-- Closed a first round of private placement for US $1.6 million.
-- Signed a production and distribution deal with Mega Vision Productions
Limited for the new movie 'Tough Guy.'
-- Received US $100,000 for the TV series 'Poor Dad, Rich Dad'
Racemind HuaDing
-- Total contract value from January 2008 to April 2008 was RMB 7,424,540
(approx. US $1,061,000).
-- Total contract value for calendar year 2007 was RMB 12,333,669 (approx.
US $1,762,000).
-- Provided an array of public relations services to Siemens China.
-- Selected by Microsoft China as an approved public relations vendor.
For more information, please visit the Company website at
http://www.greaterchinamedia.com .
2 trades at .078: 4.600 shares and 5.000 shares.
from their latest report (filed in April):
NOTE 11 - SUBSEQUENT EVENTS
On January 17, 2008, the Company issued 245,098 shares of its common stock upon conversion of 100 shares of Series A preferred stock.
On January 24, 2008, the Company issued 1,388,889 shares of its common stock upon conversion of 250 shares of Series A preferred stock.
On March 4, 2008, the Company issued 1,712,121 shares of its common stock upon conversion of 113 shares of Series A preferred stock.
On April 7, 2008, the Company issued 1,795,455 shares of its common stock upon conversion of 79 shares of Series A preferred stock.
F-32
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TRANSAX INTERNATIONAL LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements December 31, 2007 and 2006
NOTE 11 - SUBSEQUENT EVENTS (CONTINUED)
On March 26, 2008, the board of directors of the Company, pursuant to unanimous written consent resolutions, approved the execution of a stock purchase and option agreement (the "Agreement") with Engetech, Inc., a Turks & Caicos corporation controlled and owned 20% by Americo de Castro, director and President of Medlink Conectividade and 80% by Flavio Gonzalez Duarte (the "Buyer"). In accordance with the terms and provisions of the Agreement, the Company sold to the Buyer 45% of the total issued and outstanding stock of its wholly-owned subsidiary, Transax Limited ("Transax Sub"). Transax Sub owns one hundred percent of the total issued and outstanding shares of: (i) Medlink Conectividade and (ii) MTI.
The purchase price for the 45%, or 45 shares, ("Initial Shares") is $3,200,000. Of this amount, $220,000 was to have been paid by December 31, 2007. Of this amount, approximately $188,000 was received by the Company by December 31, 2007 and is reflected as a liability on the accompanying consolidated balance sheet as a deposit on sale of minority interest. The balance is to be paid as follows
i) $32,000 of the initial deposit is due immediately; ii) $480, 000 is to be paid on March 31, 2008, and iii) the balance of $2,400,000 is due in twelve equal monthly payments of $200,000 commencing April 2008. The $2,880,000 balance due and owing by the Buyer is evidenced by an installment note secured by a pledge of all of Initial Shares. As of the date of this report, the Buyer has not paid the March 31, 2008 payment or the remaining initial deposit.
The Buyer has an option to purchase the remaining 55% of Transax Sub. The Option is exercisable by the Buyer during March and April 2009, subject to shareholder approval, to acquire the balance of the Company's Medlink Conectividade operations (and its corresponding debt) by way of acquisition of the remaining 55 shares of the Transax Sub and certain licensing rights for Latin America, Spain and Portugal in exchange for further payments to the Company of approximately $2,400,000 in the form of twelve equal monthly payments of $200,000.
In accordance with the further terms and provisions of the Agreement, a performance bonus shall also be payable by the Buyer to the Company (the "Bonus") equal to 50% of the revenues received by Medlink Conectividade (converted monthly to US Dollars at the monthly average exchange rate as provided by the Central Bank of Brazil) with respect to transactions in excess of an aggregate of 678,076 executed during 2008 for Medlink Conectividade's customer, Brandesco Saude. The Buyer shall pay the Bonus due as follows: 40% of January 31, 2009, 20% on April 30, 2009, 20% on July 31, 2009, and 20% on October 31, 2009. The Bonus shall be payable regardless of whether or not the Buyer elects to exercise the Option.
Additionally, in accordance with the terms and provisions of the Agreement, MTI shall grant to the Company a perpetual, exclusive and sub-license to use all of the software and other intellectual property owned by MTI in all territories other than (i) Latin America (defined as all mainland countries in the Western Hemisphere south of the USA/Mexico border; and (ii) Spain and Portugal.
As of the date of this report, the Buyer is in default by $480,000 of the payment due on March 31, 2008.
F-33
TNSX"E".OB once again.....
This is ridiculous....
Today's after hours trade: 825K shares at $ 0.0021.
Hahahahahahahah!!!! This is getting ridiculous.
Still no official comment from TNSX-management.
Good news: annual report is available
Bad news: read "Subsequent events" and you know it all....
TNSX"E".OB!!!!!
TNSX.PK soon.....
The convertible was for $ 1.6m and can be coverted into shares at a 20 % discount to the average shareprice of last 5 trading days.
Cornell can convert $1.6m : $ 0,004 = 400m shares. Issued/outstanding shares are 33m, authorized shares are 100m (as of June 2003).....makes you think, doesn't it?
Ask these guys, if they intend to use the 800K "Brazilian" money to pay off Cornell/YA.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2007
Commission File Number: 0001027484
TILDEN ASSOCIATES, INC.
(Name of small business issuer in Its Charter)
DELAWARE 11-3343019
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
300 Hempstead Turnpike
West Hempstead, New York 11552
(address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (516) 746-7911
Securities registered pursuant to Section 12(b) of the Exchange Act: NONE
Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of Each Class:
Common Stock (par value $.0005 per share)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or Section 15(d) of the Exchange Act during the past 12 months (or for such shorter period that Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB [ ]
State issuer's revenues for its most recent fiscal year was $1,546,495.
The aggregate market value of the Common Stock held by non-affiliates of the Registrant was approximately $658,224 based upon the $0.08 average bid price of these shares on the NASDAQ Stock Market on April 8, 2008.
As of April 8, 2008, there were 11,385,903 outstanding shares of Common Stock, $.0005 par value per share.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Tilden Associates, Inc. (the "Company") is a Delaware Corporation. Its principal business is to sell automotive franchises and to administer and support full service automotive repair centers carrying its trademarks. The Company's operations are based at 300 Hempstead Turnpike, West Hempstead, New York 11552.
S.G. Tilden Incorporated was founded by the late Sidney G. Tilden in 1923. Prior to 1966, S.G. Tilden Incorporated operated Company run brake shops. In 1966 S.G. Tilden Incorporated sold its individual shops to its then shop managers who became franchisees of S.G. Tilden Management Corp. In 1995 Tilden Associates Inc. acquired the business of S.G. Tilden Management Corp. S.G. Tilden Management Corp., at the time of the sale, had nine (9) operating franchises. One franchise closed within six (6) months of transfer and another was bought back as a company store in 1998. The royalty income from those nine
(9) operating franchises was excluded from the sale. The seven (7) remaining franchises of S.G. Tilden Management Corp. work, in many other respects, with the other franchises and Tilden Associates, Inc. and its franchises, including performing training services and joint marketing of related activities. Prior to May of 1998, exclusive of the aforesaid seven (7) franchises, which the Company received no royalties from, the Company had established franchises in Verona, New Jersey, Baldwin, New York and Boynton Beach in Palm Beach County, Florida. The company also opened two (2) locations in Texas, as well as one (1) in California.
In June of 1998 the Company entered into an agreement with Esther Muram to purchase B&E Auto Center, Inc. and several other associated corporations collectively known as the "Brake World Franchise System" ("Brake World"). In acquiring Brake World, the company acquired twenty-one (21) franchises, all of which were operating in the State of Florida. Such franchises performed brake servicing as their primary business with additional auto services on a very limited basis. Approximately six (6) of those franchises, at the time of the transaction, were engaged in litigation with Brake World, primarily relating to the non-payment of royalties. Three (3) of those litigations remain ongoing. One of the litigations was resolved early on, which ultimately resulted in the closure of a franchise.
In addition, in 1998 the Company, at various times, operated two (2) Company stores, one (1) of which was opened as a Company store with the intention of being operated as a Company store until sold. One Company store was the franchise purchased by the Company from one of the original nine (9) franchisees of S.G. Tilden Management Corp. This store, which was initially acquired by the Company from the franchisee, was subsequently sold to a new franchisee. At the end of the calendar year 1998, the Company had thirty-eight
(38) franchise and Company owned stores in operation, including one (1) Company store, the seven (7) stores acquired from S.G. Tilden Management Corp., and the twenty-one (21) stores acquired from Brake World of which only fifteen (15) stores are considered franchises in good standing, and six (6) franchises which are involved in litigation described herein.
In January of 1999, the Company purchased from American Brake Service, Inc., thirteen (13) additional stores. In 1999 the Company's one (1) remaining Company store was sold to a franchisee. An additional store was bought from a franchisee in 1999, operated as a Company store for a brief period of time, and then sold to a new franchisee. There was also an additional store opened and then sold to a franchisee during 1999.
In 2007, the Company sold five (5) new franchises but wrote-off six (6) franchises due to abandonment by franchisees. By the end of 2007, the Company had forty eight (48) franchises operating under its name, including: the seven
(7) from S.G. Tilden Incorporated, from which the Company received no royalties, eleven (11) remaining franchises in good standing acquired from Brake World now being operated under Tilden Brake World, Inc., the six (6) remaining franchises acquired from America Brake service, Inc., now being operated under Tilden ABS, Inc., three (3) company-owned stores that were sold to franchisees, and twenty-one (21) additional new franchisees, making a total of forty eight franchises and Company stores plus additional disputed franchises in litigation. All franchises do all forms of auto repairs, although the Brake World franchises and the American Brake service franchises initially focused primarily on brake and brake related repairs. The Company recognizes royalty fee income on existing franchises operating under its name (except for the seven (7) from S.G. Tilden Incorporated), which was approximately 43% of its total revenues in 2007.
In addition to the Company's primary business, which is selling franchises and collecting royalties there from, the Company also has a wholly owned subsidiary, Tilden Equipment Corp., which sells shop equipment for auto repair shops. To date, Tilden Equipment Corp. sales have been limited to the Company's franchise locations and Company stores. The Company hopes, in the future, to market the equipment to third parties.
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In addition, the Company owns a number of realty corporations, which corporations are obligated on leases for one or more of the Company's franchise locations.
REGULATORY REQUIREMENTS FOR FRANCHISING
Franchising is both regulated by the Federal Trade Commission and many of the states. The Company believes it is in compliance with all the rules of the Federal Trade Commission and is registered in the following states to sell franchises: California, Florida, Indiana, Minnesota, New York, Rhode Island, and Virginia. There are approximately Thirty-five (35) States, which have no registration requirements.
The Company generally competes in the sale of franchises with other companies of similar size and similar resources. The larger automotive franchises typically already exist in the areas where the Company seeks to sell its franchises and are therefore not competing for franchise location sales in these areas.
The Company's individual franchisees compete with other franchise operators, large company run stores and individual operators, both brake specialists and parties performing general automotive repairs. The Company believes that its franchise operators are able to compete, both financially and in providing service, with its competitors.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's offices are located at 300 Hempstead Turnpike, West Hempstead, New York 11552. The Company has a 60-month lease, which commenced on October 1, 2003. The space is approximately 1,600 square feet. The space is sufficient for the Company's needs for the foreseeable future
In addition, the Company leases real estate in the Continental United States and sub leases these locations to its franchises. As of December 31, 2007, the Company and subsidiaries leased to its franchises a total of eleven
(11) sites.
ITEM 3. LEGAL PROCEEDINGS
In July 2006, the Company and its directors were named as defendants in a lawsuit instituted in the Chancery Court of the State of Delaware in and for New Castle County. The action alleged that the exercise price of stock options were in violation of the Company's stock option plan for the years 2001 through 2005, in that the options exercise price on the date of the grant were below the requirements of the plans. The lawsuit was settled during the third quarter 2006 for $20,000. As part of the settlement without conceding the accuracy or correctness of the plaintiffs' allegations, the Company has decided to rescind the stock options issued for the years 2001 through 2005 without prejudice to its right to issue stock options in the future.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the "Pink Sheets" under the symbol "TLDN". The following constitutes the high and low sales prices for the common stock as reported by NASDAQ for each of the quarters of 2007 and 2006. The quotations shown below reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.
2007 HIGH LOW
----------------------- ---------- ----------
FIRST QUARTER $ .11 $ .06
Common Stock
SECOND QUARTER
Common Stock $ .07 $ .05
THIRD QUARTER
Common Stock $ .06 $ .05
FOURTH QUARTER
Common Stock $ .10 $ .06
2006 HIGH LOW
----------------------- ---------- ----------
FIRST QUARTER $ .18 $ .08
Common Stock
SECOND QUARTER
Common Stock $ .11 $ .07
THIRD QUARTER
Common Stock $ .08 $ .04
FOURTH QUARTER
Common Stock $ .07 $ .04
The Company has not declared cash dividends on its Common Stock and does not intend to do so in the foreseeable future. If the Company generates earnings, management's policy is to retain such earnings for further business development. It plans to maintain this policy as long as necessary to provide funds for the Company's operations. Any future dividend payments will depend upon the Company's earnings, financial requirements and other relevant factors, including approval of such dividends by the Board of Directors.
As of April 8, 2008, there were approximately 70 shareholders of record of the Company's common stock, excluding shares held in street name.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Company's consolidated financial statements and notes thereto included elsewhere herein. The statements disclosed herein include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of certain risks and uncertainties, including, but not limited to, the Company's need for additional financing, competition in the franchise industry for retail automobile and truck repair service, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
Fiscal 2007 Compared to Fiscal 2006
Revenue decreased to $1,546,495 in the year 2007 from $2,117,520 in the year 2006, representing a 27% decrease. The decrease in revenue during the year was attributed to market area sales, initial franchise acquisition fees, sales of equipment purchased for resale, rental income, sales from the operation of company owned stores of $225,000, $172,500, $89,612, $65,246 and $66,732, respectively. These decreases were primarily offset by increases in royalty fees and the sale of company owned locations of $32,936 and $23,000, respectively. The decrease market area sales, reflects that no new market areas were sold in 2007 compared to five in 2006. The decrease in initial franchise acquisition fees is attributable to the sale of five new franchises in 2007 compared to twelve in 2006. The decrease in equipment purchased for resale was a result of a decrease in sales to new franchises in 2007 as compared to 2006. The decrease in rental revenue was attributable to the decrease in franchises obligated to the Company under sub-lease agreements in 2007 as a result of an abandoned franchise in 2007. The decrease in sales from the operation of company owned stores was attributable to the sale of its Texas store in 2007 and less stores under the control of the Company in 2007 as compared to 2006. The Company attributes the overall decrease in new franchise sales activity including market area and equipment sales to the inability of prospective franchisees to obtain financing as a result of the tightening of the credit markets. The increase in royalty fees was primarily attributable to the Company's increased collections efforts in 2007. The increase in the sale of company owned locations was due to the Company's ability to record an $80,000 sale of a location in 2007 as compared with sales of company owned locations totaling $57,000 in 2006.
Operating costs decreased to $768,065 in 2007 from $1,006,501 in 2006, a 24% decrease. The decrease was attributed to lower costs associated with rent paid for real estate sublet, broker fees, costs of equipment purchased for resale and costs of operation of company owned stores of $74,680, $62,443, $51,565 and $39,493, respectively. There were no significant offsetting increases in operating costs as the Company curtailed costs to coincide with the decrease in revenues. The decrease in rent paid for sublease was attributable to a decrease in franchise locations on which the Company was liable at abandoned locations, which were temporarily under the Company's control during 2006. The decrease in broker fees was attributable to the decrease in market area and new franchise sales, on which the Company often pays broker fees, in 2007. The decrease in the costs of equipment purchased for resale is a result of the decrease in equipment and software sold to new franchisees in 2007. The decrease in costs of operation of company owned stores was a result of the Company's commitment to operate its Texas store as a fully operational location from August 2006 until sold in 2007 during the first quarter.
Selling, general and administrative expenses decreased to $922,879 in the year 2007 from $1,262,442 in the year 2006, a 27% decrease. The decrease was primarily due to decreases in bad debt expense, travel and entertainment and settlement expense of $324,573, $36,366 and $20,000, respectively. These decreases were offset by increases in professional fees and salaries and wages of $33,479 and $11,984, respectively. The decrease in bad debt expense was attributable to a decrease in the number of franchises requiring reserve for bad debt during the period and there no write-offs of notes receivable in 2007 as compared to two in 2006. The decrease in travel and entertainment relates to fewer franchises requiring training and consulting at their respective locations. The decrease in settlement costs reflected the Company's settlement of a lawsuit for $20,000 in 2006 (see part I, legal proceedings). The increase in professional fees is attributable to the increased costs of complying with its regulatory reporting requirements in 2007. The increase in salaries and wages was attributable to increases in the salaries of the Company's employees in 2007.
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LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 2007 was $407,829, compared to working capital of $433,180 at December 31, 2006. The ratio of current assets to current liabilities was 1.65:1 at December 31, 2007 and 1.93:1 at December 31, 2006. Cash flows provided by operations for the year 2007 was $104,995, compared to cash flow provided by operations for the year 2006 of $254,312.
Cash and accounts and notes receivable decreased to $813,143 at December 31, 2007 from $847,253 at December 31, 2006, while accounts payable and accrued expenses increased to $338,115 at December 31, 2007 from $197,231 at December 31, 2006.
The Company's current business plan and objective is to continue expanding the number of franchises in its system through sales of new franchises, as well as through acquisitions of other franchises similar to the acquisitions they have done in the past.
The Company has not paid any dividends in the past and does not contemplate paying any in the foreseeable future.
Some of the Company's subsidiaries lease properties on which franchisees are located. The franchisees typically pay rent to these subsidiaries and, in some cases, may pay rent directly to the lessor.
The Company has $407,829 in working capital. The Company believes that its working capital and cash generated by operations will be sufficient to implement its business plan.
The Company has secured a $250,000 line of credit effective August 1, 2006 (see Notes to Condensed Consolidated Financial Statements, note-Notes Payable). As of December 31, 2007, the Company has not utilized any of the available credit line.
