EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AMONG
MONTPILIER HOLDINGS, INC.
SECURFONE AMERICA, INC.
MATERIAL TECHNOLOGY, INC.
and
XXXXXX X. XXXXXXXXX
DATED AS OF
FEBRUARY __, 1997
TABLE OF CONTENTS
Page
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1. Sale and Purchase of Shares. 1
1.1 Sale of Shares. 1
1.2 Payment of the Purchase Price 1
1.3 Delivery of Shares. 1
1.4 Reimbursement of Expenses 1
1.5 Consulting Fee to RMB 2
2. Closing; Closing Date 2
3. Representations and Warranties of the Company 2
3.1 Due Incorporation and Authority 2
3.2 Authority to Execute and Perform Agreement 3
3.3 Qualification; Subsidiaries, Etc. 3
3.4 Outstanding Capital Stock 3
3.5 Options or Other Rights 4
3.6 Certificate of Incorporation and By-laws 4
3.7 Financial Statements 4
3.8 No Material or Adverse Change 5
3.9 Tax Matters 5
3.10 Compliance with Laws 5
3.11 No Breach 5
3.12 Actions and Proceedings 6
3.13 Contracts and Other Agreements 6
3.14 Real Property 7
3.15 Environmental Matters 8
3.16 Intangible Property 9
3.17 Title to Assets 10
3.18 Liabilities 10
3.19 Employee Obligations 10
3.20 Employee Benefit Plans 11
3.21 Officers, Directors and Key Employees 11
3.22 Operations of Matech 12
3.23 Potential Conflicts of Interest 13
3.24 Full Disclosure 13
4. Representations and Warranties of MHI 14
4.1 Title to Shares. 14
4.2 Authority to Execute and Perform Agreement 14
4.3 Purchase for Investment 14
5. Representations and Warranties of SecurFone 15
5.1 Due Incorporation 15
5.2 Authority to Execute and Perform Agreement 15
5.3 No Breach 15
5.4 Qualification; Subsidiaries, Etc. 15
5.5 Outstanding Capital Stock 16
5.6 Options or Other Rights 16
5.7 Certificate of Incorporation and By-laws 16
5.8 Financial Statements 16
5.9 No Material or Adverse Change 17
5.10 Tax Matters 17
5.11 Compliance with Laws 17
5.12 No Breach 17
5.13 Actions and Proceedings 18
5.14 Contracts and Other Agreements 18
5.15 Real Property 19
5.16 Environmental Matters 20
5.17 Intangible Property 21
5.18 Title to Assets 22
5.19 Liabilities 22
5.20 Employee Obligations 22
5.21 Employee Benefit Plans 23
5.22 Officers, Directors and Key Employees 23
5.23 Operations of SecurFone 24
5.24 Potential Conflicts of Interest 25
5.25 Full Disclosure 25
6. Covenants and Agreements 26
6.1 Spin-Off of Business of Matech 26
6.2 RMB's Accrued Salary and Class B Stock and Convertible
Notes 26
6.3 Preferred Stock of Matech 26
6.4 No Sale of Stock by XXX 00
6.5 Conduct of Business of SecurFone 27
6.6 Continued Effectiveness of Representations and
Warranties 27
6.7 Corporate Examinations and Investigations 27
6.8 Expenses 28
6.9 Indemnification of Brokerage 28
6.10 Further Assurance 28
7. Conditions Precedent to the Obligation of MHI and SecurFone to Close 29
7.1 Representations and Covenants 29
7.2 Governmental Permits, Approvals and Third Party Consents 29
7.3 Legal Proceedings 29
7.4 Certified Copy of Resolutions 29
7.5 Officer's Certificate 29
7.6 Approval of Counsel to the Buyer 30
7.7 Releases 30
7.8 Resignations 30
7.9 Lock-Up and Registration Rights Agreement 30
7.10 Delivery of Documents 30
8. Conditions Precedent to the Obligation of Matech and RMB to Close 30
8.1 Representations and Covenants 30
8.2 Governmental Permits and Approvals 31
8.3 Certified Copy of Resolutions 31
8.4 Officer's Certificates 31
8.5 Approval of Counsel to Matech and XXX 00
8.6 Completion of Spin-Off 31
8.7 Pledge of Newco Shares. 31
8.8 Consulting Agreement 31
9. Survival of Representations and Warranties 31
10. General Indemnification 32
10.1 Obligation of RMB to Indemnify 32
10.2 Obligation of SecurFone to Indemnify 32
10.3 Notice and Opportunity to Defend 33
10.3.1 Notice of Asserted Liability 33
10.3.2 Opportunity to Defend 33
11. Termination of Agreement 34
11.1 Xxxxxxxxxxx 00
00.0 Xxxxxxxx 00
00. Resolution of Disputes 34
12.1 Required Notice and Limitations Period 35
12.2 Procedures 35
12.3 The Arbitrator's Decision 37
13. Miscellaneous 37
13.1 Certain Definitions 37
13.2 Publicity 38
13.3 Notices 38
13.4 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies 39
13.5 Governing Law 39
13.6 Binding Effect; Assignment 40
13.7 Variations in Pronouns 40
13.8 Counterparts 40
13.9 Exhibits and Schedules 40
13.10 Headings 40
13.11 Entire Agreement 40
EXHIBITS
A: Escrow Agreement Section 1.2(i)
B: Note Section 1.2(ii)
C: Form of Release Section 7.7
D: Form of Letter of Resignation Section 7.8
E: Consulting Agreement Section 8.8
SCHEDULES
COMPANY
3.3 -- Qualifications
3.5 -- Options or Other Rights
3.6 -- Certificate of Incorporation and By-laws
3.7 -- Financial Statements
3.10 -- Compliance with Laws
3.11 -- Approvals or Consents
3.12 -- Actions and Proceedings
3.13 -- Contracts
3.14 -- Real Property
3.15 -- Environmental Matters
3.16 -- Intangible Property
3.17 -- Liens or Encumbrances
3.18 -- Liabilities
3.19 -- Employee Obligations
3.20 -- Employee Benefit Plans
3.21 -- Officers, Directors and Key Employees
3.22 -- Operations of the Company
3.23 -- Potential Conflicts of Interest
SECURFONE
5.3 -- Approvals or Consents
5.4 -- Qualifications
5.6 -- Options or Other Rights
5.7 -- Certificate of Incorporation and By-laws
5.8 -- Financial Statements
5.11 -- Compliance with Laws
5.12 -- Approvals or Consents
5.13 -- Actions and Proceedings
5.14 -- Contracts
5.15 -- Real Property
5.16 -- Environmental Matters
5.17 -- Intangible Property
5.18 -- Liens or Encumbrances
5.19 -- Liabilities
5.20 -- Employee Obligations
5.21 -- Employee Benefit Plans
5.22 -- Officers, Directors and Key Employees
5.23 -- Operations of SecurFone
5.24 -- Potential Conflicts of Interest
6.6 -- Certain Affiliated Stockholders
6.9 -- Brokers
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") dated as of the __th
day of February 1997, among MONTPILIER HOLDINGS, INC., a Nevada corporation
("MHI"), SECURFONE AMERICA, INC., a Delaware corporation ("SecurFone"), and
XXXXXX X. XXXXXXXXX, a resident of Los Angeles, California ("RMB"), and MATERIAL
TECHNOLOGY, INC. ("Matech"), a Delaware corporation.
RECITALS:
MHI owns all of the issued and outstanding shares of capital stock of
SecurFone.
RMB owns or controls (i) 916,676 shares of Class A Common Stock of
Matech, constituting 33.45% of the issued and outstanding shares of such class
and (ii) 60,000 shares of Class B Common Stock of Matech, constituting 100% of
the issued and outstanding shares of such class. At the Closing, RMB will own or
control 2,371,130 shares of the Class A Common Stock of Matech, constituting
47.4% of the 5,000,000 then issued and outstanding shares of Class A Common
Stock, and no shares of Class B Common Stock will be outstanding.
Matech wishes to sell, and MHI wishes to purchase, 4,500,000 (as
adjusted to reflect the 1-for-10 reverse stock split described in Section 6.1 of
this Agreement) authorized but unissued shares of Class A Common Stock of Matech
(the "Shares"), which shares will constitute 90% of the Class A Common Stock to
be issued and outstanding as of the Closing Date, upon the terms and conditions
of this Agreement.
Accordingly, the parties agree as follows:
1. SALE AND PURCHASE OF SHARES.
1.1 SALE OF SHARES. At the closing provided for in Section
2 (the "Closing"), (i) Matech shall sell and MHI shall purchase all of the
Shares for a purchase price consisting of all of the 3,000 issued and
outstanding shares of common stock of SecurFone.
1.2 PAYMENT OF THE PURCHASE PRICE .
The Purchase Price shall be paid by MHI by delivery to Matech at
Closing of certificate(s) representing all of the 3,000 issued and outstanding
shares of SecurFone, duly endorsed in blank for transfer.
1.3 DELIVERY OF SHARES. At the Closing, Matech shall deliver or
cause to be delivered to MHI stock certificates representing all of the
Purchased Shares, duly endorsed in blank for transfer.
1.4 REIMBURSEMENT OF EXPENSES . SecurFone agrees to reimburse
Matech for its expenses, in an amount equal to $120,000, incurred in connection
with the transactions
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contemplated by this Agreement. No proof of these expenses need be provided to
SecurFone. This payment shall be made by (1) delivery to Xxxxxxx Xxxxxxx &
Xxxxxx P.L.L. (the "Escrow Agent"), at the execution of this Agreement of
$70,000, by certified check or by wire transfer of immediately available funds,
payable to the order of Newco, as defined in Section 6.1 hereof, to be held
until the Closing and to be distributed by the Escrow Agent in accordance with
the terms of the Escrow Agreement attached hereto as Exhibit A; and (2) delivery
to Newco at the Closing of a non-recourse promissory note of SecurFone,
substantially in the form of Exhibit B hereto (the "Note"). The Note shall be in
the principal amount of $50,000, shall not bear any interest, and shall be
payable in two installments of $25,000 on the date that is 30 days after Closing
and $25,000 on the date that is 75 days after Closing. Payment of the Note shall
be secured by a pledge to Newco of 500,000 shares of common stock of Newco that
will be retained by Matech and not distributed to Matech's shareholders,
pursuant to the terms of a pledge agreement to be agreed to by SecurFone and
Matech prior to Closing.
1.5 CONSULTING FEE TO RMB . SecurFone agrees to pay a consulting
fee to RMB in the amount of $5,000 in consideration for his services pursuant to
the Consulting Agreement referred to in Section 8.8 of this Agreement. This
amount shall be deposited into escrow together with the $70,000 deposited
pursuant to Section 1.4 of this Agreement and paid to RMB at the closing.
2. CLOSING; CLOSING DATE. The closing of the sale and purchase
of the Purchased Shares contemplated hereby shall take place at the offices of
Matech, 00000 Xxxx Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, at 10:00 a.m.
local time, on the third business day after the effectiveness of the
registration statement on Form S-1 (the "Registration Statement") to be filed by
Matech with the Securities and Exchange Commission with respect to the spin-off
of its subsidiary, as described herein (the "Closing"), or such other time, date
or place as MHI and Matech agree in writing, but in no event later than May 30,
1997. The time and date upon which the Closing occurs is hereinafter referred to
as the "Closing Date."
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As of the
date of this Agreement and as of the Closing Date, Matech and RMB, jointly and
severally, represent and warrant to MHI as follows:
3.1 DUE INCORPORATION AND AUTHORITY . Matech is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and lawful authority to own, lease
and utilize its assets, properties and business and to carry on its business as
such business is presently being conducted and as it is presently contemplated
that such business will be conducted in the future.
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3.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT . Matech and RMB have
the full legal right and power and all authority and approval required to
enter into, execute and deliver this Agreement, and to perform fully their
respective obligations hereunder. This Agreement has been duly executed and
delivered by Matech and RMB. This Agreement is the valid and binding
obligation of Matech and RMB, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights, or
by limitations in the availability of the remedy of specific performance or
injunctive relief.
3.3 QUALIFICATION; SUBSIDIARIES, ETC. Matech is duly qualified
or otherwise authorized as a foreign corporation to transact business and is in
good standing in each jurisdiction where such qualification or authorization is
required, which jurisdictions are set forth on Schedule 3.3. The failure to
obtain such qualification or authorization in any other jurisdiction will not
adversely affect the "condition of Matech" (as defined in Article 13). Except as
set forth on Schedule 3.3, Matech does not directly or indirectly own any
interest in any other person, corporation, partnership or other entity.
3.4 OUTSTANDING CAPITAL STOCK. Matech is authorized to issue (i)
100,000,000 shares of Class A Common Stock, $.001 par value, of which
2,740,546 shares are issued and outstanding as of the date of this Agreement
and 5,000,000 shares will be issued and outstanding as of the Closing Date;
(ii) 300,000 shares of Class B Common Stock, $.001 par value, of which 60,000
shares are issued and outstanding as of the date of this Agreement and no
shares will be outstanding as of the Closing Date; (iii) 10,000,000 shares of
Class A Preferred Stock, $.001 par value, of which 350,000 shares are issued
and outstanding as of the date of this Agreement and no shares will be
outstanding as of the Closing Date; and (iv) 510 shares of Class B Preferred
Stock, $.001 par value, none of which are issued and outstanding. No other
class of capital stock of Matech is authorized or outstanding. All of the
Shares are duly authorized and are validly issued, fully paid and
nonassessable and are not subject to any preemptive rights. There are no
voting trust agreements or other contracts, agreements, or arrangements
restricting voting or dividend rights or transferability with respect to the
Shares. Matech has not violated any federal, state or local law, ordinance,
rule or regulation in connection with the offer for sale or sale and issuance
of its outstanding shares of capital stock or any other securities. RMB
represents and warrants that since December 13, 1996, he has sold no more
than 26,000 shares of Class A Common Stock of Matech. The list of holders of
Matech's Class A Comon Stock, dated December 19, 1996, previously delivered
to MHI and SecurFone, is true and correct as of the date of this Agreement,
except that an additional 100,000 shares were issued between December 19,
1996 and the date of this Agreement, and
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each of the share certificates identified with the letter "I" in such list
contains a legend restricting the transfer of the shares represented by such
certificate, without compliance with or exemption from the provisions of the
Securities Act of 1933, as amended.
