Exhibit 10.71
AquaSource entered into Stock Purchase Agreements in the following form
with its 66 Class B stockholders to purchase 19,590 shares of Class B stock.
AquaSource placed $30 million in escrow to fund the payments described in the
agreement.
FORM OF
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of February 16, 1999 (this
"Agreement") is by and between the undersigned owner (a "Class B Investor" or
the "Seller") of the designated number of shares set forth on the signature page
hereto ("Shares") of Class B Common Stock ("Class B Stock") of AquaSource, Inc.,
a Delaware corporation (the "Company"), and the Company.
RECITALS:
WHEREAS, the Seller owns the Shares; and
WHEREAS, subject to and according to the terms of this Agreement, the
Company wishes to purchase from the Seller, and the Seller wishes to sell to the
Company, the Shares; and
WHEREAS, in connection with such purchase and sale, the parties wish to
engage in certain other transactions which are the subject of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, as well as the representations, warranties, and covenants herein
contained, the parties, intending to be legally bound, agree as follows:
1. Definitions. Unless the context otherwise specifies or requires, the terms
defined in this Section 1 shall, for the purposes of this Agreement, have the
meanings herein specified.
"Additional Amount" is defined in Section 2.2.
"API" means Acquisition Partners, Inc.
"Appraised Value" has the meaning set forth in the Services Agreement.
"Business Day" means any day that is not a Saturday, a Sunday, or a day
that is a banking holiday under United States, Pennsylvania or Texas Law.
"Cash Amount" is defined in Section 2.2(1).
"Closing" is defined in Section 6.
"Closing Date" is defined in Section 6.
"Closing Milestone" is defined in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"DQE Investment" has the meaning set forth in the Service Agreement.
"Employment Consent" is defined in Section 5(e).
"Escrow Agent" means the escrow agent serving from time to time under the
Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement of even date herewith, by and
between the Company, the holders of Class B Stock listed therein (including the
Seller) and Chase Bank of Texas, National Association, as the same may be
amended, modified, supplemented or replaced from time to time in the form
attached as Exhibit A.
"Factor" is defined in Section 2.2(2).
"Final Value" is defined in Schedule A of the Services Agreement.
"Governmental Authority" means any federal, state, local or foreign
government or any department, agency, political subdivision, commission or court
thereof.
"Law" means any common law and any constitution, statute, code, regulation,
rule, injunction, judgment, order, decree, ruling, or other charge of any
applicable Governmental Authority.
"Person" means any individual, partnership, association, corporation,
limited liability company, trust, joint venture, other legal entity, or a
Governmental Authority.
"Purchase Price" is defined in Section 2.1.
"Representative" means Xxxxxx X. Xxxxxxx or such other Person as a majority
of the Class B Stockholders (other than the Company) may designate.
"Second Amendment" is defined in Section 2.4.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest of any kind or type whatsoever.
"Services Agreement" means that certain Services Agreement by and among the
Company and API, as the same may be amended, modified, supplemented or replaced
from time to time.
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"Stockholders Agreement" means that certain Stockholders Agreement among
DQE, Inc. (successor in interest to DQEnergy Partners, Inc.), those Class B
Investors listed on the signature pages thereto and the Company dated as of
April 4, 1997, as previously amended by the First Amendment to Stockholders
Agreement dated as of April 4, 1997.
"Stock Power" is defined in Section 5.
"Transaction Documents" means this Agreement, the Second Amendment, the
Employment Consent, the Escrow Agreement, the Stock Power, Power of Attorney and
the Written Consent.
"Written Consent" is defined in Section 2.4.
2. Purchase and Sale.
2.1 Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Company agrees to purchase from the Seller, and the Seller agrees
to sell to the Company, the Shares in exchange for, among other things, the
consideration being specified in this Section 2 (such consideration being
referred to herein as the "Purchase Price").
