EXHIBIT 10.19
OPTION TO PURCHASE
RAMUS MEDICAL TECHNOLOGIES
THIS OPTION TO PURCHASE RAMUS MEDICAL TECHNOLOGIES (the "OPTION AGREEMENT")
is made and entered into on the date hereinafter set forth by and among RAMUS
MEDICAL TECHNOLOGIES, a California corporation ("RAMUS"), PDT CARDIOVASCULAR,
INC., a Delaware corporation ("PDTC"), and the other shareholders of Ramus
identified in SCHEDULE 1 hereto (collectively, the "SHAREHOLDERS").
WHEREAS:
A. PDTC and Ramus are entering into an Investment Agreement of even date
(the "INVESTMENT AGREEMENT");
B. The Shareholders own all of the outstanding shares of capital stock of
Ramus or hold all of the outstanding options, rights or other securities to
acquire the shares of capital stock of Ramus;
C. The Investment Agreement contemplates Ramus granting to PDTC an option
to purchase Ramus as set forth herein; and
D. The Shareholders have also agreed to join in this Option Agreement.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. OPTION.
1.1 OPTION TO PURCHASE RAMUS. In consideration of the execution and
performance of the Investment Agreement, Ramus and the Shareholders hereby agree
that PDTC has fully complied with all obligations in the Investment Agreement as
required to date, Ramus and the Shareholders do hereby grant to PDTC an option
(the "OPTION") to purchase Ramus for the purchase price set forth in SECTION 1.2
below.
1.2 PURCHASE PRICE. Subject to the provisions of SECTION 4 with
respect to the issuance of PDT Shares, the purchase price for all of Ramus
shall be equal to ***** (the "PURCHASE PRICE"). (1) The Purchase Price will be
distributed on a pro rata basis to the holders of outstanding Ramus common
stock (the "COMMON STOCK"). Each Shareholder agrees to convert any
convertible securities into Common Stock and to exercise any options, rights
or other securities granting the right to acquire shares of Common Stock upon
notice by PDTC of the exercise of the Option; PROVIDED, HOWEVER, PDTC hereby
expressly acknowledges and agrees that, as provided in the option agreements
of those Shareholders who are option holders, such option holders may provide
for the exchange of their options for their applicable portion of the
Purchase Price having a value equal to the difference, or spread, between (i)
their applicable portion of the Purchase Price issuable upon exercise of the
option had the option been exercised immediately prior to the closing and
(ii) the applicable exercise price of the option.
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(1) PDTC's Shares shall not be subject to the Option, and the Purchase Price
shall be reduced accordingly. For example, if, at the Closing of the Option
purchase, PDTC owns thirty percent (30%) of the PDT Shares, the Purchase
Price would be seventy percent (70%) of *****.
2. TERM OF THE OPTION. The Option shall commence as of the execution
of this Option Agreement and shall expire (the "EXPIRATION DATE") on the
later of ***** from the execution of this Option Agreement, or ***** after
the day on which the first surgical procedure to implant the Company's
initial product in a coronary artery in a human subject involving coronary
artery bypass surgery is completed in its formally conducted clinical trials
supervised by the United States Food and Drug Administration, or the
regulatory equivalent in the country in which treatment is undertaken. Ramus
covenants to give notice to PDTC, as provided herein, of the first human
implant by Ramus, as set forth in the preceding sentence, within ten (10)
days of the date that such human implant is first undertaken.
3. NOTICE OF EXERCISE. Notice of exercise of the Option (the
"NOTICE") shall be accomplished in writing on or prior to the Expiration
Date. The Notice shall include an executed Purchase and Sale Agreement for
the purchase and sale of Ramus (the "PURCHASE AND SALE AGREEMENT"). The
Purchase and Sale Agreement shall be in the form attached hereto as EXHIBIT
A, with such changes therein as the parties reasonably determine are
necessary to implement the desired forms and transaction (sale of shares or a
merger), and shall provide for a closing within ninety (90) days of the date
of the Notice. After delivery of the Notice, if requested by Ramus, PDTC
will provide the loan described in the Stock Purchase Agreement.
4. PAYMENT OF PURCHASE PRICE.
(a) The Purchase Price will be payable in cash and the stock of
PDTC's parent corporation, PDT, Inc. (the "PDT SHARES") , or entirely in cash
or entirely in PDT Shares, at the option of PDTC. PDTC cannot convert this
from a stock sale to an asset sale without the prior written consent of Ramus
and its Shareholders.
(b) If PDTC elects to deliver the PDT Shares, it will deliver a
sufficient percentage of the Purchase Price to the Shareholders to permit
them to receive the PDT Shares as part of a tax-free reorganization as
determined by PDTC's independent auditors. ***** In the event that any of the
Purchase Price is to be payable in PDT Shares, each of the following
conditions shall have been satisfied on or prior to the closing contemplated
by this Option Agreement: (i) PDT, Inc. shall have had declared effective by
the Securities and Exchange Commission a registration statement covering the
resale by all of the Shareholders of the PDT Shares received by such
Shareholders, in form and substance reasonably satisfactory to Ramus, and
Ramus and the Shareholders will cooperate with PDT, Inc. in registering said
PDT Shares; and (ii) *****; and (iii) the PDT Shares shall be listed for
trading on the NASDAQ National Market System (NMS) or a national securities
exchange.
(c) The aggregate number of PDT Shares to be delivered by PDTC
shall be increased by ***** for each ***** of the Purchase Price paid for in
PDT Shares in consideration of the following agreement of the Shareholders:
(i) the Shareholders agree not to sell more than the greater
of ***** the PDT Shares owned by them, or ***** during any five (5)
trading day period, unless the PDT Shares are sold to PDT or the PDT
Employee Stock Ownership Plan.
(ii) the Shareholders may sell the PDT Shares in a private
transaction occurring off market and not reported in National Market
Systems (NMS) or other national securities exchange which is either
approved by PDT or which is included in the limitations of (i) above.
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(iii) each share certificate representing the PDT Shares will
contain a legend reflecting the foregoing.
5. ADDITIONAL SHAREHOLDERS. Ramus shall not issue any capital stock
or any securities convertible into, exchangeable for or exercisable for
capital stock of Ramus (whether preferred, common or otherwise) unless the
purchaser, grantee or other recipient thereof shall have executed a Joinder
Agreement to this Option Agreement in the form of EXHIBIT B at the time that
they first become a holder of or entitled to such securities. Ramus shall
use its best efforts to secure the execution by its existing option holders
of the Joinder Agreement and will not issue new options that do not include a
condition of executing the Joinder Agreement.
6. EMPLOYMENT AGREEMENTS AND CONSULTING AGREEMENTS. Ramus shall have
entered into Employment Agreements and Consulting Agreements to the
satisfaction of Ramus. Employment Agreements would be required for ***** if
they are still employed by Ramus at the time that this Option is exercised
and provided that they will agree to the compensation terms in effect
immediately preceding the exercise of the Option, together with any other
managers that PDTC wishes to retain. The Employment Agreements will provide
for customary provisions and shall include six (6) months' severance for
termination without cause, and no severance if termination is for cause.
*****. Any of the foregoing agreements will be terminable in the event of a
breach of the covenants not to compete by that party.
7. PROXY; LEGENDS. Each Shareholder, by signing this Option
Agreement, and each person who shall execute a Joinder Agreement by signing
such Joinder Agreement, grants PDTC an irrevocable proxy with respect to all
of such person's securities in Ramus, whether now or hereafter held by such
person, for the purpose of voting, converting, exchanging, exercising or
transferring such securities in connection with any exercise of the Option by
PDTC. The parties agree and acknowledge that such proxy is irrevocable by
the existing Shareholders and other persons who join this Option Agreement in
accordance with Section 705(e) of the California Corporations Code. Each
outstanding security of Ramus (including any right to acquire a security) and
each security or other right thereafter issued by Ramus shall bear a legend
reflecting the granting of such proxy and the existence of the Option in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
AND CONDITIONS OF AN OPTION AGREEMENT AMONG RAMUS MEDICAL TECHNOLOGIES
("RAMUS"), PDT CARDIOVASCULAR, INC. ("PDTC") AND CERTAIN OTHER PERSONS
PURSUANT TO WHICH THIS SECURITY IS SUBJECT TO AN OPTION TO PURCHASE
GRANTED IN FAVOR OF PDTC. PURSUANT TO SUCH OPTION AGREEMENT, THE
HOLDERS OF THIS SECURITY HAS GRANTED AN IRREVOCABLE PROXY IN FAVOR OF
PDTC WITH RESPECT TO CERTAIN MATTERS RELATING TO SUCH OPTION. A COPY OF
THE OPTION AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL
EXECUTIVE OFFICES OF RAMUS.
8. ROLE OF HAI FINANCIAL. Ramus and the Shareholders hereby
acknowledge that HAI Financial ("HAI") is acting as an advisor to Ramus and
will be entitled to be paid a fee upon the exercise of the Option by PDTC and
upon funding of PDTC's investment in Ramus. Ramus and the Shareholders
further acknowledge that the principal of HAI, Xxxxxxx X. Xxxxxx ("XXXXXX"),
is a director and shareholder of PDTC's parent corporation, PDT, Inc. After
consultation with counsel and with full knowledge of the relationship and
possible conflict of interest, Ramus and the Shareholders agree that
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HAI or Xxxxxxx X. Xxxxxx'x involvement in this transaction shall in no way
invalidate the Option or serve as an excuse for non-performance by either
Ramus or the Shareholders for performing their obligations hereunder. The
following waiver and release is not intended to apply to claims which Ramus
may have against HAI or Foscue, nor is it intended to apply to any breach of
the Investment Agreement or this Option Agreement, by PDTC. However, an
assertion of a breach of the Investment Agreement or this Option Agreement
shall not excuse Ramus and the Shareholders from performing their obligations
under the Option. Ramus and the Shareholders irrevocably and unconditionally
waive and release any and all claims against PDTC, PDT, their respective
officers, directors, employees, agents and insureds from HAI's involvement
with Ramus, the Shareholders or this transaction, whether now existing or
hereafter arising.
Ramus and the Shareholders acknowledge that they are aware of,
understand and hereby waive the rights of Section 1542 of the California
Civil Code, which provides:
"A general release does not extend to claims which the creditor does not know
or suspect to exist in his favor at the time of executing the release, which
if known by him must have materially affected his settlement with the debtor."
9. NO SOLICITATION. The Shareholders will not take, nor will they
permit Ramus, or authorize or permit any investment banker, financial
advisor, attorney, accountant or other person retained by or acting for or on
behalf of any Shareholder or Ramus to take, directly or indirectly, any
action to solicit, encourage, receive, negotiate, assist or otherwise
facilitate (including by furnishing confidential information with respect to
Ramus or permitting access to the assets and properties and books and records
of Ramus), any offer or inquiry from any person concerning a proposed sale or
license of Ramus' technology or a proposed sale of the shares of Ramus or a
merger or other business combination between Ramus and a third-party. The
foregoing shall not preclude the sale of securities which does not result in
a change of control and which otherwise complies with this Option Agreement.