3.5 OPTIONS OR OTHER RIGHTS . Except as set forth on Schedule
3.5, there is no outstanding right, subscription, warrant, call, unsatisfied
preemptive right, option or other agreement of any kind, and there is no
commitment of Matech to issue or grant such right, to purchase or otherwise to
receive from Matech any of the outstanding, authorized but unissued,
unauthorized or treasury shares of the capital stock or any other security of
Matech, and there is no outstanding security of any kind convertible or
exchangeable into such capital stock.
3.6 CERTIFICATE OF INCORPORATION AND BY-LAWS . Matech has
heretofore delivered to the Buyer true and complete copies of the Certificate of
Incorporation and of the By-laws of Matech (certified by the secretary of
Matech) as in effect on the date hereof; prior to the Closing Date, Matech will
deliver a copy if its Certificate of Incorporation certified by the Delaware
Secretary of State. Matech's corporate record book and stock transfer records
shall accurately reflect all action taken through the Closing Date.
3.7 FINANCIAL STATEMENTS . The audited balance sheets of Matech
as of December 31, 1994, 1995 and 1996, and the related statements of income and
retained earnings and cash flow for the 12 month periods then ended, including
the notes thereto (the "Annual Financial Statements"), shall be delivered to MHI
by Matech prior to the filing of the Registration Statement. The Annual
Financial Statements will be certified by a firm of independent certified public
accountants and will be accurate and complete and present fairly in all material
respects the financial position of Matech as at such dates and the results of
operations of Matech for such respective periods, in each case in accordance
with generally accepted accounting principles consistently applied for the
periods covered thereby and prepared on a basis consistent with the Matech's
prior practices. Except as reflected on said financial statements, as of the
dates thereof there were no accrued or undisclosed liabilities, there were no
special or non-recurring charges against income, and there were no matters for
which reserves should be established.
3.8 NO MATERIAL OR ADVERSE CHANGE . Since December 31, 1996,
there has been no material or adverse change in the condition of Matech, and
neither Matech nor RMB knows of any such change which is threatened, nor has
there been any damage, destruction or loss, whether or not covered by insurance,
which could have or has had a material or adverse effect on the condition of
Matech.
3.9 TAX MATTERS . All tax returns (federal, state, county and
local) which were required to be filed through December 31, 1996 will be duly
filed with the appropriate taxing
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authority, and Matech will pay all taxes shown as due and payable on such
returns, prior to the filing of the Registration Statement. All payments of
taxes (including amounts withheld from employees) due and payable through the
Closing, including, without limitation, federal, state and local income taxes,
personal property taxes, sales taxes, excise taxes and real estate taxes, will
be fully paid prior to the Filing of the Registration Statement. Matech has not
made or entered into any agreement or arrangement pursuant to which the statute
of limitations, or any other time limitations, or the right by or of the
Internal Revenue Service or any other tax body or authority to audit, review or
challenge any tax return filed by Matech, would be extended beyond the periods
provided by law or regulation.
3.10 COMPLIANCE WITH LAWS . Matech is not in violation of any
applicable federal, state, local or foreign law, ordinance, regulation, order,
judgment, injunction, award, decree or other requirement of any governmental or
regulatory body, court or arbitrator, which violation could have a material or
adverse effect on the condition of Matech. Matech has all licenses, permits,
orders or approvals of, and has made all required registrations with, any
governmental or regulatory body that are material to the conduct of the business
of Matech and to its use of its properties and assets (collectively, "Permits").
The Permits are listed on Schedule 3.10 and are in full force and effect. No
material violations are or have been recorded in respect of any Permit, and no
proceeding is pending or threatened to revoke or limit any Permit. There is no
federal, state or local ordinance, regulation or order which adversely effects
or may adversely effect the ability of Matech to produce and distribute its
products or otherwise conduct its business.
3.11 NO BREACH . The execution and delivery by Matech of this
Agreement, the consummation of the contemplated transactions (including the
transfer of assets to a new subsidiary), and the performance by Matech of this
Agreement in accordance with the terms and conditions hereof, will not (i)
require the approval or consent of any federal, state, county, local or other
governmental regulatory body (domestic or foreign), or the approval of any other
person or entity, except as set forth on Schedule 3.11; (ii) conflict with or
result in any breach or violation of any of the terms of, result in a material
modification of, or otherwise give any other contracting party the right to
terminate, or constitute (or with notice or lapse of time or both constitute) a
default under, the Certificate of Incorporation or Bylaws of Matech, or any
material contract or other agreement to which Matech is a party or by or to
which Matech's assets or properties may be bound or subject; (iii) violate any
order, writ, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body against, or binding upon, Matech or upon the
assets of Matech; (iv) violate any statute, law or regulation of any
jurisdiction, which violation could have a material or adverse effect on the
condition of Matech;
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(v) violate or result in the revocation or suspension of any Permit, or (vi)
result in the imposition of any lien, security interest or claim in favor of any
person or entity other than MHI.
3.12 ACTIONS AND PROCEEDINGS . There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against Matech. Except as set forth on Schedule
3.12, there are no actions, suits or claims or legal, administrative or arbitral
proceedings or investigations (whether or not the defense thereof or liabilities
in respect thereof are covered by insurance) pending, or to the knowledge of the
Seller threatened, against or involving Matech or any of its properties or
assets. All notices required to have been given to any insurance company listed
as insuring against any action, suit or claim set forth on Schedule 3.12 have
been timely and duly given and no insurance company has asserted, orally or in
writing, that such claim is not covered by the applicable policy relating to
such claim or has reserved its right to so assert at a later date. Schedule 3.12
also describes any dispute with or claim from a sales agent, broker or customer
in connection with or related to a product warranty claim, commission, fee,
pricing or any other monetary dispute which involves $5,000 or more.
3.13 CONTRACTS AND OTHER AGREEMENTS . Schedule 3.13 sets forth
all of the following contracts and other agreements to which Matech is a party
or by or to which it or its assets or properties are bound or subject: (i)
contracts and other agreements with any current or former employee, officer,
director or affiliate or with any other current employee or consultant or with
an entity in which any of the foregoing is a controlling person; (ii) contracts
and other agreements with any labor union or association representing any
employee; (iii) contracts and other agreements with any person to sell,
distribute or otherwise market, or to produce, any products or services of
Matech; (iv) contracts and other agreements, pursuant to which Matech will
receive payments in excess of $10,000; (v) contracts and other agreements for
the sale of any of its assets other than in the ordinary course of business or
for the grant to any person of any option or preferential rights to purchase any
of its assets; (vi) joint venture agreements; (vii) contracts and other
agreements under which it agrees to indemnify any party or to share tax
liability of any party; (viii) contracts or other agreements pursuant to which
Matech is a licensor or licensee of any rights; (ix) contracts and other
agreements that can be canceled without liability, premium or penalty only on
ninety days' or more notice; (x) contracts and other agreements with customers,
distributors or suppliers for the sharing of fees, the rebating of charges or
other similar arrangements; (xi) contracts and other agreements containing
covenants of Matech not to compete in any line of business or with any person in
any geographical area or covenants of any other person not to compete with
Matech in any line of business or in any geographical area; (xii) contracts and
other agreements relating to the
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acquisition by Matech of any operating business or the capital stock of any
other person; (xiii) contracts and other agreements requiring the payment to any
person of an override or similar commission or fee; (xiv) contracts and other
agreements relating to the borrowing of money; or (xv) any other contracts and
other agreements whether or not made in the ordinary course of business (other
than those reflected on any other Schedule) pursuant to which payments in excess
of $5,000 may be expected to be made. All of the foregoing shall be collectively
referred to hereinafter as the "Contracts". Matech has made available to MHI
true, correct and complete copies of all of the Contracts. All of the Contracts
are valid, binding and in full force and effect. Except as described on Schedule
3.13, Matech is not in default under any of the Contracts, nor, to the knowledge
of Matech and RMB, is any other party to any of the Contracts in default
thereunder in any material respect, nor does any condition exist that with
notice or lapse of time or both would constitute a material default thereunder.
Except as separately identified on Schedule 3.13, no approval or consent of any
person is needed in order that any of the Contracts continue in full force and
effect following the consummation of the transactions contemplated hereby.
Schedule 3.13 also lists all contracts and other agreements currently in
negotiation or proposed by Matech of a type which if entered into by Matech
would be required to be listed on Schedule 3.13 or on any other Schedule. Matech
has made available to MHI true and correct copies of the latest drafts or
summaries of all such proposed contracts and other agreements and copies of all
documents relating thereto.
3.14 REAL PROPERTY . Matech owns no real property. Matech leases
certain office space located at 11835 West Olympic Boulevard, Xxxx Xxxxx 000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000 ("Leased Property"), a copy of which lease has
been furnished to MHI. Matech is not in default under any lease for Leased
Property, and, with respect to Matech, there is no default or event of default
or set of facts which has occurred which, with notice or lapse of time or both,
would constitute a default. The Leased Property is zoned to permit its present
use, there is no record of any violation of any zoning, building or other
restriction relating to the use of the Leased Property, the existing use and
current operation of the building or buildings on the Leased Property does not,
and the past operations did not, violate any applicable environmental laws or
regulations and all certificates, permits, licenses and other authorizations of
governmental bodies or authorities which are necessary to permit the use and
occupancy of the Leased Property for its current operations have been obtained
by Matech, have not been violated or breached, and are in full force and effect.
The only real property in which Matech has any interest is the Leased Property
described above. Such property shall be referred to hereinafter as the
"Property".]
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3.15 ENVIRONMENTAL MATTERS . The terms used in this Section 3.15
shall have the meanings specified by applicable local, state, federal or foreign
statutes or regulations with the respect to environmental protection, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 ET SEQ., and regulations
promulgated thereunder, each as amended ("CERCLA"), the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 ET SEQ., and regulations promulgated
thereunder, each as amended ("RCRA"), and other laws and regulations concerning
water pollution, groundwater protection, air pollution, solid wastes, hazardous
wastes, spills or other releases of toxic or hazardous substances,
transportation and disposal of hazardous substances, materials and wastes and
occupational or employee health and safety (collectively, the "environmental
laws").
(a) There has been no past, and there is no current or
presently anticipated, storage, disposal, generation, manufacture, refinement,
transportation, production or treatment of toxic wastes, solid wastes, hazardous
wastes or hazardous substances by Matech (or any of its predecessors-in-interest
or any predecessor owner or operator of any of the Property) at, upon, or away
from any of the Property. There has been no spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto any of the Property, or
into the environment surrounding any of the Property, of any toxic wastes, solid
wastes, hazardous wastes or hazardous substances. No asbestos fibers or
materials or polychlorinated biphenyls (PCBs) are on or in any of the Property.
(b) None of the Property has previously been used, is
now being used, or is contemplated to be used, for the treatment, collection,
storage or disposal of any refuse or objectionable wastes so as to require a
permit or approval from the United States Environmental Protection Agency
(the"EPA") or any state agency responsible for protection of the environmental
(a "State EPA").
(c) None of the Property has previously been used, is
now being used, or is contemplated to be used, for the generation,
transportation, treatment, storage or disposal of any hazardous wastes subject
to regulation by the EPA or any State EPA pursuant to the environmental laws.
(d) No written reports of environmental audits or internal
audits relating to environmental matters have been prepared within the last five
years, and no citations, orders and decrees have been issued within the last
five years by, for or on behalf of Matech and/or concerning any of the Property
by or with any governmental agency with respect to the treatment, storage or
disposal of hazardous wastes or with respect to air, water and noise pollution.
Matech has not received notification pursuant to CERCLA or any of the
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environmental laws, or any regulations thereunder, of any potential liability
with the respect to the clean-up of any waste disposal site at which it has
disposed of any hazardous substances or with respect to any other alleged
violation of any of the environmental laws.
3.16 INTANGIBLE PROPERTY . Schedule 3.16 sets forth all patents,
trademarks, copyrights, service marks and trade names, all applications for any
of the foregoing, and all permits, grants and licenses or other rights running
to or from Matech relating to any of the foregoing that are material to the
business of Matech (collectively, "Patents and Trademarks"). Matech has the
right to use, free and clear of any claims or rights of others, all trade
secrets, inventions, know how, processes, logos and technology, designs utilized
in or incident to the conduct of its business as presently conducted or as being
developed ("Trade Secrets"). Except as set forth on Schedule 3.16, Matech does
not have any notice that any other person or entity disputes Matech's ownership
or right to use any Patents and Trademarks and/or Trade Secrets, or notice of
any claim of any other person or entity relating to any of the Patents and
Trademarks or any of the Trade Secrets of Matech, and neither Matech nor RMB
knows of any basis for any such dispute or claim. Neither Matech nor RMB has any
knowledge that any person or entity has infringed upon the rights of Matech with
respect to any Patents and Trademarks or Trade Secrets, and Matech has not
infringed upon any patent, copyright, trademark, trade secret or other
intellectual property right of any other person or entity. The books of account
and other corporate records of Matech are complete and correct in all material
respects and have been maintained in accordance with good business practice.
Schedule 3.16 lists all bank accounts maintained by Matech and the names
and capacities of all persons authorized to draw thereon or who
have access thereto.
3.17 TITLE TO ASSETS . Matech owns outright and has good and
marketable title to all of the assets used in its business, including, without
limitation, all of the assets reflected on the Balance Sheet, in each case free
and clear of any lien or other encumbrance, except for (i) liens or encumbrances
specifically described in Schedule 3.17 hereto; (ii) assets disposed of, or
subject to purchase or sales orders, in the ordinary course of business since
the Balance Sheet Date; (iii) liens or other encumbrances securing taxes,
assessments, governmental charges or levies, or the claims of materialmen,
carriers, landlords and like persons, all of which are not yet due and payable;
or (iv) minor liens or other encumbrances of a character that do not
substantially impair the assets to which they apply.