In addition, several franchisees are significantly in arrears in the payment of royalties. Management, however, has addressed these arrearages and resolutions are negotiated with the franchisees on an individual-by-individual basis.
Report of Audit Committee
The following report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this report by reference therein.
The Audit Committee Charter was adopted by the Board and reflects the standards set forth in SEC regulations and the rules of the NASD.
The Audit Committee's primary duties and responsibilities are:
Serve as an independent objective party to monitor the Company's financial reporting process and internal control system. Review and appraise the audit efforts of the Company's independent accountants.
Provide an open avenue of communication among the independent accountants, financial and senior management and the Board
The duties and responsibilities of a member of the Audit Committee are in addition to his or her duties as a member of the Board.
The Audit Committee has implemented procedures to ensure that during the course of each fiscal year it devotes the attention that it deems necessary or appropriate to each of the matters assigned to it under its charter. The Audit Committee met two times during the 2007 fiscal year.
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In overseeing the preparation of the Company's financial statements, the Audit Committee met with both management and the Company's outside auditors to review and discuss all financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Audit Committee that all financial statements were prepared in accordance with generally accepted accounting principals, and the Audit Committee discussed the statements with both management and the outside auditors. The Audit Committee's review included discussion with the outside auditors of matters required to be discussed pursuant to Statements on Auditing Standards No. 61 and 90 (Communication with Audit Committees).
With respect to the Company's outside auditors, the Audit Committee among other things, discussed with Michael T. Studer CPA, PC matters relating to its independence, including the written disclosures made to the Audit Committee as required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committee).
On the basis of these reviews and discussions, the Audit Committee recommended to the Board that the Board approve the inclusion of the Company's audited financial statements in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2007.
ITEM 7. FINANCIAL STATEMENTS
The response to this item follows Item 13, and is hereby incorporated herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
ITEM 8a. CONTROLS AND PROCEDURES
Within the ninety-day period preceding the filing of this report, our management and Audit Committee evaluated the effectiveness of the design and operation of its disclosure controls and procedures (the "Disclosure Controls") as of the end of the period covered by this Form 10-KSB and (ii) any changes in internal controls over financial reporting that occurred during the last quarter of our fiscal year. This evaluation ("Controls Evaluation") was done under the supervision and with the participation of management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as well as the Audit Committee and out Independent Accountants.
Limitations on the Effectiveness of Controls
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected. We will conduct periodic evaluations of our internal controls to enhance, where necessary, our procedures and controls.
Conclusions
Based upon the Controls Evaluation, the CEO and CFO have concluded that the Disclosure Controls are effective in reaching a reasonable level of assurance that management is timely alerted to material information relating to the Company during the period when its periodic reports are being prepared. In accord with the U.S. Securities and Exchange Commission's requirements, the CEO and CFO conducted an evaluation of the Company's internal control over financial reporting (the "Internal Controls") to determine whether there have been any changes in Internal Controls that occurred during the quarter which have materially affected or which are reasonable likely to materially affect Internal Controls. Based on this evaluation, there have been no such changes in Internal Controls during the last quarter of the period covered by this report.
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ITEM 8A(T). MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management's assessment of the effectiveness of the small business issuer's internal control over financial reporting is as of the year ended December 31, 2007. We believe that internal control over financial reporting is effective. We have not identified any, current material weaknesses considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits us to provide only management's report in this annual report.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The Company's Certificate of Incorporation provides for no less than three (3) Directors. Each Director shall hold office until the next annual meeting of shareholders and until his successor has been elected and qualified. At the present time there are a total of three (3) Directors. The Board of Directors is empowered to fill vacancies on the Board. The Company's Directors and Executive
Officers are listed below:
POSITIONS
NAME AGE W/ COMPANY DIRECTOR SINCE
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Robert Baskind 66 Chairman of the Board, Chief 1996
Executive Officer
Arthur Singer 40 Director 1996
Jason Baskind 36 Director of Franchise Development 2003
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DIRECTORS
Robert Baskind is a founding stockholder and was employed as a registered representative by On-Site Trading, Inc., a registered Broker Dealer and a member of the National Association of Security Dealers, Inc. Prior thereto and since 1992, Mr. Baskind was employed with Trading Places, Inc., a franchise sales organization and business broker. Mr. Baskind has many years of experience as a franchiser and business Broker specializing in business automotive services and was entrepreneurially involved in many of these entities.
Arthur Singer is a graduate of the State University at Albany. He has devoted his entire career to Sales and Marketing. From 1990, Mr. Singer has worked for Carrington Laboratories, Inc. He has a documented track record of success in field sales and sales management. As Regional Sales Manager of this publicly held bio-pharmaceutical company, his duties included training and development of new sales representatives for the launching of new products, in the development of educational programs and in the development of goals, strategies and budgets for that company's sales force. Mr. Singer's experience included working on the distribution of products and working with buying groups. During his employment with Carrington, Mr. Singer had, on more than one occasion, been selected "Sales Person of the Year", and on one occasion was selected as "Regional Manager of the Year" for the entire United States.
Jason Baskind joined the Company as Director of Franchise Development. Prior to joining the Company, he was working as an equities trader at On-Site Trading, Inc. He graduated from the University of Miami with a B.A. in Management. His previous experience includes working for Breslin Realty, which is a large real estate developer on Long Island in New York, as a site selector.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten percent shareholders are required by regulation to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that Form 5's were required and filed for those persons, the Company believes that, during the period from January 1, 2007 through December 31, 2007, all filing requirements applicable to its officers, directors, and greater than ten percent beneficial owners were complied with.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation of executive officers of the Company for services provided to the Company and its subsidiaries in 2007, 2006, 2005, 2004. No other executive officers received salary in excess of $100,000 in any such year.
Summary Compensation Table
YEAR COMPENSATION OPTIONS GRANTED
---------------------------------------------------
Robert Baskind 2007 $144,000 -
2006 $147,000 -
2005 $110,000 -
2004 $100,000 -
Employment Agreements:
An employment agreement for the year 2007 existed for the following officer and key employee:
Robert Baskind: An agreement in the amount of $110,000. Due to the low level of working capital maintained during 2002 and 2001, the Company was unable to fulfill its obligation to pay the officer his entire salary in accordance with the terms of the contract. As of December 31, 2002, the Company was liable for unpaid salary. It has been specifically agreed when and if the Company shall have sufficient earnings and cash flow, in the opinion of management, deferred amounts shall be paid. All unpaid salary was accrued and included in accrued expenses on the balance sheet at December 31, 2002. During 2001, the president agreed to forego his prior salary. Accordingly, the $35,000 of previously accrued salaries was reversed and the benefit included in the statement of operations. Additionally, during 2001, the president agreed to receive $67,758 as his total salary for the year. He is entitled to five percent (5)% increases
8
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on a yearly basis. The agreement, which employs Mr. Baskind as the president of the Company, expires in 2010. In February of 2003, Mr. Baskind received 214,000 shares of the Company's common stock registered on Form S-8 in satisfaction of partial salary, other compensation and expenses owed to him by the Company. The market value of those shares when issued was $19,260.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of December 31, 2007: (i) the name and address of each person who owns of record or who is known by the Board of Directors to be beneficial owner of more than five percent (5%) of the Company's outstanding common stock, (ii) each of the Company's Directors, and (iii) all of the Company's Executive Officers and Directors as a group.
NAME AND BENEFICIAL PERCENT OF COMMON
ADDRESS OWNERSHIP STOCK OUTSTANDING
--------------------------------------------------------------------------------
Robert Baskind 2,707,000 (1) 24.0%
300 Hempstead Turnpike
West Hempstead, NY 11552
Arthur Singer 451,100 (2) 4.0%
300 Hempstead Turnpike
West Hempstead, NY 11552
Jason Baskind 2,707,000 (3) 24.0%
300 Hempstead Turnpike
West Hempstead, NY 11552
Officers and Directors as a 5,865,100 52.0%
group (3 Persons)
--------------------------------------------------------------------------------
(1) Ownership includes 2,331,500 shares of the Company's common stock and 375,000 shares of the Company's common stock imputed to him from his son Jason Baskind.
(2) Ownership includes 451,100 shares of the Company's common stock.
(3) Ownership includes 375,000 shares of the Company's common stock and 2,331,500 shares of the Company's common stock imputed to him from his father Robert Baskind.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Certificate of Incorporation of the Registrant (1)
3.2 By-laws of the Registrant (1)
4.1 Tilden Associates, Inc. incentive plan (1)
4.2 Tilden Associates, Inc. 1998 stock option plan (1)
4.3 Tilden Associates, Inc. 2001 stock option plan
10.1 Consulting agreement with Tilden Huntington, Inc. (1)
10.2 Employment agreement with the President Robert Baskind. (1)
10.3 Deferred compensation letter for president Robert Baskind (1)
9
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10.4 Waiver of deferred compensation by president Robert Baskind (2)
21.1 Subsidiaries (2)
23.1 Consent of independent accountants
31.1 Certification pursuant to Rule 13a-14 or 15d-14 of the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
-------------------------
(1) Incorporated by reference to the Company's annual report on Form 10KSB for
the fiscal year ended December 31, 2000.
(2) Incorporated by reference to the Company's annual report on Form 10KSB for
the fiscal year ended December 31, 2001.
Item 14. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures within 90 days of the filing date of this Annual Report on Form 10-KSB. Based on that evaluation, our principal executive officer and principal financial officer have concluded that these controls and procedures are effective. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.
Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
10
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TILDEN ASSOCIATES, INC. AND SUBSIDIARIES
FINANCIAL STATEMENTS
AND SUPPLEMENTAL INFORMATION
DECEMBER 31, 2007 AND 2006
Table of Contents
Page
Report of Independent Registered Public Accounting Firm F - 2
Consolidated Balance Sheets F - 3
Consolidated Statements of Operations F - 4
Consolidated Statements of Cash Flows F - 5
Consolidated Statements of Stockholders' Equity F - 6
Notes to Consolidated Financial Statements F - 7 - F - 14
SUPPLEMENTAL INFORMATION :
Report of Independent Registered Public Accounting Firm on Supplemental Information F - 15
Consolidated Statements of Selling, General and Administrative Expenses F - 16
F-1
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Tilden Associates, Inc.
I have audited the accompanying consolidated balance sheets of Tilden Associates, Inc. and subsidiaries (the Company) as of December 31, 2007 and 2006 and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tilden Associates, Inc. and subsidiaries as of December 31, 2007 and 2006 and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.
/s/ Michael T. Studer CPA P.C.
-----------------------------------
Freeport, New York
April 11, 2008
F-2
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TILDEN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
----------------------------
2007 2006
------------ ------------
ASSETS
Cash and cash equivalents $ 526,293 $ 570,064
Accounts and notes receivable - net of allowance for doubtful accounts of
$367,910 and $427,239 at December 31, 2007 and 2006, respectively 286,850 277,189
Inventory 4,300 --
Escrow receivable 200,000 --
Prepaid expenses and other current assets 6,679 20,037
Loan Receivable - Oilmatic 7,222 32,500
------------ ------------
Total current assets 1,031,344 899,790
Property and equipment, net of accumulated depreciation
of $28,261 and $21,695, respectively 48,341 54,907
------------ ------------
Intangible assets, net 323,067 566,484
Deposit on purchase of property 3,000 --
Security deposits 59,685 122,485
Accounts and notes receivable, net of current portion 69,399 --
------------ ------------
Total other assets 455,151 688,969
------------ ------------
Total assets $ 1,534,836 $ 1,643,666
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 338,115 $ 197,231
Deposits on franchise acquisitions 231,717 210,217
Income taxes payable 34,983 40,462
Notes payable, current portion 18,700 18,700
------------ ------------
Total current liabilities 623,515 466,610
Security deposits 126,358 120,358
------------ ------------
Total liabilities 749,873 586,968
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, $.0005 par value; 30,000,000 shares authorized;
11,425,903 shares issued at December 31, 2007 and 2006,
respectively 5,713 5,713
Additional paid-in capital 1,639,966 1,639,966
Retained earnings (accumulated deficit) (840,716) (568,981)
------------ ------------
804,963 1,076,698
Less: treasury stock - 40,000 shares, stated at cost (20,000) (20,000)
------------ ------------
Total stockholders' equity 784,963 1,056,698
------------ ------------
Total liabilities and stockholders' equity $ 1,534,836 $ 1,643,666
============ ============
See notes to consolidated financial statements.
F-3
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TILDEN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
----------------------------
2007 2006
------------ ------------
REVENUES
Initial franchise acquisition fees $ 130,000 $ 302,500
Royalty fees 668,392 635,456
Market Area Sales -- 225,000
Sales from operation of Company owned store 115,784 182,516
Sale of equipment purchased for resale, net of refunds 27,218 116,830
Sales of Company owned locations 80,000 57,000
Rental income 504,464 569,710
Miscellaneous income 20,637 28,508
------------ ------------
Total revenues 1,546,495 2,117,520
------------ ------------
COST OF OPERATIONS
Brokers Fees 61,300 123,743
Franchise development fees 35,581 45,836
Purchase of equipment for resale 25,826 77,391
Costs of operation of Company owned store 145,368 184,861
Rent from realty corporations 499,990 574,670
------------ ------------
Total cost of operations 768,065 1,006,501
------------ ------------
Gross profit 778,430 1,111,019
Selling, general and administrative expenses 922,879 1,262,442
------------ ------------
Loss from operations (144,449) (151,423)
------------ ------------
OTHER INCOME (EXPENSES)
Interest income 24,514 19,430
Interest expense (6,078) --
Loss on impairment of franchise and market area rights (256,464) --
Loss on abandoned franchises (20,301) --
Gain on sale of building 131,043 --
------------ ------------
Total other income (expenses) (127,286) 19,430
------------ ------------
Income (loss) before provision for income taxes (271,735) (131,993)
Provision for income taxes -- --
------------ ------------
Net loss $ (271,735) $ (131,993)
============ ============
Per Share Data
Basic earnings (loss) per share $ (0.02) $ (0.01)
============ ============
Diluted earnings (loss) per share $ (0.02) $ (0.01)
============ ============
Weighted average number number of common
Shares outstanding-basic & diluted 11,385,903 11,385,903
============ ============
See notes to consolidated financial statements.
F-4
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TILDEN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31,
----------------------------
2007 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (271,735) $ (131,993)
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss on impairment of franchise and market area rights 256,464 --
Provision for bad debt 209,783 534,356
Depreciation and amortization expense 8,085 4,310
Disposition of fixed assets -- 3,901
Changes in operating assets and liabilities
Accounts and notes receivable (288,843) (301,885)
Inventory (4,300) --
Other receivable 25,278 32,500
Prepaid expenses and other current assets 13,358 26,478
Security deposit receivable (6,000) (1,633)
Accounts payable and accrued expenses 140,884 101,243
Deposit on franchise acquisitions 21,500 (50,283)
Income taxes payable (5,479) 319
Security deposits payable 6,000 36,999
------------ ------------
Net cash provided by (used for) operating activities 104,995 254,312
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment -- (55,430)
Renewal of trademark (14,566) --
Deposit on building sold 65,800 (68,800)
Escrow held on building sale (200,000) --
------------ ------------
Net cash provided by (used for) investing activities (148,766) (124,230)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of notes payable -- (4,655)
------------ ------------
Net cash (used for) financing activities -- (4,655)
------------ ------------
Net(decrease) increase in cash and cash equivalents (43,771) 125,427
Cash and cash equivalents - beginning 570,064 444,637
------------ ------------
Cash and cash equivalents - ending $ 526,293 $ 570,064
============ ============
See notes to consolidated financial statements.
F-5
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TILDEN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
Common stock Additional Treasury stock
------------------------- Paid In Accumulated ------------------------- Stockholders'
Shares Amount Capital Deficit Shares Amount Equity
--------------------------------------------------------------------------------------------------
Balance, December 31, 2005 11,425,903 $ 5,713 $ 1,639,966 $ (436,988) (40,000) $ (20,000) $ 1,188,691
Net loss for the year
ended Decemeber 31, 2006 -- -- -- (131,993) -- -- (131,993)
--------------------------------------------------------------------------------------------------
Balance, December 31, 2006 11,425,903 5,713 1,639,966 (568,981) (40,000) (20,000) 1,056,698
--------------------------------------------------------------------------------------------------
Net loss for the year
ended Decemeber 31, 2007 -- -- -- (271,735) -- -- (271,735)
--------------------------------------------------------------------------------------------------
Balance, December 31, 2007 11,425,903 $ 5,713 $ 1,639,966 $ (840,716) (40,000) $ (20,000) $ 784,963
==================================================================================================
See notes to consolidated financial statements.
F-6
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TILDEN ASSOCIATES, INC and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Summary of Significant Accounting Policies
Business Activity
The company was incorporated in the state of Delaware in June 1995 and is in the business of selling automotive franchises and administering and supporting full service automotive repair centers under the name "TILDEN FOR BRAKES CAR CARE CENTERS". The majority of franchises are currently located in New York, Florida and Colorado with twelve states being represented and expansion plans for several additional states.
Principles of Consolidation
The consolidated financial statements include all wholly owned subsidiaries. All inter-company profits and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from the estimates.
Revenue Recognition
The Company recognizes revenue in several ways: Initial fees from sale of franchises, market area sales to market developer partners, royalties (as a percentage of gross revenues) from franchisees, equipment sales, rental of premises to franchisees and the operation of Company owned automotive repair centers which are developed for potential sale to franchisees.
Franchise fee revenue for initial franchise fees and from market area sales to market developer partners is recognized upon the execution of a franchise agreement and when all material services or conditions relating to the sale have been successfully completed by the Company. Market developer partners receive a percentage of royalty fees for development and management of their market and are responsible for substantially all training and other services required in opening new franchises in their regions.
Equipment sales are recorded upon delivery and installation of equipment to franchisees.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks and short-term investments with original maturities of less than three months.
Advertising Costs
The Company's franchise agreement requires that franchisees remit advertising fees to a cooperative advertising fund managed by the Company. Corporate advertising is expensed as incurred.