Unless PDTC refuses to provide financing in accordance with Sections 6.4 or
6.5 of the Investment Agreement, Ramus will be permitted to negotiate a
proposed license of Ramus's technology to an entity not affiliated with Ramus
or its shareholders, officers or directors after *****, so long as PDTC shall
approve the license. If PDTC refuses to approve the license within ten (10)
days of submission of the license (the "LICENSE REVIEW PERIOD") by Ramus to
PDTC, PDTC will purchase ***** in ***** at a price of ***** per share,
payable in cash, within ten (10) business days of the expiration of the
License Review Period. If any Shareholder or Ramus (or any such person
acting for or on their behalf) receives from any person any offer, inquiry or
informational request referred to above, such Shareholder or Ramus, as
applicable, will promptly advise such person, by written notice, of the terms
of this SECTION 9 and will promptly, orally and in writing, advise PDTC of
such offer, inquiry or request and deliver a copy thereof and of such notice
to PDTC.
10. MISCELLANEOUS.
10.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Option Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties.
Nothing in this Option Agreement, express or implied, is intended to confer
upon any party, other than the parties hereto or their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by
reason of this Option Agreement, except as expressly provided in this Option
Agreement.
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10.2 SPECIFIC PERFORMANCE. PDTC shall be entitled to all rights
available under law, as well as injunctive relief, including the right to
demand specific performance of the Option by Ramus and the Shareholders.
10.3 GOVERNING LAW. This Option Agreement shall be governed by and
construed under the laws of the State of California.
10.4 COUNTERPARTS. This Option Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Option Agreement are used for convenience only and are not be considered in
construing or interpreting this Option Agreement.
10.6 NOTICES. Unless otherwise specifically provided herein, any
notice, demand, request or other communication herein requested or permitted
to be given shall be in writing and may be personally served, telecopied,
telexed or sent by recognized international courier service or United States
mail and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of a telecopy or telex or five (5) business
days after deposit in the United States mail in the continental United States
(registered or certified, with postage prepaid and properly addressed). For
purposes hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this SECTION 10.6) shall be as
follows:
If to Company: Ramus Medical Technologies
0000 Xxx Xxxx, Xxxx 0
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Love, President
With a copy to: Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to PDTC: PDT Cardiovascular, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxx, President
With a copy to: Nida & Xxxxxxx, PC
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
10.7 ATTORNEYS' FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Option Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party
may be entitled.
10.8 AMENDMENTS AND WAIVERS. Any term of this Option Agreement may
be amended and the observance of any term of this Option Agreement may be
waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of Ramus and
PDTC. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon the parties, their successors and assigns.
10.9 SEVERABILITY. If one or more provisions of this Option
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Option Agreement and the balance of the Option
Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
10.10 TERMINATION. This Option Agreement, and the obligations of
the parties with respect thereto, shall terminate on the Option Termination
Date.
10.11 PUBLIC DISCLOSURE. Except as may be required to comply with
applicable law, and the requirements of PDTC's parent corporation, as an
entity whose stock is publicly traded, no party this Option Agreement shall
make or cause to be made any press release or similar public announcement or
communication concerning the execution or performance of this Option
Agreement and any of the transactions contemplated hereby, unless
specifically approved in advance and in writing by Ramus and PDTC.
Notwithstanding the foregoing, unless required by an opinion of PDTC's
counsel, PDTC will not disclose the non-exercise of its Option described in
this Option Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Option
Agreement this 27th day of December, 1996.
RAMUS
RAMUS MEDICAL TECHNOLOGIES,
a California corporation
By: /s/ Xxxxxxx X. Love
--------------------------------
Title: President
PDTC
PDT CARDIOVASCULAR, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Title: Chairman
SHAREHOLDERS
/s/ Xxxxxxx X. Love
--------------------------------
/s/ *****
--------------------------------
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EXHIBIT A
Purchase and Sale Agreement
FORM OF
STOCK PURCHASE AGREEMENT
dated as of ________________
by and between
PDT CARDIOVASCULAR, INC.
and
THE SELLERS IDENTIFIED ON SCHEDULE 1 HERETO
with respect to all
outstanding capital stock of
RAMUS MEDICAL TECHNOLOGIES
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience only.
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ARTICLE I - SALE OF SHARES AND CLOSING
1.01 PURCHASE AND SALE 1
1.02 PURCHASE PRICE 1
1.03 CLOSING 2
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF SELLERS
2.01 ORGANIZATION OF SELLER 2
2.02 AUTHORITY 2
2.03 ORGANIZATION OF THE COMPANY 3
2.04 CAPITAL STOCK 3
2.05 SUBSIDIARIES 3
2.06 NO CONFLICTS 4
2.07 GOVERNMENTAL APPROVALS AND FILINGS 4
2.08 BOOKS AND RECORDS 4
2.09 FINANCIAL STATEMENTS 5
2.10 ABSENCE OF CHANGES 5
2.11 NO UNDISCLOSED LIABILITIES 7
2.12 TAXES 8
2.13 LEGAL PROCEEDINGS 9
2.14 COMPLIANCE WITH LAWS AND ORDERS 9
2.15 BENEFIT PLANS; ERISA 9
2.16 REAL PROPERTY 12
2.17 TANGIBLE PERSONAL PROPERTY; INVESTMENT ASSETS 13
2.18 INTELLECTUAL PROPERTY RIGHTS 13
2.19 CONTRACTS 14
2.20 LICENSES 15
2.21 INSURANCE 16
2.22 AFFILIATE TRANSACTIONS 16
2.23 EMPLOYEES; LABOR RELATIONS 17
2.24 ENVIRONMENTAL MATTERS 17
2.25 SUBSTANTIAL CUSTOMERS AND SUPPLIERS 18
2.26 BANK AND BROKERAGE ACCOUNTS; INVESTMENT ASSETS 19
2.27 NO POWERS OF ATTORNEY 19
2.28 ACCOUNTS RECEIVABLE 19
2.29 BROKERS 19
2.30 DISCLOSURE 19
2.31 INCORPORATION BY REFERENCE 20
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01 ORGANIZATION 20
3.02 AUTHORITY 20
3.03 NO CONFLICTS 20
3.04 GOVERNMENTAL APPROVALS AND FILINGS 21
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3.05 LEGAL PROCEEDINGS 21
3.06 PURCHASE FOR INVESTMENT 21
3.07 ACCREDITED INVESTOR 21
3.08 PURCHASE ENTIRELY FOR OWN ACCOUNT 21
3.09 INVESTMENT EXPERIENCE 21
3.10 PDT SHARES 21
ARCTICLE IV - COVENANTS OF SELLERS
4.01 REGULATORY AND OTHER APPROVALS 22
4.02 HSR FILINGS 22
4.03 INVESTIGATION BY PURCHASER 22
4.04 NO SOLICITATIONS 23
4.05 CONDUCT OF BUSINESS 23
4.06 EMPLOYEE MATTERS 24
4.07 CERTAIN RESTRICTIONS 24
4.08 AFFILIATE TRANSACTIONS 26
4.09 BOOKS AND RECORDS 26
4.10 NONCOMPETITION 26
4.11 NOTICE AND CURE 27
4.12 FULFILLMENT OF CONDITIONS 27
ARTICLE V - COVENANTS OF PURCHASER
5.01 REGULATORY AND OTHER APPROVALS 28
5.02 HSR FILINGS 28
5.03 NOTICE AND CURE 28
5.04 FULFILLMENT OF CONDITIONS 28
5.05 REGISTRATION OF PDT SHARES 29
5.06 ADVANCE BY PURCHASER TO THE COMPANY 29
ARTICLE VI - CONDITIONS TO OBLIGATIONS OF PURCHASER
6.01 REPRESENTATIONS AND WARRANTIES 29
6.02 PERFORMANCE; NO DEFAUL 29
6.03 OFFICERS' CERTIFICATES 29
6.04 ORDERS AND LAWS 29
6.05 REGULATORY CONSENTS AND APPROVALS 30
6.06 THIRD PARTY CONSENTS 30
6.07 OPINION OF COUNSEL 30
6.08 GOOD STANDING CERTIFICATES 30
6.09 SPECIAL PROCEDURES REPORT 30
6.10 RESIGNATIONS OF DIRECTORS AND OFFICERS 31
6.11 ENVIRONMENTAL SURVEY 31
6.12 PROCEEDINGS 31
6.13 EMPLOYMENT AND NONCOMPETITION AGREEMENTS 31
6.14 EQUITY RIGHTS 31
6.15 RELEASES 31
6.16 COMPLETION OF DUE DILIGENCE; FINANCIAL STATEMENTS 31
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6.17 JOINDER 31
6.18 AUDITED FINANCIAL STATEMENTS 31
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF SELLERS
7.01 REPRESENTATIONS AND WARRANTIES 32
7.02 PERFORMANCE 32
7.03 OFFICERS' CERTIFICATES 32
7.04 ORDERS AND LAWS 32
7.05 REGULATORY CONSENTS AND APPROVALS 32
7.06 THIRD PARTY CONSENTS 32
7.07 OPINION OF COUNSEL 33
7.08 PROCEEDINGS 33
7.09 GOOD STANDING CERTIFICATES 33
7.10 EMPLOYMENT AGREEMENTS AND CONSULTING AGREEMENTS 33
ARTICLE VIII - TAX MATTERS AND POST-CLOSING TAXES
8.01 INDEMNIFICATION 33
8.02 CONTROL OF CONTEST 33
8.03 ACCESS TO INFORMATION 34
8.04 RETENTION OF RECORDS 34
8.05 RESOLUTION OF DISAGREEMENTS AMONG PARTIES 34
8.06 TAX RETURNS 34
8.07 PRE-FILING APPROVAL OF TAX RETURNS AND REPORTS 34
8.08 COMPANY'S FINAL RETURNS 35
ARTICLE IX - SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS
9.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS 35
ARTICLE X - INDEMNIFICATION
10.01 TAX INDEMNIFICATION 35
10.02 OTHER INDEMNIFICATION 36
10.03 METHOD OF ASSERTING CLAIMS 36
ARTICLE XI - TERMINATION AND DEFAULT
11.01 TERMINATION 39
11.02 EFFECT OF TERMINATION 40
ARTICLE XII - DEFINITIONS
12.01 DEFINITIONS 40
ARTICLE XIII - MISCELLANEOUS
13.01 NOTICES 48
13.02 ENTIRE AGREEMENT 49
13.03 EXPENSES 49
13.04 PUBLIC ANNOUNCEMENTS 49
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13.05 CONFIDENTIALITY 49
13.06 FURTHER ASSURANCES; POST-CLOSING COOPERATION 50
13.07 WAIVER 51
13.08 AMENDMENT 51
13.09 NO THIRD PARTY BENEFICIARY 51
13.10 NO ASSIGNMENT; BINDING EFFECT 51
13.11 HEADINGS 51
13.12 ARBITRATION 51
13.13 CONSENT TO JURISDICTION AND SERVICE OF PROCESS 52
13.14 INVALID PROVISIONS 52
13.15 AGENT 53
13.16 GOVERNING LAW 53
13.17 COUNTERPARTS 53
13.18 SIGNATURES 53
EXHIBITS
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EXHIBIT A Escrow Agreement
EXHIBIT B Officer's Certificate of Sellers
EXHIBIT C Opinion of Counsel to Sellers and Company
EXHIBIT D Special Procedures Report
EXHIBIT E Officer's Certificate of Purchaser
EXHIBIT F Secretary's Certificate of Purchaser
EXHIBIT G Opinion of Counsel to Purchaser
SCHEDULES
---------
SCHEDULE 1 List of Sellers
FORM OF
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT dated as of _______________ is made
and entered into by and between PDT CARDIOVASCULAR, INC., a Delaware
corporation ("PURCHASER"), and each of the shareholders of RAMUS MEDICAL
TECHNOLOGIES., a California corporation, listed on SCHEDULE 1 hereto (each a
"SELLER" and collectively, "SELLERS"). Capitalized terms not otherwise
defined herein have the meanings set forth in SECTION 12.01.