3.18 LIABILITIES . As at December 31, 1996, Matech does not have
any indebtedness, liability, claim or loss, liquidated or unliquidated, secured
or unsecured, accrued, absolute, contingent or otherwise, of a kind required by
generally accepted accounting principles to be set forth on a financial
statement or in the notes thereto ("Liabilities") that were
9
not fully and adequately reflected or reserved against on the Balance Sheet or
described in the notes to the Financial. Matech has not, except in the ordinary
course of business, incurred any Liabilities since December 31, 1996.
3.19 EMPLOYEE OBLIGATIONS . Matech has no policies with respect
to vacation pay, holiday and/or sick pay, severance pay, pension and
profit-sharing contributions, health, medical or any other type of employee
benefit plan to which Matech presently contributes or is required to contribute,
nor is Matech indebted to any employee other than for wages and benefits earned
during the current payroll period which are not yet due and payable and
compensation due to RMB as disclosed in the financial statements. There are no
controversies pending between Matech and any of its employees, which
controversies have affected or may affect materially and adversely the condition
of Matech (as defined in Article 13). Matech has complied with all applicable
federal, state and local statutes relating to the employment of labor,
including, without limitation, the Occupational Safety and Health Act ("OSHA"),
the Fair Labor Standards Act, the National Labor Relations Act, Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act, all as
amended, and similar state and local statutes; and Matech has complied with all
applicable federal, state and local statutes relating to wages, fringe benefits
and the payment of withholding and Social Security taxes, and Matech is not
liable for any arrearage in the payment of wages or any taxes or penalties for
failure to comply with any of the foregoing.
3.20 EMPLOYEE BENEFIT PLANS . Schedule 3.20 contains a true and
complete list of all pension, profit sharing, retirement, deferred compensation,
stock purchase, stock option, incentive, bonus, vacation, severance, disability,
hospitalization, medical insurance, life insurance and other employee benefit
plans (within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), programs or arrangements maintained
by Matech or under which Matech has any obligations (other than obligations to
make current wage or salary payments or to pay sales commissions to employees or
agents whose employment or engagement may be terminated by Matech without
penalty or breach by giving a termination notice of 30 days or less) in respect
of, or which otherwise cover, any of the current or former officers or employees
of Matech, or their beneficiaries (hereinafter individually referred to as a
"Plan" and collectively referred to as the "Plans"). Matech has delivered or
made available to MHI true and complete copies of all documents, as they may
have been amended to the date hereof, embodying or relating to the Plans.
Except as specifically set forth in Schedule 3.20, (a) Matech has made all
payments due and payable by Matech to date under or with respect to each Plan,
and all amounts properly
10
accrued to date as liabilities of Matech under or with respect to each Plan
which have not been paid have been recorded on the books of Matech; (b) Matech
has performed all material obligations required to be performed by it under, and
is not in default under or in violation of, any Plan; and (c) Matech is in
compliance in all material respects with the requirements prescribed by all
statutes, orders or governmental rules or regulations applicable to the Plans,
including, without limitation, ERISA and the Code
3.21 OFFICERS, DIRECTORS AND KEY EMPLOYEES . The Registration
Statement will set forth the name and total compensation of each person who is
now or has been during the last three fiscal years of Matech an officer or
director of Matech or who is now or has been during the last three fiscal years
of Matech an employee, consultant, agent or other representative of Matech whose
annual rate of compensation (including bonuses, profit sharing and commissions)
exceeds or exceeded $60,000. Since December 31, 1996, except as set forth in the
pending contract with the U.S. Air Force, Matech has not made a commitment or
agreement to increase the compensation or to modify the conditions or terms of
employment of any such person. None of such persons currently holding such a
position has threatened to cancel or otherwise terminate such person's
relationship with Matech and none of such persons has utilized or has threatened
to utilize any Trade Secrets of Matech in competition with Matech.
3.22 OPERATIONS OF MATECH . Except as to be set forth in the
Registration Statement or in Schedule 3.22 to be attached on the Closing Date,
since December 31, 1996, Matech has not:
(i) declared or paid any dividends or declared or made
any other distributions of any kind to its shareholders, or made any
direct or indirect redemption, retirement, purchase or other
acquisition of any shares of its capital stock;
(ii) incurred any indebtedness for borrowed money;
(iii) reduced its cash or short term investments or their
equivalent, other than to meet cash needs arising in the ordinary
course of business, consistent with past practices;
(iv) waived any material right under any Contract;
(v) made any material change in its accounting methods or
practices or made any material change in depreciation or amortization
policies or rates adopted by it;
(vi) materially changed any of its business policies,
including, without limitation, advertising, distributing, marketing,
pricing, purchasing, personnel, sales, returns or budget;
11
(vii) except as set forth in the pending contract with the
U.S. Air Force, made any wage or salary increase or bonus, or increase
in any other direct or indirect compensation, or any payment or
commitment to pay any severance or termination pay to any of its
officers, directors, employees, consultants, agents or other
representatives, or any accrual for or commitment or agreement to make
or pay the same;
(viii) made any loan or advance to any of its shareholders,
officers, directors, employees, consultants, agents or other
representatives;
(ix) except in the ordinary course of business, incurred
or assumed any obligation or liability (whether absolute or contingent
and whether or not currently due and payable);
(x) disposed of any property, equipment or assets except
for inventory disposed of in the ordinary course of business or made
any acquisition of all or any part of the assets, properties, capital
stock or business of any other person;
(xi) paid, directly or indirectly, any of its material
Liabilities before the same became due in accordance with its terms or
otherwise than in the ordinary course of business;
(xii) terminated or failed to renew, or received any
written threat (that was not subsequently withdrawn) to terminate or
fail to renew, any contract or other agreement that is or was material
to the condition of Matech;
(xiii) except in the ordinary course of business, entered
into or amended any Contract;
(xiv) merged or consolidated with any other person, firm,
corporation or entity;
(xv) failed to maintain in full force and effect policies
of insurance of the same type, character and coverage as the policies
currently carried; or
(xvi) amended, changed or modified its Certificate of
Incorporation or By-laws.
3.23 POTENTIAL CONFLICTS OF INTEREST . Except as to be set forth
in the Registration Statement , neither any officer, director or affiliate of
Matech, nor any entity controlled by any such officer, director or affiliate,
nor RMB, nor any relative or spouse (or relative of such spouse) of RMB or of
any such officer, director or affiliate:
(i) owns, directly or indirectly, any interest in
(excepting less than 1% stock holdings for investment purposes in
securities of publicly held and traded companies), or is an officer,
director, employee or consultant of, any person which is, or is
engaged in business as, a competitor, lessor, lessee, distributor or
supplier of Matech;
12
(ii) owns, directly or indirectly, in whole or in part,
any tangible or intangible property material to the condition of
Matech that Matech uses in the conduct of business; or
(iii) has any cause of action or other claim whatsoever
against, or owes any amount to, Matech, except for claims in the
ordinary course of business such as for accrued vacation pay, accrued
benefits under employee benefit plans, and similar matters and
agreements existing on the date hereof.
3.24 FULL DISCLOSURE . All documents and other papers delivered
by or on behalf of Matech or RMB in connection with this Agreement and the
transactions contemplated hereby are true, complete and authentic in all
material respects. This Agreement, including the Schedules and Exhibits hereto,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. No representation or warranty of Matech or RMB contained
in this Agreement contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements made, in the context in which made, not materially false or
misleading. There is no fact that Matech or RMB has not disclosed to MHI in
writing that materially adversely affects the condition of Matech or the
ability of Matech to perform this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF MHI. As of the date of this
Agreement and as of the Closing Date, MHI represents and warrants to Matech and
RMB as follows:
4.1 TITLE TO SHARES. MHI owns beneficially and of record, free
and clear of any lien, option or other encumbrance, and has full power and
authority to convey free and clear of any lien, claims, charges, assessments,
adverse intent or other encumbrance, all of the 3,000 issued and outstanding
shares of common stock of SecurFone, and, in accordance with Section 1.2, MHI
will convey to Matech good and valid title thereto, free and clear of any lien
or other encumbrance.
4.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT . MHI has the
full legal right and power and all authority and approval required to enter
into, execute and deliver this Agreement and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered by MHI and is the
valid and binding obligation of MHI enforceable in accordance with its terms.
The execution and delivery by MHI of this Agreement, the consummation of the
transactions contemplated hereby and thereby and the performance by MHI of this
Agreement in accordance with its respective terms
13
and conditions will not (i) require the approval or consent of any foreign,
federal, state, county, local or other governmental or regulatory body or the
approval or consent of any other person which has not been obtained and
disclosed to Matech; (ii) conflict with or result in any breach or violation of
any of the terms and conditions of, or constitute (or with notice or lapse of
time or both constitute) a default under, any statute, regulation, order,
judgment or decree applicable to MHI or to the shares of SecurFone held by MHI,
or any instrument, contract or other agreement to which MHI is a party or by or
to which MHI is or the shares of SecurFone held by MHI are bound or subject;
(iii) result in the creation of any lien or other encumbrance on the shares of
SecurFone held by MHI; or (iv) conflict with or result in any breach or
violation of any instrument governing or applicable to the MHI.
4.3 PURCHASE FOR INVESTMENT . MHI is purchasing the Shares for
investment and not for resale or distribution.
5. REPRESENTATIONS AND WARRANTIES OF SECURFONE. As of the date of this
Agreement and as of the Closing Date, SecurFone represents and warrants to
Matech and RMB as follows:
5.1 DUE INCORPORATION . SecurFone is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the corporate power and authority to own, lease and operate
its assets and business and to carry on its business as now being and as
heretofore conducted.
5.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT . SecurFone has
the full legal right and power and all authority and approval required to enter
into, execute and deliver this Agreement, and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered by SecurFone.
This Agreement is valid and binding obligation of SecurFone enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights, or by limitations and the availability of the remedy of
specific performance or injunctive relief.
5.3 NO BREACH . The execution and delivery by SecurFone of this
Agreement, the consummation of the contemplated transactions, and the
performance by SecurFone of this Agreement in accordance with the terms and
conditions hereof, will not (i) require the approval or consent of any federal,
state, county, local or other governmental or regulatory body (domestic or
foreign), or the approval or consent of any other person or entity, except as
set forth on Schedule 5.3; (ii) conflict with or result in any breach or
violation of any of the terms and conditions of, or constitute (or with notice
14
or lapse of time or both constitute) a default under, the Certificate of
Incorporation or Bylaws of SecurFone, any statute, regulation, order, judgment
or decree of or applicable to SecurFone, or any instrument, contract or other
agreement to which SecurFone is a party or by or to which SecurFone or any of
its properties is bound or subject; or (iii) result in the creation of any lien
or encumbrance on any of the properties of SecurFone.
5.4 QUALIFICATION; SUBSIDIARIES, ETC. SecurFone is duly
qualified or otherwise authorized as a foreign corporation to transact
business and is in good standing in each jurisdiction where such
qualification or authorization is required, which jurisdictions are set forth
on Schedule 5.4. The failure to obtain such qualification or authorization in
any other jurisdiction will not adversely affect the "condition of SecurFone"
(as defined in Article 13). Except as set forth on Schedule 5.4, SecurFone
does not directly or indirectly own any interest in any other person,
corporation, partnership or other entity.
5.5 OUTSTANDING CAPITAL STOCK . SecurFone is authorized to issue
3,000 shares of Common Stock, $.01 par value, all of which are issued and
outstanding. No other class of capital stock of SecurFone is authorized or
outstanding. All of the Shares are duly authorized and are validly issued, fully
paid and nonassessable and are not subject to any preemptive rights. There are
no voting trust agreements or other contracts, agreements, or arrangements
restricting voting or dividend rights or transferability with respect to the
Shares. SecurFone has not violated any federal, state or local law, ordinance,
rule or regulation in connection with the offer for sale or sale and issuance of
its outstanding shares of capital stock or any other securities.
5.6 OPTIONS OR OTHER RIGHTS . There is no outstanding right,
subscription, warrant, call, unsatisfied preemptive right, option or other
agreement of any kind, and there is no commitment of SecurFone to issue or grant
such right, to purchase or otherwise to receive from SecurFone any of the
outstanding, authorized but unissued, unauthorized or treasury shares of the
capital stock or any other security of SecurFone, and there is no outstanding
security of any kind convertible or exchangeable into such capital stock.
5.7 CERTIFICATE OF INCORPORATION AND BY-LAWS. SecurFone will
deliver to the Buyer true and complete copies of the Certificate of
Incorporation (certified by the Secretary of State of Delaware) and of the
By-laws of SecurFone (certified by the secretary of SecurFone) as in effect on
the date hereof. SecurFone's corporate record book and stock transfer records
accurately reflect all action taken through the date of this Agreement.
15
5.8 FINANCIAL STATEMENTS . The unaudited balance sheet of
SecurFone as of November 30, 1996, and the related statement of income and
retained earnings for the six months period then ended, (the "Financial
Statements") will be delivered to Matech by SecurFone. The Financial Statements
are accurate and complete and present fairly in all material respects the
financial position of SecurFone as at such date and the results of operations of
SecurFone for such period, in accordance with generally accepted accounting
principles consistently applied for the periods covered thereby and prepared on
a basis consistent with SecurFone's prior practices. Except as reflected on the
Financial Statements, as of the date thereof there were no accrued or
undisclosed liabilities, there were no special or non-recurring charges against
income, and there were no matters for which reserves should be established. The
balance sheet included in the Financial Statements is sometimes herein called
the "Balance Sheet" and November 30, 1996, is sometimes herein called the
"Balance Sheet Date."