2.2 Transfer of Shares; Payment of Purchase Price.
(1) The Seller shall transfer Shares to the Company, and the Company
shall pay the Seller the Purchase Price, through the Escrow Agent on each of the
following dates (each a "Closing Milestone"), as follows:
(A) on the later of February 16, 1999 or 12 months after the date
on the initial certificate representing the Shares originally issued to
Seller, the Escrow Agent shall transfer or cause to be transferred one-
quarter of the Shares to the Company and the Escrow Agent shall pay to the
Seller $__________ (a "Cash Amount");
(B) on February 28, 2000, the Escrow Agent shall transfer or
cause to be transferred one-tenth of the Shares to the Company and the
Escrow Agent shall pay to the Seller $__________ (a "Cash Amount") plus the
Additional Amount for 1999;
(C) on February 28, 2001, the Escrow Agent shall transfer or
cause to be transferred one-tenth of the Shares to the Company and the
Escrow Agent shall pay to the Seller $__________ (a "Cash Amount") plus the
Additional Amount for 2000;
(D) on February 28, 2002, the Escrow Agent shall transfer or
cause to be transferred one-tenth of the Shares to the Company and the
Escrow Agent shall pay to the Seller the Additional Amount for 2001;
(E) on February 28, 2003, the Escrow Agent shall transfer or
cause to be transferred one-tenth of the Shares to the Company and the
Escrow Agent shall pay to the Seller the Additional Amount for 2002;
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(F) on February 28, 2004, the Escrow Agent shall transfer or
cause to be transferred one-tenth of the Shares to the Company and the
Escrow Agent shall pay to the Seller the Additional Amount for 2003; and
(G) upon termination of the Services Agreement, the Escrow Agent
shall transfer or cause to be transferred the remaining one-quarter or the
remaining balance of the Shares to the Company and the Escrow Agent shall
pay to Seller a final payment, if any, upon determination of the Final
Value.
The "Additional Amount" is an amount in dollars which is the product of (i)
66 2/3% multiplied by the number of Class B Shares owned by the Seller on the
date hereof divided by 19,590; and (ii) the Annual Distribution Amount, if any,
as such amount is determined from time to time pursuant to Schedule A of the
Services Agreement.
(2) Notwithstanding the foregoing, except for the payment due on the
Closing Milestone set forth in Section 2.2(1)(A) above, if the Seller's
employment with the Company or API, as the case may be, terminates for any
reason, Seller shall receive:
(i) the Additional Amount for the year in which Seller's
employment terminates at the time such payment is
scheduled to be paid; plus
(ii) on February 28, 2004, any of the unpaid Cash Amounts under
2.2 (B) or (C) multiplied by the Factor; plus
(iii) on February 28, 2004, an amount equal to the sum of all
Additional Amounts accrued through the time of Seller's
termination multiplied by the Factor.
The amount payable in (ii) and (iii) of the preceding sentence shall accrue
interest from the date of termination at a rate equal to that borne by six-month
U.S. Government T-Bills from time to time. The "Factor" means the lesser of the
ratio of (i) the Final Value at the termination of the Services Agreement
divided by the corresponding aggregate DQE Investment, and that quotient divided
by the value obtained by dividing by the Appraised Value for the year in which
the Seller's employment was terminated by the aggregate DQE Investment for that
year or (ii) the ratio of the Final Value less the corresponding aggregate DQE
Investment, and that difference divided by the value obtained by subtracting the
aggregate DQE Investment for the year in which the Seller's employment was
terminated from the Appraised Value for that year; provided, however, that the
Factor shall never be greater than one or less than zero. If there is no Final
Value determination at February 28, 2004, the Appraised Value determined as of
February 28, 2004 will be used. In the event Seller's termination of employment
with the Company or API, as applicable, the remaining balance of Seller's Shares
held by the Escrow Agent shall be surrendered to the Company on February 28,
2004.
(3) In the event that the Services Agreement is terminated prior to
February 28, 2004, Seller shall be paid all Cash Amounts, payable at their
respective Closing Milestone, plus the sum of all Additional Amounts accrued and
unpaid through the date of the
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termination of the Services Agreement and any payment due as a result of the
determination of a Final Value, as defined in the Services Agreement. The
remaining balance of Seller's Shares shall be transferred to the Company upon
payment to Seller of all amounts due under Section 2.2(3). Upon termination of
the Services Agreement, the Company at its sole discretion may accelerate any
payments set forth in Section 2.2(2) upon which the Company shall receive any
remaining Shares from the Escrow Agent.
(4) In the event of Seller's death, Seller's estate or personal
representative shall only receive the Cash Amounts in (A), (B) and (C) of
Section 2.2(1) payable upon the respective Closing Milestones plus any accrued
but unpaid Additional Amounts as of the date of death.