Income Taxes
The Company provides for income taxes under the provisions of Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" ("SFAS No. 109"). SFAS No. 109 requires that an asset and liability based approach be used in accounting for income taxes.
Deferred income tax assets and liabilities are recorded to reflect the tax consequences on future years of the temporary differences of revenue and expense items for financial statement and income tax purpose. Valuation allowances are provided against assets, which are not likely to be realized.
F-7
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Leases
Leases that transfer substantially all of the risks and benefits of ownership are treated as capital leases. Capital leases are included in property and equipment and are depreciated over their estimated useful lives using the straight-line method.
Carrying Values of Long-Lived Assets
The Company evaluates the carrying values of its long-lived assets to be held and used in the business by reviewing undiscounted cash flows by operating unit. Such evaluations are performed whenever events and circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the projected undiscounted cash flows over the remaining lives of the related assets does not exceed the carrying values of the assets, the carrying values are adjusted for the differences between the fair values and the carrying values.
Intangible Assets
Intangible assets are stated at cost less accumulated amortization. Intangible assets with an indefinite useful economic life, such as franchise and market area rights, were amortized through 2001 on a straight-line basis using an estimated economic life of 40 years. Effective January 1, 2002, in accordance with SFAS No. 142, the Company ceased amortizing intangible assets with an indefinite useful economic life. Other intangible assets are amortized over their expected period of benefit on a straight-line basis.
Presently, the Company owns the trademarks "Tilden for Brakes Car Care Centers", "Brakeworld", The Brake Shop" and "American Brake Service".
Goodwill
Goodwill represents the amount paid in consideration for an acquisition in excess of the net tangible assets acquired. Goodwill is tested for impairment annually or under certain circumstances, and written off when determined to be impaired. In accordance with SFAS No. 142, the Company did not amortize goodwill for new acquisitions made after June 30, 2001. For acquisitions prior to that date, the Company continued to amortize goodwill through the end of 2001. The Company conducts tests for impairment and goodwill that is determined to have become impaired is written off.
Accounts and Notes Receivable
Accounts and notes receivable are primarily recorded for royalty income, rental income, and franchise and market area sales. In instances where the Company provides financing to franchisees and provides payment arrangements which allow for payments to be received over a period greater than one year, non-current receivables are recorded at the present value of estimated future cash flows.
In most instances, financing of franchisees is secured by notes receivable and collateralized by shop equipment and franchise rights (see Note 2).
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided on the straight-line method over the estimated useful lives of the assets, generally 39 years for buildings and building improvements, and 3 to 7 years for furniture and equipment. When property is sold or retired, the cost and accumulated depreciation are eliminated from the accounts and gains or losses are recorded in the statement of operations. Expenditures for repairs and maintenance are expensed as incurred.
Stock-based Compensation
Effective January 1, 2006, the Company adopted SFAS No. 123(R) for stock-based compensation. SFAS No. 123(R) requires that the fair value of equity instruments (such as stock options) exchanged for services be recognized as an expense in the financial statements as the related services are performed. Prior to 2006, the Company followed APB Opinion No. 25 in accounting for stock-based compensation. APB Opinion No. 25 only required the recognition of compensation costs for stock options when the market price of the Company's common stock at the date of grant exceeded the exercise price of the option.
F-8
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Earnings Per Share
Earnings per share ("EPS") has been calculated in accordance with SFAS No. 128, which requires the presentation of both basic net income per share and net income per common share assuming dilution. Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of shares outstanding for the year. Diluted earnings per share reflects the potential dilution that could occur upon the exercise of common stock options resulting in the issuance of common stock to stockholders who would then share in the earnings of the Company. SFAS No. 128 precludes the inclusion of any potential common shares in the computation of any diluted per-share amounts when a loss from continuing operations exists.
Reclassifications
Certain amounts in the 2006 financial statements were reclassified to conform to the 2007 presentation.
Business Segment Information
The Company operates in a single business segment: selling automotive franchises and administering and supporting full service automotive repair centers primarily under the name "TILDEN FOR BRAKES CAR CARE CENTERS", principally through franchised and company-operated shops located in North America. Sales to any single customer were less than five percent of total revenues in each of the periods presented.
New accounting pronouncements
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures" ("SFAS 157") which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and provides for additional fair value disclosures. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and interim periods. The Company does not believe SFAS 157 will have a material effect on its financial statements.
NOTE 2 - Accounts and Notes Receivable
Accounts and notes receivable consisted of the following:
December 31 December 31
2007 2006
------------ ------------
Trade receivables from franchisees $ 627,913 $ 663,341
Installment loans due between August 31, 2005
and June 30, 2009 with varying interest rates
between 6.0% and 8.0% 96,247 41,087
------------ ------------
724,159 704,428
Less allowance for doubtful accounts (367,910) (427,239)
------------ ------------
356,249 277,189
Less current portion (286,850) (277,189)
------------ ------------
Non-current accounts and notes receivable $ 69,399 $ --
============ ============
F-9
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NOTE 3 - Property and Equipment
Property and equipment consisted of the following:
December 31, December 31,
2007 2006
------------ ------------
Machinery and shop equipment $ 59,286 $ 59,286
Signage 5,623 5,623
Furniture 11,693 11,693
Leasehold Improvements -- --
------------ ------------
76,602 76,602
Less accumulated depreciation (28,261) (21,695)
------------ ------------
Property and equipment, net
of accumulated depreciation $ 48,341 $ 54,907
============ ============
Depreciation expense for the years ended December 31, 2007 and 2006 was $6,566 and $2,792, respectively.
NOTE 4 - Intangible Assets
Intangible assets consisted of the following:
December 31, December 31,
2007 2006
------------ ------------
Trademarks $ 42,749 $ 28,183
Franchise and market area rights 408,945 746,657
------------ ------------
451,694 774,840
Less accumulated amortization (128,627) (208,356)
------------ ------------
Intangible assets, net
of accumulated amortization $ 323,067 $ 566,484
============ ============
In May 2007, the Company renewed one of its trademarks at a cost of $14,566. During the year ended December 31, 2007, the Company reflected a loss on the impairment of franchise and market area rights in the amount of $256,464. The impaired rights had an original cost of $337,712 and accumulated amortization of $81,248. Prior to 2007, the Company had been testing the carrying value of the rights by considering the values of franchise networks purchased in the aggregate rather than identifying individual franchise rights requiring write-down. Of the intangible assets listed above, only trademarks have been amortized for the year ended December 31, 2007 in the amount of $1,519.
NOTE 5 - Notes Payable
Notes payable consisted of the following:
December 31, December 31,
2007 2006
------------ ------------
Notes payable bearing interest up to 25%
maturing between March 2006 and July of 2007 $ 18,700 $ 18,700
------------ ------------
18,700 18,700
Less current portion (18,700) (18,700)
------------ ------------
Notes payable, net of current portion $ -- $ --
============ ============
In August, 2006, the Company secured a revolving line of credit. The line is secured by the assets of the Company. During the fiscal year ended December 31, 2007, the Company utilized the line to help finance the purchase of a building, which it later sold within the year. The Company used part of the proceeds on the sale to pay down the line in full.
F-10
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NOTE 6 - Income Taxes
Tilden Associates Inc. and its subsidiaries have elected to file consolidated income tax returns for Federal and New York State taxes. Tax expense is allocated to each subsidiary based on the proportion of its taxable income to the total consolidated taxable income.
Consolidated income tax expense consisted of the following:
December 31
---------------------------
2007 2006
------------ ------------
Current
Federal $ -- $ --
State -- --
------------ ------------
Total current provision -- --
Deferred
Federal -- --
State -- --
------------ ------------
Total deferred provision -- --
------------ ------------
Total income tax expense $ -- $ --
============ ============
Deferred income taxes arise from temporary differences resulting from income and expense items reported in different periods for financial accounting and tax purposes. The sources of deferred income taxes and their tax effects are the result of nondeductible bad debt reserves and net operating loss carryforwards. The benefit resulting from deferred taxes has been fully reserved.
The actual income tax expense differed from amounts computed by applying the U.S. Federal tax rate of 35% to pretax loss as a result of the nonrecognition of net operating loss carryforwards and the increase in the related valuation allowance.
Net operating loss carryovers at December 31, 2007 were approximately $285,000 and will expire in 2023
NOTE 7 - Commitments and Contingencies
Leases
The Company, through various subsidiaries, sub-lets properties to several franchisees. Additionally, several franchisees sub-let property from affiliates of the Company's President (See Note 9). Franchisees typically pay rent on these properties to the subsidiaries. In some circumstances, franchisees may pay rent directly to the lessors of the operating leases.
The future minimum lease payments under these operating leases for the year ended December 31, are as follows:
2008 $ 313,622
2009 302,447
2010 248,381
2011 233,921
2012 200,851
2013 and thereafter 861,046
------------
$ 2,160,268
============
F-11
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The company leases an office in New York under an agreement that commenced in October 2003 and expires in September 2008. Total gross rent expense for the years ended December 31 2007 and 2006 was $18,796 and $20,077, respectively.
The future minimum annual rental payments are as follows:
2008 15,300
------------
$ 15,300
============
Employment Agreements
The President of the Company, Mr. Robert Baskind, has an employment contract that renews annually on the first day of each year and which entitled him to a salary of $155,000 during 2007. In accordance with the terms of the employment contract, he is entitled to five percent increases on a yearly basis. The employment agreement, as amended, expires in 2010. Additionally, Mr. Baskind's agreement provides for other customary provisions.
NOTE 8 - Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit risk include cash and accounts and notes receivable. At December 31 2007 two accounts exceeded federally insured limits by approximately $272,000 and at December 31, 2006 two accounts exceeded the federally insured limits by approximately $347,000. Also, at December 31 2007 and December 31, 2006, the Company had accounts and notes receivable from franchisees of approximately $356,300 and $277,200, respectively, net of an allowance for doubtful accounts of approximately $367,900 and $427,200, respectively. Notes receivable, derived principally from sales of franchises and market areas, are collateralized by the franchise agreements to which they relate. Presently, a majority of the Company's franchises are within the states of New York, Florida and Colorado.
NOTE 9 - Related Party Transactions
Franchise Facilities
The Company rents certain Franchise locations owned or leased by the Company's president and affiliates, which are sublet to Franchisees. For the years ended December 31, 2007 and 2006, rent paid to the Company's president and affiliates for real estate sublet was $67,706 and $69,102 respectively. Management believes that the lease payments made by the Company to these officers, directors, and affiliates are at fair market value and are approximately equal to the rent charged to the Franchises occupying each facility
NOTE 10 - Stock Options
Tilden Associates, Inc. Stock Option Plans
From May 1998 to December 2005, the Company adopted several Tilden Associates, Inc. Stock Option Plans ("the Plans") on an annual basis. The Company may issue incentive options for a term of no greater than ten years and non-incentive stock options for a term of no greater than eleven years. The incentive stock options may be issued with an exercise price of no less than 100% of the fair market value of the stock at the time of the grant. However, in the case of employees holding greater than 10% of the Company's common stock, the option price shall not be less than 110% of the fair market value of the stock at the time of the grant and the term of the option may not exceed five years. The non-incentive stock options may be issued with an exercise price of no less than 50% of the fair market value of the stock at the time of the grant. Additionally, options may be granted to any eligible person for shares of common stock of any value provided that the aggregate fair market value of the stock with respect to which incentive stock options are exercisable for the first time during any calendar year, shall not exceed $100,000.
F-12
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Additionally, the option price shall be paid in full at the time of exercise in cash or, with the approval of the Board of Directors, in shares of common stock. Further, if prior to the expiration of the option the employee ceases to be employed by the Company, the options granted will terminate 90 days after termination of the employee's employment with the Company.
From 1998 to 2005, the Company granted stock options to purchase a total of 7,038,300 shares of the Company's common stock at exercise prices ranging from $0.01 per share to $3.00 per share. Through December 31, 2005, 32,500 options were exercised, 938,800 options expired or were forfeited, and 6,067,000 options remained outstanding at December 31, 2005.
On July 18, 2006, a derivative action was filed challenging the issuance of stock options by the Company to members of management and the Board of Directors between 2001 and 2005. In August of 2006, the Company rescinded the stock options issued in the years 2001 to 2005. On September 11, 2006, the action was settled.
No stock options were granted during the years ended December 31, 2007 or 2006, respectively. At December 31, 2007, there are no stock options outstanding.
NOTE 11 - Other Receivable
On May 5, 2004, Oilmatic Franchising Corp., a wholly owned subsidiary of the Company (Oilmatic), was formed for the purpose of selling franchises for the system developed by Oilmatic International, LLC. (International). Through December 31 2005, the Company advanced $79,258 to Oilmatic in connection with its formation and the acquisition of the exclusive franchise rights for certain locations from International. In November 2005, Oilmatic agreed to terminate its franchise rights and International agreed to pay the Company $65,000 payable in eighteen equal monthly installments of $3,611 commencing January, 2006. As of December 31, 2007 and 2006 the balance receivable on the agreement was $7,222 and $32,500, respectively.
NOTE 12 - Franchises and Market Area Activities
Franchises
During the years ended December 31 2007 and 2006, the Company sold five and twelve new franchises, respectively. As of December 31 2007 and 2006, the Company had 48 and 49 active franchised locations. Throughout each year several franchises are returned to the Company's control either through foreclosures or abandonment.
Market Areas
During the years ended December 31 2007 and 2006 the Company sold zero and five rights to develop new market areas, respectively.
NOTE 13 - Company Owned Store
In August 2006, the Company took possession of an abandoned location in Fort Worth Texas. The Company committed to operating the location until it could find a buyer. The Texas location generated revenue and loss from operations of approximately $116,000 and $30,000, respectively, in 2007 and $183,000 and $2,000, respectively, in 2006. The store was sold during the first quarter, 2007.
NOTE 14 - Retirement Plan
In November, 2006, the Company adopted a qualified deferred arrangement 401(k) plan where employees may contribute up to the Internal Revenue Service deferred compensation limit for 401(k) plans, which was $15,500 in 2007. The plan allows the Company to make optional non-elective contributions into the plan for full-time employees up to 6% of employee's wages. Company contributions to the plan (which are expensed when incurred) for the years ended December 31, 2007 and 2006 were $0 and $22,594, respectively.
F-13
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NOTE 15- Sale of Building
In March 2007, the Company purchased a building in West Babylon, New York for approximately $819,000. The purchase was financed by cash on hand at the time of the purchase and by the utilization of a line of credit established by the Company in 2006. Included in the cost of the building was the purchase of lease rights, from the franchisee who previously occupied the space, in the amount of $125,000. Also in March 2007, the Company sold the West Babylon building for approximately $950,000 resulting in a profit of approximately $131,000. The contract of sale required that the Company keep $200,000 in escrow until the building is evacuated and the equipment maintained by the franchisee is removed. Subsequent to December 31, 2007 the premises were emptied out and the Company had the funds held in escrow released to them.
NOTE 16-Subsequent Events
On March 27, 2008, the Company entered into an Agreement and Plan of Merger and Reorganization with Extreme Mobile Coatings, Inc. ("Extreme"), Extreme Acquisition Company, Inc.("Extreme Acquisition") and TFB Acquisition Company, LLC ("TFB"), which contemplates the Company's acquisition of Extreme, by way of a merger of Extreme Acquisition, a wholly owned subsidiary of the Company, with and into Extreme. Under the terms of the merger agreement, the existing shareholders of Extreme will be issued 9,355,000 unregistered shares of the Company's common stock after giving effect to a proposed 1 for17 reverse split of the Company's common stock and Extreme will become a wholly owned subsidiary of the Company. The shares will represent approximately 94% of the Company's outstanding common stock after completion of the merger. Extreme is in the business of (1) offering franchises to operate a mobile business which provides painting or coatings on various surfaces using a patented system and (2) operating a mobile coating business in Kentucky. The agreement also contemplates that at the time of the merger into Extreme, the assets owned by the Company in connection with conducting its existing business (the "Automotive Assets") will be sold to TFB, a newly formed company controlled by Robert Baskind, Chairman and President of the Company. The purchase price for the Automotive Assets will consist of (1) the assumption of substantially all of the Company's liabilities,
(2) the release of the Company by Mr. Baskind from all existing and future claims, liabilities and obligations under his employment agreement with the Company and (3) the surrender of 75,000 shares of the Company's common stock after giving effect to the reverse stock split, for cancellation. As a result of the merger and the disposition of the Company's existing business to TFB, the business of Extreme will represent the Company's sole line of business after the closing of transactions contemplated by the merger. In connection with the consummation of the transactions contemplated by the merger agreement, the directors and officers of the Company, will be replaced by designees of Extreme. The closing of the transactions contemplated by the merger agreement is scheduled to take place within five days after the date when each of the conditions precedent to closing set forth in the merger agreement have been fulfilled, including, among others, approval of such transactions by the stockholders of the Company. No assurance can be given that the stockholders of the Company will approve the transactions or that the transactions will be consummated.
F-14
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Report of Independent Registered Public Accounting Firm On Supplemental Financial Information
To the Board of Directors and Stockholders of Tilden Associates, Inc.
My report on the audit of the basic consolidated financial statements of Tilden Associates, Inc. and subsidiaries for the years 2007 and 2006 appears on page F-1. The audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole.
The supplementary information presented in the schedule of selling, general and administrative expenses that appears on page F-17, is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements for the years 2007 and 2006 and, in my opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Michael T. Studer CPA P.C.
----------------------------------
Freeport, New York
April 11, 2008
F-15
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TILDEN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES
Year Ended December 31,
----------------------------
2007 2006
------------ ------------
Salaries and wages $ 206,853 $ 194,869
Officer's salary 144,352 147,404
Payroll and other taxes 23,740 21,520
Bad debt expense 209,783 534,356
Professional fees 138,040 104,561
Consulting 29,940 30,808
Rent 18,796 20,077
Office expense 26,277 18,528
Telephone expense 12,172 8,671
Fees and licenses 12,273 19,229
Amortization expense 1,519 1,519
Depreciation expense 6,566 2,792
Travel and entertainment 26,286 62,652
Trade shows 7,595 14,075
Training 10,000 6,200
Automobile expense 15,820 11,093
Settlement costs -- 20,000
Advertising 5,767 --
Insurance 13,919 7,416
Miscellaneous expense 13,181 36,672
------------ ------------
$ 922,879 $ 1,262,442
============ ============
F-16
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TILDEN ASSOCIATES, INC. AND SUBSIDIARIES
SIGNATURES
In accordance with section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed by the undersigned, thereunto duly authorized.