5.9 NO MATERIAL OR ADVERSE CHANGE . Since the Balance Sheet
Date, there has been no material or adverse change in the condition of
SecurFone, and SecurFone knows of no such change which is threatened, nor has
there been any damage, destruction or loss, whether or not covered by insurance,
which could have or has had a material or adverse effect on the condition of
SecurFone.
5.10 TAX MATTERS . All tax returns (federal, state, county and
local) which were required to be filed through the Closing have been duly filed
with the appropriate taxing authority, and SecurFone has paid all taxes shown
as due and payable on such returns. All payments of taxes (including amounts
withheld from employees) due and payable through the Closing, including, without
limitation, federal, state and local income taxes, personal property taxes,
sales taxes, excise taxes and real estate taxes, have been fully paid in a
timely fashion. SecurFone has not made or entered into any agreement or
arrangement pursuant to which the statute of limitations, or any other time
limitations, or the right by or of the Internal Revenue Service or any other tax
body or authority to audit, review or challenge any tax return filed by
SecurFone, would be extended beyond the periods provided by
law or regulation.
5.11 COMPLIANCE WITH LAWS . SecurFone is not in violation of any
applicable federal, state, local or foreign law, ordinance, regulation, order,
judgment, injunction, award, decree or other requirement of any governmental or
regulatory body, court or arbitrator, which violation could have a material or
adverse effect on the condition of SecurFone. SecurFone has all licenses,
permits, orders or approvals of, and has made all required registrations with,
any governmental or regulatory body that
16
are material to the conduct of the business of SecurFone and to its use of its
properties and assets (collectively, "Permits"). The Permits are listed on
Schedule 5.11 and are in full force and effect. No material violations are or
have been recorded in respect of any Permit, and no proceeding is pending or
threatened to revoke or limit any Permit. There is no federal, state or local
ordinance, regulation or order which adversely effects or may adversely effect
the ability of SecurFone to produce and distribute its products or otherwise
conduct its business.
5.12 NO BREACH . The execution and delivery by SecurFone of this
Agreement, the consummation of the contemplated transactions, and the
performance by SecurFone of this Agreement in accordance with the terms and
conditions hereof, will not (i) require the approval or consent of any federal,
state, county, local or other governmental regulatory body (domestic or
foreign), or the approval of any other person or entity, except as set forth on
Schedule 5.13; (ii) conflict with or result in any breach or violation of any of
the terms of, result in a material modification of, or otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, the Certificate of Incorporation or
Bylaws of SecurFone, or any material contract or other agreement to which
SecurFone is a party or by or to which SecurFone assets or properties may be
bound or subject; (iii) violate any order, writ, judgment, injunction, award or
decree of any court, arbitrator or governmental or regulatory body against, or
binding upon, SecurFone or upon the assets of SecurFone; (iv) violate any
statute, law or regulation of any jurisdiction, which violation could have a
material or adverse effect on the condition of SecurFone; (v) violate or result
in the revocation or suspension of any Permit, or (vi) result in the imposition
of any lien, security interest or claim in favor of any person or entity other
than Matech.
5.13 ACTIONS AND PROCEEDINGS . There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against SecurFone. There are no actions, suits
or claims or legal, administrative or arbitral proceedings or investigations
(whether or not the defense thereof or liabilities in respect thereof are
covered by insurance) pending, or to the knowledge of SecurFone threatened,
against or involving SecurFone or any of its properties or assets. All notices
required to have been given to any insurance company listed as insuring against
any action, suit or claim set forth on Schedule 5.13 have been timely and duly
given and no insurance company has asserted, orally or in writing, that such
claim is not covered by the applicable policy relating to such claim or has
reserved
17
its right to so assert at a later date. Schedule 5.13 also describes any dispute
with or claim from a sales agent, broker or customer in connection with or
related to a product warranty claim, commission, fee, pricing or any other
monetary dispute which involves $5,000 or more.
5.14 CONTRACTS AND OTHER AGREEMENTS . Schedule 5.14 sets forth
all of the following contracts and other agreements to which SecurFone is a
party or by or to which it or its assets or properties are bound or subject:
(i) contracts and other agreements with any current or former employee, officer,
director or affiliate or with any other current employee or consultant or with
an entity in which any of the foregoing is a controlling person; (ii) contracts
and other agreements with any labor union or association representing any
employee; (iii) contracts and other agreements with any person to sell,
distribute or otherwise market, or to produce, any products or services of
SecurFone; (iv) contracts and other agreements, pursuant to which SecurFone will
receive payments in excess of $10,000; (v) contracts and other agreements for
the sale of any of its assets other than in the ordinary course of business or
for the grant to any person of any option or preferential rights to purchase any
of its assets; (vi) joint venture agreements; (vii) contracts and other
agreements under which it agrees to indemnify any party or to share tax
liability of any party; (viii) contracts or other agreements pursuant to which
SecurFone is a licensor or licensee of any rights; (ix) contracts and other
agreements that can be canceled without liability, premium or penalty only on
ninety days' or more notice; (x) contracts and other agreements with customers,
distributors or suppliers for the sharing of fees, the rebating of charges or
other similar arrangements; (xi) contracts and other agreements containing
covenants of SecurFone not to compete in any line of business or with any person
in any geographical area or covenants of any other person not to compete with
SecurFone in any line of business or in any geographical area; (xii) contracts
and other agreements relating to the acquisition by SecurFone of any operating
business or the capital stock of any other person; (xiii) contracts and other
agreements requiring the payment to any person of an override or similar
commission or fee; (xiv) contracts and other agreements relating to the
borrowing of money; or (xv) any other contracts and other agreements whether or
not made in the ordinary course of business (other than those reflected on any
other Schedule) pursuant to which payments in excess of $5,000 may be expected
to be made. All of the foregoing shall be collectively referred to hereinafter
as the "Contracts". SecurFone has made available to Matech true, correct and
complete copies of all of the Contracts. All of the Contracts are valid, binding
and in full force and effect. Except as
18
described on Schedule 5.14, SecurFone is not in default under any of the
Contracts, nor, to the knowledge of SecurFone, is any other party to any of the
Contracts in default thereunder in any material respect, nor does any condition
exist that with notice or lapse of time or both would constitute a material
default thereunder. Except as separately identified on Schedule 5.14, no
approval or consent of any person is needed in order that any of the Contracts
continue in full force and effect following the consummation of the transactions
contemplated hereby. Schedule 5.14 also lists all contracts and other agreements
currently in negotiation or proposed by SecurFone of a type which if entered
into by SecurFone would be required to be listed on Schedule 5.14 or on any
other Schedule. SecurFone has made available to Matech true and correct copies
of the latest drafts or summaries of all such proposed contracts
and other agreements and copies of all documents relating thereto.
5.15 REAL PROPERTY . SecurFone owns no real property. SecurFone
leases certain office space located at 00 Xxxx Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000
("Leased Property"), as more fully described in Schedule 5.15. Except as set
forth in Schedule 5.15, SecurFone is not in default under any lease for Leased
Property, and, with respect to SecurFone, there is no default or event of
default or set of facts which has occurred which, with notice or lapse of time
or both, would constitute a default. The Leased Property is zoned to permit its
present use, there is no record of any violation of any zoning, building or
other restriction relating to the use of the Leased Property, the existing use
and current operation of the building or buildings on the Leased Property does
not, and the past operations did not, violate any applicable environmental laws
or regulations and all certificates, permits, licenses and other authorizations
of governmental bodies or authorities which are necessary to permit the use and
occupancy of the Leased Property for its current operations have been obtained
by SecurFone, have not been violated or breached, and are in full force and
effect. The only real property in which SecurFone has any interest is the Leased
Property described above. Such property shall be referred to hereinafter as the
"Property".
5.16 ENVIRONMENTAL MATTERS . The terms used in this Section 5.16
shall have the meanings specified by applicable local, state, federal or foreign
statutes or regulations with the respect to environmental protection, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 ET SEQ., and regulations
promulgated thereunder, each as amended ("CERCLA"), the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 ET SEQ., and regulations promulgated
thereunder, each as amended ("RCRA"), and other laws
19
and regulations concerning water pollution, groundwater protection, air
pollution, solid wastes, hazardous wastes, spills or other releases of toxic or
hazardous substances, transportation and disposal of hazardous substances,
materials and wastes and occupational or employee health and safety
(collectively, the "environmental laws"). Except as disclosed in Schedule 5.16:
(a) There has been no past, and there is no current
or presently anticipated, storage, disposal, generation, manufacture,
refinement, transportation, production or treatment of toxic wastes, solid
wastes, hazardous wastes or hazardous substances by SecurFone (or any of its
predecessors-in-interest or any predecessor owner or operator of any of the
Property) at, upon, or away from any of the Property. There has been no spill,
discharge, leak, emission, injection, escape, dumping or release of any kind
onto any of the Property, or into the environment surrounding any of the
Property, of any toxic wastes, solid wastes, hazardous wastes or hazardous
substances. No asbestos fibers or materials or polychlorinated biphenyls
(PCBs) are on or in any of the Property.
(b) None of the Property has previously been used, is
now being used, or is contemplated to be used, for the treatment, collection,
storage or disposal of any refuse or objectionable wastes so as to require a
permit or approval from the United States Environmental Protection Agency
(the"EPA") or any state agency responsible for protection of the environmental
(a "State EPA").
(c) None of the Property has previously been used, is
now being used, or is contemplated to be used, for the generation,
transportation, treatment, storage or disposal of any hazardous wastes subject
to regulation by the EPA or any State EPA pursuant to the environmental laws.
(d) No written reports of environmental audits or
internal audits relating to environmental matters have been prepared within the
last five years, and no citations, orders and decrees have been issued within
the last five years by, for or on behalf of SecurFone and/or concerning any of
the Property by or with any governmental agency with respect to the treatment,
storage or disposal of hazardous wastes or with respect to air, water and noise
pollution. SecurFone has not received notification pursuant to CERCLA or any of
the environmental laws, or any regulations thereunder, of any potential
liability with the respect to the clean-up of any waste disposal site at which
it has disposed of any hazardous substances or with respect to any other
alleged violation of any of the environmental laws.
20
5.17 INTANGIBLE PROPERTY . Schedule 5.17 sets forth all patents,
trademarks, copyrights, service marks and trade names, all applications for any
of the foregoing, and all permits, grants and licenses or other rights running
to or from SecurFone relating to any of the foregoing that are material to the
business of SecurFone (collectively, "Patents and Trademarks"). SecurFone has
the right to use, free and clear of any claims or rights of others, all trade
secrets, inventions, know how, processes, logos and technology, designs
utilized in or incident to the conduct of its business as presently conducted
or as being developed ("Trade Secrets"). Except as set forth on Schedule 5.17,
SecurFone does not have any notice that any other person or entity disputes
SecurFone's ownership or right to use any Patents and Trademarks and/or Trade
Secrets, or notice of any claim of any other person or entity relating to any
of the Patents and Trademarks or any of the Trade Secrets of SecurFone, and
SecurFone knows of no basis for any such dispute or claim. SecurFone has no
knowledge that any person or entity has infringed upon the rights of
SecurFone with respect to any Patents and Trademarks or Trade Secrets, and
SecurFone has not infringed upon any patent, copyright, trademark, trade secret
or other intellectual property right of any other person or entity. The books
of account and other corporate records of SecurFone are complete and correct in
all material respects and have been maintained in accordance with good business
practice. Schedule 5.17 lists all bank accounts maintained by SecurFone and the
names and capacities of all persons authorized to draw thereon or who have
access thereto.
5.18 TITLE TO ASSETS . SecurFone owns outright and has good and
marketable title to all of the assets used in its business, including, without
limitation, all of the assets reflected on the Balance, in each case free and
clear of any lien or other encumbrance, except for (i) liens or encumbrances
specifically described in Schedule 5.18 hereto; (ii) assets disposed of, or
subject to purchase or sales orders, in the ordinary course of business since
the Balance Sheet Date; (iii) liens or other encumbrances securing taxes,
assessments, governmental charges or levies, or the claims of materialmen,
carriers, landlords and like persons, all of which are not yet due and
payable; or (iv) minor liens or other encumbrances of a character that do not
substantially impair the assets to which they apply.
5.19 LIABILITIES . As at the Balance Sheet Date, SecurFone does
not have any indebtedness, liability, claim or loss, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise, of a kind
required by generally accepted accounting principles to be set forth on a
financial statement or in the notes
21
thereto ("Liabilities") that were not fully and adequately reflected or
reserved against on the Balance Sheet or described on any Schedule hereto or in
the notes to the Financial. SecurFone has not, except in the ordinary course
of business, incurred any Liabilities since the Balance Sheet Date.
5.20 EMPLOYEE OBLIGATIONS . SecurFone has no policies with
respect to vacation pay, holiday and/or sick pay, severance pay, pension and
profit-sharing contributions, health, medical or any other type of employee
benefit plan to which SecurFone presently contributes or is required to
contribute, nor is SecurFone indebted to any employee other than for wages and
benefits earned during the current payroll period which are not yet due and
payable. There are no controversies pending between SecurFone and any of its
employees, which controversies have affected or may affect materially and
adversely the condition of SecurFone (as defined in Article 13). SecurFone has
complied with (i) all applicable federal, state and local statutes relating to
the employment of labor, including, without limitation, the Occupational Safety
and Health Act ("OSHA"), the Fair Labor Standards Act, the National Labor
Relations Act, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, all as amended, and similar state and local
statutes; and (ii) all applicable federal, state and local statutes relating to
wages, fringe benefits and the payment of withholding and Social Security
taxes, and SecurFone is not liable for any arrearage in the payment of wages or
any taxes or penalties for failure to comply with any of the foregoing.