The Seller hereby acknowledges that the consideration received by the
Seller as set forth in this Section 2.2 for the Seller's Shares will be
different from and received at different times than that consideration per share
contemplated in the Stockholders Agreement and may be different from the
consideration per share received by other sellers of Class B Stock and consents
thereto.
2.3 Escrow. To facilitate and effect the transfer of Shares and payment
of Purchase Price at each Closing Milestone hereunder, the Company and the
Seller have agreed to the escrow arrangement provided for in the Escrow
Agreement, and, in connection therewith, will take the actions (among others)
set forth in Section 5(a), (b) and (c) and Section 7 of this Agreement.
2.4 Treatment of Stockholders Agreement. Seller will execute and deliver
the following documents:
(a) Contemporaneously with the execution of this Agreement, the Second
Amendment to Stockholders Agreement in the form attached hereto as Exhibit
B (the "Second Amendment"), which shall become effective upon the execution
and delivery of the same by the holders of at least 80% of the Class B
Common Stock; and
(b) Contemporaneously with the execution of this Agreement, a Written
Consent ("Written Consent") of the Class B Stockholders of AquaSource, Inc.
in the form attached hereto as Exhibit C.
2.5 Termination of Employment Agreement. By execution of this Agreement,
the Company and the Seller hereby terminate that certain Employment Agreement by
and between the Seller and the Company and hereby release each other from any
further obligations thereunder.
3. Representations and Warranties of the Seller. The Seller hereby represents
and warrants to the Company as follows:
3.1 Power and Authority; Enforceability. The Seller has all requisite
legal power and authority to enter into this Agreement, the other Transaction
Documents and all other documents to be entered into by the Seller in connection
with the consummation of the transactions contemplated hereby and to perform the
Seller's obligations hereunder and thereunder. This Agreement, the other
Transaction Documents and all other documents being
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entered into by the Seller in connection with the consummation of the
transactions contemplated hereby have been duly executed and delivered by the
Seller and, assuming due authorization, execution and delivery by the Company,
constitute the legal, valid and binding obligations of the Seller enforceable in
accordance with their respective terms, except that (i) such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws
relating to or affecting creditors' rights generally and (ii) the remedy of
specific performance and injunction and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3.2 Ownership of Class B Company Stock. The Seller owns beneficially and,
of record, the Shares. Except for this Agreement and the Stockholders Agreement
there are no outstanding options, convertible securities, rights (preemptive or
other), warrants, calls or agreements relating to the Shares. The Seller is the
lawful owner of the Shares with full right, power and authority to sell and
transfer them, free and clear of any and all Security Interests, proxies,
shareholder agreements, voting agreements, voting trusts and adverse claims, to
the Company pursuant to the provisions of this Agreement. The Shares are being
sold and transferred by the Seller to the Company free and clear of any and all
Security Interests, proxies, shareholder agreements, voting agreements, voting
trusts and adverse claims.
3.3 No Default or Consents. Neither the execution and delivery of this
Agreement or any other Transaction Documents nor the consummation of the
transactions contemplated herein or therein (A) will conflict with or result in
(or with giving notice or passage of time would result in) a breach, default or
violation of any agreement, document, instrument, judgment, decree, order,
governmental permit, certificate or license to which the Seller is a party or to
which the Seller is subject or by which the Seller's property, including the
Shares, is bound, or (B) will result in the creation of any Security Interest on
any property or asset of the Seller, including the Shares; or (C) will require
the Seller to obtain the consent of any Person. No consent, action, approval or
authorization of, or registration, declaration or filing with, any Governmental
Authority having jurisdiction over the Seller or other Person is required to
authorize the execution and delivery of this Agreement or the other Transaction
Documents by the Seller or the performance of its or their terms or the
transactions contemplated hereby or thereby by the Seller.
3.4 Third-Party Fees. The Seller does not have any liability to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Company could be
liable or obligated at or after Closing.
4. Representations and Warranties of the Company. Subject to satisfying the
Conditions to Closing set forth in Section 6, the Company represents and
warrants to the Seller as follows:
4.1 Organization. The Company is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of Delaware
4.2 Authorization of Transaction. The Company has all requisite power and
authority to execute and to deliver this Agreement and the Escrow Agreement, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Escrow Agreement by the
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Company and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action and no other action
on the part of the Company is necessary to authorize this Agreement, the Escrow
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company and constitutes the valid
and legally binding obligation of the Company, enforceable in accordance with
its terms.