Date: April 14, 2008 TILDEN ASSOCIATES, INC.
By: /s/ ROBERT BASKIND
------------------------------------
Robert Baskind
President and
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signatures Titles Date
By: /s/ ROBERT BASKIND Chairman of the Board, President April 14, 2008
--------------------- Chief Executive Officer
Robert Baskind (Principal Executive and
Financial Officer)
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Exhibit 31.1
CERTIFICATIONS
I, Robert Baskind, certify that:
1. I have reviewed this annual report on Form 10-KSB of Tilden Associates, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date /s/ Robert Baskind
April 14, 2008 -----------------------------------------
Robert Baskind
Chairman, Chief Executive Officer,
President and Chief Financial Officer
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Exhibit 32.1
CERTICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Tilden Associates, Inc. (the "Company") on Form 10-KSB for the period ending December 31, 2007 as filed with the Securities and Exchange Commission on April 14, 2008 (the "Report"), I, Robert Baskind, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that:
1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Robert Baskind
----------------------------
Robert Baskind,
Chairman, President,
Chief Executive Officer
and Chief Financial Officer
Date April 14, 2008
Assuming you're correct and TNSX really only received the first half (800K) of the convertible: What prevents TNSX to use the 800K upfront payment to pay off the Cornell/Yorkville-covertible?
In 2006 the reverse merger failed. Now they try it again. Does anyone have information about "Extreme Mobile Coatings, Inc."?
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 27, 2008
Tilden Associates, Inc.
(Exact name of registrant as specified in its charter)
Delaware 000-1027484 11-3343019
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
300 Hempstead Turnpike, Suite 110
West Hempstead, New York 11552
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (516) 746-7911
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c))
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Item 1.01 Entry Into a Material Definitive Agreement.
On March 27, 2008, Tilden Associates, Inc. (the "Company") entered into an Agreement and Plan of Merger and Reorganization (the "Merger Agreement") with Extreme Mobile Coatings, Inc. ("Extreme"), Extreme Acquisition Company, Inc. ("Acquisition Sub") and TFB Acquisition Company, LLC ("TFB"). The Merger Agreement contemplates the Company's acquisition of Extreme by way of a merger (the "Merger") of Acquisition Sub, a recently formed, wholly-owned subsidiary of the Company, with and into Extreme. Under the terms of the Merger Agreement, the existing shareholders of Extreme will be issued approximately 9,355,000 unregistered shares (the "Shares") of the Company's common stock after giving effect to a proposed 1-for-17 reverse split of the Company's Common Stock, and Extreme Mobile Coatings will become a wholly owned subsidiary of the Company. The Shares will represent approximately 94% of the Company's outstanding common stock, on a fully diluted basis, after the completion of the Merger.
Extreme, based in Nicholasville, Kentucky, was formed in February 2007 to (i) offer franchises to operate a mobile business which provides painting or coatings on various surfaces utilizing a special patented system and powders developed by Xiom Corp. and (ii) operate a mobile coating business in Kentucky. Extreme is in its initial stage of operations and has not generated any revenues to date.
The Merger Agreement provides that at the effective time of the Merger, the assets used by the Company to conduct its existing business of selling automotive franchises and administering and supporting full service automotive repair centers, will be sold to TFB, a newly formed company controlled by Robert Baskind, the chairman of the board, chief executive officer and president of the Company. The purchase price for such assets will consist of (i) the assumption of substantially all of the Company's liabilities, (ii) the release of the Company by Mr. Baskind from all existing and future claims, liabilities and obligations under his employment agreement with the Company, including payments required upon a change of control, and (iii) the surrender of 75,000 shares of the Company's common stock (giving effect to the reverse stock split) for cancellation. As a result of the Merger and the disposition of the Company's existing business to TFB, the business of Extreme will represent the Company's sole line of business after the closing of the transactions contemplated by the Merger Agreement.
In connection with the consummation of the transactions contemplated by the Merger Agreement, the directors and officers of the Company will be replaced by designees of Extreme.
The closing of the transactions contemplated by the Merger Agreement is scheduled to take place within five days after the date when each of the conditions to closing set forth in the Merger Agreement have been fulfilled (or waived by the party entitled to waive such condition), including, among others, the approval of such transactions by the stockholders of the Company. No assurance can be given that the stockholders of the Company will approve the transactions or that the transactions will be consummated.
The Merger Agreement has been filed as an exhibit to this Current Report on Form 8-K and the description of the Merger Agreement set forth above is qualified in its entirety by reference to such exhibit.
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Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Number Description
------ -----------
10.1 Agreement and Plan of Merger and Reorganization, dated as
of March 27, 2008, among Tilden Associates, Inc., Extreme
Acquisition Company, Extreme Mobile Coatings, Inc. and TFB
Acquisition Company, LLC.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: March 27, 2008 Tilden Associates, Inc.
By: /s/ Robert Baskind
------------------------------------
Robert Baskind, President
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Exhibit 10.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization ("Agreement") is made as of the 27th day of March, 2008, by and between Tilden Associates, Inc., a Delaware corporation ("Tilden" or the "Company") with its principal business offices located at 300 Hempstead Turnpike, West Hempstead, New York 11552, Extreme Acquisition Company, Inc., a Delaware corporation ("Sub") and a wholly owned subsidiary of Tilden with its principal business offices located at 300 Hempstead Turnpike, West Hempstead, New York 11552, TFB Acquisition Company, LLC, a Delaware limited liability company ("TFB"), with its principal offices located at 300 Hempstead Turnpike, West Hempstead, New York 11552 and Extreme Mobile Coatings, Inc., a Delaware corporation ("Extreme") with its principal business offices located at 225 Two Oaks Drive, Nicholasville, Kentucky 40356.
WHEREAS, Extreme has been formed to (i) offer franchises for the operation of mobile coating businesses which provide painting or coating on various surfaces utilizing a patented system and materials developed by Xiom Corp. and (ii) operate a mobile coating business in Kentucky (collectively, the "Business");
WHEREAS, Tilden is in the business of selling automotive franchises and administering and supporting full service automotive repair centers (the "Automotive Business");
WHEREAS, Tilden desires to acquire the Business from Extreme by way of a merger of Sub with and into Extreme (the "Merger");
WHEREAS, simultaneously with the Merger, TFB desires to purchase from Tilden, and Tilden desires to sell to TFB, substantially all of the properties, rights and assets used by Tilden in conducting the Automotive Business, all upon and subject to the terms and conditions hereinafter set forth.
WHEREAS, for Federal income tax purposes, it is intended that the Merger shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. The Merger.
1.1. Merger; Effective Time. At the Effective Time (as defined below) and subject to the provisions of this Agreement and in accordance with the provisions of the Delaware General Corporation Law (the "DGCL"), Sub shall be merged with and into Extreme. Subject to the provisions of this Agreement, a certificate of merger (the "Certificate of Merger") shall be duly prepared, executed and acknowledged by Extreme and Sub and thereafter delivered to the Secretary of State of the State of Delaware for filing, as provided in the DGCL as soon as practicable on or after the Closing Date (as defined in
Section 1.5). The Merger shall become effective upon the filing of the certificate of merger with the Secretary of State of the State of Delaware (the "Effective Time") or at such other date and time as is specified in the Certificate of Merger.
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1.2. Effects of the Merger. At the Effective Time (i) the separate existence of Sub shall cease and Sub shall be merged with and into Extreme (Extreme and Sub are sometimes referred to herein as the "Constituent Corporations" and Extreme is sometimes referred to herein as the "Surviving Corporation"), (ii) the Certificate of Incorporation of Extreme, as in effect at the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation, (iii) the Bylaws of Extreme as in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation and (iv) the directors and officers of Extreme at the Effective Time of the Merger shall, from and after the Effective Time, be the directors and officers of the Surviving Corporation until their successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Certificate of Incorporation and By-laws.
1.3. Conversion of Securities. As of the Effective Time, by virtue of the Merger and without any action on the part of holders of any shares of the common stock of Extreme (the "Extreme Common Stock") or Tilden as the owner of all of the outstanding shares of the common stock of Sub (the "Sub Common Stock"), the outstanding shares of Extreme Common Stock and the outstanding shares of Sub Common Stock will be treated in the manner set forth below:
(a) Exchange Ratio for Extreme Common Stock. Each share of Extreme Common Stock outstanding immediately prior to the Effective Time (each an "Old Extreme Share") shall by virtue of the Merger, and after giving effect to the Reverse Split (as defined in Section 5.19) and Share Cancellation (as defined in Section 3.2), be converted into 9,364 shares (each, a "Merger Share") of the common stock, par value $.0001 per share, of Tilden (the "Tilden Common Stock");
(b) Fractional Shares. Notwithstanding any other provision of this Agreement, no fractional shares of Tilden Common Stock will be issued and any holder of Extreme Common Stock who would otherwise be entitled to receive a fractional share of Tilden Common Stock shall receive a number of shares of Tilden Common Stock rounded to the nearest whole share;
(c) Adjustment of Exchange Ratio. The Parties hereto intend that the Shares to be issued to the stockholders of Extreme pursuant to this Section 1.3 shall represent ninety-four percent (94%) of Tilden's outstanding Common Stock on a Fully Diluted Basis (as defined in
Section 2.3(b) below) at the Effective Time. In the event that the Merger Shares represent less than ninety-four percent (94%) of Tilden's outstanding Common Stock on a Fully Diluted Basis, the number of Merger Shares to be issued to the holders of Extreme Common Stock shall be adjusted at Closing to be equal to ninety-four percent (94%) of Tilden's outstanding Common Stock on a Fully Diluted Basis at the Effective Time, and such additional Merger Shares shall be distributed among the holders of the Old Extreme Shares immediately preceding the Effective Time on a pro rata basis; and
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(d) Exchange Ratio of Sub Common Stock. Each share of Sub Common Stock outstanding immediately prior to the Effective Time shall by virtue of the Merger be converted into one (1) share of Extreme Common Stock. (each, a "New Extreme Share").
1.4. Closing. The closing (the "Closing") of the transactions contemplated by this Agreement shall take place at the offices of Moritt Hock Hamroff & Horowitz LLP, located at 400 Garden City Plaza, Suite 200, Garden City, New York, within five (5) days after the date when each of the conditions set forth in Section 6 shall have been fulfilled (or waived by the party entitled to waive such condition) or such other time or date or such other location as the parties may mutually agree (the "Closing Date"), but no later than June30, 2008 unless the date of closing is extended by written agreement between the parties, or required for either or both of the parties to comply with the rules and regulations of the Securities and Exchange Commission (the "SEC") and other applicable federal and state laws, rules and regulations.
2. Representations and Warranties. Except as set forth in the corresponding sections or subsections of the disclosure schedule of Tilden annexed hereto as Appendix I (the "Tilden Disclosure Schedule") or the disclosure schedule of Extreme annexed hereto as Appendix II (the "Extreme Disclosure Schedule"; each of the Tilden Disclosure Schedule and the Extreme Disclosure Schedule to be sometimes referred to herein as a "Disclosure Schedule") and, with respect to Tilden, disclosures contained in the forms, reports, schedules, statements and other documents which Tilden has filed with the SEC under the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act") (collectively, the "SEC Documents"), Extreme (except for Sections 2.1(b), 2.2(b), 2.2(c),2.3(b), 2.5(b), and references to Tilden Financial Statements in
Section 2.7), hereby represents and warrants to Tilden, and Tilden (except for Sections 2.1(a), 2.2(a), 2.3(a), 2.5(a), 2.25, and references to Predecessor Financial Statements in Section 2.7), hereby represents and warrants to Extreme, that:
2.1. Organization, Good Standing and Qualification.
(a) Extreme is a corporation duly organized, validly existing as a corporation and in good standing under the laws of Delaware. Each of its Subsidiaries (as defined below) is a limited liability company duly formed and validly existing and in good standing under the laws of the State of Delaware. Extreme and each of its Subsidiaries has all requisite power and authority to own and operate its properties and assets and to carry on the Business, and is qualified to do business and is in good standing in each jurisdiction where the ownership or operation of its properties or conduct of the Business requires such qualification, except where the failure to be so qualified or in good standing is not, when taken together with all other such failures, reasonably likely to have a material adverse effect on its business, financial condition, operating results or prospects (a "Material Adverse Effect"). Extreme has made available to Tilden, a complete and correct copy of its certificate of incorporation and by-laws (the "Extreme Organizational Documents") and the organizational documents of each of its Subsidiaries, each as amended to date, together with the Certificate of Conversion of A&C Coatings, LLC ("A&C") pursuant to which A&C converted into Extreme. The Extreme Organizational Documents and the organizational documents of each of its Subsidiaries are in full force and effect.
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(b) Tilden and each of its Subsidiaries (as defined below) is a corporation duly organized, validly existing as a corporation and in good standing under the laws of its respective jurisdiction of incorporation. Tilden and each of its Subsidiaries has all requisite power and authority to own and operate its properties and assets and to carry on its business, including, but not limited to, the Automotive Business, as presently conducted and is qualified to do business and is in good standing in each jurisdiction where the ownership or operation of its properties or conduct of its business requires such qualification, except where the failure to be so qualified or in good standing is not, when taken together with all other such failures, reasonably likely to have a Material Adverse Effect. Tilden has made available to Extreme, a complete and correct copy of its certificate of incorporation and by-laws (the "Tilden Organizational Documents") and the organizational documents of each of its Subsidiaries, each as amended to date. The Tilden Organizational Documents and the organizational documents of each of its Subsidiaries are in full force and effect.
(c) As used in this Agreement, (i) the term "Subsidiary" means, with respect to Extreme or Tilden, as the case may be, any entity, whether incorporated or unincorporated, of which at least fifty percent of the securities or ownership interests having by their terms ordinary voting power to elect at least fifty percent of the board of directors or other persons performing similar functions is directly or indirectly owned by such party or by one or more of its respective Subsidiaries or by such party and any one or more of its respective Subsidiaries, (ii) reference to "the other party" means, with respect to Extreme, Tilden and means with respect to Tilden, Extreme, and (iii) the term "Person" means, an association, corporation, estate, general partnership, governmental entity (or any agency, department or political subdivision thereof), individual, joint stock company, joint venture, limited liability company, limited partnership, trust, or any other organization or entity.
2.2. Capital Structure.
(a) The authorized capital stock of Extreme consists of 1,000 shares of Extreme Common Stock, of which 999 shares were issued and outstanding and no shares were held in treasury as of the date of this Agreement. All of the outstanding shares of Extreme Common Stock have been duly authorized and are validly issued, fully paid and nonassessable. All of the outstanding membership interests in Extreme's Subsidiaries are owned by Extreme free and clear of any lien, pledge, security interest, claim or encumbrance. Extreme has no shares of Extreme Common Stock reserved for issuance and there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements or commitments to issue or to sell any shares of capital stock or other securities of Extreme or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of Extreme or any of Extreme's Subsidiaries, and no securities or obligation evidencing such rights are authorized, issued or outstanding. Keystone Capital Resources, LLC, Bluegrass Mobile Powder Coatings, LLC and Xiom Corp. (collectively, the "Extreme Stockholders") collectively own all of the outstanding Extreme Common Stock.
(b) The authorized capital stock of Tilden consists of 30,000,000 shares of Tilden Common Stock, of which 11,425,903 shares were issued and outstanding and no shares were held in treasury as of the date of this Agreement. All of the outstanding shares of Tilden Common Stock have
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been duly authorized and are validly issued, fully paid and nonassessable. Each of the outstanding shares of capital stock of each of Tilden's Subsidiaries is owned by Tilden or a direct or indirect wholly-owned subsidiary of Tilden, free and clear of any lien, pledge, security interest, claim or other encumbrance. Tilden has no shares of Tilden Common Stock reserved for issuance and there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements or commitments to issue or to sell any shares of capital stock or other securities of Tilden or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of Tilden or any of its Subsidiaries, and no securities or obligation evidencing such rights are authorized, issued or outstanding.
(c) Sub is a corporation duly organized, validly existing as a corporation and in good standing under the laws of Delaware, The authorized capital stock of Sub consists of 1,000 shares of Sub Common Stock, of which 100 shares were issued and outstanding and no shares were held in treasury as of the date of this Agreement. All of the outstanding shares of Sub Common Stock have been duly authorized and are validly issued, fully paid and nonassessable. This Agreement is a valid and binding obligation of Sub enforceable against it in accordance with its terms, subject to the Bankruptcy and Equity Exception (as defined in Section 2.3(a)). By Tilden's execution of this Agreement, Tilden, in its capacity as the sole stockholder of Sub, hereby adopts this Agreement for the purposes of stockholder approval of this Merger Agreement required by Section 251 of the DGCL. Sub was incorporated on March 13, 2008 for the sole purpose of entering into this Agreement and has conducted no business other than its organizational activities and entering into this Agreement.
2.3. Authority; Approval.
(a) Extreme has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement is a valid and binding agreement of Extreme enforceable against Extreme in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles (the "Bankruptcy and Equity Exception"). The members of Extreme have approved this Agreement and the sale of the Extreme Assets and the other transactions contemplated hereby.