5.21 EMPLOYEE BENEFIT PLANS . Schedule 5.21 contains a true and
complete list of all pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical insurance, life insurance and
other employee benefit plans (within the meaning of section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
programs or arrangements maintained by SecurFone or under which SecurFone has
any obligations (other than obligations to make current wage or salary payments
or to pay sales commissions to employees or agents whose employment or
engagement may be terminated by SecurFone without penalty or breach by giving a
termination notice of 30 days or less) in respect of, or which otherwise cover,
any of the current or former officers or employees of SecurFone, or their
beneficiaries (hereinafter individually referred to as a "Plan" and
collectively referred to as the "Plans"). SecurFone has delivered or made
available to Matech true and complete copies of all documents, as they may have
been amended to the date hereof, embodying or relating to the Plans.
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Except as specifically set forth in Schedule 5.21, (a) SecurFone has
made all payments due and payable by SecurFone to date under or with respect to
each Plan, and all amounts properly accrued to date as liabilities of SecurFone
under or with respect to each Plan which have not been paid have been recorded
on the books of SecurFone; (b)SecurFone has performed all material obligations
required to be performed by it under, and is not in default under or in
violation of, any Plan; and (c)SecurFone is in compliance in all material
respects with the requirements prescribed by all statutes, orders or
governmental rules or regulations applicable to the Plans, including, without
limitation, ERISA and the Code
5.22 OFFICERS, DIRECTORS AND KEY EMPLOYEES . Schedule 5.22 sets
forth the name and total compensation of each person who is now or has been
during the last three fiscal years of SecurFone an officer or director of
SecurFone or who is now or has been during the last three fiscal years of
SecurFone an employee, consultant, agent or other representative of SecurFone
whose annual rate of compensation (including bonuses, profit sharing and
commissions) exceeds or exceeded $20,000. Since the Balance Sheet Date,
SecurFone has not made a commitment or agreement to increase the compensation
or to modify the conditions or terms of employment of any such person. None of
such persons currently holding such a position has threatened to cancel or
otherwise terminate such person's relationship with SecurFone and none of such
persons has utilized or has threatened to utilize any Trade Secrets of
SecurFone in competition with SecurFone.
5.23 OPERATIONS OF SECURFONE . Except as set forth on Schedule
5.23, since the Balance Sheet Date SecurFone has not:
(i) declared or paid any dividends or declared or made
any other distributions of any kind to its shareholders, or made any direct
or indirect redemption, retirement, purchase or other acquisition of any
shares of its capital stock;
(ii) incurred any indebtedness for borrowed money;
(iii) reduced its cash or short term investments or their
equivalent, other than to meet cash needs arising in the ordinary course
of business, consistent with past practices;
(iv) waived any material right under any Contract;
(v) made any material change in its accounting methods
or practices or made any material change in depreciation or amortization
policies or rates adopted by it;
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(vi) materially changed any of its business policies,
including, without limitation, advertising, distributing, marketing,
pricing, purchasing, personnel, sales, returns or budget;
(vii) made any wage or salary increase or bonus, or
increase in any other direct or indirect compensation, or any payment or
commitment to pay any severance or termination pay to any of its
officers, directors, employees, consultants, agents or other
representatives, or any accrual for or commitment or agreement to make
or pay the same;
(viii) made any loan or advance to any of its shareholders,
officers, directors, employees, consultants, agents or other
representatives;
(ix) except in the ordinary course of business, incurred
or assumed any obligation or liability (whether absolute or contingent and
whether or not currently due and payable);
(x) disposed of any property, equipment or assets except
for inventory disposed of in the ordinary course of business or made any
acquisition of all or any part of the assets, properties, capital stock or
business of any other person;
(xi) paid, directly or indirectly, any of its material
Liabilities before the same became due in accordance with its terms or
otherwise than in the ordinary course of business;
(xii) terminated or failed to renew, or received any
written threat (that was not subsequently withdrawn) to terminate or fail
to renew, any contract or other agreement that is or was material to the
condition of SecurFone;
(xiii) except in the ordinary course of business, entered
into or amended any Contract;
(xiv) merged or consolidated with any other person, firm,
corporation or entity;
(xv) failed to maintain in full force and effect policies
of insurance of the same type, character and coverage as the policies
currently carried; or
(xvi) amended, changed or modified its Certificate of
Incorporation or By-laws.
5.24 POTENTIAL CONFLICTS of Interest . Neither any officer,
director or affiliate of SecurFone, nor any entity controlled by any such
officer, director or affiliate, nor any relative or spouse (or relative of such
spouse) of any such officer, director or affiliate:
(i) owns, directly or indirectly, any interest in
(excepting less than 1% stock holdings for investment purposes in
securities of publicly held and traded
24
companies), or is an officer, director, employee or consultant of, any
person which is, or is engaged in business as, a competitor, lessor,
lessee, distributor or supplier of SecurFone;
(ii) owns, directly or indirectly, in whole or in part,
any tangible or intangible property material to the condition of SecurFone
that SecurFone uses in the conduct of business; or
(iii) has any cause of action or other claim whatsoever
against, or owes any amount to, SecurFone, except for claims in the
ordinary course of business such as for accrued vacation pay, accrued
benefits under employee benefit plans, and similar matters and agreements
existing on the date hereof.
5.25 FULL DISCLOSURE . All documents and other papers delivered
by or on behalf of MHI or SecurFone in connection with this Agreement and the
transactions contemplated hereby are true, complete and authentic in all
material respects. This Agreement, including the Schedules and Exhibits hereto,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. No representation or warranty of MHI or SecurFone
contained in this Agreement contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements made, in the context in which made, not materially false or
misleading. There is no fact that MHI or SecurFone has not disclosed to Matech
in writing that materially adversely affects the condition of MHI or SecurFone
or the ability of MHI or SecurFone to perform this Agreement.
6. COVENANTS AND AGREEMENTS. The parties covenant and
agree as follows:
6.1 SPIN-OFF OF BUSINESS OF MATECH and Reverse Stock Split.
Between the date of this Agreement and the Closing Date, Matech agrees to (i)
create a new wholly-owned subsidiary ("Newco") to which it will transfer all of
its assets, subject to the assumption by Newco of all of its liabilities,
whether fixed or contingent, known or unknown; and (ii) after such transfer not
engage in any business, not acquire any assets, not undertake any obligations or
assume or create any liabilities. In order to effect the spin-off of Newco to
the current stockholders of Matech, Matech agrees to prepare and file, on or
before March 10, 1997, with the Securities and Exchange Commission ("SEC") a
registration statement for the purpose of registering the shares of Newco under
the Securities Act of 1933, as amended (the "Registration Statement").
Immediately following the effectiveness of the Registration Statement, Matech
will effect a 1-for-10 reverse stock split of its outstanding Class A Common
Stock, pursuant to which each stockholder holding fewer than 10 shares shall be
entitled to have any fractional share to which such stockholder would otherwise
be entitled rounded up to
25
one full share. In addition, Matech agrees to prepare an information statement
to be distributed to the stockholders of Matech in connection with the approval
by its stockholders of the transfer of all of its assets to Newco and the
reverse stock split. In addition, Matech shall not issue any shares of its
Class A Common Stock or any securities convertible into Class A Common Stock,
other than as disclosed in Schedule 6.4.
6.2 RMB'S ACCRUED SALARY AND CLASS B STOCK AND CONVERTIBLE NOTES
Between the date of this Agreement and the Closing Date, RMB agrees to (i)
assign all accrued salary and other compensation owed to him by Matech to Newco
and to waive any claims for compensation from Matech, (ii) exchange all of the
60,000 shares of Class B Common Stock of Matech held by him for 934,454
(pre-reverse stock split) shares of Class A Common Stock of Matech, (iii)
convert the promissory note of Matech in the principal amount of $108,000 held
by him into 520,000 (pre-reverse stock split) shares of Class A Common Stock of
Matech, and (iv) arrange for Xxxxxxx Xxxxx to convert the promissory note of
Matech in the principal amount of $58,000 into 280,000 (pre-reverse stock
split) shares of Class A Common Stock.
6.3 PREFERRED STOCK OF MATECH . Between the date of this
Agreement and the Closing Date, all of issued and outstanding shares of Matech's
Class A and Class B Preferred Stock shall be redeemed by Matech or surrendered
to Matech and canceled or converted into shares of Class A Common Stock of
Matech.
6.4 NO SALE OF STOCK BY RMB . Commencing with the date of this
Agreement and for a period of one year thereafter, RMB agrees not to sell,
pledge or otherwise transfer any shares of Matech owned or controlled by him at
the time of Closing. RMB agrees to use his best efforts to obtain the same
agreement from certain other holders of Matech stock, whose names and the number
of shares held by them are set forth in Schedule 6.4 hereto, covering a minimum
of 90% of the total number of shares listed in such Schedule 6.4. On or before
the date of this Agreement, RMB shall obtain the written agreement of Xxxxx
Xxxxxxxx, M.D. not to sell his 65,000 shares of Class A Common Stock until the
earlier of the Closing or May 30, 1997.
6.5 CONDUCT OF BUSINESS OF SECURFONE . From the date thereof
through the Closing Date, SecurFone shall conduct its business in the ordinary
course and shall not undertake any of the actions specified in Section 5.23,
except as disclosed on Schedule 5.23.
6.6 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES .
From the date hereof through the Closing Date, RMB shall cause Matech to conduct
its business in such a manner so that, except as set forth in Sections 6.1, 6.2
and 6.3, the representations and warranties contained in Section 3 shall
continue to be true and correct on and as of the Closing Date as if made on and
as of the Closing Date, and SecurFone shall conduct its affairs in such
26
a manner so that the representations and warranties contained in Section 5 shall
continue to be true and correct on and as of the Closing Date as if made on and
as of the Closing Date, and Matech and SecurFone shall give each other prompt
notice of (i) any event, condition or circumstance occurring from the date
hereof through the Closing Date that would constitute a violation or breach of
any representation, warranty or covenant of either if them contained in this
Agreement, or (ii) any event, occurrence, transaction or other item which would
have been required to have been disclosed on any Schedule or statement delivered
hereunder, had such event, occurrence, transaction or item existed on the date
hereof.
6.7 CORPORATE EXAMINATIONS AND INVESTIGATIONS . Prior to the
Closing Date, Matech and SecurFone shall be entitled, through their respective
employees and representatives, including, without limitation, its lawyers and
accountants, to make such investigation of the assets, properties, business and
operations of each other, and such examination of the books, records and
financial condition of each other as they wish. Any such investigation and
examination shall be conducted at reasonable times and under reasonable
circumstances and Matech and SecurFone shall cooperate fully therein. No
investigation by either Matech or SecurFone shall diminish or obviate any of the
representations, warranties, covenants or agreements of either of them under
this Agreement. If this Agreement terminates, Matech and SecurFone and their
respective affiliates shall keep confidential and shall not use in any manner
any information or documents obtained from each other concerning its assets,
business and operations, unless readily ascertainable from public or published
information, or trade sources, or already known or subsequently developed by the
party obtaining such information independently of any investigation of other
party. If this Agreement terminates, any documents obtained from either Matech
or SecurFone shall be returned to the party which furnished them.
6.8 EXPENSES . Except as specifically provided in Section 1.4 of
this Agreement, Matech and SecurFone shall each bear its respective expenses
incurred in connection with the negotiation, preparation, execution, delivery
and performance of this Agreement and the transactions contemplated hereby,
including, without limitation, all fees and expenses of agents, representatives,
counsel and accountants. Escrow fees, if any, will be shared equally by Matech
and SecurFone.
6.9 INDEMNIFICATION OF BROKERAGE . Each party represents and
warrants to each other party to this Agreement that, except for persons or
entities identified on Schedule 6.9, there are no brokerage commissions,
finders' fees or similar fees or commissions payable in connection herewith
based upon any agreement, arrangement or understanding with such party, or upon
any action taken by such party. Each party agrees to indemnify and save each
27
other party to this Agreement harmless from any claim or demand for commissions
or other compensation by any broker, finder, agent or similar intermediary,
including persons or entities identified on Schedule 6.9 claiming to have been
employed by or on behalf of the indemnifying party, and to bear the cost of
legal expenses incurred in defending against any such claim.
6.10 FURTHER ASSURANCE . Each of the parties shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall use its best efforts to fulfill or
obtain the fulfillment of the conditions to the Closing.
6.11 DELIVERY OF SCHEDULES. Within 10 days following the date of
this Agreement, RMB and Matech shall deliver to MHI and SecurFone, and MHI and
SecurFone shall deliver to RMB and Matech, all of the Schedules to this
Agreement required by Sections 3 and 5, respectively, together with copies of
all the documents referred to in such Schedules.
7. CONDITIONS PRECEDENT TO THE OBLIGATION OF MHI AND SECURFONE
TO CLOSE. The obligation of MHI and SecurFone to proceed with the Closing is
subject, at its option, to the fulfillment on or prior to the Closing Date of
the following conditions, any one or more of which may be waived by it:
7.1 REPRESENTATIONS AND COVENANTS . The representations and
warranties of Matech and RMB contained in this Agreement shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date. Matech and RMB shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with them on
or prior to the Closing Date.
7.2 GOVERNMENTAL PERMITS, APPROVALS AND THIRD PARTY CONSENTS .
All permits and approvals from any governmental or regulatory body, if any,
required for the lawful consummation of the contemplated transactions shall have
been obtained. All consents, permits and approvals from parties to material
contracts or other agreements with Matech that may be required in connection
with the performance by Matech of its obligations under this Agreement or the
consummation of the contemplated transactions shall have been obtained.
7.3 LEGAL PROCEEDINGS . There shall be no law, and no order
shall have been entered and not vacated by a court or administrative agency of
competent jurisdiction in any litigation, which (a) enjoins, restrains, makes
illegal or prohibits consummation of the transaction contemplated hereby; (b)
imposes any lien or other encumbrance on the Shares or imposes any restriction
on their transfer; or (c) interferes with, in any material way, or materially or
adversely affects the condition of Matech; and there shall be no litigation
pending before a
28
court or administrative agency of competent jurisdiction, or threatened, seeking
to do, or which, if successful, would have the effect of, any of the foregoing.