WHEREAS, Sellers own _____________________________________
(________) shares of common stock, no par value, of Ramus Medical
Technologies, a California corporation (the "COMPANY"), constituting all
issued and outstanding shares of capital stock of the Company, or the rights
to acquire such shares as indicated on SCHEDULE 1, excluding shares owned by
Purchaser prior to the execution of this Agreement (such shares being
referred to herein as the "SHARES");
WHEREAS, Xxxxxxx X. Love ("LOVE") is a Seller and owns _________
percent (___%) of the Shares owned by the Sellers; and
WHEREAS, Sellers desire to sell, and Purchaser desires to purchase,
the Shares on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.01 PURCHASE AND SALE. Each Seller agrees to sell to Purchaser,
and Purchaser agrees to purchase from each Seller, all of the right, title
and interest of such Seller in and to the Shares owned by such Seller at the
Closing, as hereinafter defined, on the terms and subject to the conditions
set forth in this Agreement.
1.02 PURCHASE PRICE. The aggregate purchase price (the "PURCHASE
PRICE") for the Shares and for the covenant of the Sellers contained in
Section 4.11 is as follows:
(a) ****(1)
(b) The Purchase Price will be payable at the option of the
Purchaser in immediately available United States funds or in the shares of
Common Stock of the Purchaser's parent corporation, PDT, Inc., a Delaware
corporation (the "PDT SHARES") or any combination thereof, provided that the
PDT Shares must be received on a tax-free basis in the opinion of PDT's
auditors, and subject to Sellers cooperating and agreeing to all conditions
necessary to create a tax-free exchange for PDT Shares. *****.
-------------------
(1) The Purchase price will be reduced by the percentage ownership of the
Shares already owned by PDTC at the time of the Closing.
*****Confidential Treatment Requested
(c) The Purchase Price will be payable pro rata to the Sellers
with ***** of the Purchase Price being paid in cash and PDT Shares to the
Sellers and ***** of cash and PDT Shares will be transferred immediately to
_______________________ (the "ESCROW AGENT") under an escrow agreement
substantially in the form attached hereto as EXHIBIT A (the "ESCROW
AGREEMENT") to be retained by the Escrow Agent for a period of one year as
provided in the Escrow Agreement. Any payments due under SECTION 2.29 hereof
to HAI Financial will be reduced from the sums due the Sellers and will be
payable to HAI Financial as if it were a Seller.
1.03 CLOSING. The Closing will take place at the offices of
Purchaser, or at such other place as Purchaser and Sellers mutually agree, at
10:00 a.m. local time, on the Closing Date. Purchaser will pay the
installments of the Purchase Price payable under clauses (b) and (c) of
SECTION 1.02 by checks payable in United States funds to the order of the
Agent, as hereinafter defined. Such checks shall be delivered to the Agent.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Love, jointly and severally as to all warranties and representations,
and the remaining Sellers on an individual basis as to SECTIONS 2.01, 2.02 AND
2.04 hereof, represent and warrant to Purchaser as follows:
2.01 ORGANIZATION OF SELLER. Each Seller is (a) an individual
acting on its own behalf, (b) an individual acting as trustee of a trust that
is duly organized, validly existing and in good standing under the Law of the
jurisdiction set forth in SCHEDULE 1 or (c) a corporation duly organized,
validly existing and in good standing under the Law of the jurisdiction of
its organization as set forth in SCHEDULE 1. Each Seller has full
individual, trustee or corporate power and authority to execute and deliver
this Agreement and the Operative Agreements to which it is a party and to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby, including to own, hold, sell
and transfer (pursuant to this Agreement) the Shares.
2.02 AUTHORITY. The execution and delivery by each Seller of this
Agreement and the Operative Agreements to which it is a party, and the
performance by each Seller of its obligations hereunder, and thereunder, have
been duly and validly authorized by any trustee, beneficiary, board,
stockholder or other Person whose authorization is required, except as
provided in SECTION 2.07 OF THE DISCLOSURE SCHEDULE, no other action on the
part of any Seller or any trustee, beneficiary, board, stockholder or other
Person being necessary. This Agreement has been duly and validly executed
and delivered by each Seller and constitutes, and upon the execution and
delivery by each Seller of the Operative Agreements to which it is a party,
such Operative Agreements will constitute legal, valid and binding
obligations of each Seller enforceable against each Seller in accordance with
their terms.
2.03 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly organized, validly existing and in good standing under the Law of the
State of California, and has full corporate power and authority to conduct
its business as and to the extent now conducted and to own, use and lease its
Assets and Properties. SECTION 2.03 OF THE DISCLOSURE SCHEDULE lists all
lines of business in which the Company is participating or engaged. The
Company is duly qualified, licensed or admitted to do business and is in good
standing in those jurisdictions specified in SECTION 2.03 OF THE DISCLOSURE
SCHEDULE, which are the only jurisdictions in which the ownership, use or
leasing of its Assets and Properties, or the conduct or nature of its
business, makes such qualification, licensing or admission
*****Confidential Treatment Requested
necessary, except for those jurisdictions in which the adverse effects of all
such failures by the Company and the Subsidiaries to be qualified, licensed
or admitted and in good standing can in the aggregate be eliminated without
material cost or expense by the Company or a Subsidiary, as the case may be,
becoming qualified or admitted and in good standing. The name of each
director and officer of the Company on the date hereof, and the position with
the Company held by each, are listed in SECTION 2.03 OF THE DISCLOSURE
SCHEDULE. Love has, prior to the execution of this Agreement, delivered to
Purchaser true and complete copies of the articles of incorporation and
by-laws of the Company as in effect on the date hereof.
2.04 CAPITAL STOCK. The authorized capital stock of the Company
consists solely of ________________________ (__________) shares of Common
Stock and ____________________ (________) shares of Preferred Stock, of which
only the Shares have been issued. The Shares are duly authorized, validly
issued, outstanding, fully paid and nonassessable. Sellers own the Shares,
beneficially and of record, free and clear of all Liens, in the manner and as
set forth in SECTION 2.04 OF THE DISCLOSURE SCHEDULE. Except for this
Agreement and as disclosed in SECTION 2.04 OF THE DISCLOSURE SCHEDULE, there
are no outstanding Options with respect to the Company. The delivery of a
certificate or certificates at the Closing representing the Shares in the
manner provided in SECTION 1.03 will transfer to Purchaser good and valid
title to the Shares, free and clear of all Liens.
2.05 SUBSIDIARIES. SECTION 2.05 OF THE DISCLOSURE SCHEDULE lists
the name of each Subsidiary and all lines of business in which each
Subsidiary is participating or engaged. Each Subsidiary is a corporation
duly organized, validly existing and in good standing under the Law of its
jurisdiction of incorporation identified in SECTION 2.05 OF THE DISCLOSURE
SCHEDULE, and has full corporate power and authority to conduct its business
as and to the extent now conducted and to own, use and lease its Assets and
Properties. Each Subsidiary is duly qualified, licensed or admitted to do
business and is in good standing in those jurisdictions specified in SECTION
2.05 OF THE DISCLOSURE SCHEDULE, which are the only jurisdictions in which
the ownership, use or leasing of such Subsidiary's Assets and Properties, or
the conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for those jurisdictions in which the adverse
effects of all such failures by the Company and the Subsidiaries to be
qualified, licensed or admitted and in good standing can in the aggregate be
eliminated without material cost or expense by the Company or a Subsidiary,
as the case may be, becoming qualified, licensed or admitted and in good
standing. SECTION 2.05 OF THE DISCLOSURE SCHEDULE lists for each Subsidiary
the amount of its authorized capital stock, the amount of its outstanding
capital stock and the record owners of such outstanding capital stock.
Except as disclosed in SECTION 2.05 OF THE DISCLOSURE SCHEDULE, all of the
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and are
owned, beneficially and of record, by the Company or Subsidiaries wholly
owned by the Company free and clear of all Liens. Except as disclosed in
SECTION 2.05 OF THE DISCLOSURE SCHEDULE, there are no outstanding Options
with respect to any Subsidiary. The name of each director and officer of
each Subsidiary on the date hereof, and the position with such Subsidiary
held by each, are listed in SECTION 2.05 OF THE DISCLOSURE SCHEDULE. Love
has prior to the execution of this Agreement delivered to Purchaser true and
complete copies of the certificate or articles of incorporation and by-laws
(or other comparable corporate charter documents) of each of the Subsidiaries
as in effect on the date hereof.
2.06 NO CONFLICTS. The execution and delivery by Love of this
Agreement do not, and the execution and delivery by Love of the Operative
Agreements to which it is a party, the performance by Love of his obligations
under this Agreement and such Operative Agreements and the consummation of
the transactions contemplated hereby, and thereby, will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate or articles of incorporation
or by-laws (or other comparable corporate charter
documents) of the Company or any Subsidiary or Love or of any trust agreement
(or other comparable governing documents) of Love;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in SECTION 2.07 OF THE
DISCLOSURE SCHEDULE, conflict with or result in a violation or breach of any
term or provision of any material Law or Order applicable to Love, the
Company or any Subsidiary or any of their respective Assets and Properties; or
(c) except as disclosed in SECTION 2.06 OF THE DISCLOSURE
SCHEDULE, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Love, the Company or any Subsidiary to obtain any consent,
approval or action of, make any filing with or give any notice to any Person
as a result or under the terms of, (iv) result in or give to any Person any
right of termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments
under, or (vi) result in the creation or imposition of any Lien upon Love,
the Company or any Subsidiary or any of their respective Assets and
Properties under, any material Contract or License to which Love, the Company
or any Subsidiary is a party or by which any of their respective Assets and
Properties is bound.
2.07 GOVERNMENTAL APPROVALS AND FILINGS. Except as disclosed in
SECTION 2.07 OF THE DISCLOSURE SCHEDULE, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part
of Love, the Company or any Subsidiary is required in connection with the
execution, delivery and performance of this Agreement or any of the Operative
Agreements to which it is a party or the consummation of the transactions
contemplated hereby or thereby.
2.08 BOOKS AND RECORDS. The minute books and other similar records
of the Company and the Subsidiaries as made available to Purchaser prior to
the execution of this Agreement contain a true and complete record, in all
material respects, of all action taken at all meetings and by all written
consents in lieu of meetings of the stockholders, the boards of directors and
committees of the boards of directors of the Company and the Subsidiaries.
The stock transfer ledgers and other similar records of the Company and the
Subsidiaries as made available to Purchaser prior to the execution of this
Agreement accurately reflect all record transfers prior to the execution of
this Agreement in the capital stock of the Company and the Subsidiaries.
Except as set forth in SECTION 2.08 OF THE DISCLOSURE SCHEDULE, neither the
Company nor any Subsidiary has any of its Books and Records recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by
any means (including any electronic, mechanical or photographic process,
whether computerized or not) which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of the
Company or a Subsidiary.