(b) Each of Tilden and Sub has all requisite corporate power and authority and each has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement, subject only to approval by the holders of a majority of the outstanding shares of Tilden Common Stock (the "Tilden Requisite Vote") of the Reverse Split (as defined in
Section 4.19) the Tilden Charter Amendments (as defined in Section 4.19) and this Agreement. Subject to the Tilden Requisite Vote, this Agreement is a valid and binding agreement of Tilden, enforceable against Tilden in accordance with its terms, subject to the Bankruptcy and Equity Exception. The Shares of Tilden Common Stock, when issued pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and no stockholder of Tilden will have any
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preemptive right of subscription or purchase in respect thereof. The Board of Directors of Tilden has unanimously approved the Reverse Split, the Tilden Charter Amendments, this Agreement, and the transactions contemplated hereby. After giving effect to the Reverse Split, the Shares issued to Extreme pursuant to this Agreement shall represent 94% of the shares of Tilden Common Stock outstanding, on a Fully Diluted Basis, immediately after the Effective Time. For purposes of this Agreement, the phrase "Fully Diluted Basis" shall mean after giving effect to the assumed exercise of all outstanding warrants, options and other rights to acquire Tilden Common Stock and securities convertible into Tilden Common Stock, and the assumed conversion of all securities convertible into Tilden Common Stock.
2.4. Governmental Filings; No Violations.
(a) Other than the disclosures, filings and/or notices (i) required under the Exchange Act or the Securities Act, (ii) to comply with state securities or "blue-sky" laws (such filings and/or notices of Tilden being the "Tilden Governmental Consents" and of Extreme being the "Extreme Governmental Consents"), or (iii) to comply with the DGCL with respect to the approval and adoption of this Agreement, the Reverse Split and the Tilden Charter Amendments, no notices, reports or other filings are required to be made by it with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by it from, any governmental or regulatory authority, court, agency, commission, body or other governmental entity ("Governmental Entity"), in connection with the execution and delivery of this Agreement by it and the consummation by it of the transactions contemplated hereby, except those that the failure to make or obtain are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on it or prevent, materially delay or materially impair its ability to consummate the transactions contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement by it do not, and the consummation by it of the transactions contemplated hereby will not, constitute or result in (A) a breach or violation of, or a default under, the Extreme Organizational Documents with respect to Extreme or the Tilden Organizational Documents with respect to Tilden or the organizational documents governing any of its Subsidiaries, (B) a breach or violation of, or a default under, the acceleration of any obligations or the creation of a lien, pledge, security interest or other encumbrance on its assets or the assets of any of its Subsidiaries (with or without notice, lapse of time or both) pursuant to, any agreement, lease, contract, note, mortgage, indenture, arrangement or other obligation ("Contracts") binding upon it or any of its Subsidiaries or any Law (as defined in Section 2.9) or governmental or non-governmental permit or license to which it or any of its Subsidiaries is subject or (C) any change in the rights or obligations of any party under any of its Contracts, except, in the case of clause (B) or (C) above, for any breach, violation, default, acceleration, creation or change that, individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect on it or prevent, materially delay or materially impair its ability to consummate the transactions contemplated by this Agreement. Section 2.4(b) of its Disclosure Schedule sets forth a correct and complete list of its Contracts and Contracts of its Subsidiaries pursuant to which consents or waivers are or may be required prior to consummation of the transactions contemplated by this Agreement other than those where the failure to obtain such consents or waivers is not reasonably likely to have a Material Adverse Effect on it or prevent or materially impair its ability to consummate the transactions contemplated by this Agreement.
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2.5. Financial Statements; SEC Reports.
(a) Attached as Exhibit 2.5 to the Extreme Disclosure Schedule are an unaudited balance sheet of A&C (the predecessor of Extreme) at December 31, 2007, and statements of operations and cash flows of A&C for each of the two years then ended (or shorter period in which A&C existed, and related notes thereto (collectively, the "Predecessor Financial Statements"). The Predecessor Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except that no notes to such Predecessor Financial Statements have been provided) and fairly present the financial position of A&C as of the dates thereof and the results of its operations and cash flows for the periods indicated.
(b) Since December 31, 2005, Tilden has filed with the Securities and Exchange Commission (the "SEC") all forms, reports, schedules, statements and other documents required to be filed by it under the Exchange Act or the Securities Act (as such documents have been amended since the time of their filing, collectively, the "SEC Documents"). The SEC Documents, including without limitation any financial statements and schedules included therein, at the time filed or, if subsequently amended, as so amended, (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder. The financial statements of Tilden (the "Tilden Financial Statements") included in the SEC Documents comply as to form in all material respects with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted under Regulation S-X and/or Item 310 of Regulation S-K promulgated by the SEC) and fairly present (subject, in the case of the unaudited statements, to customary year-end audit adjustments) the financial position of Tilden as at the dates thereof and the results of its operations and cash flows for the periods indicated.
2.6. Absence of Certain Changes. Except as expressly contemplated by this Agreement, since December 31, 2007 (in the case of Extreme) and September 30, 2007 (in the case of Tilden), there has not been (i) any change in the financial condition, properties, prospects, business or results of operations of it and its Subsidiaries, except those changes that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on it; (ii) any damage, destruction or other casualty loss with respect to any asset or property owned, leased or otherwise used by it or any of its Subsidiaries, whether or not covered by insurance, which damage, destruction or loss is reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on it; or (iii) any change by it in accounting principles, practices or methods. Since December 31, 2007 (in the case of Extreme) and December 31, 2006 (in the case of Tilden), except as set forth in its SEC Documents in the case of Tilden, there has not been any increase in the compensation payable or that could become payable by it or any of its Subsidiaries to officers or key employees or any amendment of any of its Benefit Plans (as defined in Section 2.8) other than increases or amendments in the ordinary course.
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2.7. Litigation and Liabilities. Except as reflected on the Predecessor Financial Statements or in the notes thereto (in the case of Extreme) or the Tilden Financial Statements(in the case of Tilden), there are no
(i) civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending or, to the knowledge of its executive officers, threatened against it or any of its Affiliates (which term, as used in this Agreement, shall be as defined in Rule 12b-2 under the Exchange Act) or
(ii) obligations or liabilities, whether or not accrued, contingent or otherwise, including those relating to matters involving any Environmental Law (as defined in Section 2.10), or any other facts or circumstances, in either such case, of which its executive officers have actual knowledge that are reasonably likely to result in any claims against or obligations or liabilities of it or any of its Affiliates, except for those that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on it or prevent or materially impair its ability to consummate the transactions contemplated by this Agreement.
2.8. Employee Benefits.
(a) A copy of each bonus, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, employment, termination, severance, compensation, medical, health or other plan, agreement, policy or arrangement that covers employees, officers, directors, former employees, former officers or former directors of its and its Subsidiaries (its "Benefit Plans") and any trust agreements or insurance contracts forming a part of such Benefit Plans has been made available by it to the other party prior to the date hereof and each such Benefit Plan is described in its SEC Documents in the case of Tilden.
(b) To its knowledge, all of its Benefit Plans are in substantial compliance with all applicable law, including the Internal Revenue Code of 1986, as amended (the "Code"), and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). None of its Benefit Plans is a defined benefit plan (as defined in Section 3(35) of ERISA) or a multi-employer plan (as defined in Section 3(37) of ERISA). Each of its Benefit Plans that is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service (the "IRS"), and it is not aware of any circumstances likely to result in revocation of any such favorable determination letter. There is no pending or, to the actual knowledge of its executive officers, threatened litigation relating to its Benefit Plans. Neither it nor any Subsidiary has engaged in a transaction with respect to any of its Benefit Plans that, assuming the taxable period of such transaction expired as of the date hereof, would subject it or any of its Subsidiaries to a material tax or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA.
(c) As of the date hereof, no liability under Subtitle C or D of Title IV of ERISA (other than the payment of prospective premium amounts to the Pension Benefit Guaranty Corporation in the normal course) has been or, to the actual knowledge of its executive officers, is expected to be incurred by it or any Subsidiary with respect to any ongoing, frozen or terminated "single-employer plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the single-employer plan of any entity which is considered one employer with it under Section 4001 of ERISA or Section 414 of the Code (its "ERISA Affiliate")
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(each such single-employer plan, its "ERISA Affiliate Plan"). It and its Subsidiaries and ERISA Affiliates have not contributed, or been obligated to contribute, to a multiemployer plan under Subtitle E of Title IV of ERISA. No notice of a "reportable event", within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any of its Pension Plans or any of its ERISA Affiliate Plans within the 12-month period ending on the date hereof or, to the actual knowledge of its executive officers, will be required to be filed in connection with the transactions contemplated by this Agreement.
(d) All contributions required to be made under the terms of any of its Benefit Plans as of the date hereof have been timely made or have been reflected on its most recent balance sheet delivered by it to the other party. Neither any of its Pension Plans nor any of any of its ERISA Affiliate Plans has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither it nor its Subsidiaries has provided, or is required to provide, security to any of its Pension Plans or to any of its ERISA Affiliate Plans pursuant to Section 401(a)(29) of the Code.
(e) Under each of its Pension Plans which is a single-employer plan and each of its ERISA Affiliate Plans, as of the last day of the most recent plan year ended prior to the date hereof, the actuarially determined present value of all "benefit liabilities", within the meaning of
Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial valuation), did not exceed the then current value of the assets of such Pension Plan or ERISA Affiliate Plan and there has been no material change in the financial condition of such Pension Plan or ERISA Affiliate Plan since the last day of the most recent plan year.
(f) Neither it nor its Subsidiaries have any obligations for retiree health and life insurance benefits under any of its Benefit Plans, except as required by applicable law.
(g) The consummation of the transactions contemplated by this Agreement will not (x) entitle any of its employees, officers or directors or any employees of its Subsidiaries to severance pay, directly or indirectly, upon termination of employment, (y) accelerate the time of payment or vesting or trigger any payment of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of its Benefit Plans or (z) result in any breach or violation of, or a default under, any of its Benefit Plans.
2.9. Compliance with Laws. The businesses of each of it and its Subsidiaries have not been, and are not being, conducted in violation of any law, statute, ordinance, regulation, judgment, order, decree, injunction, arbitration award, license, authorization, opinion, agency requirement or permit of any Governmental Entity or common law (collectively, "Laws"), except for violations or possible violations that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on it or prevent or materially impair its ability to consummate the transactions contemplated by this Agreement. No investigation or review by any Governmental Entity with respect to it or any of its Subsidiaries is pending or, to the actual knowledge of its executive officers, threatened, nor has any Governmental Entity indicated an intention to conduct the same, except for those the outcome of which are not, individually or in the aggregate, reasonably likely to have a Material Adverse
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Effect on it or prevent or materially impair its ability to consummate the transactions contemplated by this Agreement. To the knowledge of its executive officers, no material change is required in its or any of its Subsidiaries' processes, properties or procedures in connection with any such Laws, and it has not received any notice or communication of any material noncompliance with any such Laws that has not been cured as of the date hereof, except for such changes and noncompliance that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on it or prevent or materially impair its ability to consummate the transactions contemplated by this Agreement. Each of it and its Subsidiaries has all permits, licenses, franchises, variances, exemptions, orders and other governmental authorizations, consents and approvals (collectively, "Permits"), necessary to conduct their business as presently conducted, except for those the absence of which are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on it or prevent or materially impair its ability to consummate the transactions contemplated by this Agreement.
2.10. Environmental Matters. Except for such matters that, alone or in the aggregate, are not reasonably likely to have a Material Adverse Effect on it, to the knowledge of its executive officers: (i) each of it and its Subsidiaries has complied with all applicable Environmental Laws (as defined below); (ii) the properties currently owned or operated by it or any of its Subsidiaries (including soils, groundwater, surface water, buildings or other structures) are not contaminated with any Hazardous Substances (as defined below); (iii) the properties formerly owned or operated by it or any of its Subsidiaries were not contaminated with Hazardous Substances during the period of ownership or operation by it or any of its Subsidiaries; (iv) neither it nor any of its Subsidiaries is subject to liability for any Hazardous Substance disposal or contamination on any third party property; (v) neither it nor any of its Subsidiaries has been associated with any release or threat of release of any Hazardous Substance; (vi) neither it nor any Subsidiary has received any notice, demand, letter, claim or request for information alleging that it or any of its Subsidiaries may be in violation of or liable under any Environmental Law; (vii) neither it nor any of its Subsidiaries is subject to any orders, decrees, injunctions or other arrangements with any Governmental Entity or is subject to any indemnity or other agreement with any third party relating to liability under any Environmental Law or relating to Hazardous Substances; and
(viii) there are no circumstances or conditions involving it or any of its Subsidiaries that could reasonably be expected to result in any claims, liability, investigations, costs or restrictions on the ownership, use, or transfer of any of its properties pursuant to any Environmental Law.
As used herein, the term "Environmental Law" means any Law relating to pollution (or the clean up of the environment), or the protection of air, surface water, groundwater, drinking water, land (surface or subsurface), human health, the environment or any other natural resource or the use, storage, recycling, treatment, generation, processing, handling, production or disposal of Hazardous Materials, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 USC ss.ss.9601 et seq. and 40 CFR ss.ss.302.1 et seq., and regulations thereunder; the Federal Clean Air Act, as amended, 42 USC ss.ss.7401 et seq., and regulations thereunder; the Resource Conservation and Recovery Act, 42 USC ss.ss.6901 et seq., as amended, and regulations thereunder; and the Federal Water Pollution Control Act, 33 USC ss.ss.1251 et seq., as amended, and regulations thereunder.
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As used herein, the term "Hazardous Substance" means any asbestos containing materials, mono- and polychlorinated biphenyls, urea formaldehyde products, radon, radioactive materials, any "hazardous substance", "hazardous waste", "pollutant", "toxic pollutant", "oil" or "contaminant" as used in, or defined pursuant to any Environmental Law, and any other substance, waste, pollutant, contaminant or material, including petroleum products and derivatives, the use, transport, disposal, storage, treatment, recycling, handling, discharge, release, threatened release, discharge or emission of which is regulated or governed by any Environmental Law.
2.11. Taxes. It and each of its Subsidiaries have prepared in good faith and duly and timely filed (taking into account any extension of time within which to file) all material Tax Returns (as defined below) required to be filed by any of them and all such filed tax returns are complete and accurate in all material respects and: (i) it and each of its Subsidiaries have paid all Taxes (as defined below) that are shown as due on such filed Tax Returns or that it or any of its Subsidiaries is obligated to withhold or remit from amounts owing to any employee, creditor or third party, except with respect to matters contested in good faith or for such amounts that, alone or in the aggregate, are not reasonably likely to have a Material Adverse Effect on it;
(ii) as of the date hereof, there are not pending or, to the actual knowledge of its executive officers, threatened in writing, any audits, examinations, investigations or other proceedings in respect of Taxes or Tax matters; and
(iii) there are not, to the actual knowledge of its executive officers, any unresolved questions or claims concerning its or any of its Subsidiaries' Tax liability that are reasonably likely to have a Material Adverse Effect on it. Neither it nor any of its Subsidiaries has any liability with respect to Taxes in excess of the amounts accrued in respect thereof that are reflected in its consolidated balance sheet as of December 31, 2007 (in the case of Extreme) and September 30, 2007 (in the case of Tilden), except such excess liabilities that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on it.
As used in this Agreement, (i) the term "Tax" (including, with correlative meaning, the terms "Taxes", and "Taxable") includes all federal, state, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severance, stamp, payroll, sales, employment, unemployment, disability, use, property, withholding, excise, production, value added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties and additions imposed with respect to such amounts and any interest with respect to such penalties and additions, and (ii) the term "Tax Return" includes all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to a Tax authority relating to Taxes.
2.12. Labor Matters. Neither it nor any of its Subsidiaries is the subject of any proceeding asserting that it or any of its Subsidiaries has committed an unfair labor practice or is seeking to compel it to bargain with any labor union or labor organization nor is there pending or, to the knowledge of its executive officers, threatened, nor has there been for the past five years, any labor strike, dispute, walkout, work stoppage, slow-down or lockout involving it or any of its Subsidiaries, except in each case as is not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on it.
2.13. Securities Law Compliance. Each outstanding share of its capital stock and each outstanding option and right to acquire its capital stock, if any, have been registered under the Securities Act and all applicable state "blue sky" laws or issued pursuant to applicable exemptions from registration under the Securities Act or such "blue sky" laws.
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2.14. No Default. To the knowledge of its executive officers, neither it nor any of its Subsidiaries is or currently expects to be in the future, in violation or breach of or in default under, and no conditions exist that, with the giving of notice or the lapse of time or both, would constitute a default under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which it or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound except for such violations, breaches or defaults as are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on it.
2.15. Related Party Transactions. Since December 31, 2005, neither it nor any of its Subsidiaries (nor, with respect to Extreme, A&C) has
(a) incurred any obligation to pay commissions or other amounts to any firm of which any of its directors, officers or stockholders which beneficially own 5% or more of its outstanding common stock (each a "5% Stockholder") is a partner or stockholder; (b) cancelled, without payment in full, any notes, loans or other obligations receivable from any employee, officer, director or 5% Stockholder, or any member of the families of any thereof, or from any corporation, partnership or other entity in which any officer, director or 5% Stockholder, or any member of their families, then has any direct or indirect interest; (c) sold, assigned or transferred any of its assets to or from any of its employees, officers, directors, 5% Stockholders or members of their families for less than fair market value.
2.16. Property. Section 2.16 of its Disclosure Schedule, and/or its SEC Documents in the case of Tilden, lists all leases of real and personal property to which it or any of its Subsidiaries is a party, except for leases of personal property which are not material to its operations. To the knowledge of its executive officers, it and each of its Subsidiaries (i) has good and marketable title in fee simple to, or valid existing leases for, all real property used in the operation or conduct of its business and (ii) owns, leases or rents all the machinery, equipment, furniture, fixtures and all other capital assets used in the conduct of its business and has good and marketable title or valid existing leases for all such machinery, equipment, furniture and fixtures. All real and personal properties owned by it or any of its Subsidiaries are owned by it free and clear of all mortgages, liens, charges or encumbrances of any nature whatsoever except for Permitted Liens (as defined below). To the knowledge of its executive officers, all leases to which it or any of its Subsidiaries is a party are valid and effective in accordance with their terms, and except for defaults not reasonably likely to have a Material Adverse Effect on it, there is not, under any leases for real or personal property, any existing default by it or any of its Subsidiaries or, to the best of its knowledge, by any other party, nor to the best of its knowledge, is there any event which with notice or lapse of time or both would constitute such a default. To its knowledge, each such parcel of real property owned or leased by it or by any Subsidiary is in compliance with all applicable zoning, building, health and safety laws, ordinances, and regulations and all applicable Environmental Laws, except where non-compliance would not have a Material Adverse Effect on it. All real property and fixtures and all personal property and assets, excluding inventory, used by it or any of its Subsidiaries in its operations and business are and at the Closing Date will be sufficient to operate the business of it or its Subsidiaries, as the case may be, as conducted on the date hereof, and, except for normal wear and tear, will be in as good
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condition and repair as they were on the date hereof. As used herein, the term "Permitted Liens" means (i) liens or encumbrances for taxes not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the owner; (ii) carrier's, warehousemen's, mechanic's, material men's, repairmen's or other like liens or encumbrances arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the owner; and (iii) those liens or encumbrances described in Section 2.16 of the applicable Disclosure Schedule.