7.4 CERTIFIED COPY OF RESOLUTIONS . Matech shall have each
delivered to MHI a certified copy of the resolutions duly adopted by its Board
of Directors and shareholders authorizing the execution and delivery of this
Agreement and any other documents described or referred to herein, and the
consummation of the transactions contemplated hereby.
7.5 OFFICER'S CERTIFICATE . MHI shall have received a
certificate executed by an executive officer of Matech, dated the Closing Date,
reasonably satisfactory in form and substance MHI, certifying that the
conditions specified in Sections 7.1, 7.2, 7.3 and 7.4 hereof have been
satisfied.
7.6 APPROVAL OF COUNSEL TO THE BUYER . All actions and
proceedings hereunder and all documents and other papers required to be
delivered by the Seller hereunder or in connection with the consummation of the
contemplated transactions, and all other related matters, including compliance
with federal and state securities laws, shall have been approved by Xxxxxxx
Xxxxxxx & Xxxxxx P.L.L., counsel to MHI and SecurFone, as to their form and
substance.
7.7 RELEASES . Each officer and director of Matech shall have
executed and delivered to Matech and MHI duplicate counterparts of a Release,
dated the Closing Date, in the form of Exhibit C.
7.8 RESIGNATIONS . Simultaneously with Closing, Matech shall
deliver to MHI the written resignation of each officer and director of Matech as
the Buyer shall request, in the form of Exhibit D.
7.9 LOCK-UP AND REGISTRATION RIGHTS AGREEMENT . RMB and the
other holders of Matech stock listed on Schedule 6.4 shall have entered into
agreements restricting the sale or other transfer of their shares for a period
of one year following the Closing Date and granting them certain registration
rights for a period of 18 months following the Closing with respect to shares in
an amount equal to 25% of any shares registered by Matech (other than on Form
S-8) during such 18 months, such agreements to be in form and substance
reasonably satisfactory to MHI. MHI shall also enter into the agreement granting
registration rights and MHI (and other shareholders of SecurFone) shall be
entitled to to register shares held by them in an aggregate amount equal to 75%
of any shares registered by Matech (other than on Form S-8).
7.10 DELIVERY OF DOCUMENTS . Simultaneously with Closing, all
corporate records and record books of Matech shall be delivered to MHI along
with such other documents as MHI may reasonably request.
29
8. CONDITIONS PRECEDENT TO THE OBLIGATION OF MATECH AND RMB TO
CLOSE. The obligation of Matech and RMB to proceed with the Closing is subject,
at the option of Matech and RMB acting in accordance with the provisions of this
Agreement with respect to termination hereof, to the fulfillment of the
following conditions, any one or more of which may be waived:
8.1 REPRESENTATIONS AND COVENANTS . The representations and
warranties of SecurFone contained in this Agreement shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date. SecurFone shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.
8.2 GOVERNMENTAL PERMITS AND APPROVALS . All permits and
approvals from any governmental or regulatory body, if any, required for the
lawful consummation of the contemplated transactions shall have been obtained.
8.3 CERTIFIED COPY OF RESOLUTIONS . SecurFone shall have
delivered to Matech a certified copy of the resolutions duly adopted by its
Board of Directors authorizing the execution and delivery of this Agreement and
any other documents described or referred to herein, and the consummation of the
transactions contemplated hereby.
8.4 OFFICER'S CERTIFICATES . Matech shall have received a
certificate executed by an executive officer of SecurFone, dated the Closing
Date, reasonably satisfactory in form and substance to Matech, certifying that
the conditions specified in Sections 8.1, 8.2 and 8.3 hereof have been
satisfied.
8.5 APPROVAL OF COUNSEL TO MATECH AND RMB . All actions and
proceedings hereunder and all documents or other papers required to be delivered
by SecurFone hereunder or in connection with the consummation of the
transactions contemplated hereby, and all other related matters, including
compliance with federal and state securities laws, shall have been approved by
C. Xxxxxxx Xxxxx, counsel to Matech and RMB, as to their form and substance.
8.6 COMPLETION OF SPIN-OFF AND REVERSE STOCK SPLIT. The
Registration Statement shall have been filed with the Securities and Exchange
Commission and shall have become effective under the Securities Act of 1933, as
amended, the spin-off shall have been accomplished with Matech retaining
560,000 of Newco and the outstanding shares of Class A Common Stock shall have
been split on a 1-for-10 basis, with no fractional shares being issued and each
stockholder who would otherwise be entitled to receive a fractional share
entitled to one full share.
30
8.7 PLEDGE OF NEWCO SHARES. SecurFone shall have entered into a
pledge agreement, in form reasonably satisfactory to Matech, pledging 560,000
shares of Newco to secure the payment of the Note.
8.8 CONSULTING AGREEMENT . Matech and RMB shall have executed
and delivered the Consulting Agreement substantially in the form attached hereto
as Exhibit E.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding any right
of either Matech or SecurFone fully to investigate the affairs of each other and
notwithstanding any knowledge of facts determined or determinable by any party
to this Agreement pursuant to such investigation or right of investigation, each
party has the right to rely fully upon the representations, warranties,
covenants and agreements of the other parties contained in this Agreement or in
any certificate delivered pursuant to any of the foregoing. All of the
representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution and delivery of this Agreement and the
Closing hereunder, and, except as otherwise specifically provided in this
Agreement, shall thereafter terminate and expire (A) on February 12, 1999, with
respect to any General Claim (as herein defined) based upon, arising out of or
otherwise in respect of any fact, circumstance, action or proceeding of which
the party asserting such claim shall have given notice on or prior to February
12, 1999 to the party against which such General Claim is asserted, and (B) with
respect to any Tax Claim (as herein defined), on the later of (1) the date upon
which the liability to which any such Tax Claim may relate is barred by all
applicable statutes of limitation, and (2) the date upon which any claim for
refund or credit related to such Tax Claim is barred by all applicable statutes
of limitations. As used in this Agreement, the following terms have the
following meanings:
(i) "General Claim" means any claim (other than a Tax Claim) based
upon, arising out of or otherwise in respect of any inaccuracy in or any
breach of any representation, warranty, covenant or agreement contained in
this Agreement;
(ii) "Tax Claim" means any claim based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement contained in this Agreement
related to Taxes.
10. GENERAL INDEMNIFICATION.
10.1 OBLIGATION OF RMB TO INDEMNIFY . RMB agrees to indemnify,
defend and hold SecurFone (and its directors, officers, employees, affiliates,
successors and assigns) harmless from and against all losses, liabilities,
damages, deficiencies, costs or expenses (including interest, penalties and
reasonable attorneys' and accounting fees and disbursements), which are referred
to collectively hereinafter as "Losses", based upon, arising out of or otherwise
in respect of (i) any inaccuracy in or any breach of any representation,
31
warranty, covenant or agreement of Matech or RMB contained in this Agreement or
in any document or other papers delivered by Matech or RMB pursuant to this
Agreement, and (ii) all claims, demands or actions by any person holding shares
of capital stock of Matech arising out of events occurring prior to the Closing
Date.
10.2 OBLIGATION OF SECURFONE TO INDEMNIFY . SecurFone agrees to
indemnify, defend and hold Matech and RMB (and their respective directors,
officers, employees, affiliates, successors and assigns) harmless from and
against all Losses based upon, arising out of or otherwise in respect of (i) any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of SecurFone contained in this Agreement or in any document or other
papers delivered by SecurFone pursuant to this Agreement and (ii) all claims,
demands or actions by any person holding shares of capital stock of Matech
arising out of events occurring after the Closing Date.
10.3 NOTICE AND OPPORTUNITY TO DEFEND .
10.3.1 NOTICE OF ASSERTED LIABILITY . Promptly after
receipt by any party hereto (the "Indemnitee") of notice of any demand, claim or
circumstances which gives rise, or with the lapse of time would or might give
rise, to a claim or the commencement (or threatened commencement) of any action,
proceeding or investigation that may result in a Loss (an "Asserted Liability"),
the Indemnitee shall give notice thereof (the "Claims Notice") to any other
party (or parties) obligated to provide indemnification pursuant to Section 10.1
or 10.2 (the "Indemnifying Party"). The Claims Notice shall describe the
Asserted Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary and to the extent feasible) of the Loss that has been
or may be suffered by the Indemnitee. No failure or delay to provide notice
shall reduce or otherwise affect the obligation to indemnify.
10.3.2 OPPORTUNITY TO DEFEND . The Indemnifying Party may
elect to compromise or defend, at its own expense and by its own counsel, any
Asserted Liability. If the Indemnifying Party elects to compromise or defend
such Asserted Liability, it shall within 30 days (or sooner, if the nature of
the Asserted Liability so requires) notify the Indemnitee of its intent to do
so, and the Indemnitee shall cooperate, at the expense of the Indemnifying
Party, in the compromise of or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the objection of the other; provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any event, the
Indemnitee and the Indemnifying Party may
32
participate, at their own expense, in the defense of such Asserted Liability. If
the Indemnifying Party chooses to defend any claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense.
11. TERMINATION OF AGREEMENT.
11.1 TERMINATION . This Agreement may be terminated prior
to the Closing as follows:
(i) at the election of MHI, if Matech or RMB have
breached any material representation, warranty, covenant or agreement
contained in this Agreement, which breach cannot be or is not cured by
the Closing Date, or if any of the conditions precedent set forth in
Article 7 has not been satisfied by the Closing Date;
(ii) at the election of Matech, if SecurFone has
breached any material representation, warranty, covenant or agreement
contained in this Agreement, which breach cannot be or is not cured
by the Closing Date, or if any of the conditions precedent set forth
in Article 8 has not been satisfied by the Closing Date;
(iii) at the election of SecurFone, if the Registration
Statement has not been filed with the SEC by March 10, 1997, or has
not become effective by May 27, 1997;
(iv) at the election of either Matech or SecurFone, if
any legal proceeding is commenced or threatened by any governmental
or regulatory body or other person directed against the consummation
of the Closing or any other transaction contemplated under this
Agreement and either the Matech or SecurFone, as the case may be,
reasonably and in good xxxxx xxxxx it impractical or inadvisable to
proceed in view of such legal proceeding or threat thereof; or
(v) at any time on or prior to the Closing Date, by
mutual written consent of Matech and SecurFone.
If this Agreement so terminates, it shall become null and void and have no
further force or effect, except as provided in Section 11.2.
11.2 SURVIVAL . If this Agreement is terminated and the transactions
contemplated hereby are not consummated as described above, this Agreement
shall become void and of no further force and effect, except for the
provisions of Section 6.3 relating to the obligations of Matech and SecurFone
to keep confidential and not to use certain information and data obtained by
them from each other and to return documents to each other and except for the
provisions of Section 6.6. No party hereto shall have any liability to any
other party in respect of a termination of this Agreement except pursuant to
Sections 6.5, 6.6 or 6.7.
33
12. RESOLUTION OF DISPUTES. The parties to this Agreement agree
to submit any disputes arising under or in relation to this Agreement to
mediation to be conducted by a mediator approved by SecurFone and RMB. If
mediation fails to resolve all disputes, the parties agree to submit the
disputes to binding arbitration. If no party is claiming more than $40,000,
excluding cost and expenses, the dispute shall be submitted to a single
arbitrator approved by SecurFone and RMB. If any party is claiming more than
$40,000, the dispute shall be submitted to a panel of three neutral arbitrators,
one arbitrator appointed by each of SecurFone and RMB and the third to be agreed
upon by the two appointed arbitrators. No party shall appoint an arbitrator with
any conflict of interest. SecurFone and RMB shall each bear one-half of the cost
of mediation and pay its own attorneys' fees related to mediation. If
arbitration becomes necessary, the prevailing party shall be entitled to recover
all costs, expenses, and attorneys' fees related to the prior mediation and the
arbitration, which recovery shall be made a part of the arbitration award. The
parties agrees to provide each other with any and all documents and information
relevant to any disputes within 20 days of receipt of a written request.
SecurFone and RMB further agree that an arbitrator or panel of arbitrators may
impose monetary sanctions for failure to timely provide relevant documents or
information.
12.1 REQUIRED NOTICE AND LIMITATIONS PERIOD . SecurFone
and RMB agree that within one year of the discovery of any claim related to this
Agreement or, in any event, within two years of the accrual of any claim, the
claiming party shall give written notice to the other parties of the nature of
the claim and the specific facts upon which the claim is based, and demand
mediation of the claim. The parties understand that this provision has two
separate limits. The first limit means that the claiming party has one year from
the date that party discovers the facts to support a claim to give notice and
make a demand. If notice and a demand are not made within that time, a claim
cannot be brought. The second limit is two years regardless of when the facts
are discovered. If no notice and demand are made within two years, the claim
cannot be brought even if it is not discovered until after the two years has
expired. The parties further agree that if mediation fails to resolve the claim
within six months of the receipt of notice and the claiming party fails to
demand arbitration within the second six months, the claim of the claiming party
shall be forever barred. The intent is that all claims be resolved or submitted
to binding arbitration within one year of written notice of a claim.
12.2 PROCEDURES . Within two months of the receipt of notice and
demand, the parties to the claim shall choose a person acceptable to all such
parties to mediate the claim. Absent agreement within two months, the claiming
party shall ask the American Arbitration Association ("AAA") to appoint a person
who is experienced in the process of deciding contract disputes and the parties
shall, in good faith, attempt to mediate the claim.
34
(i) If after six months from the date of receipt of demand
and notice, no agreement is reached, any party to the dispute may demand in
writing that the dispute be submitted to binding arbitration. Once such a
demand is made, the claim shall be submitted to AAA for binding arbitration.
(ii) The parties to the claim shall, in good faith, attempt to
agree on a single arbitrator if no more than $40,000 excluding costs and
expenses is claimed by either party. If within two months of a demand for
arbitration, the parties have not agreed, the arbitrator shall be selected by
alternate striking from a list of nine arbitrators drawn by the AAA from a
panel of arbitrators with expertise in the process of deciding contract
disputes.