2.09 FINANCIAL STATEMENTS. Prior to the execution of this
Agreement, Love has delivered to Purchaser true and complete copies of the
following financial statements:
(a) the audited balance sheets of the Company and its consolidated
subsidiaries as of __________________________, and the related audited
consolidated statements of operations, stockholders' equity and cash flows
for each of the fiscal years then ended, together with a true and correct
copy of the unqualified report with no exceptions or modifications, but with
allowable explanatory language with respect to the Company's ability to
continue as a going concern, on such audited information by
_____________________, and all letters from such accountants with respect to
the results of such audits; and
(b) the unaudited balance sheets of the Company and its consolidated
subsidiaries as
of _________________, and the related unaudited consolidated statements of
operations, stockholders' equity and cash flows for the portion of the fiscal
year then ended.
Except as set forth in the notes thereto and as disclosed in SECTION 2.09 OF
THE DISCLOSURE SCHEDULE, all such financial statements (i) were prepared in
accordance with GAAP on a consistent basis, (ii) fairly present the
consolidated financial condition and results of operations of the Company and
its consolidated subsidiaries as of the respective dates thereof and for the
respective periods covered thereby, and (iii) were compiled from the Books
and Records of the Company and the Subsidiaries regularly maintained by
management and used to prepare the financial statements of the Company and
the Subsidiaries in accordance with the principles stated therein. The
Company and the Subsidiaries have maintained their respective Books and
Records in a manner sufficient to permit the preparation of financial
statements in accordance with GAAP, such Books and Records fairly reflect, in
all material respects, the income, expenses, assets and liabilities of the
Company and the Subsidiaries and the Books and Records provided a fair and
accurate basis for the preparation of the Audited Financial Statements and
the Unaudited Financial Statements. Except for those Subsidiaries listed in
SECTION 2.09 OF THE DISCLOSURE SCHEDULE, the financial condition and results
of operations of each Subsidiary are, and for all periods referred to in this
SECTION 2.09 have been, consolidated with those of the Company.
2.10 ABSENCE OF CHANGES. Except for the execution and delivery of
this Agreement and the transactions to take place pursuant hereto on or prior
to the Closing Date, since the Audited Financial Statement Date there has not
been any material adverse change, or any event or development which,
individually or together with other such events, could reasonably be expected
to result in a material adverse change, in the Business or Condition of the
Company. Without limiting the foregoing, except as disclosed in SECTION 2.10
OF THE DISCLOSURE SCHEDULE, there has not occurred between the Audited
Financial Statement Date and the date hereof:
(i) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company or any
Subsidiary not wholly owned by the Company, or any direct or indirect
redemption, purchase or other acquisition by the Company or any Subsidiary
of any such capital stock of or any Option with respect to the Company or
any Subsidiary not wholly owned by the Company;
(ii) any authorization, issuance, sale or other disposition by the
Company or any Subsidiary of any shares of capital stock of or Option with
respect to the Company or any Subsidiary, or any modification or amendment
of any right of any holder of any outstanding shares of capital stock of
or Option with respect to the Company or any Subsidiary;
(iii) (x) any increase in the salary, wages or other compensation of
any officer, employee or consultant of the Company or any Subsidiary whose
annual salary is, or after giving effect to such change would be, $100,000
or more, except increases in the ordinary course of business, consistent
with past practice; (y) any establishment or modification of (A) targets,
goals, pools or similar provisions in respect of any fiscal year under any
Benefit Plan, employment-related Contract or other employee compensation
arrangement or (B) salary ranges, increase guidelines or similar provisions
in respect of any Benefit Plan, employment-related Contract or other
employee compensation arrangement, except for changes in the ordinary
course of business, consistent with past practice; or (z) any adoption,
entering into or becoming bound by any Benefit Plan, employment-related
Contract or collective bargaining agreement, or amendment, modification or
termination (partial or complete) of any Benefit Plan, employment-related
Contract or collective bargaining agreement not in the ordinary course of
business, except to the extent required by applicable Law and, in the event
compliance with legal requirements presented options, only to the extent
the option which the Company or Subsidiary reasonably
believed to be the least costly was chosen; other than such bonus payments
permitted under SECTION 4.07(b);
(iv) (A) incurrences by the Company or any Subsidiary of Indebtedness
in an aggregate principal amount exceeding $25,000 (net of any amounts
discharged during such period), or (B) any voluntary purchase,
cancellation, prepayment or complete or partial discharge in advance of a
scheduled payment date with respect to, or waiver of any right of the
Company or any Subsidiary under, any Indebtedness of or owing to the
Company or any Subsidiary; other than borrowings by the Company in the
ordinary course of business.
(v) any physical damage, destruction or other casualty loss (whether
or not covered by insurance) affecting any of the plant, real or personal
property or equipment of the Company or any Subsidiary in an aggregate
amount exceeding $10,000;
(vi) any material change in (x) any pricing, investment, accounting,
financial reporting, inventory, credit, allowance or Tax practice or policy
of the Company or any Subsidiary, (y) any method of calculating any bad
debt, contingency or other reserve of the Company or any Subsidiary for
accounting, financial reporting or Tax purposes, or any change in the
fiscal year of the Company or any Subsidiary or (z) the financial
projections of the Company or any Subsidiary;
(vii) any write-off or write-down of or any determination to write-off
or write-down, not in the ordinary course or business, any of the Assets
and Properties of the Company or any Subsidiary in an aggregate amount
exceeding $10,000;
(viii) any acquisition or disposition of, or incurrence of a Lien
(other than a Permitted Lien) on, any Assets and Properties of the Company
or any Subsidiary, other than in the ordinary course of business consistent
with past practice;
(ix) any (x) amendment of the certificate or articles of incorporation
or by-laws (or other comparable corporate charter documents) of the Company
or any Subsidiary, (y) recapitalization, reorganization, liquidation or
dissolution of the Company or any Subsidiary or (z) merger or other
business combination involving the Company or any Subsidiary and any other
Person;
(x) any entering into, amendment, modification, termination (partial
or complete) or granting of a waiver under or giving any consent with
respect to (A) any material Contract which is required (or had it been in
effect on the date hereof would have been required) to be disclosed in the
Disclosure Schedule pursuant to SECTION 2.19(a) or (B) any material License
held by the Company or any Subsidiary, except for amendments,
modifications, terminations, waivers or consents in the ordinary course of
business;
(xi) capital expenditures or commitments for additions to property,
plant or equipment of the Company and the Subsidiaries constituting capital
assets in an aggregate amount exceeding $50,000 without Purchaser's consent
which shall not unreasonably be withheld;
(xii) any commencement or termination by the Company or any
Subsidiary of any new line of business;
(xiii) any transaction by the Company or any Subsidiary with Love, any
officer,
director, Affiliate (other than the Company or any Subsidiary) or Associate
of Love or any Associate of any such officer, director or Affiliate (A)
outside the ordinary course of business consistent with past practice or
(B) other than on an arm's-length basis, other than pursuant to any
Contract in effect on the Audited Financial Statement Date and disclosed
pursuant to SECTION 2.19(a)(vii) OF THE DISCLOSURE SCHEDULE;
(xiv) any entering into of a Contract to do or engage in any of the
foregoing after the date hereof; or
(xv) any other transaction involving or development affecting the
Company or any Subsidiary outside the ordinary course of business
consistent with past practice.
2.11 NO UNDISCLOSED LIABILITIES. Except as reflected or reserved
against in the balance sheet included in the Audited Financial Statements or
in the notes thereto or as disclosed in SECTION 2.11 OF THE DISCLOSURE SCHEDULE
or any other Section of the Disclosure Schedule, there are no Liabilities
against, relating to or affecting the Company or any Subsidiary or any of their
respective Assets and Properties, other than Liabilities incurred in the
ordinary course of business consistent with past practice which in the aggregate
are not material to the Business or Condition of the Company.
2.12 TAXES.
(a) Except to the extent that any such failure would not have a
material adverse effect on the Company, the Company and each of its
Subsidiaries have (i) timely filed all Tax Returns required to be filed in
any jurisdiction to which it is subject, except as disclosed in SECTION 2.12
OF THE DISCLOSURE SCHEDULE, (ii) either timely paid in full all Taxes due to
be paid or collected by it and all Taxes claimed to be due from it by each
such jurisdiction (except for any such Taxes as are being contested in good
faith by appropriate proceedings), and any interest, additions to Tax and
penalties with respect thereto, or provided adequate reserves for the payment
thereof (which reserves are reflected in the Company's Audited Financial
Statements), and (iii) fully accrued on its Audited Financial Statements and
Books and Records all Taxes, and any interest, additions to Tax and penalties
with respect thereto, for any period through the date hereof which are not
yet due, including such as are being contested. There are no agreements for
extension of the time of assessment or payment of any Taxes of the Company or
any of its Subsidiaries. No waiver of any statute of limitations has been
executed by or on behalf of the Company or any of its Subsidiaries. There
are no examinations by the IRS of or relating to the Company or any of its
Subsidiaries presently in process, or, to the Knowledge of Love, threatened
against the Company or any of its Subsidiaries. Neither the IRS nor any
other taxing authority is now asserting or, to the Knowledge of Love,
threatening to assert, any deficiency or assessment for additional Taxes,
including any interest, penalties or fines, against the Company or any of its
Subsidiaries. No federal income tax returns of the Company or any of its
Subsidiaries have been audited by the IRS. Except as set forth in SCHEDULE
2.12 OF THE DISCLOSURE SCHEDULE, state, local and foreign income tax returns
of the Company and its Subsidiaries have never been audited by the
appropriate tax authorities for the jurisdictions indicated in SECTION 2.12
OF THE DISCLOSURE SCHEDULE. None of the Company or any of its Subsidiaries
has incurred any liability for Taxes other than in the ordinary course of
business and none of the Company or any of its Subsidiaries has incurred any
liability for Taxes which, in the aggregate, would result in a material
decrease in the net worth of the Company or any of its Subsidiaries. Love
has provided or made available to Purchaser or its authorized representative
complete and correct copies of all income Tax, franchise or capital stock
Tax, sales, occupational, employment, personal property, real property or
other Tax Returns related to the Company or any of its Subsidiaries and its
business for each of the __________ fiscal years of the Company ended
_______________________________, respectively, together with complete and
correct copies of any reports of Tax authorities relating to examination of
such returns and all prior returns for the __________
fiscal years prior to _______________________, respectively, that have been
audited, together with any elections to adopt any particular method of
treating an item for Tax purposes and any closing agreements applicable to
the Company or any of its Subsidiaries.
(b) No election under Section 341(f) of the Code has been made by
Love to treat the Company as a "consenting corporation" as defined therein.
(c) None of the Company or any of its Subsidiaries has been formed
or availed of for the purpose of avoiding the Tax with respect to its
shareholders or the shareholders of any other corporation by permitting
earnings on profits to be accumulated instead of being divided or distributed.
(d) No compensation or benefits paid by the Company or any of its
Subsidiaries or payable by the Company or any of its Subsidiaries in
connection with the transactions contemplated by or effected in connection
with this Agreement has been or will be nondeductible by the Company or any
such Subsidiary or subject to any excise or penalty payable under the Code,
including Sections 280G or 4999 thereof.