2.17. Intellectual Property Rights. Section 2.17 of its Disclosure Schedule, and/or its SEC Documents in the case of Tilden, contains an accurate and complete description of all domestic and foreign patents, trademarks, trademark registration, service marks, service marks registration, logos, trade names, assumed names, copyrights and copyright registrations and all applications therefor, presently owned or held by it or any of its Subsidiaries or under which it or any of its Subsidiaries owns or holds any license, or in which it or any of its Subsidiaries owns or holds any direct or indirect interest, and no others are necessary for the conduct of the present business of it or any of its Subsidiaries. To the best of its knowledge, no products, sold by it or any of its Subsidiaries, nor any patents, formulae, know-how, secrets, trademarks, trademark registrations, service marks, service marks registration, logos, trade names, assumed names, copyrights, copyright registrations, or designation used or licensed for use in its business or the business of any of its Subsidiaries, infringe on any patents, trademarks, licenses, or copyrights, or any other rights, of any Person. It and each of its Subsidiaries is the sole owner of, has the sole and exclusive right to use, has the right and power to sell, and has taken all reasonable measures to maintain and protect, the patents, trademarks, trademark registrations, logos, trade names, assumed names, copyrights, copyright registrations, service marks and service mark registrations listed in Section 2.17 of its Disclosure Schedule or in its SEC Documents in the case of Tilden. No claims have been asserted against it or any of its Subsidiaries in writing by any person and received by it challenging the use of any such patents, trademarks, trademark registrations, service marks, service mark registrations, logos, trade names, assumed names, copyrights and copyright registrations or challenging or questioning the validity or effectiveness of any such license or agreement, or the use of any formula, know-how or secrets used in its business or the business of its Subsidiaries and, to the best of its knowledge, there is no valid basis for any such claims. To the knowledge of its executive officers, no other party is infringing on the patents, trademarks, trademark registrations, logos, tradenames, assumed names, copyrights copyright registrations, service marks and service mark registrations listed in Section 2.17 of its Disclosure Schedule and/or in the SEC Documents in the case of Tilden.
2.18. Receivables. All of the accounts receivable reflected on its balance sheet as of December 31, 2007 (in the case of Extreme) and September 30, 2007 (in the case of Tilden) and all accounts receivable of it arising since such applicable date, (a) arose from bona fide transactions, (b) represent bona fide indebtedness of the respective debtors, (c are valid and do not have original payment terms in excess of 45 days, and (d) to the best of its knowledge, are not subject to any defense or offset.
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2.19. Insurance Policies. Section 2.19 of its Disclosure Schedule contains a true and complete list of all policies of fire, liability, workers' compensation and other forms of insurance owned by or held by it and its Subsidiaries, and it has made available for inspection by the other party true and complete copies of all of such policies. All such policies are in full force and effect, all premiums with respect thereto covering all periods to the date of this Agreement have been paid, and no notice of cancellation or termination has been received with respect to any such policy. To the knowledge of its executive officers, such policies (a) are sufficient for compliance with all requirements of law and all agreements to which it is a party, (b) are valid, outstanding and enforceable policies, (c) will remain in full force and effect through the Closing Date and (d) will not in any way be affected by, or terminate or lapse by reason of, the transactions contemplated by this Agreement. Neither it nor any of its Subsidiaries had made any material claims under such insurance policies.
2.20. Contracts. Neither it nor any of its Subsidiaries is a party to or bound by any written or oral Contract, (i) for the employment of any officer or individual employee; (ii) with any labor union; (iii) for the purchase of materials, supplies or equipment involving more than $25,000; (iv) for the provision of services by it or any of its Subsidiaries involving more than $25,000 other than in the ordinary course of business; (v) in the nature of a confidentiality agreement, royalty or license or an agreement for the acquisition of intangible property rights; (vi) with a governmental agency;
(vii) for the purchase of products for which there is no alternative source of supply; (viii) in the nature of a non-competition agreement which in any way restricts the right of it or any of its Subsidiaries to conduct business; (ix) in the nature of a management agreement; (x) for any quantity discount, volume purchase, rebate or billback sales arrangement that will continue after the Effective Time and involves more than $25,000; (xi) in the nature of a note, bond, mortgage, indenture or loan agreement, or (xii) relating to any matter which is material to it. To the knowledge of its executive officers, neither it nor any of its Subsidiaries, as of the date hereof, is a party to or bound by any contract or contracts which, in its judgment as of the date hereof, either separately or in the aggregate are contracts which are, or will, have a Material Adverse Effect on it or any of its Subsidiaries.
2.21. Bank Accounts. Information pertaining to the names and locations of all banks in which it or any Subsidiary has an account or safe deposit box and the names of all authorized signatories with respect thereto has been provided to the other party.
2.22. Subsidiaries. Section 2.22 of its Disclosure Schedule, and/or its SEC Documents in the case of Tilden, lists each of its Subsidiaries. It owns of record and beneficially 100% of each class of the outstanding capital stock of or other interest in each of its Subsidiaries.
2.23. Consents. Neither the execution, delivery or performance of this Agreement requires the consent or approval of any other Person or Governmental Entity.
2.24. Broker and Finders. Neither it nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders fees in connection with the transactions contemplated by this Agreement.
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3. Transfer of Automotive Business.
3.1. Purchase and Sale of Automotive Business.
(a) Tilden Assets. Subject to and upon the terms and conditions of this Agreement and excluding the assets retained by Tilden as set forth in Section 3.1(b) herein, at the Closing, Tilden shall sell, transfer, convey, assign and deliver, to TFB, and TFB shall purchase from Tilden, all of the properties, rights and assets, of every kind and nature, real, personal or mixed, tangible or intangible, wherever located, which are owned, leased, licensed or used by Tilden in the conduct of the Automotive Business and which exist on the Closing Date (collectively, the "Automotive Assets"), including, without limitation, the following assets:
(i) all office supplies and similar materials;
(ii) all contracts, agreements, leases, arrangements and/or commitments of any kind, whether oral or written, relating to the Automotive Assets, including, but not limited to agreements with franchisees (the "Automotive Contracts");
(iii) all customer lists, files, records and documents (including credit information) relating to customers and vendors of the Automotive Business and all other business, financial and employee books, records, files, documents, reports and correspondence relating to the Automotive Business (collectively, the " Automotive Records");
(iv) all rights of Tilden, if any, under express or implied warranties from the suppliers of Tilden in connection with the Automotive Assets;
(v) all furnishings, furniture, fixtures, tools, machinery, equipment, display racks, stands, and leasehold improvements owned by Tilden and related to the Automotive Assets, whether or not reflected as capital assets in the accounting records of Tilden (collectively, the "Automotive Fixed Assets");
(vi) all patents, trademarks, tradenames, service marks, copyrights and applications therefor which are owned by Tilden and related to the Automotive Assets and/or the operation of the Automotive Business;
(vii) all computers, computer programs, computer databases, hardware and software owned or licensed by Tilden and used in connection with the Automotive Assets and/or the operation of the Automotive Business;
(viii) all municipal, state and federal franchises, licenses, authorizations and permits of Tilden which are necessary to operate or are related to the Automotive Assets;
(ix) all prepaid charges, deposits, sums and fees of Tilden relating to the Automotive Assets or arising out of the operation of the Automotive Business;
(x) all claims and rights of Tilden related to or arising from the Automotive Assets or arising out of the operation of the Automotive Business;
(xi) all cash and cash equivalents;
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(xii) all accounts receivable and rights to receive payment related to or arising out of the conduct of the Automotive Business;
(xiii) all of the goodwill of the Automotive Business;
(xiv) all rights with respect to any internet address and/or sites of Tilden and/or the Automotive Business;
(xv) all supplies, inventories, finished goods and other materials of Tilden utilized in the conduct of the Automotive Business;
(xvi) all securities or equity and other interests in the Subsidiaries of Tilden; and
(xvii) all other assets and properties of any nature whatsoever, tangible or intangible, held by Tilden either directly or indirectly, and used in, allocated to, or required for the conduct of the Automotive Business.
(b) Retained Tilden Assets. Notwithstanding anything to the contrary set forth in this Agreement, the following assets of Tilden (the "Retained Tilden Assets") are not included in the sale of Automotive Assets contemplated hereby: (i) the Automotive Purchase Price (as hereinafter defined) and the other rights of Tilden under or relating to this Agreement, and
(ii) the corporate minute books, stock records, qualification to conduct business as a foreign corporation, and other documents relating to the formation, maintenance or existence as a corporation of Tilden, except that Tilden agrees that it will provide copies of any such document from the corporate minute books as reasonably requested by TFB which TFB believes are necessary for the use and operation of the Automotive Assets and the conduct of the Automotive Business after the Closing Date.
3.2. Automotive Purchase Price. The purchase price for the Automotive Assets (the "Automotive Purchase Price" shall consist of (i) 75,000 shares (after giving effect to the Reverse Split) of Tilden Common Stock which shall be surrendered to Tilden for cancellation at the Closing (the "Share Cancellation"), (ii) the assumption of liabilities by TFB as contemplated by
Section 3.3 below and (iii) the release of Tilden by Robert Baskind from all claims, liabilities and obligations now existing or which could hereafter arise as a result of or related to his employment with Tilden, including but not limited to any obligation of Tilden to pay amounts to Robert Baskind under
Section 11 of that certain Employment Agreement between Tilden and Robert Baskind dated January 2000.
3.3. Assumption of Liabilities. Effective as of the Closing Date, TFB agrees to assume and to pay, perform and discharge all liabilities and obligations of Tilden, whether now, unknown, absolute or contingent, existing as of the Closing Date or arising from the conduct of the Automotive Business on, prior or after the Closing Date, including, but not limited to, all liabilities and obligations (i) reflected on Tilden's Balance Sheet dated as of September 30, 2007 (the "Tilden Balance Sheet"), (ii) incurred after the date of the Tilden Balance Sheet, (iii) under the Automotive Contracts and arising out of the use and operation of the Automotive Assets by TFB after the Closing Date, (iv) arising from taxes of any kind that accrue as a result of the sale of the Automotive Assets pursuant to this Agreement; and (v) the fees and expenses of Tilden's counsel, accountants and other experts and all other
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expenses incurred by Tilden incident to the negotiation, preparation and execution of this Agreement and any agreement entered into in connection herewith and the performance by Tilden prior to the Closing of its obligations hereunder (collectively, the "Assumed Automotive Liabilities").
3.4. Allocation of Automotive Purchase Price. The Automotive Purchase Price shall be allocated among the various Automotive Assets by mutual agreement of the parties prior to the Closing Date. The parties covenant and agree with each other that this allocation shall be arrived at by arm's length negotiation and that none of them will take a position on any income tax return, before any governmental agency charged with the collection of any income tax or in any judicial proceeding that is in any manner inconsistent with the terms of this Section 3.4 without the written consent of the other party to this Agreement. Each of TFB and Tilden covenant and agree to execute and timely file U.S. Treasury Form 8594 consistent with such allocation and upon a party's reasonable request the other party shall execute and file such other documents as may be necessary to document such allocation.
3.5. Representations of TFB. TFB hereby represents and warrants to Tilden and Extreme that (a) it is a limited liability duly formed, validly existing as a limited liability company and in good standing under the laws of Delaware, (b) it has all requisite power and authority and has taken all action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, (c) this Agreement is a valid and binding obligation of TFB enforceable against it in accordance with its terms, subject to the Bankruptcy and Equity Exception and (d) it was formed for the purpose of acquiring the Automotive Assets and has conducted no business other than its organizational activities and entering into this Agreement.
4. Closing Deliveries.
4.1. By Extreme with respect to Merger. Extreme shall deliver at the Closing each of the following documents:
(a) a cross receipt duly executed by Extreme, in a form mutually satisfactory to Tilden and Extreme ("Cross Receipt"), to Tilden;
(b) certificates evidencing the Old Extreme Shares marked "Cancelled" to Tilden;
(c) certificates evidencing the New Extreme Shares to Tilden;
(d) a certificate duly executed by the Chief Executive Officer of Extreme that all representations and warranties made herein by Extreme are true and correct and that all terms, conditions and provisions of this Agreement have been performed and complied with at the time of Closing, to Tilden;
(e) a certificate duly executed by the secretary of Extreme attesting to the accuracy of resolutions to be attached thereto approved by the Board of Directors and stockholders of Extreme authorizing the execution, delivery and performance of this Agreement and providing incumbency information for the individual signing this Agreement and each other agreement, certificate or other document contemplated by this Agreement on behalf of Extreme, to Tilden;
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(f) such certificates or other documents as may be reasonably requested by Tilden, including, without limitation, certificates of legal existence, good standing and certified formation documents from the Secretary of State of Delaware, and certificates of an officer of Extreme with respect to directors' resolutions and any other relevant matters concerning Extreme in connection with the transactions contemplated by this Agreement.
4.2. By Tilden with respect to Merger. Tilden shall deliver at the Closing each of the following documents:
(a) certificates representing the Merger Shares to the shareholders of Extreme;
(b) the Cross Receipt duly executed by Tilden, to Extreme;
(c) a certificate duly executed by the Chief Executive Officer of Tilden that all representations and warranties made herein by Tilden are true and correct and that all terms, conditions and provisions of this Agreement have been performed and complied with at the time of Closing, to Extreme;
(d) a certificate duly executed by the secretary of Tilden attesting to the accuracy of the resolutions to be attached thereto approved by the Board of Directors and stockholders of Tilden authorizing the execution, delivery and performance of this Agreement, approval of the Reverse Split and approval of the Tilden Charter Amendments; and providing incumbency information for the individual signing this Agreement and each other agreement, certificate or other document contemplated by this Agreement on behalf of Tilden, to Extreme;
(e) such certificates or other documents as may be reasonably requested by Extreme, including, without limitation, certificates of legal existence, good standing and certified charter documents from the Secretary of State of Delaware, and certificates of an officer of Tilden with respect to directors' resolutions, by-laws and other matters.
4.3. By Tilden with respect to Automotive Sale. Tilden shall deliver to TFB at the Closing each of the following documents:
(a) a Bill of Sale in a form mutually satisfactory to Extreme, Tilden and TFB;
(b) an Assignment and Assumption of Contracts and Liabilities duly executed by TFB evidencing Tilden's assignment and TFB's assumption of the Assumed Automotive Liabilities contemplated by Section 3.3 hereof in a form mutually satisfactory to Extreme, Tilden and TFB (the "Automotive Assignment and Assumption Agreement");
(c) a cross receipt duly executed by Tilden, in a form mutually satisfactory to Extreme, Tilden and TFB (the "Automotive Cross Receipt");
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(d) the resignations contemplated by Section 5.18, duly executed by the applicable officer and directors;
(e) such certificates or other documents as may be reasonably requested by TFB, including, without limitation, certificates of legal existence, good standing and certified charter documents from the Secretary of State of Delaware, and certificates of the Chief Executive Officer of Tilden with respect to minutes, resolutions, by-laws and any other relevant matters concerning Tilden in connection with the transactions contemplated by this Agreement.
4.4. By TFB with respect to the Automotive Sale. TFB shall deliver at the Closing, each of the following documents:
(a) the Automotive Assignment and Assumption Agreement, duly executed by TFB, to Tilden;
(b) the Automotive Cross Receipt, duly executed by TFB, to Tilden;
(c) An Independent Sales Representative Agreement in a form mutually satisfactory to Extreme, Tilden and TFB (the "Sales Representative Agreement"), duly executed by TFB, to Extreme;
(d) a release with respect to the matters contemplated by clause (iii) of Section 3.2 in a form satisfactory to Extreme, duly executed by Robert Baskind;
(e) certificates representing 75,000 shares of Tilden Common Stock (after giving effect to the Reverse Split), duly endorsed for transfer or accompanied by stock powers duly executed in blank, to Tilden for cancellation;
(f) such certificates or other documents as may be reasonably requested by Tilden, including, without limitation, certificates of legal existence, good standing and certified charter documents from the Secretary of State of Delaware, and certificates of an officer of TFB with respect to members' resolutions, by-laws and other matters concerning TFB in connection with the transactions contemplated by this Agreement, to Tilden.
4.5. By Extreme, with respect to the Automotive Sale:
Extreme shall deliver to TFB at the Closing the Sales Representative Agreement, duly executed by Extreme.
5. Covenants. Except as expressly contemplated or permitted by this Agreement, or to the extent that the other party shall otherwise consent in writing, during the period from the date of this Agreement and continuing until the Effective Time, each of Extreme and Tilden agrees as to itself and its Subsidiaries that:
5.1. Ordinary Course. It and its Subsidiaries shall carry on their businesses in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and use all reasonable efforts to preserve intact their present business organizations, keep available the services of their present officers and employees and preserve their relationships with customers, suppliers and others having business dealings with them so that their goodwill and ongoing business shall not be impaired in any
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respect on the Closing Date; provided, however that nothing contained in this Agreement shall prohibit Extreme from issuing additional equity securities or debt securities convertible into equity securities.