4.3 Third-Party Fees. The Company does not have any liability to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
4.4 Investment Intent. The Company is acquiring the Shares for the
Company's own account and not with a view to, or for sale in connection with,
directly or indirectly, any distribution thereof that would require registration
under the Securities Act of 1933, as amended (the "Securities Act") or
applicable state securities laws or would otherwise violate the Securities Act
or such state securities laws.
5. Pre-Closing Covenants and Actions. Contemporaneously with the execution of
this Agreement by the parties, the parties shall engage in the following
actions:
(a) The Seller, the Company and Escrow Agent shall enter into the
Escrow Agreement;
(b) The Seller shall deposit into escrow its Shares along with an
executed Stock Power duly endorsed in blank in the form attached hereto as
Exhibit D-1 or such Stock Power coupled with an endorsed Power of Attorney
in the form attached hereto as Exhibit D-2 in order to sell such Shares to
the Escrow Agent, in the event such shares are held by a fiduciary on
behalf of the Seller or the Seller's estate (the "Stock Power");
(c) The Company shall deposit with the Escrow Agent $30,000,000 to
fund the Cash Amounts referenced in Section 2.2;
(d) The Seller shall execute and deliver to the Company the Written
Consent; and
(e) The Seller shall execute that certain Employment Consent (the
"Employment Consent") attached hereto as Exhibit E by and between the
Company, API and Seller regarding the employment of Seller.
6. Closing; Closing Date. Upon the occurrence of a Closing Milestone, the
parties shall close the sale and purchase of the Shares specifically identified
to the Closing Milestone (the "Closing"), in accordance with the terms hereof
and the Escrow Agreement. The precise date and time will be established and
agreed to by the parties, but shall be not later than five Business Days
following the Closing Milestone (the "Closing Date").
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The following conditions shall have been satisfied prior to the initial
Closing:
(a) the Second Amendment shall have been entered into by Seller and
become effective as set forth in Section 2.4, thereby amending the
Stockholders Agreement; and
(b) the Written Consent shall have been executed and delivered by
Seller and the holders of a majority of the Class B Common Stock and the
Company's Certificate of Incorporation shall have been amended as
contemplated therein.
7. Closing; Closing Procedure. At each Closing, the following shall occur:
(a) The Escrow Agent on behalf of the Company shall deliver to the
Seller the applicable portion of the Purchase Price as set forth in Section
2.2 in cash or other immediately available funds in a manner which is
acceptable to the Seller, and the Company agrees to deliver to the Escrow
Agent an amount necessary to meet such Purchase Price obligation no later
than five Business Days prior to the Closing Date;
(b) If required by any party, both the Seller and the Company shall
sign a certificate indicating that the representations and warranties
specified in Section 3 as to the Seller and Section 4 as to the Company are
true and correct as of the Closing Date;
(c) The Escrow Agent on behalf of the Seller and pursuant to the Stock
Power shall sign, transfer and convey to the Company all of the Seller's
right, title and interest in that number of Shares to be delivered to the
Company pursuant to Section 2.2;
(d) Each party shall deliver any other documents or take any other
actions necessary or helpful to facilitate and accomplish the purposes of
this Agreement as well as to consummate the various transactions
contemplated herein necessary for Closing.
8. Post-Closing Covenants and Actions.
8.1 Other Required Actions. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as the other
party reasonably may request; provided, however, that this Section 8.1 shall not
be deemed to require either party to expend funds or to incur obligations not
otherwise expressly required pursuant to this Agreement.