(iii) Arbitration shall be conducted under the appropriate AAA
rules in the form they exist on the date the claim is submitted to AAA. Delaware
substantive and procedural law shall apply to any such arbitration and shall
control if in conflict with AAA's rules. The arbitration shall take place in
San Diego, California.
(iv) The arbitrator shall have the discretion to order any and
all reasonable discovery permitted under the laws of Delaware upon the written
request of any party. The request for discovery shall include the discovery
requested and the reasons therefore. The responding party shall be given a
reasonable opportunity to submit any objections in writing prior to an order of
discovery. No hearing, however, shall be required but may be held if the
arbitrator believes that it may assist in a decision. The parties agree that
the arbitrator should honor all reasonable discovery requests. In addition, the
arbitrator may order the parties to exchange any relevant information prior to
the hearing, including, but not limited to, documents, exhibit lists, witness
lists, expert witnesses with a summary of their opinions and credentials,
pre-hearing briefs and summaries of testimony of proposed witnesses.
(v) In deciding the claim and the appropriate award or other relief,
the arbitrator shall determine the rights and obligations of the parties to the
claim under the substantive and procedural laws of Delaware as though the
arbitrator was a court of competent jurisdiction in Delaware and may afford any
relief that could be afforded by Delaware courts including, but not limited to,
specific performance, punitive damages, injunctive relief, and/or sanctions for
abusing or frustrating the arbitration process. In addition, the arbitrator
shall award costs of this action to the prevailing party or parties including
but not limited to the arbitrator's fees. Any party, at its expense, may
arrange for and pay the cost of a court reporter or video recorder to provide a
record of proceedings.
35
12.3 THE ARBITRATOR'S DECISION . The decision of the arbitrator must
be based on a written statement of decision explaining the factual and legal
bases for each material issue relevant to the claim and raised in the briefs
or at the hearing. Only if the arbitrator's decision correctly applies the
substantive and procedural laws of Delaware shall the facts found be
conclusive and binding on the parties who appear in the arbitration
proceeding. If the arbitrator's decision correctly applies the substantive
and procedural laws of Delaware, it may be confirmed and entered as a
judgment by an appropriate court of Delaware and may be challenged only for
(1) errors of law or (2) errors of fact appearing in the written decision.
13. MISCELLANEOUS.
13.1 CERTAIN DEFINITIONS . As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
(i) "AFFILIATE" with respect to any person, means any
other person controlling, controlled by or under common control with,
or the parents, spouse, lineal descendants or beneficiaries of such
person.
(ii) "CONDITION OF THE MATECH OR SECURFONE" means the
assets, liabilities, properties, business, results of operations,
prospects and financial condition of Matech or SecurFone, as the case
may be.
(iii) "DOCUMENT OR OTHER PAPERS" means any document,
agreement, instrument, certificate, notice, consent, affidavit,
letter, telegram, telex, statement, schedule (including any Schedule
to this Agreement), exhibit (including any Exhibit to this Agreement)
or any other paper whatsoever.
(iv) "GOVERNMENTAL OR REGULATORY BODY" means any
government or political subdivision thereof, whether federal, state,
local or foreign, or any agency or instrumentality of any such
government or political subdivision.
(v) "KNOWLEDGE" of a party means within the knowledge,
information or belief of the party, which knowledge, information or
belief has been obtained by the party after investigation, and, in
the case of a party which is a corporation, after an appropriate
officer of the party has reviewed all relevant facts and corporate
records and files, including those in the possession and under
control of the party and its employees, attorneys, accountants and
other agents, and after making inquiry of those employees of the
party who might have relevant information.
(vi) "LIEN OR OTHER ENCUMBRANCE" means any lien,
pledge, mortgage, security interest, claim, lease, charge, option,
right of first refusal, easement, servitude, transfer restriction
under any shareholder or similar agreement, encumbrance or any other
restriction or limitation whatsoever.
36
(vii) "PERSON" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental or regulatory body
or other entity.
(viii) "PROPERTY" means real, personal or mixed
property, tangible or intangible.
13.2 PUBLICITY . No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be made without advance
approval thereof by the Seller and the Buyer.
13.3 NOTICES . Any notice or other communication required or permitted
hereunder shall be in writing and shall be either (i) delivered personally, (ii)
sent by telegraph or telex, (iii) sent by facsimile transmission, (iv) delivered
by nationally recognized overnight courier service against a receipt therefor,
or (v) sent by certified, registered or express mail, postage prepaid. Any such
notice shall be deemed given (A) when so delivered personally, telegraphed,
telexed or sent by facsimile transmission if applicable; (B) when delivered by
courier if applicable; or (C) if mailed, five days after the date of deposit in
the United States mail if applicable, as follows:
(i) if to MHI or SecurFone:
SecurFone America, Inc.
00 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax No: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxxxxxx
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxxxx, XX 00000
Fax No: 000-000-0000
(ii) if to Matech or RMB:
Xxxxxx X. Xxxxxxxxx
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax No: 000-000-0000
with a copy to:
C. Xxxxxxx Xxxxx
37
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Fax No: 000-000-0000
Any party may, by notice given in accordance with this Section to
the other parties, designate another address or person for
receipt of notices hereunder.
13.4 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES; PRESERVATION
OF REMEDIES . This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the Buyer and the Seller or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof. Nor
shall any waiver on the part of any party of any such right, power or
privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity. The rights and remedies of any party
based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement contained in
this Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this Agreement
(or in any other agreement between the parties) as to which there is no
inaccuracy or breach.
13.5 GOVERNING LAW . This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State.
13.6 BINDING EFFECT; ASSIGNMENT . This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and legal representatives. Buyer may, in its sole discretion, assign
any and all of its right, title and interest under this Agreement to such
assignee or nominee as it shall, in its sole discretion, elect.
13.7 VARIATIONS IN PRONOUNS . All pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require.
13.8 COUNTERPARTS . This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart
38
may consist of a number of copies hereof each signed by less than all, but
together signed by all of the parties hereto.
13.9 EXHIBITS AND SCHEDULES . The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references herein to
sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
13.10 HEADINGS . The headings in this Agreement are for
reference only, and shall not affect the interpretation of this Agreement.
13.11 ENTIRE AGREEMENT . This Agreement (including the
Schedules and Exhibits) and the collateral agreements executed in connection
with the consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the purchase of the Shares and
supersedes all prior agreements, written or oral, with respect thereto.
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement as of the day and year first above written.
MONTPILIER HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
President
SECURFONE AMERICA, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------
President
MATERIAL TECHNOLOGY, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxxxx, President Dated: February 18, 1997
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxx Dated: February 18, 1997
39
EXHIBIT A
ESCROW AGREEMENT
This Escrow Agreement, dated as of February 21, 1997, among MONTPILIER HOLDINGS,
INC., a Nevada corporation ("MHI"), SECURFONE AMERICA, INC., a Delaware
corporation ("SecurFone"), XXXXXX X. XXXXXXXXX, a resident of Los Angeles,
California ("RMB"), MATERIAL TECHNOLOGY INC., a Delaware corporation ("Matech")
and XXXXXXX XXXXXXX & XXXXXX P.L.L., an Ohio registered partnership having
limited liability, as escrow agent ("Escrow Agent").
This is the Escrow Agreement referred to in the Stock Purchase Agreement, dated
as of February 17, 1997 (the "Stock Agreement") among MHI, SecurFone, RMB, and
Matech. Capitalized terms used in this Agreement without definition shall have
the respective meanings given to them in the Stock Agreement.
The parties, intending to be legally bound, hereby agree as follows:
1. ESTABLISHMENT OF ESCROW
(a) Contemporaneously with the execution of the Stock Agreement, SecurFone is
depositing with Escrow Agent $75,000 (as increased by any earnings thereon and
as reduced by any disbursements, amounts withdrawn under Section 3, the "Escrow
Fund"). Escrow Agent acknowledges receipt thereof.
(b) Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard
and disburse the Escrow Fund pursuant to the terms and conditions hereof.
2. INVESTMENT OF ESCROW FUND
The Escrow Agent shall hold the Escrow Fund in a separate bank account bearing
interest at the rate normally paid by the bank on commercial accounts. Any
interest shall be paid to the party receiving the Escrow Fund pursuant to this
Agreement.
3. PURPOSE OF ESCROW
MHI and Matech acknowledge and agree that the purpose of the escrow established
by this Agreement is to hold the funds in escrow between the execution of the
Stock Agreement and the closing scheduled thereunder. In the event that the
closing does not occur because of the failure of the conditions set forth in
Section 7 of the Stock Agreement to be satisfied, the Escrow Fund and any
interest earned thereon shall be returned by the Escrow Agent to SecurFone. In
the event that the transactions contemplated by the Stock Agreement are
consummated, the Escrow Fund shall be paid (a) $70,000 to Matech's subsidiary
and (b) $5,000 to RMB. In the event that the closing does not occur because of
MHI's or SecurFone's breach of the Stock Agreement, the Escrow Fund shall be
paid to Matech. The procedures for disbursement of the Escrow Fund are set forth
in Section 4 of this Agreement.
1
4. PAYMENT OF ESCROW FUND; DISPUTES
(a) In the event that the transactions contemplated by the Stock Agreement
are not consummated on the Closing Date set forth in the Stock Agreement,
SecurFone shall promptly give give notice (the "Notice") to Matech and Escrow
Agent specifying in reasonable detail the reasons that the transactions did not
close on schedule and the party to whom the Escrow Fund should be paid.
Escrow Agent shall not independently inquire into or consider the accuracy or
adequacy of such reasons but shall be entitled to rely upon and shall perform
its duties hereunder in strict accordance with the provisions of this Escrow
Agreement.
(b) If Matech gives notice (a "Counter Notice") to SecurFone and Escrow Agent
disputing the reasons set forth in the Notice, the Counter Notice shall specify
in reasonable detail the reason for the dispute (the "Dispute") within ten (10)
days following receipt by Escrow Agent of the Notice (the "Counter Notice
Period"), Escrow Agent shall not make any payment to SecurFone with respect to
any such Dispute except upon Escrow Agent's receipt of, and then only in
accordance with the terms of, (i) a joint written instruction of SecurFone and
Matech instructing Escrow Agent to disburse or retain all or a portion of the
Escrow Fund in resolution of such Dispute or (ii) a Certified Arbitration Order
(as hereinafter defined). For purposes of this Escrow Agreement, a "Certified
Arbitration Order" shall be an order of the arbitrator or arbitrators rendered
in accordance with the provisions of the Stock Agreement with respect to
arbitration. Escrow Agent shall upon receipt and without further investigation,
act upon and comply with the terms of any such joint written instruction or
Certified Arbitration Order.
(c) If the Escrow Agent does not receive a Counter Notice before expiration
of the Counter Notice Period, it shall pay the Escrow Fund pursuant to the terms
of the Notice.
5. DUTIES OF ESCROW AGENT
(a) Escrow Agent shall not be under any duty to give the Escrow Fund held by
it hereunder any greater degree of care than it gives its own similar property
and shall not be required to invest any funds held hereunder except as directed
in this Agreement.
(b) Escrow Agent shall not be liable, except for its own gross negligence or
willful misconduct and, except with respect to claims based upon such gross
negligence or willful misconduct that are successfully asserted against Escrow
Agent, the other parties hereto shall jointly and severally indemnify and hold
harmless Escrow Agent (and any successor Escrow Agent) from and against any and
all losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursements, arising out of and in connection
with this Agreement. Without limiting the foregoing, Escrow Agent shall in no
event be liable in connection with its investment or reinvestment of any cash
held by it hereunder in good faith, in accordance with the terms hereof,
including, without limitation, any liability for any delays (not resulting from
its gross negligence or willful misconduct) in the investment or reinvestment of
the Escrow Fund, or any loss of interest incident to any such delays.
2
(c) Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full power and
authority to instruct Escrow Agent on behalf of that party unless written notice
to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of counsel with respect to
any matter relating to this Agreement and shall not be liable for any action
taken or omitted by it in good faith in accordance with such advice.
(e) Escrow Agent does not have any interest in the Escrow Fund deposited
hereunder but is serving as escrow holder only and having only possession
thereof. Any payments of income from this Escrow Fund shall be subject to
withholding regulations then in force with respect to United States taxes. The
parties hereto will provide Escrow Agent with appropriate Internal Revenue
Service Forms W-9 for tax identification number certification, or non-resident
alien certifications. This Section 6(e) and Section 6(b) shall survive
notwithstanding any termination of this Agreement or the resignation of Escrow
Agent.
(f) Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(g) Escrow Agent shall not be called upon to advise any party as to the
wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
(h) Escrow Agent (and any successor Escrow Agent) may at any time resign as
such by delivering the Escrow Fund to any successor Escrow Agent jointly
designated by the other parties hereto in writing, or to any court of competent
jurisdiction, whereupon Escrow Agent shall be discharged of and from any and all
further obligations arising in connection with this Agreement. The resignation
of Escrow Agent will take effect on the earlier of (a) the appointment of a
successor (including a court of competent jurisdiction) or (b) the day which is
30 days after the date of delivery of its written notice of resignation to the
other parties hereto. If at that time Escrow Agent has not received a
designation of a successor Escrow Agent, Escrow Agent's sole responsibility
after that time shall be to retain and safeguard the Escrow Fund until receipt
of a designation of successor Escrow Agent or a joint written disposition
instruction by the other parties hereto or a final non-appealable order of a
court of competent jurisdiction.
(i) In the event of any disagreement between the other parties hereto
resulting in adverse claims or demands being made in connection with the Escrow
Fund or in the event that Escrow Agent is in doubt as to what action it should
take hereunder, Escrow Agent shall be entitled to retain the Escrow Fund until
Escrow Agent shall have received (a) a final non-appealable order of a court of
competent jurisdiction directing delivery of the Escrow Fund or (b)
3
a written agreement executed by the other parties hereto directing delivery of
the Escrow Fund, in which event Escrow Agent shall disburse the Escrow Fund in
accordance with such order or agreement. Any court order shall be accompanied by
a legal opinion by counsel for the presenting party satisfactory to Escrow Agent
to the effect that the order is final and non-appealable. Escrow Agent shall act
on such court order and legal opinion without further question.