5.2. Dividends; Changes in Stock. Except to the extent contemplated by this Agreement it shall not, nor shall any of its Subsidiaries, nor shall it or any of its Subsidiaries propose to, (i) declare or pay any dividends on or make other distributions in respect of any of its capital stock or other outstanding securities or interests, except for dividends or distributions to Extreme or Tilden or a Subsidiary that is wholly owned (directly or indirectly) by a Subsidiary that is wholly owned (directly or indirectly) by Extreme or Tilden, (ii) split, combine or reclassify any of its capital stock or equity interests or issue or authorize or propose the issuance of any other securities in replacement of, in lieu of or in substitution for shares of its capital stock or equity interests, or (iii) repurchase, redeem or otherwise acquire, or permit any Subsidiary to repurchase, redeem or otherwise acquire, any shares of its capital stock or equity interests.
5.3. Issuance of Securities. Neither it nor any of its Subsidiaries, shall issue, deliver or sell, or authorize or propose the issuance, delivery or sale of, any shares of its capital stock of any class or equity interests, or any securities convertible into, or any rights, warrants, calls, subscriptions or options to acquire, any such shares or convertible securities, other than (i) the issuance of shares of Tilden Common Stock upon the exercise of warrants and stock options identified in SEC Documents and/or
Section 2.2(b) of the Tilden Disclosure Schedule in accordance with the terms of such warrants and stock options or (ii) the issuance by Extreme of any additional equity securities or debt securities convertible into equity securities.
5.4. Governing Documents. Except as contemplated by this Agreement, it and its Subsidiaries shall not amend or propose to amend the Tilden Organizational Documents, with respect to Tilden, and the Extreme Organizational Documents, with respect to Extreme.
5.5. No Acquisitions. Neither it nor any of its Subsidiaries shall, acquire or agree to acquire by merging or consolidating with, or by purchasing an equity interest in or portion of the assets of, or by any manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets.
5.6. No Dispositions. It shall not, nor shall any of its Subsidiaries sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease, license, encumber or otherwise dispose of any of its assets, except in the ordinary course of business.
5.7. Indebtedness. Except for borrowings in the ordinary course of business under credit arrangements existing on the date of this Agreement, it shall not, nor shall any of its Subsidiaries, incur (which shall be deemed to include entering into credit agreements, lines of credit or similar arrangements) any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of it or any of its Subsidiaries or guarantee any debt securities of others except as permitted by Section 5.1 or 5.3.
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5.8. Other Actions. It shall not, nor shall any of its Subsidiaries, take any action that would or is reasonably likely to result in any of its representations and warranties set forth in this Agreement being untrue or in its failure to perform covenants it is obliged to perform hereunder or in any of the conditions to the Closing set forth in Section 5 not being satisfied.
5.9. Advice of Changes; Filings. Except as prohibited by the terms of any confidentiality agreement to which it is a party, it shall confer on a regular and frequent basis with the other party, report on operational matters and promptly advise the other party in writing of any change or event having (in either case), or which, insofar as can reasonably be foreseen could have (in either case), a Material Adverse Effect on it and its Subsidiaries (financial or otherwise) or their respective businesses, properties, prospective results of operations or net worth. It shall promptly provide the other party (or its counsel) copies of all filings made by it or any of its Subsidiaries with any Federal, state or foreign Governmental Entity in connection with this Agreement and the transactions contemplated hereby or which are material to the operation of the business conducted by it or any such Subsidiary.
5.10. Notice of Untrue Facts. It will promptly advise the other party if, at any time before the Information Statement (as defined in
Section 4.20) is mailed to the stockholders of Extreme or before the Effective Time, the Information Statement as the same relates to it, contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading.
5.11. Employee Benefit Plans. It and its Subsidiaries will not, without the prior written consent of the other, (i) enter into, adopt, amend (except as may be required by law or otherwise permitted or contemplated by this Agreement) or terminate any Benefit Plan or other employee benefit plan or any agreement, arrangement, plan or policy between it or a Subsidiary of it and one or more of its directors, officers or employees; or (ii) increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any plan and arrangement as in effect as of the date hereof (including, without limitation, the granting of stock options, stock appreciation rights or performance units), except for reasonable increases in salary in the ordinary course of business, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
5.12. Acquisitions of Property. During the period from the date of this Agreement until the Effective Time, it agrees as to itself and its Subsidiaries that it will not, without the prior written consent of the other party, acquire or lease any additional real or personal property, including, without limitation, capital equipment or inventories, except for real or personal property which will not exceed $25,000 in the aggregate.
5.13. Consents Without Any Condition. It shall not make any agreement or reach any understanding not approved in writing by the other party as a condition for obtaining any consent, authorization, approval, order, license, certificate, or permit required for the consummation of any of the transactions contemplated by this Agreement.
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5.14. No Related Transaction. Neither it nor any of its Subsidiaries shall enter into or become a party to any contract, lease, agreement or transaction with any member of its board of directors, any of its officers or management employees or any of its Subsidiaries or with any business organization owned or controlled by any of them, from the date of the execution of this Agreement to the Closing Date except in the ordinary course of business or as contemplated by this Agreement.
5.15. Legal Requirements. It will take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on itself with respect to the transactions contemplated by this Agreement (which actions shall include, without limitation, furnishing all information required in connection with approvals of or filings with any Governmental Entity and filing initial notices and obtaining an administrative consent order or otherwise satisfying the requirements of any state or federal environmental laws with respect to properties owned, leased, or operated by it or any of its Subsidiaries on or before the date of this Agreement and through the Closing Date, to the extent such properties are subject to such laws) and will promptly cooperate with and furnish information to each other in connection with any such requirements imposed upon any of them or any of their Subsidiaries in connection with the transactions contemplated by this Agreement. It will, and will cause its Subsidiaries to, take all reasonable actions necessary to obtain (and will cooperate with the other party obtaining) any consent, authorization, order or approval of, or any exemption by, any Governmental Entity or other public or private third party, required to be obtained or made by Tilden, Extreme or any of their Subsidiaries in connection with the transactions contemplated by this Agreement or the taking of any action contemplated thereby or by this Agreement; provided, that except as otherwise provided to the contrary in this Agreement, neither Tilden or any of its Subsidiaries nor Extreme or any of its Subsidiaries shall be obliged to expend funds or commit to expend funds or undertake any other obligation to obtain any consent, authorization, order, approval or exemption, required to be obtained by any other person or entity not its parent or Subsidiary, as the case may be.
5.16. Access to Information. Upon reasonable notice and subject to restrictions contained in confidentiality agreements to which it is subject, it shall (and shall cause each of its Subsidiaries to) afford to the officers, employees, accountants, counsel and other representatives of the other party, access, during normal business hours until the earlier of the Closing or the date of the termination of this Agreement, to all of its properties, books, contracts, commitments and records and, during such period, it shall (and shall cause each of its Subsidiaries to) furnish promptly to the other (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws and (b) all other information concerning its business, properties and personnel as such other party may reasonably request.
5.17. Additional Agreements; Best Efforts. It will use its best efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement, including cooperating fully with the other party. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement or to vest Tilden with full title to all properties, assets, rights, approvals, immunities and franchises of the
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Business, the proper officers and directors of each party to this Agreement shall take all such necessary action.
5.18. Additional Covenants of Tilden. During the period from the date of this Agreement and continuing until the Closing, Tilden agrees that (except as expressly contemplated or permitted by this Agreement or to the extent that Extreme shall otherwise consent in writing):
(a) SEC Reports. Tilden shall duly and timely file all reports and other documents required to be filed by it with the SEC and will deliver complete and accurate copies thereof to Extreme at the time of filing. None of such reports and other documents will contain at the time of filing any untrue statement of a material fact or omit to state any material fact (excluding any such misstatement or omission made in reliance upon information provided by Extreme) required to be stated therein or necessary to make the statements therein not misleading, and all of such reports shall comply as to form in all material respects with all of the applicable rules and regulations promulgated under the Exchange Act and the Securities Act, as the case may be.
(b) Resignation of Directors and Officers. Consistent with applicable law, Tilden shall procure prior to the Closing Date
(a) resignations of each of its officers which shall be effective at the Effective Time and (b) resignations of each of Arthur Singer and Jason Baskind as directors of Tilden and shall cause Tilden's Board of Directors, prior to the effectiveness of such resignations and prior to the Closing Date, to (i) appoint as officers, effective as of the Effective Time, such individuals as may be designated by Extreme prior to the Closing and (ii) elect to the Board of Directors of Tilden, effective as of the Effective Time, such number of individuals as shall be designated by Extreme prior to the Closing. Tilden agrees that during the three (3) year period following the Closing, its Board of Directors will include Robert Baskind in each Board of Directors' slate of nominees proposed to the stockholders of Tilden for election to such Board of Directors and recommend to such stockholders the election of Robert Baskind to such Board.
5.19. Tilden Stockholder Consent. Tilden shall provide to Extreme the names of and contact information with respect to holders of not less than a majority of the outstanding shares of the Tilden Common Stock, and Extreme shall solicit from such holders a written consent which shall provide for the adoption and approval of (i) this Agreement and transactions contemplated hereby, (ii) a one-for-seventeen reverse split of the Tilden Common Stock (the "Reverse Split") and (iii) amendments to the Certificate of Incorporation of Tilden (the "Tilden Charter Amendments") so as to result in such Certificate of Incorporation, as amended, reading as set forth in the form of Amended and Restated Certificate of Incorporation attached Exhibit A hereto.
5.20. Schedule 14C Information Statement and Related Matters.
(a) As promptly as practicable after the date of this Agreement, and approval of this Agreement, the Reverse Split and the Tilden Charter Amendments by the holders of a majority of the outstanding voting power of each class of the voting securities of Tilden, Tilden and Extreme shall prepare, and Tilden shall file with the SEC, a Schedule 14C Information
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Statement to be sent to the stockholders of Tilden in connection with the transactions contemplated hereby. Tilden and Extreme shall use reasonable best efforts to cause the Information Statement to be cleared by the SEC as soon after filing as practicable and (i) Tilden shall mail the Information Statement in substantially the form cleared by the SEC to its stockholders at least twenty
(20) days prior to the Closing Date. Tilden and Extreme shall make all other necessary filings with respect to this Agreement and the transactions contemplated hereby under the Securities Act of 1933 and the Securities Exchange Act of 1934 and the rules and regulations of the SEC thereunder.
(b) Extreme shall take such action as may be necessary to ensure that the information to be supplied by Extreme for inclusion in the Information Statement shall not at the time the Information Statement is mailed to Tilden's stockholders contain any untrue statement of a material fact or omit to state any material fact required to be stated in the Information Statement or necessary in order to make the statements in the Information Statement, in light of the circumstances under which they were made, not misleading. If at any time prior to the Closing any event relating to Extreme or any of its Affiliates, officers or directors should be discovered by Extreme that should be set forth in an amendment or supplement to the Information Statement, Extreme shall promptly so inform Tilden.
(c) Tilden, Sub and TFB shall take such action as may be necessary to ensure that the information to be supplied by it for inclusion in the Information Statement shall not at the time the Information Statement is mailed to Tilden's stockholders contain any untrue statement of a material fact or omit to state any material fact required to be stated in the Information Statement or necessary in order to make the statements in the Information Statement, in light of the circumstances under which they were made, not misleading. If at any time prior to the Closing any event relating to Tilden, Sub or TFB or any of their respective Affiliates, officers, directors or members should be discovered by any such party, that should be set forth in an amendment or supplement to the Information Statement, the party discovering same shall promptly so inform Extreme.
5.21. Insurance Coverage. Tilden shall have obtained the Insurance Coverage described in Section 6.2(d) and such Insurance Coverage shall be in effect as of the Closing Date.
5.22. Audit Costs. In the event that the Closing shall not have occurred prior to the earlier of the date upon which Tilden's auditor fees for the audit conducted with respect to the year ended December 31, 2007 are due or April 15, 2008 for any reason other than a breach by Tilden of its obligations under this Agreement or the failure to obtain the Tilden Requisite Vote within fourteen (14) days of the date of this Agreement, Extreme shall be liable for and pay the fees incurred by Tilden with respect to the audit of Tilden's 2007 financial statements.
6. Conditions.
6.1. Conditions to Each Party's Obligation to Close Transaction. The respective obligations of each party to effect the Transactions contemplated by this Agreement shall be subject to the satisfaction prior to the Closing Date of the following conditions:
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(a) Tilden shall have received all state securities or "Blue Sky" permits and other authorizations necessary to issue the Merger Shares pursuant to this Agreement or such issuances shall be exempt from registration or qualification under all applicable state securities or "blue sky" laws.
(b) No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect.
(c) The consents set forth in Section 2.23 of each of the Disclosure Schedules shall have been obtained.
(d) The Information Statement shall have been mailed to Tilden's stockholders at least twenty (20) days prior to the Closing Date.
6.2. Conditions of Obligations of Tilden. The obligations of Tilden to effect the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions unless, to the extent permitted below, waived by Tilden:
(a) The representations and warranties of Extreme set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement, and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, except as otherwise contemplated by this Agreement, and Tilden shall have received a certificate signed on behalf of Extreme by a managing member of Extreme to such effect.
(b) Extreme shall have performed in all material respects all obligations, covenants and agreements required to be performed by it under this Agreement at or prior to the Closing Date, and Tilden shall have received a certificate signed on behalf of Extreme by the managing member of Extreme to such effect.
(c) Extreme shall have delivered to Tilden all documents required to be delivered by it pursuant to Section 4.1.
(d) Tilden shall have obtained prior to and have in effect as of the Closing Date directors' and officers' liability insurance and fiduciary liability insurance providing for not less than $5,000,000 of coverage with respect to claims arising from facts or events that occurred prior to, as of or after the Closing Date, including, but not limited to, all actions of the Board of Directors with respect to or in any manner related to the transactions contemplated by this Agreement, including the Merger, the Reverse Split, Tilden Charter Amendments and sale of the Automotive Business (the "Insurance Coverage").
(e) The holders of a majority of the outstanding voting power of each class of voting securities of Tilden Common Stock shall have approved this Agreement and the transactions contemplated hereby, including the Reverse Split, the Tilden Charter Amendments, and the Reverse Split shall have become effective.
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6.3. Conditions of Obligations of Extreme. The obligation of Extreme to effect the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions unless waived by Extreme:
(a) The representations and warranties of Tilden set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement, and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, except as otherwise contemplated by this Agreement, and Extreme shall have received a certificate signed on behalf of Tilden by the President and the Chief Financial Officer of Tilden to such effect.
(b) The representations and warranties of TFB set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and (except to the extent such representations speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, except as otherwise contemplated by this Agreement and Extreme shall have received a certificate signed on behalf of TFB by the managing member of TFB to such effect.
(c) Tilden shall have performed in all material respects all obligations, covenants and agreements required to be performed by it under this Agreement at or prior to the Closing Date, and Extreme shall have received a certificate signed on behalf of Tilden by the President and the Chief Financial Officer of Tilden to such effect.
(d) TFB shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Extreme shall have received a certificate signed on behalf of TFB by the managing member of TFB to such effect.
(e) Tilden shall have procured prior to the Closing Date the resignation of Robert Baskind as President of Tilden, and the termination of its employment agreements with each of Robert Baskind and all other officers and employees of Tilden.
(f) Each of Tilden and TFB shall have delivered all documents required to be delivered by it pursuant to Sections 4.2, 4.3 and 4.4.
(g) The holders of a majority of the outstanding voting power of each class of voting securities of Tilden Common Stock shall have approved this Agreement and the transactions contemplated hereby, including the Merger, the sale of the Automotive Assets, the Reverse Split, the Tilden Charter Amendments, and the Reverse Split shall have become effective.
6.4. Conditions of Obligations of TFB. The obligation of TFB to effect the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions unless waived by TFB:
(a) The representations and warranties of Extreme set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and (except to the extent such representations speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, except as otherwise contemplated by this Agreement.
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(b) Extreme shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date.
(c) Tilden shall have obtained and have in effect the Insurance Coverage.
(d) Extreme shall have delivered all documents required by Section 4.1 and Tilden shall have delivered all documents required to be delivered by it pursuant to Sections 4.2 and 4.3.
7. Post-Closing Agreements. Extreme and Tilden agree that from and after the Closing Date:
7.1. Further Assurances and Data.
(a) At any time and from time to time after the Closing Date, at TFB's reasonable request and without further consideration, Tilden shall execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation, and take such other action, all at TFB's sole cost and expense, as TFB may reasonably request to more effectively transfer, convey and assign to TFB, and to confirm TFB's title to, all the Automotive Assets, to put TFB in actual possession and operating control thereof, to assist TFB in exercising all rights with respect thereto, and to carry out the purpose and intent of this Agreement. Immediately after the Closing Date, Tilden shall, to the extent applicable, authorize the release to TFB of all files pertaining to the Automotive Assets held by any federal, state, county or local authorities, agencies or instrumentalities. Tilden and TFB will cooperate in communications with suppliers and customers to accomplish the transfer of the Automotive Assets to TFB.
(b) Each of the parties hereby agrees that from and after the Closing Date, as to any monies received that rightfully belong to the other party, they shall remit such monies promptly to the other party.
(c) TFB shall have the right, for a period of three (3) years following the Closing Date, to have reasonable access to those books, records and accounts, including financial and tax information, correspondence, employment records and other records that may, at that time, be in the possession of Tilden to the extent that any of the foregoing relates to the Automotive Assets and is needed by TFB in order to comply with its obligations under applicable securities, tax, environmental, employment or other laws and regulations.
7.2. Limits on Sales to Affiliates. For a period of twenty-four (24) months following the Closing Date, Tilden shall not issue any shares of Tilden Common Stock or securities convertible into or exercisable for Tilden Common Stock to any Affiliate (as that term is defined in Rule 501(a) promulgated under the Securities Act of 1933) of Extreme or Tilden except pursuant to the exercise of any stock option or warrant or conversion of a convertible security outstanding as of the date of this Agreement.