8.2 Non-Compete. The Seller further agrees that during the term of this
Agreement and for three years following the completion of the payments to the
Seller in exchange for the Shares as set forth in Section 2.2 (the "Restricted
Period"), the Seller shall not, directly or indirectly, compete with the Company
or any direct or indirect affiliate thereof in any manner, on behalf of the
Seller or any other Person, including, without limitation, that the Seller shall
not (i) engage in Company Business (as hereafter defined); (ii) enter the employ
of, or render any services to, any Person engaged in Company Business; (iii)
become interested in any such Person engaged in Company Business as an
individual, partner, shareholder, officer, director, licensor,
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licensee, principal, agent, employee, trustee, consultant or in any other
relationship or capacity; provided, however, that the Seller may own, directly
or indirectly, solely as an investment, securities of any Person which are
traded on any national securities exchange if the Seller (A) is not a
controlling Person of, or a member of a group which controls, such Person or (B)
does not, directly or indirectly, own 1% or more of any class of securities of
such Person; or (iv) request or instigate any account or customer of the Company
or any direct or indirect affiliate thereof to withdraw, diminish, curtail or
cancel any of its business with the Company. "Company Business" shall mean any
business actually conducted by the Company or any direct or indirect affiliate
thereof or contemplated to be conducted by the Company or any direct or indirect
affiliate thereof in the Geographic Proximity. "Geographic Proximity" shall mean
the states in which such business is conducted either at the beginning of the
Restricted Period or in the future. In addition, during the Restricted Period,
the Seller shall refrain from soliciting employees of the Company or its direct
or indirect affiliates for employment with the Seller or with any other Person
engaged in Company Business. The parties hereto agree that Seller's employment
with Acquisition Partners, Inc., if it occurs, does not violate the provisions
of this Section 8.2 as long as the Services Agreement is in effect.
9. Miscellaneous.
9.1 Advisors. Seller has been afforded the opportunity to discuss this
Agreement and the transactions contemplated herein with counsel and/or a
financial advisor of Seller's choice.
9.2 No Third-Party Beneficiaries; Standing. This Agreement shall not
confer any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns and no Person, other than the
parties and their respective successors and permitted assigns, shall have
standing with respect to the matters which are the subject of this Agreement,
including, without limitation, this Agreement, the various agreements attached
hereto or referenced herein and the transactions contemplated hereby or thereby.
9.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations between the parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
9.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective heirs,
successors and permitted assigns. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other parties hereto.
9.5 Multiple Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
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9.6 Notices. Any notice, request, instruction, correspondence or other
documents to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of receipt of delivery or mailed in the
country of origination by certified or registered mail, postage prepaid and
return receipt requested, or by telecopier, as follows:
If to the Seller, addressed as follows:
The name and address set forth on
the signature page hereto
If to the Company, addressed as follows:
AquaSource, Inc.
00xx Xxxxx
000-Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
ATTN: Xxxxxx X. Xxxxxxx
Telecopier No.: 000-000-0000
Notice given by personal delivery or courier service shall be effective upon
actual receipt. Notice given by telecopier shall be confirmed by appropriate
answer back and shall be effective upon actual receipt if received during the
recipient's normal business hours, or at the beginning of the recipient's next
business day after receipt if not received during the recipient's normal
business hours. Notice given by mail shall be effective 72 hours after its
deposit in the mails as provided herein. Any party may change any address to
which Notice is to be given to it by giving at least 72 hours advance Notice as
provided above of such change of address.
9.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware without giving effect to any
choice or conflict of Law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the State of Delaware.
9.8 Amendments and Waivers. No amendments of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by each
party hereto. No waiver by either party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
9.9 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
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9.10 Expenses. Each of the parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
9.11 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring either party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
9.12 Specific Performance. The parties hereto agree that this Agreement
shall be specifically enforceable and the parties hereto hereby waive any
defense to such a proceeding in equity that monetary damages are sufficient.
9.13 Exhibits. Each agreement, schedule and exhibit attached to this
Agreement or referred to herein is hereby incorporated herein and made a part
hereof for all purposes as if fully set out in this Agreement.
9.14 No Individual Liability. With respect to any party who has entered
into this Agreement in his or her capacity as a director, officer, employee,
trustee, fiduciary or other type of representative of another Person, this
Agreement and the various rights, obligations and liabilities imposed hereunder
apply to such party in his or her representative capacity only and shall not
impose nor create any rights, obligations and liabilities against such Person in
his or her individual capacity or in any other manner other than in his or her
representative capacity.
9.15 Waiver of Trial by Jury. The parties hereto (including, in the case
of the Company, in its own behalf and, to the extent permitted by applicable
law, on behalf of its subsidiaries and affiliates) waive all right to trial by
jury in any such action, proceeding or counterclaim (whether based on contract,
tort or otherwise) related to or arising out of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement this ____ day
of February, 1999, to be effective as of the date first above written.
SELLER
By:
Fax No. (if applicable):
Number of Shares:
COMPANY
By:
Xxxxxx X. Xxxxxxx
President
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