2.13 LEGAL PROCEEDINGS. Except as disclosed in SECTION 2.13 OF
THE DISCLOSURE SCHEDULE (with paragraph references corresponding to those set
forth below):
(a) there are no Actions or Proceedings pending or, to the
Knowledge of Love, threatened against, relating to or affecting Love, the
Company or any Subsidiary or any of their respective Assets and Properties
which (i) could reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any
of the Operative Agreements or otherwise result in a material diminution of
the benefits contemplated by this Agreement or any of the Operative
Agreements to Purchaser, or (ii) if determined adversely to Love, the Company
or a Subsidiary, could reasonably be expected to result in (x) any injunction
or other equitable relief against the Company or any Subsidiary that would
interfere in any material respect with its business or operations or (y)
Losses by the Company or any Subsidiary, individually or in the aggregate
with Losses in respect of other such Actions or Proceedings, exceeding
$25,000;
(b) there are no facts or circumstances Known to Love that could
reasonably be expected to give rise to any Action or Proceeding that would be
required to be disclosed pursuant to clause (a) above; and
(c) there are no Orders outstanding against the Company or any
Subsidiary.
Prior to the execution of this Agreement, Love has delivered to Purchaser all
responses of counsel for the Company and the Subsidiaries to auditors'
requests for information delivered in connection with the Audited Financial
Statements (together with any updates provided by such counsel) regarding
Actions or Proceedings pending or threatened against, relating to or
affecting the Company or any Subsidiary.
2.14 COMPLIANCE WITH LAWS AND ORDERS. Except as disclosed in
SECTION 2.14 OF THE DISCLOSURE SCHEDULE, neither the Company nor any
Subsidiary is or has at any time within the last five (5) years been, or has
received any notice that it is or has at any time within the last five (5)
years been, in violation of or in default under, in any material respect, any
Law or Order applicable to the Company or any Subsidiary or any of their
respective Assets and Properties.
2.15 BENEFIT PLANS; ERISA.
(a) SECTION 2.15(a) OF THE DISCLOSURE SCHEDULE (i) contains a true
and complete list and description of each of the Benefit Plans, (ii) identifies
each of the Benefit Plans that is a Qualified Plan, (iii) identifies each
Benefit Plan which at any time during the five-year period preceding the date
of this Agreement was a Defined Benefit Plan and (iv) lists, describes and
identifies each other Plan maintained, established, sponsored or contributed to
by an ERISA Affiliate, or any predecessor thereof, which, during the five-year
period preceding the date of this Agreement, was at any time a Defined Benefit
Plan. Neither the Company nor any Subsidiary has scheduled or agreed upon
future increases of benefit levels (or creations of new benefits) with respect
to any Benefit Plan, and no such increases or creation of benefits have been
proposed, made the subject of representations to employees or requested or
demanded by employees under circumstances which make it reasonable to expect
that such increases will be granted. Except as disclosed in SECTION 2.15(a) OF
THE DISCLOSURE SCHEDULE, no loan is outstanding between the Company or any
Subsidiary and any Benefit Plan.
(b) Neither the Company nor any Subsidiary maintains or is
obligated to provide benefits under any life, medical or health plan (other
than as an incidental benefit under a Qualified Plan) which provides benefits
to retirees or other terminated employees other than benefit continuation
rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
(c) Except as set forth in SECTION 2.15(c) OF THE DISCLOSURE
SCHEDULE, each Benefit Plan covers only employees who are employed by the
Company or a Subsidiary (or former employees or beneficiaries with respect to
service with the Company or a Subsidiary), so that the transactions
contemplated by this Agreement will require no spin-off of assets and
liabilities or other division or transfer of rights with respect to any such
plan.
(d) Neither the Company, any Subsidiary, any ERISA Affiliate nor
any other corporation or organization controlled by or under common control
with any of the foregoing within the meaning of Section 4001 of ERISA has at
any time contributed to any "multiemployer plan," as that term is defined in
Section 4001 of ERISA.
(e) Each of the Benefit Plans is, and its administration is and
has been since inception, in all material respects in compliance with, and
neither the Company nor any Subsidiary has received any claim or notice that
any such Benefit Plan is not in compliance with, all applicable Laws and
Orders and prohibited transactions exemptions, including the requirements of
ERISA, the Code, the Age Discrimination in Employment Act, the Equal Pay Act
and Title VII of the Civil Rights Act of 1964. Each Qualified Plan is
qualified under Section 401(a) of the Code, and, if applicable, complies with
the requirements of Section 401(k) of the Code. Each Benefit Plan which is
intended to provide for the deferral of income, the reduction of salary or
other compensation or to afford other Tax benefits complies with the
requirements of the applicable provisions of the Code or other Laws required
in order to provide such Tax benefits.
(f) Neither the Company nor any Subsidiary is in default in
performing any of its contractual obligations under any of the Benefit Plans
or any related trust agreement or insurance contract. All contributions and
other payments required to be made by the Company or any Subsidiary to any
Benefit Plan with respect to any period ending before or at or including the
Closing Date have been made or reserves adequate for such contributions or
other payments have been or will be set aside therefor and have been or will
be reflected in Financial Statements in accordance with GAAP. There are no
material outstanding liabilities of any Benefit Plan other than liabilities
for benefits to be paid to participants in such Benefit Plan and their
beneficiaries in accordance with the terms of such Benefit Plan.
(g) No event has occurred, and there exists no condition or set of
circumstances in
connection with any Benefit Plan, under which the Company or any Subsidiary,
directly or indirectly (through any indemnification agreement or otherwise),
could reasonably be expected to be subject to any risk of material liability
under Section 409 of ERISA, Section 502(i) of ERISA, Title IV of ERISA or
Section 4975 of the Code.
(h) No transaction contemplated by this Agreement will result in
liability to the PBGC under Section 302(c)(ii), 4062, 4063, 4064 or 4069 of
ERISA, or otherwise, with respect to the Company, any Subsidiary, Purchaser
or any corporation or organization controlled by or under common control with
any of the foregoing within the meaning of Section 4001 of ERISA, and no
event or condition exists or has existed which could reasonably be expected
to result in any such liability with respect to Purchaser, the Company, any
Subsidiary or any such corporation or organization. No "reportable event"
within the meaning of Section 4043 of ERISA has occurred with respect to any
Defined Benefit Plan. No termination re-establishment or spin-off
re-establishment transaction has occurred with respect to any Subject Defined
Benefit Plan. No Subject Defined Benefit Plan has incurred any accumulated
funding deficiency whether or not waived. No filing has been made and no
proceeding has been commenced for the complete or partial termination of, or
withdrawal from, any Benefit Plan which is a Pension Benefit Plan.
(i) Except as described in SECTION 2.15(i) OF THE DISCLOSURE
SCHEDULE, no benefit under any Benefit Plan, including any severance or
parachute payment plan or agreement, will be established or become
accelerated, vested, funded or payable by reason of any transaction
contemplated under this Agreement.
(j) To the Knowledge of Love, there are no pending or threatened
claims by or on behalf of any Benefit Plan, by any Person covered thereby, or
otherwise, which allege violations of Law which could reasonably be expected
to result in liability on the part of Purchaser, the Company, any Subsidiary
or any fiduciary of any such Benefit Plan, nor is there any basis for such a
claim.
(k) No employer securities, employer real property or other employer
property is included in the assets of any Benefit Plan.
(l) The fair market value of the assets of each Subject Defined
Benefit Plan, as determined as of the last day of the plan year of such plan
which coincides with or first precedes the date of this Agreement, was not
less than the present value of the projected benefit obligations under such
plan at such date as established on the basis of the actuarial assumptions
applicable under such Subject Defined Benefit Plan at said date and, to the
Knowledge of Love, there have been no material changes in such values since
said date.
(m) Complete and correct copies of the following documents have
been furnished to Purchaser prior to the execution of this Agreement:
(i) the Benefit Plans and any predecessor plans referred to therein,
any related trust agreements, and service provider agreements, insurance
contracts or agreements with investment managers, including all amendments
thereto;
(ii) current summary Plan descriptions of each Benefit Plan subject
to ERISA, and any similar descriptions of all other Benefit Plans;
(iii) the most recent Form 5500 and Schedules thereto for each Benefit
Plan subject to ERISA reporting requirements;
(iv) the most recent determination of the IRS with respect to the
qualified status of each Qualified Plan;
(v) the most recent accountings with respect to any Benefit Plan
funded through a trust;
(vi) the most recent actuarial report of the qualified actuary of any
Subject Defined Benefit Plan or any other Benefit Plan with respect to
which actuarial valuations are conducted; and
(vii) all qualified domestic relations orders or other orders
governing payments from any Benefit Plan.
2.16 REAL PROPERTY.
(a) SECTION 2.16(a) OF THE DISCLOSURE SCHEDULE contains a true and
correct list of (i) each parcel of real property owned by the Company or any
Subsidiary, (ii) each parcel of real property leased by the Company or any
Subsidiary (as lessor or lessee) and (iii) all Liens (other than Permitted
Liens) relating to or affecting any parcel of real property referred to in
clause (i).
(b) Except as disclosed in SECTION 2.16(a) OF THE DISCLOSURE
SCHEDULE, the Company or a Subsidiary has good and marketable fee simple
title to each parcel of real property owned by it, free and clear of all
Liens other than Permitted Liens. Except for the real property leased to
others referred to in clause (ii) of paragraph (a) above, the Company or a
Subsidiary is in possession of each parcel of real property owned by it,
together with all buildings, structures, facilities, fixtures and other
improvements thereon. The Company and the Subsidiaries have adequate rights
of ingress and egress with respect to the real property listed in SECTION
2.16(a) OF THE DISCLOSURE SCHEDULE and all buildings, structures, facilities,
fixtures and other improvements thereon. None of such real property,
buildings, structures, facilities, fixtures or other improvements, or the use
thereof, contravenes or violates any building, zoning, administrative,
occupational safety and health or other applicable Law in any material
respect (whether or not permitted on the basis of prior nonconforming use,
waiver or variance).
(c) The Company or a Subsidiary has a valid and subsisting
leasehold estate in and the right to quiet enjoyment of the real properties
leased by it for the full term of the lease thereof. Each lease referred to
in clause (ii) of paragraph (a) above is a legal, valid and binding
agreement, enforceable in accordance with its terms, of the Company or a
Subsidiary and of each other Person that is a party thereto, and except as
set forth in SECTION 2.16(c) OF THE DISCLOSURE SCHEDULE, there is no, and
neither the Company nor any Subsidiary has received notice of any, default
(or any condition or event which, after notice or lapse of time or both,
would constitute a default) thereunder. Neither the Company nor any
Subsidiary owes any brokerage commissions with respect to any such leased
space.
(d) Love has delivered to Purchaser prior to the execution of this
Agreement true and complete copies of (i) all deeds, leases, mortgages, deeds
of trust, certificates of occupancy, title insurance policies, title reports,
surveys and similar documents, and all amendments thereof, with respect to
the real property owned by the Company and the Subsidiaries, and (ii) all
leases (including any amendments and renewal letters) and, to the extent
reasonably available, all other documents referred to in clause (i) of this
paragraph (d) with respect to the real property leased by the Company and the
Subsidiaries.
(e) Except as disclosed in SECTION 2.16(e) OF THE DISCLOSURE
SCHEDULE, no tenant or other party in possession of any of the real
properties owned by the Company and the Subsidiaries, has
any right to purchase, or holds any right of first refusal to purchase, such
properties.