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7.3. Consents. Tilden and TFB will use their commercially reasonable best efforts to obtain by the Closing Date, consents from each landlord relating to all Real Property Leases identified on Section 2.16 of the Tilden Disclosure Schedule, consenting to the assumption of each such Real Property Lease by TFB, and any other consents required under any Contract or otherwise in connection with the transactions contemplated by this Agreement. To the extent that any interest in any of the Tilden Assets is not capable of being assigned, transferred, conveyed or registered without the consent, waiver or authorization of, or registration with, a third person (including, but not limited to, a governmental, regulatory or administrative authority), or if such assignment, transfer, conveyance, registration or attempted assignment, transfer, conveyance or registration would constitute a breach of any Tilden Asset, or a violation of any law, statute, decree, rule, regulation or other governmental edict or is not immediately practicable, this Agreement shall not constitute an assignment, transfer or conveyance of such interest, or an attempted assignment, transfer or conveyance of such interest (such interests being hereinafter collectively referred to as "Restricted Automotive Interests"). The entire beneficial interest in any Automotive Assets subject to a restriction as described above, and any other interest in such Automotive Assets which are transferable notwithstanding such restriction, shall be transferred from Tilden to TFB as provided in Section 3.1(a). To the extent that any required consents, waivers, authorizations and registrations are not obtained, or until the impracticalities of transfer referred to therein are resolved, Tilden shall (i) provide to TFB, at the request of TFB, the benefits of any Restricted Automotive Interests, (ii) cooperate in reasonable and lawful arrangements designed to provide such benefits to TFB and (iii) enforce, at the request of TFB for the account of TFB, any rights of Tilden arising from any Restricted Automotive Interests (including the right to elect to terminate in accordance with the terms thereof upon the advice of TFB).
7.4. Director and Officer Indemnification. From and after the Closing Date, Tilden and its Subsidiaries shall not amend, repeal or otherwise modify the provisions with respect to indemnification set forth in their respective charters or by-laws (or comparable organizational documents) as in effect on the Closing Date or as shall become effective upon the effectiveness of the Tilden Charter Amendments, in any manner that would adversely affect the rights thereunder of individuals who, on or prior to the Closing Date, were directors, officers, employees or agents of Tilden or any Tilden Subsidiary with respect to actions or failure to act prior to the Closing, unless such modification is required by law (and then only to the minimum extent required by law).
7.5. Director and Officer Liability Insurance. Tilden shall, for a period of three years from the Closing Date, maintain in effect the Insurance Coverage for each of the three (3) years following the Closing Date, provided that the premium cost of the Insurance Coverage shall be no greater than $50,000 for each year of coverage. In the event that the annual premium cost shall exceed $50,000 for any year within such three year period, Tilden shall maintain the maximum amount of Insurance Coverage that can be obtained for a premium of $50,000 for such year. All Insurance Coverage during such three year period shall cover all periods under which Insurance Coverage was first obtained and, in the event that Tilden changes insurance providers during such three year period, any new Insurance Coverage shall include "tail" coverage for all periods covered by the predecessor Insurance Coverage.
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7.6. Robert Baskind as Director. For each of the three (3) years following the Closing Date, Tilden shall use its best efforts to cause Robert Baskind to be included in each Board of Directors' slate of nominees proposed to the stockholders of Tilden for election to Tilden's Board of Directors and recommend to such stockholders the election of Robert Baskind to such Board.
8. Indemnification and Related Procedures.
8.1. Indemnification. TFB agrees to defend, indemnify and hold harmless Tilden and its officers, directors, employees, managers, members, agents, advisers and representatives (collectively, the "Indemnitees") from and against, and pay or reimburse the Indemnitees for, any and all claims, demands, liabilities, obligations, losses, fines, costs, expenses, royalties, litigation, deficiencies or damages (whether absolute, accrued, contingent or otherwise and whether or not resulting from third party claims), including interest and penalties with respect thereto and out-of-pocket expenses and reasonable attorneys' and accountants' fees and expenses incurred in the investigation or defense of any of the same or in asserting, preserving or enforcing any of their respective rights hereunder (collectively, "Losses", and each individually, a "Loss"), resulting from or arising out of:
(a) the Assumed Automotive Liabilities;
(b) any transaction, liability or obligation, whether absolute or contingent, that occurs or arises out of the operations of the Automotive Business or the use of Automotive Assets on, prior to or after the Closing Date;
(c) Any taxes arising out of the operations of Tilden prior to the Closing Date or out of the operation of the Automotive Business or the use of the Automotive Assets prior to the Closing Date.
8.2. Indemnification Procedures. In the case of any claim asserted by a third party against a party entitled to indemnification under this Agreement (the "Indemnified Party"), notice shall be given by the Indemnified Party to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and the Indemnified Party shall permit the Indemnifying Party (at the expense of such Indemnifying Party) to assume the defense of any claim or any litigation resulting therefrom, provided, that (i) counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party, and the Indemnified Party may participate in such defense at such Indemnified Party's expense, and (ii) the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except to the extent that such failure results in a lack of actual notice to the Indemnifying Party and such Indemnifying Party is materially prejudiced as a result of such failure to give notice. Except with the prior written consent of the Indemnified Party, no Indemnifying Party, in the defense of any such claim or litigation, shall consent to entry of any judgment or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of a release from all liability with respect to such claim or litigation. In no event shall a party guilty of fraud or willful misconduct be
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entitled to indemnity with respect to any matter involving such fraud or willful misconduct. In the event that the Indemnified Party shall in good faith determine that the Indemnified Party may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the Indemnifying Party in respect of such claim or any litigation relating thereto, the Indemnified Party shall have the right at all times to take over and assume control over the defense, settlement, negotiations or litigation relating to any such claim at the sole cost of the Indemnifying Party, provided, that if the Indemnified Party does so take over and assume control, the Indemnified Party shall not settle such claim or litigation without the written consent of the Indemnifying Party, such consent not to be unreasonably withheld. In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party shall have the full right to defense against any such claim or demand, and shall be entitled to settle or agree to pay in full such claim or demand, subject to the written consent of the Indemnifying Party such consent not to be unreasonably withheld. In any event, except to the extent that they have an interest adverse to the other, the parties hereto shall cooperate in the defense of any claim or litigation subject to this Section 8 and the records of each shall be available to the other with respect to such defense.
9. Transfer and Sales Tax. Notwithstanding any provisions of law imposing the burden of such taxes on Tilden or TFB, as the case may be, TFB shall pay (a) all sales, bulk sales, use and transfer taxes and (b) all governmental charges, if any, upon and due in connection with the sale or transfer of any of the Automotive Assets hereunder.
10. Employees; WARN Act. Effective on the Closing Date, Tilden shall terminate the employment of all employees engaged in the Automotive Business (the "Terminated Automotive Employees"), and shall terminate any employment agreements with such Terminated Automotive Employees. As of the Closing Date, TFB shall offer employment to all of the Terminated Automotive Employees (such hired persons being the "Hired Automotive Employees"), at initial salaries and with initial benefits comparable to those immediately prior to the termination. For the purposes of determining and measuring benefits provided to any given Hired Automotive Employee by TFB, each Hired Automotive Employee will be given credit for the Hired Automotive Employee's term of service to Tilden. For a period of at least forty-five (45) days from and after the Effective Date, TFB shall employ substantially all, but in no event less than 70%, of the Hired Automotive Employees and shall not terminate more than 50 full time employees who were employed by Tilden as of the Closing Date. TFB shall be liable and responsible for any obligations under WARN, arising out of TFB's breach of this Section 21 with respect to the Hired Automotive Employees.
11. Termination.
11.1. Time of Termination. This Agreement may be terminated at any time prior to the Closing, whether before or after approval of the matters presented in connection with the transactions contemplated by this Agreement by the stockholders of Extreme:
(a) By mutual consent of Tilden and Extreme.
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(b) (i) By either Tilden or Extreme if there shall be a material breach of any representation, warranty, covenant, obligation or agreement on the part of the other party set forth in this Agreement which breach shall not have been cured, in the case of a representation or warranty, prior to the Closing, or in the case of a covenant, obligation or agreement, within two (2) business days following receipt by the breaching party of notice of such breach; or (ii) by either Tilden or Extreme if any permanent injunction or other order of a court or other competent authority preventing the consummation of the transactions contemplated by this Agreement shall have become final and non-appealable.
(c) By Extreme if there shall be a material breach of any representation, warranty, covenant, obligation or agreement on the part of TFB set forth in this Agreement which breach shall not have been cured, in the case of a representation or warranty, prior to Closing, or in the case of a covenant, obligation or agreement, within two (2) business days, following receipt by the breaching party of notice of such breach
(d) By Extreme if the stockholders of Tilden do not approve and adopt this Agreement, the Reverse Split and the Tilden Charter Amendments on or prior to April 7, 2008.
(e) In accordance with Section 14.3.
11.2. Effect of Termination. In event of a termination of this Agreement by either Extreme or Tilden as provided in Section 8.1, this Agreement shall forthwith become void; provided, however, that no such termination shall relieve any party hereto from any liability for breach of this Agreement.
11.3. Remedies Not Exclusive. No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute or otherwise, including, without limitation, the remedy of specific performance. The election of any one or more remedies by Tilden or Extreme shall not constitute a waiver of the right to pursue other available remedies.
12. Notices. Any notices or other communications required or permitted hereunder shall be in writing and shall be sufficiently given if delivered personally against written receipt therefor, or sent by facsimile (with transmission confirmed), a nationally recognized overnight delivery service (such as UPS, DHL, U.S.P.S. Priority Mail, Federal Express), registered or certified mail, return receipt requested, postage prepaid, addressed as follows or to such other address or facsimile number of which the parties may have given notice:
To Extreme: With a copy to:
----------- ---------------
Extreme Coatings, Inc. Giordano, Halleran & Ciesla, P.C.
225 Two Oaks Drive 125 Half Mile Road, P.O. Box 190
Nicholasville, Kentucky 40356 Middletown, NJ 07748
Fax: Fax: 732-224-6599
Attention: James Zimbler Attention: Philip D. Forlenza, Esq.
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To Tilden or TFB: With a copy to:
----------------- ---------------
Tilden Associates, Inc. Dennis O'Rourke, Esq.
300 Hempstead Turnpike Moritt Hock Hamroff & Horowitz LLP
West Hempstead, NY 11552 400 Garden City Plaza, Suite 200
Fax: 516-746-1288 Garden City, NY 11530
Attention: Robert Baskind Fax: 516-873-2010
Unless otherwise specified herein, such notices or other communications shall be deemed received (a) on the date delivered, if delivered personally, or by facsimile; (b) on the first Business Day following delivery to the overnight service; Federal Express; or (c) three business days after being sent, if sent by registered or certified mail.
13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns, except that neither party may assign its obligations hereunder without the prior written consent of the other party hereto.
14. Entire Agreement; Amendments; Attachments.
14.1. Entire Agreement; Amendment. This Agreement, all schedules and exhibits hereto, and all agreements and instruments to be delivered by the parties pursuant hereto represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede all prior oral and written, and all contemporaneous oral negotiations, commitments and understandings between such parties. Tilden and Extreme, by the consent of their respective Board of Directors and members, or officers authorized by such Board or members, may amend or modify this Agreement, in such manner as may be agreed upon, by a written instrument executed by Tilden and Extreme.
14.2. Attachments. If the provisions of any schedule or exhibit to this Agreement are inconsistent with the provisions of this Agreement, the provisions of this Agreement shall prevail. The exhibits and schedules attached hereto or to be attached hereafter are hereby incorporated as integral parts of this Agreement.
14.3. Update of Disclosure Schedules. During the ten (10) day period commencing with the date of this Agreement, each of Extreme and Tilden shall have the opportunity to modify and update its Disclosure Schedule, and any revised or new information contained in the modified and updated Disclosure Schedule (each, a "New Disclosure") shall be deemed to have been included in the applicable Disclosure Schedule as of the date of this Agreement; provided, however, that if any such New Disclosure relates to a matter which has had or could reasonably be expected to have a Material Adverse Effect on the party making the New Disclosure or on the ability of such party to complete the transactions contemplated by this Agreement, the other party shall have the right to terminate this Agreement by written notice provided within five (5) days of the making of such New Disclosure.
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15. Expenses.
(a) Except as provided in Section 3.3 and
Section 15(b), each party shall bear its own costs and expenses associated with the negotiation, execution and delivery of this Agreement and all other agreements contemplated by this Agreement and the consummation of the transactions contemplated by this Agreement.
(b) In the event that this Agreement is terminated for any reason other than a termination by (i) Extreme pursuant to section 11.1(b) due to a breach of the Agreement by Tilden, (ii) Extreme pursuant to Section 11.1(c) due to a breach of the agreement by TFB, (iii) Extreme pursuant to Section 11.1(d) due to a failure of Tilden to obtain the Tilden Requisite Vote, or (iv) Tilden if Extreme is not in breach of the Agreement, then Extreme shall reimburse Tilden for $55,000 in expenses and all reasonable attorneys fees and expenses incurred by Tilden in connection with the preparation, negotiation and execution of the Merger Agreement and the Transactions.
16. Legal Fees. In the event that legal proceedings are commenced by any party hereto against any other party hereto in connection with this Agreement or the transactions contemplated hereby, the party which does not prevail in such proceedings shall pay the reasonable attorneys' fees and costs incurred by the prevailing party in such proceedings to the extent determined by a court of competent jurisdiction.
17. Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles. The parties agree to the exclusive jurisdiction of the federal and state courts located in the County of Nassau, State of New York with respect to all matters relating to this Agreement.
18. Section Headings. The section headings are for the convenience of the parties and in no way alter, modify, amend, limit, or restrict the contractual obligations of the parties.
19. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which, when taken together, shall be one and the same document.
21. Public Disclosure. Neither party shall make any public statement about, nor issue any press release concerning this Agreement or the transactions contemplated hereby without first consulting with the other party hereto as to the form and substance of any such press release or public disclosure; provided, however, that (a) nothing in this Section 21 shall be deemed to prohibit any party hereto from making any disclosure that its counsel deems necessary or advisable in order to satisfy such party's disclosure obligation imposed by law and that (b) Tilden and Extreme may each continue such communications with employees, customers, suppliers, franchises, lenders, lessors, shareholders, members, and other particular groups as maybe legally required or necessary in order to continue to operate its business in the ordinary course and not inconsistent with the best interests of the other party or the prompt consummation of the transaction.
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22. Confidentiality. Each of Tilden and Extreme shall hold in confidence and cause its officers, directors, employees, representatives, agents and advisors not to disclose or use any Confidential Information (as defined below) and not disclose the same to any third person without the prior consent of the other party. If this Agreement is terminated or dissolved for any reason, the receiving party will promptly return to the other party all Confidential Information furnished by the other party, including all copies and summaries thereof and will not make use of such Confidential Information at any time thereafter. As used herein, "Confidential Information" means any information identified as such in writing by the disclosing party. The provisions of this
Section 18 shall survive the Closing or any termination of this Agreement.
23. Exclusivity.
(a) Tilden will not, prior to the Closing Date or the termination of this Agreement, solicit, initiate, or encourage the submission of any proposal or offer from any person relating to any acquisition of the assets of, or any securities of, or any merger, consolidation or business combination with Tilden, or any other corporate transaction inconsistent with the transactions provided for herein.
(b) Extreme will not prior to the Closing Date or the termination of this Agreement, solicit, initiate, or encourage the submission of any proposal or offer from any person relating to any acquisition of the assets of, or any securities of, or any merger, consolidation or business combination with Extreme, or any other corporate transaction inconsistent with the transactions provided for herein.
(c) The provisions of this Section 23 shall survive the termination of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first above written.
EXTREME:
EXTREME MOBILE COATINGS, INC.
By: /s/ James Zimbler
------------------------------------
Name: James Zimbler
Title: Vice President
TILDEN:
TILDEN ASSOCIATES, INC.
By: /s/ Robert Baskind
------------------------------------
Name: Robert Baskind
Title: President
ACQUISITION SUB:
EXTREME ACQUISITION COMPANY, INC.
By: /s/ James Zimbler
------------------------------------
Name: James Zimbler
Title: President
TFB ACQUISITION COMPANY, LLC
By: /s/ Robert Baskind
------------------------------------
Name: Robert Baskind
Title: Managing Member
35
I still don't get it.
Why can't TNSX use the $3.2m (sale of Brazilian operations) to pay off the $1.6m Cornell-convertible?
Once again, in late trading on Friday, another million shares hit the market. As long as TNSX can't get rid of Cornell, this stock will only move lower.
Can TNSX use the $3.2m they receive for 45 % of their Brzilian Operatons to pay off the Cornell convertible?
The next quarterly/yearly report should be filed within a few days. Maybe we will learn more about the Cornell situation....
Could you comment on the Cornell financing? Let's say, Cornell decides to covert the $1.6m, how many shares would they own? 1.6m /(0,01*.75)= 213m shares for Cornell?
We entered subpenny-land today!!!
Pinks here we come!!! hahahahah!!!!
A new all-time low!!!!
Subpenny-land, here we come....
Cornell selling the shit out of TNSX, and billions of more share still to come...
TNSX.PK before year-end...!!!
Tomorrow, Cornell will push TNSX into subpenny-land!!
Pink sheets, here we come!!!!!
TNSX must be broke....shares down 50 % today.....market cap with $0,015/share and about 34m (?) shares outstanding only $ 500K...Cornell converting and selling shares?...
GET OUT IMMEDIATELY!!!
Who sold 1.5m shares in January and pushed the price below ct., if not Cornell?
How is TNSX going to pay for principal and interest?
1. What's the time frame for these negotitiations with Cornell?
2. Assuming full conversion, how many shares will Cornell be holding/selling?
Anything new?
What happened to the sale of the Brazilian subsidiary?
CEO has bought 1.000.000 shares at 0,06 in November 07!
Company lost 2/3 of its value today.
No news? Can't believe it.
What happened today? Down by 50 % to .025!
...or another fake deal?
Still only $0,075
They have a floorless convertible outstanding to Cornell Capital Partners. The lower the share price drops, the more shares Cornell can convert. This is a death spiral with no way out...
Juts add up all other outstanding convertibles: They will have to issue billions and trillions of shares...
YES!!!! This is great news.
CMCA will start to fly very soon. And don't forget: They will soon get a dual listing (OTCBB/Pink sheets) again. All it needs are two more quarterly reports on time....
Prinz18