(j) Escrow Agent shall not charge a fee for the services to be rendered by
Escrow Agent hereunder, but the parties agree to reimburse Escrow Agent for all
reasonable expenses, disbursements and advances incurred or made by Escrow Agent
in performance of its duties hereunder (including reasonable fees, expenses and
disbursements of its counsel). Any such compensation and reimbursement to which
Escrow Agent is entitled shall be borne 50% by MHI, and 50% by Matech. Any fees
or expenses of Escrow Agent or its counsel that are not paid as provided for
herein may be taken from any property held by Escrow Agent hereunder.
(k) No printed or other matter in any language (including, without
limitation, prospectuses, notices, reports and promotional material) that
mentions Escrow Agent's name or the rights, powers, or duties of Escrow Agent
shall be issued by the other parties hereto or on such parties' behalf unless
Escrow Agent shall first have given its specific written consent thereto.
(l) The other parties hereto authorize Escrow Agent, for any securities held
hereunder, to use the services of any United States central securities
depository it reasonably deems appropriate, including, without limitation, the
Depositary Trust Company and the Federal Reserve Book Entry System.
6. LIMITED RESPONSIBILITY
This Agreement expressly sets forth all the duties of Escrow Agent with respect
to any and all matters pertinent hereto. No implied duties or obligations shall
be read into this agreement against Escrow Agent. Escrow Agent shall not be
bound by the provisions of any agreement among the other parties hereto except
this Agreement.
7. OWNERSHIP FOR TAX PURPOSES
Matech agrees that, for purposes of federal and other taxes based on income, it
will be treated as the owner of the Escrow Fund, and that Matech will report all
income, if any, that is earned on, or derived from, the Escrow Fund as its
income, in the taxable year or years in which such income is properly includible
and pay any taxes attributable thereto.
8. NOTICES
All notices, consents, waivers and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt) provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
4
each case to the appropriate addresses and telecopier numbers set forth in the
Stock Agreement.
9. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement shall be decided by arbitration in
accordance with the applicable provisions of the Stock Agreement.
10. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original and all of which, when taken together, will be
deemed to constitute one and the same.
11. SECTION HEADINGS
The headings of sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation.
12. WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
13. EXCLUSIVE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties with respect to
its subject matter and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by MHI, SecurFone, RMB, Matech
and the Escrow Agent.
14. GOVERNING LAW
5
This Agreement shall be governed by the laws of the State of Delaware, without
regard to conflicts of law principles.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
MONTPILIER HOLDINGS, INC. SECURFONE AMERICA, INC.
By: /s/ Xxxxxxxx X. Xxxxxx By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------- -----------------------
Xxxxxxxx X. Xxxxxx Xxxxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxxx MATERIAL TECHNOLOGY, INC.
-----------------------------------
Xxxxxx X. Xxxxxxxxx
Dated: February 18, 1997
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxxx
Dated: February 18, 1997
Escrow Agent:
XXXXXXX XXXXXXX & XXXXXX P.L.L.
By: H. Xxxxx Xxxxxx, Jr.
----------------------------
H. Xxxxx Xxxxxxx, Jr.
6
EXHIBIT B
NON-RECOURSE PROMISSORY NOTE
$50,000 __________, _________ _________, 1997
For value received the undersigned, SECURFONE AMERICA, INC., (hereinafter
"Payor"), promises to pay to the order of [NEWCO] (hereinafter "Payee") the sum
of Fifty Thousand Dollars ($50,000) with no interest, payable in two
installments of principal each in the amount of $25,000, the first installment
due on ____________ , 1997, and the second installment due on ____________ ,
1997. Installments of principal shall be payable at 11835 West Olympic
Boulevard, Xxxx Xxxxx 000, Xxx Xxxxxxx Xxxxxxxxxx 00000, or any place hereafter
designated by Payee. Payor may prepay this note, in full or in part, at any
time without penalty. If all or any part of any installment due hereunder is
not received by the Payee by the close of business on the fifth (5th) day
after the date on which such payment is due, then the outstanding principal
balance hereof shall at once become due and payable at the option of Payee
without notice or demand.
Payor hereby waives diligence, presentment, demand, protest and notice of
every kind whatsoever; and hereby consents to an unlimited number of extensions
or modifications of the time of any payment hereunder before or after maturity
at Payee's sole discretion without notice to Payor, and that the obligations
evidenced hereby shall not be discharged by reason of any such extensions and/or
modifications. The failure of Payee to exercise any of its rights hereunder
shall not constitute a waiver of the same or of any other right in that or any
subsequent instance.
This Note is secured by a Pledge Agreement (referred to herein as the
"Pledge Agreement") validly executed and delivered by the Maker to the payee
hereof pledging certain shares of common stock of [Newco], to which agreement
reference is made for a description of the security and the rights of the holder
hereof and the obligations of the Maker in respect thereto, but neither this
reference to the Pledge Agreement nor any provisions thereof shall affect or
impair the absolute and unconditional obligation of the Maker to pay the
principal of this Note when due.
By its acceptance of this Note, [Newco], the Payee, for itself and its
successors and assigns as owner and holder hereof, covenants and agrees that
from and after the date hereof, neither the Maker nor its successors and assigns
shall have any personal liability for payment of the indebtedness evidenced
hereby, and that the holder hereof shall look exclusively to the shares
described in, and encumbered by, the Pledge Agreement, and to such other and
further security as may from time to time be given; and that no judgment, order
or execution of this Note, the Pledge Agreement, or any other instrument
securing the indebtedness evidenced hereby shall be rendered or enforced
against either the Maker or its successors or assigns personally in any such
action, suit or proceeding, whether legal or equitable, brought on this Note,
the Pledge
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Agreement, or such other agreements; provided, however, that nothing herein
contained shall limit, or be construed to limit or impair, the enforcement of
the rights and remedies of the holder hereof, and its successors and assigns as
owner and holder hereof, under this and any other instruments now or hereafter
securing the same, against the shares encumbered by the Pledge Agreement, and
against such other and further security as may from time to time be given as
security for the payment of the indebtedness evidenced by this Note.
The provisions hereof shall inure to the benefit of, and shall be binding
upon, Payor, Payee and their respective, successors and permitted assigns.
IN WITNESS WHEREOF, Payor has executed and delivered this note on the
date first set forth above.
PAYOR:
SECURFONE AMERICA, INC.
By:
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EXHIBIT C
RELEASE
The undersigned, having been a duly elected officer and/or director of
MATERIAL TECHNOLOGY, INC. (the "Company"), for good and valuable consideration,
the receipt of which is hereby acknowledged, does for myself and my heirs,
executors, administrators, assigns and all parties in interest with me, release
and forever discharge the Company, and its officers, directors, employees,
agents, successors and all parties in interest with it, from any and all manner
of claims, demands, damages, causes of action or suits that I might now have, or
that might subsequently accrue to me by reason of any matter or thing
whatsoever, from the beginning of time to the date hereof, arising out of or
related to my service as an officer and/or director of the Company or any
subsidiary of the Company or any other matter, including, but not limited to,
any claims for wages, salaries, commissions or other compensation, fees,
reimbursed expenses, etc., but excluding any amounts to which I may be entitled
by reason of my participation in any pension or profit sharing plan of the
Company, if applicable, and further excluding any claim I might have for
indemnification as an officer or director of the Company or any subsidiary of
the Company with respect to claims against me for actions taken in such capacity
on behalf of the Company.
Dated this_____ day of______, 1997.
EXHIBIT D
LETTER OF RESIGNATION
Board of Directors
Material Technology, Inc.
Gentlemen:
The undersigned hereby resigns from any and all positions which I now
hold as an officer and/or director of Material Technology, Inc. and any related
entity, effective immediately.
Dated this____ day of_____, 1997.
EXHIBIT E
CONSULTING AGREEMENT
CONSULTING AGREEMENT
As of the last date written below, Material Technology, Inc., ("Matech")
and Xxxxxx X. Xxxxxxxxx ("Consultant") agree that Consultant shall act as a
consultant to Matech on the following terms and conditions:
WHEREAS, the willingness of Matech to enter into the Stock Purchase
Agreement among Montpilier Holdings, Inc., SecurFone America, Inc., Matech, and
Xxxxxx X. Xxxxxxxxx was conditioned on the willingness of Consultant to act as
consultant on the terms in this Agreement; and
WHEREAS, Consultant is willing to act as a consultant as described below
and on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises set forth herein,
the parties hereto agree as follows:
1. AGREEMENT TO ACT AS CONSULTANT . Effective on the Closing Date of the
Stock Purchase Agreement, Consultant hereby agrees to act as a consultant to
Matech for eighteen months following the Closing (as defined in the Stock
Purchase Agreement). Upon request of Matech's officers or directors, Consultant
shall make himself available for up to fifty (50) hours per calendar quarter to
consult with Matech's officers and directors on matters involving Matech's
business and affairs. Consultant shall be entitled to reasonable notice to
prepare to perform the services requested and to render such services at times
reasonable convenient to Consultant. Moreover, Consultant shall be reimbursed
for all reasonable travel expenses in connection with such services, provided
such expenses are adequately documented.
2. COMPENSATION . On the Closing Date under the Stock Purchase Agreement,
RMB shall be paid $5,000 out of the escrow referred to in such Stock Purchase
Agreement. In addition, for a period of five years from Closing, Consultant
shall be entitled to receive stock options entitling him to purchase Class A
Common Stock of Matech. The number of shares of Matech Class A Common Stock
subject to such options shall be equal to seven per cent (7%) of the sum of (A)
the total number of shares of any class of equity security of Matech that,
during the five years following the Closing, Matech registers with the
Securities Exchange Commission on Form S-8 plus (B) the total number of shares
of any class of equity security of Matech that, during the five years following
Closing, Matech sells under Regulation S of the Securities Act of 1933. The
shares issuable upon exercise of all such options granted to Consultant shall be
registered on Form S-8 within 180 days following the date of grant. In
addition, (i) Consultant's options based on shares registered on Form S-8 shall
be granted to him on the date each such registration statement becomes
effective, shall not be exercisable until one year following the date of grant,
and shall be exercisable for a period of five years following the expiration of
such one-year period and (ii) Consultant's options based on shares sold under
Regulation S shall be granted within twenty (20) days of any sales under
Regulation S and shall grant Consultant the right to purchase shares on the same
terms and conditions as the purchasers under Regulation S, except that (i) such
option shall not be exercisable for a period of one year following the date of
grant ; (ii) any restrictions on resale of the Regulation S shares shall not
apply to the shares Consultant receives upon exercising his options after such
one-year period; and (iii) the shares shall be registered on Form S-8 within 180
days following the date of grant of options to Consultant; provided that Matech
shall not be obligated to file more than two Form S-8 registration statements in
any calendar year. Consultant shall pay for shares purchased upon exercise of
such options in full at the time of exercise.
3. NO SET-OFF OR REDUCTION. Matech agrees that the right of Consultant to
receive the compensation set forth in Paragraph 2 above shall not be subject to
reduction or set-off for any reason whatever, including, but not limited to, any
alleged breach of warranties or other obligations under this Agreement or the
Stock Purchase Agreement.
4. REMEDIES OF CONSULTANT. In the event of any breach by Matech of its
obligations to compensate consultant, in addition to any remedies Consultant may
have at law, any and all options previously granted to Consultant shall become
immediately exercisable. In the event that Consultant incurs costs, expenses,
and/or attorneys fees to enforce his rights under this Agreement, Matech shall
reimburse Consultant for any and all such costs, expenses, and/or reasonable
attorneys fees.
5. AUTHORIZATION. This Agreement has been authorized by Matech's
directors prior to Closing and by Matech's replacement directors after the
Closing.
6. CONFIDENTIAL INFORMATION. Consultant will acquire information of a
confidential nature relating to the operation, finances, business relationships,
intellectual property, and trade secrets of Matech. During the term of this
Agreement and for two years following termination of the 18-month term of his
consulting obligation, Consultant will not, without Matech's prior written
consent, use, publish, or disclose or authorize anyone else to use, publish, or
disclose,any confidential information pertaining to Matech or its affiliated
entities, including, without limitation, any information relating to existing or
potential business, customers, trade or industrial practices, plans, costs,
processes, technical or engineering data, or trade secrets; provided, however,
that Consultant shall be prohibited from ever using, publishing, or disclosing
or authorizing anyone else to use, publish, or disclose any confidential
information which constitutes a trade secret under applicable law. The foregoing
notwithstanding, Consultant has
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no obligation to refrain from using, publishing, or disclosing any such
confidential information which is or hereafter shall become available to the
public otherwise than by Consultant's use, publication, or disclosure. This
prohibition also does not prohibit Consultant from disclosing confidential
information in response to lawful process compelling disclosure. On the other
hand, Consultant shall provide reasonable notice to Matech of any such process
to allow Matech to timely object to such disclosure.
7. RETURN OF DOCUMENTS. Within five days of termination of the 18-month
consulting period under this Agreement, Consultant shall return to Matech or
destroy all of Matech's papers, documents, and things, including information
stored for use in or with computers and software applicable to Matech's business
and all copies of such papers, documents, and things, which are in Consultant's
possession, custody, or control and Consutant shall certify in writing that he
has complied with this provision.
8. AGREEMENT ON FAIRNESS. Consultant acknowledges that: (i) this
Agreement has been specifically bargained between the parties and reviewed by
Consultant and his counsel and (ii) the covenants made by and the duties imposed
upon Consultant hereby are fair, reasonable, and minimally necessary to protect
the legitimate business interests of Matech, and such covenants and duties will
not place an undue burden upon Consultant's livelihood.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
last date written below.
Date: CONSULTANT
-------------------------------
Xxxxxx X. Xxxxxxxxx
Date: MATERIAL TECHNOLOGY, INC.
By:
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Print Name and Title
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