(f) Except as disclosed in SECTION 2.16(f) OF THE DISCLOSURE
SCHEDULE, the improvements on the real property identified in SECTION 2.16(a)
OF THE DISCLOSURE SCHEDULE are in good operating condition and in a state of
good maintenance and repair, ordinary wear and tear excepted, are adequate
and suitable for the purposes for which they are presently being used and, to
the Knowledge of Love, there are no condemnation or appropriation proceedings
pending or threatened against any of such real property or the improvements
thereon.
(g) Neither the Company nor any Subsidiary is or has been a United
States real property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
897(c)(i)(A)(ii).
2.17 TANGIBLE PERSONAL PROPERTY; INVESTMENT ASSETS.
(a) The Company or a Subsidiary is in possession of and has good
title to, or has valid leasehold interests in or valid rights under Contract
to use, all tangible personal property used in or reasonably necessary for
the conduct of their business, including all tangible personal property
reflected on the balance sheet included in the Unaudited Financial Statements
and tangible personal property acquired since the Unaudited Financial
Statement Date other than property disposed of since such date in the
ordinary course of business consistent with past practice. All such tangible
personal property is free and clear of all Liens, other than Permitted Liens
and Liens disclosed in SECTION 2.17(a) OF THE DISCLOSURE SCHEDULE, and as of
Closing, is in good working order and condition, ordinary wear and tear
excepted, and its use complies in all material respects with all applicable
Laws.
(b) SECTION 2.17(b) OF THE DISCLOSURE SCHEDULE describes each
Investment Asset owned by the Company or any Subsidiary on the date hereof.
Except as disclosed in SECTION 2.17(b) OF THE DISCLOSURE SCHEDULE, all such
Investment Assets are owned by the Company or a Subsidiary free and clear of
all Liens other than Permitted Liens.
2.18 INTELLECTUAL PROPERTY RIGHTS. The Company and the
Subsidiaries have interests in or use only the Intellectual Property
disclosed in SECTION 2.18 OF THE DISCLOSURE SCHEDULE, each of which the
Company or a Subsidiary either has all right, title and interest in or a
valid and binding rights under Contract to use. No other Intellectual
Property is used or necessary in the conduct of the business of the Company
or any Subsidiary. Except as disclosed in SECTION 2.18 OF THE DISCLOSURE
SCHEDULE, (i) the Company or a Subsidiary has the exclusive right to use the
Intellectual Property disclosed in SECTION 2.18 OF THE DISCLOSURE SCHEDULE,
(ii) all registrations with and applications to Governmental or Regulatory
Authorities in respect of such Intellectual Property are valid and in full
force and effect and are not subject to the payment of any Taxes or
maintenance fees or the taking of any other actions by the Company or a
Subsidiary to maintain their validity or effectiveness, (iii) there are no
restrictions on the direct or indirect transfer of any Contract, or any
interest therein, held by the Company or any Subsidiary in respect of such
Intellectual Property, (iv) Love has delivered to Purchaser prior to the
execution of this Agreement documentation with respect to any invention,
process, design, computer program or other know-how or trade secret included
in such Intellectual Property, which documentation is accurate in all
material respects and reasonably sufficient in detail and content to identify
and explain such invention, process, design, computer program or other
know-how or trade secret and to facilitate its full and proper use without
reliance on the special knowledge or memory of any Person, (v) the Company
and the Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of their trade secrets, (vi) neither the
Company nor any Subsidiary is, or has received any notice that it is, in
default (or with the giving of notice or lapse of time or both, would be in
default) under any Contract to use such Intellectual Property, (vii) to the
Knowledge of Love, no such Intellectual Property is being
infringed by any other Person, and (viii) there are no claims by third
parties against the Intellectual Property. Neither Love, the Company nor any
Subsidiary has received notice that the Company or any Subsidiary is
infringing any Intellectual Property of any other Person, no claim is pending
or, to the Knowledge of Love, has been made to such effect that has not been
resolved and, to the Knowledge of Love, neither the Company nor any
Subsidiary is infringing any Intellectual Property of any other Person.
2.19 CONTRACTS.
(a) SECTION 2.19(a) OF THE DISCLOSURE SCHEDULE (with paragraph
references corresponding to those set forth below) contains a true and
complete list of each of the following Contracts or other arrangements (true
and complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto
and all waivers of any terms thereof, have been delivered to Purchaser prior
to the execution of this Agreement), to which the Company or any Subsidiary
is a party or by which any of their respective Assets and Properties is bound:
(i) (A) all Contracts (excluding Benefit Plans) providing for a
commitment of employment or consultation services for a specified or
unspecified term or otherwise relating to employment or independent
contracting or the termination of employment or independent contracting,
the name, position and rate of compensation of each Person party to such
a Contract and the expiration date of each such Contract; and (B) any
written or unwritten representations, commitments, promises, communications
or courses of conduct (excluding Benefit Plans and any such Contracts
referred to in clause (A)) involving an obligation of the Company or any
Subsidiary to make payments in any year, other than with respect to salary
or incentive compensation payments in the ordinary course of business, to
any employee exceeding $50,000 or any group of employees exceeding $100,000
in the aggregate;
(ii) all Contracts with any Person containing any provision or
covenant prohibiting or limiting the ability of the Company or any
Subsidiary to engage in any business activity or compete with any Person
or, except as provided in SECTION 4.11, prohibiting or limiting the ability
of any Person to compete with the Company or any Subsidiary;
(iii) all partnership, joint venture, shareholders' or other similar
Contracts with any Person;
(iv) all Contracts relating to Indebtedness of the Company or any
Subsidiary in excess of $10,000 or to preferred stock issued by the Company
or any Subsidiary;
(v) all material Contracts with distributors, dealers, manufacturer's
representatives, sales agencies or franchisees;
(vi) all Contracts relating to (A) the future disposition or
acquisition of any Assets and Properties, other than dispositions or
acquisitions in the ordinary course of business consistent with past
practice, and (B) any merger or other business combination;
(vii) all Contracts between or among the Company or any Subsidiary, on
one part, and Love, any officer, director, Affiliate (other than the
Company or any Subsidiary) or Associate of Love or any Associate of any
such officer, director or Affiliate, on another part;
(viii) all collective bargaining or similar labor Contracts;
(ix) all Contracts that (A) limit or contain restrictions on the
ability of the Company or any Subsidiary to declare or pay dividends on,
to make any other distribution in respect of or to issue or purchase,
redeem or otherwise acquire its capital stock, to incur Indebtedness, to
incur or suffer to exist any Lien, to purchase or sell any Assets and
Properties, to change the lines of business in which it participates or
engages or to engage in any Business Combination or (B) require the
Company or any Subsidiary to maintain specified financial ratios or
levels of net worth or other indicia of financial condition; and
(x) all other Contracts (other than Benefit Plans, leases listed
in SECTION 2.16(a) OF THE DISCLOSURE SCHEDULE and insurance policies
listed in SECTION 2.21 OF THE DISCLOSURE SCHEDULE) that (A) involve the
payment or potential payment, pursuant to the terms of any such Contract,
by or to the Company or any Subsidiary of more than $10,000 annually and
(B) cannot be terminated within thirty (30) days after giving notice of
termination without resulting in any material cost or penalty to the
Company or any Subsidiary.
(b) Each Contract required to be disclosed in SECTION 2.19(a) OF
THE DISCLOSURE SCHEDULE is in full force and effect and constitutes a legal,
valid and binding agreement, enforceable in accordance with its terms, of
each party thereto; and except as disclosed in SECTION 2.19(b) OF THE
DISCLOSURE SCHEDULE neither the Company, any Subsidiary nor, to the Knowledge
of Love, any other party to such Contract is, or has received notice that it
is, in violation or breach of or default under any such Contract (or with
notice or lapse of time or both, would be in violation or breach of or
default under any such Contract) in any material respect.
(c) Except as disclosed in SECTION 2.19(c) OF THE DISCLOSURE
SCHEDULE, neither the Company nor any Subsidiary is a party to or bound by
any Contract that has been or could reasonably be expected to be,
individually or in the aggregate with any other such Contracts, materially
adverse to the Business or Condition of the Company.
2.20 LICENSES. SECTION 2.20 OF THE DISCLOSURE SCHEDULE contains a
true and complete list of all Licenses used in and material, individually or
in the aggregate, to the business or operations of the Company or any
Subsidiary (and all pending applications for any such Licenses), setting
forth the grantor, the grantee, the function and the expiration and renewal
date of each. Prior to the execution of this Agreement, Love has delivered to
Purchaser true and complete copies of all such Licenses. Except as disclosed
in SECTION 2.20 OF THE DISCLOSURE SCHEDULE:
(i) the Company and each Subsidiary owns or validly holds all
Licenses that are material, individually or in the aggregate, to its
business or operations;
(ii) each License listed in SECTION 2.20 OF THE DISCLOSURE SCHEDULE
is valid, binding and in full force and effect; and
(iii) neither the Company nor any Subsidiary is, or has received any
notice that it is, in default (or with the giving of notice or lapse of
time or both, would be in default) under any such License.
2.21 INSURANCE. SECTION 2.21 OF THE DISCLOSURE SCHEDULE contains a
true and complete list (including the names and addresses of the insurers,
the names of the Persons to whom such Policies have been issued, the
expiration dates thereof, the annual premiums and payment terms thereof,
whether it is a "claims made" or an "occurrence" policy and a brief
description of the interests insured thereby) of all liability, property,
workers' compensation, directors' and officers' liability and other insurance
policies currently in effect that insure the business, operations or
employees of the Company or any Subsidiary or
affect or relate to the ownership, use or operation of any of the Assets and
Properties of the Company or any Subsidiary and that (i) have been issued to
the Company or any Subsidiary or (ii) have been issued to any Person (other
than the Company or any Subsidiary) for the benefit of the Company or any
Subsidiary. The insurance coverage provided by any of the policies described
in clause (i) above will not terminate or lapse by reason of the transactions
contemplated by this Agreement. Each policy listed in SECTION 2.21 OF THE
DISCLOSURE SCHEDULE is valid and binding and in full force and effect, no
premiums due thereunder have not been paid and neither the Company, any
Subsidiary nor the Person to whom such policy has been issued has received
any notice of cancellation or termination in respect of any such policy or is
in default thereunder. The insurance policies listed in SECTION 2.21 OF THE
DISCLOSURE SCHEDULE are placed with insurers that are, to the Knowledge of
Love, financially sound and reputable and, in light of the respective
business, operations and Assets and Properties of the Company and the
Subsidiaries, are in amounts and have coverages that are reasonable and
customary for Persons engaged in such businesses and operations and having
such Assets and Properties. Neither the Company, any Subsidiary nor the
Person to whom such policy has been issued has received notice that any
insurer under any policy referred to in this Section is denying liability
with respect to a claim thereunder or defending under a reservation of rights
clause.
2.22 AFFILIATE TRANSACTIONS. Except as disclosed in SECTION
2.19(a)(vii) OR SECTION 2.22(a) OF THE DISCLOSURE SCHEDULE, (i) there are no
intercompany Liabilities between the Company or any Subsidiary, on one part,
and Love, any officer, director, Affiliate (other than the Company or any
Subsidiary) or Associate of Love or any Associate of any such officer,
director or Affiliate, on another part; (ii) Love, nor such officer,
director, Affiliate or Associate provides or causes to be provided any
assets, services or facilities to the Company or any Subsidiary, (iii)
neither the Company nor any Subsidiary provides or causes to be provided any
assets, services or facilities to Love or any such officer, director,
Affiliate or Associate and (iv) neither the Company nor any Subsidiary
beneficially owns, directly or indirectly, any Investment Assets issued by
Love or any such officer, director, Affiliate or Associate. Except as
disclosed in SECTION 2.22(b) OF THE DISCLOSURE SCHEDULE, each of the
Liabilities and transactions listed in SECTION 2.22(a) OF THE DISCLOSURE
SCHEDULE was incurred or engaged in, as the case may be, on an arm's-length
basis. Except as disclosed in SECTION 2.22(c) OF THE DISCLOSURE SCHEDULE,
since the Audited Financial Statement Date, all settlements of intercompany
Liabilities between the Company or any Subsidiary, on one part, and Love or
any such officer, director, Affiliate or Associate, on another part, have
been made, and all allocations of intercompany expenses have been applied, in
the ordinary course of business consistent with past practice.
2.23 EMPLOYEES; LABOR RELATIONS.
(a) SECTION 2.23 OF THE DISCLOSURE SCHEDULE contains a list of the
name of each officer and employee of the Company and the Subsidiaries at the
date hereof, together with each such person's position or function, annual
base salary or wages and any incentive or bonus arrangement with respect to
such person in effect on such date. To the Knowledge of Love, the Company
has not received and Love has not received any information that would lead it
to believe that a material number of such person will or may cease to be
employees, or will refuse offers of employment from Purchaser, because of the
consummation of the transactions contemplated by this Agreement.
(b) Except as disclosed in SECTION 2.23 OF THE DISCLOSURE
SCHEDULE, (i) no employee of the Company or any Subsidiary is presently a
member of a collective bargaining unit and, to the Knowledge of Love, there
are no threatened or contemplated attempts to organize for collective
bargaining purposes any of the employees of the Company or any Subsidiary,
and (ii) no unfair labor practice complaint or sex, age, race or other
discrimination claim has been brought during the last five (5) years against
the Company or any of the Subsidiaries before the National Labor Relations
Board, the Equal Employment Opportunity Commission or any other Governmental
or Regulatory Authority. Since
_____________, there has been no work stoppage, strike or other concerted
action by employees of the Company or any Subsidiary. During that period,
the Company and the Subsidiaries have complied in all material respects with
all applicable Laws relating to the employment of labor, including those
relating to wages, hours and collective bargaining. Except as disclosed in
SECTION 2.23 OF THE DISCLOSURE SCHEDULE, no loan is outstanding between the
Company or any Subsidiary and any employee.
2.24 ENVIRONMENTAL MATTERS. Each of the Company and the
Subsidiaries has obtained all Licenses which are required under applicable
Environmental Laws in connection with the conduct of the business or
operations of the Company or such Subsidiary. Each of such Licenses is in
full force and effect and each of the Company and the Subsidiaries is in
compliance in all material respects with the terms and conditions of all such
Licenses and with any applicable Environmental Law. In addition, except as
set forth in SECTION 2.24 OF THE DISCLOSURE SCHEDULE (with paragraph
references corresponding to those set forth below):
(a) No Order has been issued, no Environmental Claim has been
filed, no penalty has been assessed and no investigation or review is pending
or, to the Knowledge of Love, threatened by any Governmental or Regulatory
Authority with respect to any alleged failure by the Company or any
Subsidiary to have any License required under applicable Environmental Laws
in connection with the conduct of the business or operations of the Company
or any of the Subsidiaries or with respect to any generation, treatment,
storage, recycling, transportation, discharge, disposal or Release of any
Hazardous Material generated by the Company or any Subsidiary, and to the
Knowledge of Love, there are no facts or circumstances in existence which
could reasonably be expected to form the basis for any such Order,
Environmental Claim, penalty or investigation.
(b) Neither the Company nor any Subsidiary owns, operates or
leases a treatment, storage or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, as amended, or under any other
comparable state or local Law; and, without limiting the foregoing, (i) no
polychlorinated biphenyl is or has been present, (ii) no asbestos or
asbestos-containing material is or has been present, (iii) there are no
underground storage tanks or surface impoundments for Hazardous Materials,
active or abandoned, and (iv) no Hazardous Material has been Released in a
quantity reportable under, or in violation of, any Environmental Law or
otherwise Released, in the cases of clauses (i) through (iv), at, on or under
any site or facility now or previously owned, operated or leased by the
Company or any Subsidiary.
(c) Neither the Company nor any Subsidiary has transported or
arranged for the transportation of any Hazardous Material to any location
that is (i) listed on the NPL under CERCLA, (ii) listed for possible
inclusion on the NPL by the Environmental Protection Agency in CERCLIS or on
any similar state or local list or (iii) the subject of enforcement actions
by federal, state or local Governmental or Regulatory Authorities that may
lead to Environmental Claims against the Company or any Subsidiary.
(d) No Hazardous Material generated by the Company or any
Subsidiary has been recycled, treated, stored, disposed of or Released by the
Company or any Subsidiary at any location.
(e) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Company or any Subsidiary and,
to the Knowledge of Love, no site or facility now or previously owned,
operated or leased by the Company or any Subsidiary is listed or proposed for
listing on the NPL, CERCLIS or any similar state or local list of sites
requiring investigation or clean-up.
(f) No Liens have arisen under or pursuant to any Environmental
Law on any site or facility owned, operated or leased by the Company or any
Subsidiary, and no federal, state or local Governmental or Regulatory
Authority action has been taken or, to the Knowledge of Love, is in process
that could subject any such site or facility to such Liens, and neither the
Company nor any Subsidiary would be required to place any notice or
restriction relating to the presence of Hazardous Materials at any site or
facility owned by it in any deed to the real property on which such site or
facility is located.
(g) Except as disclosed in SECTION 2.24(g) OF THE DISCLOSURE
SCHEDULE, there have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or that are in the possession
of, Love, the Company or any Subsidiary in relation to any site or facility
now or previously owned, operated or leased by the Company or any Subsidiary
which have not been delivered to Purchaser prior to the execution of this
Agreement.
2.25 SUBSTANTIAL CUSTOMERS AND SUPPLIERS. SECTION 2.25(a) OF THE
DISCLOSURE SCHEDULE lists the five (5) largest customers of the Company and
the Subsidiaries, on the basis of revenues for goods sold or services
provided for the most recently-completed fiscal year. SECTION 2.25(b) OF THE
DISCLOSURE SCHEDULE lists the five (5) largest suppliers of the Company and
the Subsidiaries, on the basis of cost of goods or services purchased for the
most recently-completed fiscal year. Except as disclosed in SECTION 2.25(c)
OF THE DISCLOSURE SCHEDULE, no such customer or supplier has ceased or
materially reduced its purchases from, use of the services of, sales to or
provision of services to the Company and the Subsidiaries since the Audited
Financial Statement Date, or to the Knowledge of Love, has threatened to
cease or materially reduce such purchases, use, sales or provision of
services after the date hereof. Except as disclosed in SECTION 2.25(d) OF
THE DISCLOSURE SCHEDULE, to the Knowledge of Love, no such customer or
supplier is threatened with bankruptcy or insolvency.
2.26 BANK AND BROKERAGE ACCOUNTS; INVESTMENT ASSETS. SECTION 2.26
OF THE DISCLOSURE SCHEDULE sets forth (a) a true and complete list of the
names and locations of all banks, trust companies, securities brokers and
other financial institutions at which the Company or any Subsidiary has an
account or safe deposit box or maintains a banking, custodial, trading or
other similar relationship; (b) a true and complete list and description of
each such account, box and relationship, indicating in each case the account
number and the names of the respective officers, employees, agents or other
similar representatives of the Company or any Subsidiary having signatory
power with respect thereto; and (c) a list of each Investment Asset, the name
of the record and beneficial owner thereof, the location of the certificates,
if any, therefor, the maturity date, if any, and any stock or bond powers or
other authority for transfer granted with respect thereto.
2.27 NO POWERS OF ATTORNEY. Except as set forth in SECTION 2.27 OF
THE DISCLOSURE SCHEDULE, neither the Company nor any Subsidiary has any
powers of attorney or comparable delegations of authority outstanding.
2.28 ACCOUNTS RECEIVABLE. Except as set forth in SECTION 2.28 OF
THE DISCLOSURE SCHEDULE, the accounts and notes receivable of the Company and
the Subsidiaries reflected on the balance sheet included in the Unaudited
Financial Statements, and all accounts and notes receivable arising
subsequent to the Unaudited Financial Statement Date, (i) arose from BONA
FIDE sales transactions in the ordinary course of business and are payable on
ordinary trade terms, (ii) are legal, valid and binding obligations of the
respective debtors enforceable in accordance with their terms, (iii) are not
subject to any valid set-off or counterclaim, (iv) do not represent
obligations for goods sold on consignment, on approval or on a sale-or-return
basis or subject to any other repurchase or return arrangement and (v) are
not the subject of any Actions or Proceedings brought by or on behalf of the
Company or any Subsidiary. SECTION 2.28 OF THE DISCLOSURE SCHEDULE sets forth
a description of any security arrangements and collateral securing the
repayment or other satisfaction of receivables of the Company and the
Subsidiaries. To the Knowledge of Love, all steps necessary to render all
such security arrangements legal, valid, binding and enforceable, and to give
and maintain for the Company or a Subsidiary, as the case may be, a perfected
security interest in the related collateral, have been taken.
2.29 BROKERS. Except for the HAI Financial agreement, whose
obligation is to be assumed by Love as to this transaction, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried out by Love directly with Purchaser without the intervention of any
Person on behalf of Love in such manner as to give rise to any valid claim by
any Person against Purchaser, the Company or any Subsidiary for a finder's
fee, brokerage commission or similar payment.
2.30 DISCLOSURE. All material facts relating to the Business or
Condition of the Company have been disclosed to Purchaser in or in connection
with this Agreement. No representation or warranty contained in this
Agreement, and no statement contained in the Disclosure Schedule or in any
certificate, list or other writing furnished to Purchaser pursuant to any
provision of this Agreement (including the Financial Statements), contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements herein or therein, in the light of
the circumstances under which they were made, not misleading.
2.31 INCORPORATION BY REFERENCE. Love hereby incorporates by
reference all representations and warranties of the Company made in the
Investment Agreement as if set forth in this Agreement in full and made by
Love as of the date hereof and as of the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.01 ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the Laws of the State of
Delaware. Purchaser has full corporate power and authority to execute and
deliver this Agreement and the Operative Agreements to which it is a party,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.
3.02 AUTHORITY. The execution and delivery by Purchaser of this
Agreement and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and thereunder, have
been duly and validly authorized by the Board of Directors of Purchaser, no
other corporate action on the part of Purchaser or its stockholders being
necessary. This Agreement has been duly and validly executed and delivered
by Purchaser and constitutes, and upon the execution and delivery by
Purchaser of the Operative Agreements to which it is a party, such Operative
Agreements will constitute, legal, valid and binding obligations of Purchaser
enforceable against Purchaser in accordance with their terms.
3.03 NO CONFLICTS. The execution and delivery by Purchaser of this
Agreement do not, and the execution and delivery by Purchaser of the
Operative Agreements to which it is a party, the performance by Purchaser of
its obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or
by-laws (or other comparable corporate charter document) of Purchaser;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in SCHEDULE 3.04 hereto,
conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to Purchaser or any of its
Assets and Properties; or
(c) except as disclosed in SCHEDULE 3.03 hereto, (i) conflict with
or result in a violation or breach of, (ii) constitute (with or without
notice or lapse of time or both) a default under, (iii) require Purchaser to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, (iv) result in or
give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (v) result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under, or (vi) result in the creation or imposition of
any Lien upon Purchaser or any of its Assets or Properties under, any
Contract or License to which Purchaser is a party or by which any of its
Assets and Properties is bound.
3.04 GOVERNMENTAL APPROVALS AND FILINGS. Except as disclosed in
SCHEDULE 3.04 hereto, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority on the part of Purchaser
is required in connection with the execution, delivery and performance of
this Agreement or the Operative Agreements to which it is a party or the
consummation of the transactions contemplated hereby or thereby.
3.05 LEGAL PROCEEDINGS. There are no Actions or Proceedings
pending or, to the knowledge of Purchaser, threatened against, relating to or
affecting Purchaser or any of its Assets and Properties which could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any
of the transactions contemplated by this Agreement or any of the Operative
Agreements.
3.06 PURCHASE FOR INVESTMENT. The Shares will be acquired by
Purchaser (or, if applicable, its assignee pursuant to SECTION 13.10(b)(i))
for its own account for the purpose of investment, it being understood that
the right to dispose of such Shares shall be entirely within the discretion
of Purchaser (or such assignee, as the case may be). Purchaser (or such
assignee, as the case may be) will refrain from transferring or otherwise
disposing of any of the Shares, or any interest therein, in such manner as to
cause Seller to be in violation of the registration requirements of the
Securities Act of 1933, as amended, or applicable state securities or blue
sky laws.
3.07 ACCREDITED INVESTOR. At the Closing, Purchaser will be an
"accredited investor" within the meaning of SEC Rule 501 of Regulation D, as
presently in effect.
3.08 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with Purchaser in reliance upon Purchaser's representations to the Company,
which by Purchaser's execution of this Agreement hereby confirms that the
Shares will be acquired for investment for Purchaser's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same. By
executing this Agreement, Purchaser further represents that it does not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Shares.
3.09 INVESTMENT EXPERIENCE. Purchaser is able to fend for itself,
can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Shares.
3.10 PDT SHARES. The PDT Shares to be delivered by Purchaser at
the Closing will be duly authorized, validly issued and outstanding, fully
paid and non-assessable. All necessary corporate action on the part of PDT
has been taken in order to issue the PDT Shares.
ARTICLE IV
COVENANTS OF SELLERS
The Company and Love jointly and severally, and Sellers severally,
where specifically indicated, covenant and agree with Purchaser that, at all
times from and after the date hereof until the Closing and, with respect to
any covenant or agreement by its terms to be performed in whole or in part
after the Closing, for the period specified herein, the Company and Love will
comply with all covenants and provisions of this ARTICLE IV, except to the
extent Purchaser may otherwise consent in writing.
4.01 REGULATORY AND OTHER APPROVALS. Love will, and will cause the
Company and the Subsidiaries to, (a) take all commercially reasonable steps
necessary or desirable, and proceed diligently and in good faith and use all
commercially reasonable efforts, as promptly as practicable to obtain all
consents, approvals or actions of, to make all filings with and to give all
notices to Governmental or Regulatory Authorities or any other Person
required of Love, the Company or any Subsidiary to consummate the
transactions contemplated hereby and by the Operative Agreements, including
those described in SECTIONS 2.06 AND 2.07 OF THE DISCLOSURE SCHEDULE, (b)
provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as Purchaser or such Governmental or
Regulatory Authorities or other Persons may reasonably request in connection
therewith and (c) cooperate with Purchaser as promptly as practicable in
obtaining all consents, approvals or actions of, making all filings with and
giving all notices to Governmental or Regulatory Authorities or other Persons
required of Purchaser to consummate the transactions contemplated hereby and
by the Operative Agreements. Love will provide prompt notification to
Purchaser when any such consent, approval, action, filing or notice referred
to in clause (a) above is obtained, taken, made or given, as applicable, and
will advise Purchaser of any communications (and, unless precluded by Law,
provide copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Operative
Agreements.
4.02 HSR FILINGS. In addition to and not in limitation of Love's
covenants contained in SECTION 4.01, if required under applicable Law, the
Company and Love will (a) take promptly all actions necessary to make the
filings required of Love or his Affiliates under the HSR Act, (b) comply at
the earliest practicable date with any request for additional information
received by the Company, Love or their Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act and (c) cooperate with Purchaser in connection with Purchaser's
filing under the HSR Act and in connection with resolving any investigation
or other inquiry concerning the transactions contemplated by this Agreement
commenced by either the Federal Trade Commission or the Antitrust Division of
the Department of Justice or state attorneys general.
4.03 INVESTIGATION BY PURCHASER. The Company will, and will cause
the Subsidiaries to, (a) provide Purchaser and its respective officers,
directors, employees, agents, counsel, accountants, financial advisors,
consultants and other representatives (together "REPRESENTATIVES") with full
access, upon reasonable prior notice and during normal business hours, to all
officers, employees, agents and accountants of the Company and the
Subsidiaries and their Assets and Properties and Books and Records, and (b)
furnish Purchaser and such other Persons with all such information and data
(including copies of Contracts, Benefit Plans and other Books and Records)
concerning the business and operations of the Company and the Subsidiaries as
Purchaser or any of such other Persons may reasonably request in connection
with such investigation.
4.04 NO SOLICITATIONS. Love will not take, nor will he permit the
Company, the
Subsidiaries or any Affiliate of Love (or authorize or permit any investment
banker, financial advisor, attorney, accountant or other Person retained by
or acting for or on behalf of Love, the Company, the Subsidiaries or any such
Affiliate) to take, directly or indirectly, any action to solicit, encourage,
receive, negotiate, assist or otherwise facilitate (including by furnishing
confidential information with respect to the Company or any Subsidiary or
permitting access to the Assets and Properties and Books and Records of the
Company or any Subsidiary) any offer or inquiry from any Person concerning an
Acquisition Proposal. If Love, the Company, any Subsidiary or any such
Affiliate (or any such Person acting for or on their behalf) receives from
any Person any offer, inquiry or informational request referred to above,
Love will promptly advise such Person, by written notice, of the terms of
this SECTION 4.04 and will promptly, orally and in writing, advise Purchaser
of such offer, inquiry or request and deliver a copy of such notice to
Purchaser.
4.05 CONDUCT OF BUSINESS. Love will cause the Company and the
Subsidiaries to conduct business only in the ordinary course consistent with
past practice. Without limiting the generality of the foregoing, Love will:
(a) cause the Company and the Subsidiaries to use commercially
reasonable efforts to (i) preserve intact the present business organization
and reputation of the Company and the Subsidiaries, (ii) take no action
(subject to dismissals and retirements in the ordinary course of business
consistent with past practice) to cause the services of the present officers,
employees and consultants of the Company and the Subsidiaries not to be
available to the Company after the Closing, (iii) maintain the Assets and
Properties of the Company and the Subsidiaries in good working order and
condition, ordinary wear and tear excepted, (iv) maintain the good will of
customers, suppliers, lenders and other Persons to whom the Company or any
Subsidiary sells goods or provides services or with whom the Company or any
Subsidiary otherwise has significant business relationships and (v) continue
all current sales, marketing and promotional activities relating to the
business and operations of the Company and the Subsidiaries;
(b) except to the extent required by applicable Law, (i) cause the
Books and Records to be maintained in the usual, regular and ordinary manner,
(ii) not permit any material change in (A) any pricing, investment,
accounting, financial reporting, inventory, credit, allowance or Tax practice
or policy of the Company or any Subsidiary, or (B) any method of calculating
any bad debt, contingency or other reserve of the Company or any Subsidiary
for accounting, financial reporting or Tax purposes and (iii) not permit any
change in the fiscal year of the Company or any Subsidiary;
(c) (i) use, and will cause the Company and the Subsidiaries to
use, commercially reasonable efforts to maintain in full force and effect
until the Closing substantially the same levels of coverage as the insurance
afforded under the Contracts listed in SECTION 2.21 OF THE DISCLOSURE
SCHEDULE, (ii) to the extent requested by Purchaser prior to the Closing
Date, use all commercially reasonable efforts to cause such insurance
coverage held by any Person (other than the Company or any Subsidiary) for
the benefit of the Company or any Subsidiary to continue to be provided at
the expense of the Company and the Subsidiaries for at least 90 days after
the Closing on substantially the same terms and conditions as provided on the
date of this Agreement and (iii) cause any and all benefits under such
Contracts paid or payable (whether before or after the date of this
Agreement) with respect to the business, operations, employees or Assets and
Properties of the Company and the Subsidiaries to be paid to the Company and
the Subsidiaries; and
(d) cause the Company and the Subsidiaries to comply, in all
material respects, with all Laws and Orders applicable to the business and
operations of the Company and the Subsidiaries, and promptly following
receipt thereof to give Purchaser copies of any notice received from any
Governmental or Regulatory Authority or other Person alleging any violation
of any such Law or Order.
4.06 EMPLOYEE MATTERS. Except as may be required by Law, Love will
refrain, and will cause the Company and the Subsidiaries to refrain, from
directly or indirectly:
(a) making any representation or promise, oral or written, to any
officer, employee or consultant of the Company or any Subsidiary concerning
any Benefit Plan, except for statements as to the rights or accrued benefits
of any officer, employee or consultant under the terms of any Benefit Plan;
(b) materially increasing the annual level of compensation of any
employee, and not increasing, except in amounts in keeping with past
practices, the annual level of compensation of any person whose compensation
from the Company in the last preceding fiscal year exceeded $100,000, and not
granting any unusual or extraordinary bonuses, benefits or other forms of
direct or indirect compensation to any employee, officer, director or
consultant, except in amounts in keeping with past practices by formulas or
otherwise.
(c) adopting, entering into or becoming bound by any Benefit Plan,
employment-related Contract or collective bargaining agreement, or amending,
modifying or terminating (partially or completely) any Benefit Plan,
employment-related Contract or collective bargaining agreement, except to the
extent required by applicable Law and, in the event compliance with legal
requirements presents options, only to the extent that the option which the
Company or Subsidiary reasonably believes to be the least costly is chosen; or
(d) establishing or modifying any (i) targets, goals, pools or
similar provisions in respect of any fiscal year under any Benefit Plan,
employment-related Contract or other employee compensation arrangement or
(ii) salary ranges, increase guidelines or similar provisions in respect of
any Benefit Plan, employment-related Contract or other employee compensation
arrangement.
Love will cause the Company and the Subsidiaries to administer each
Benefit Plan, or cause the same to be so administered, in all material
respects in accordance with the applicable provisions of the Code, ERISA and
all other applicable Laws. Love will promptly notify Purchaser in writing of
each receipt by Love, the Company or any Subsidiary (and furnish Purchaser
with copies) of any notice of investigation or administrative proceeding by
the IRS, Department of Labor, PBGC or other Person involving any Benefit Plan.
4.07 CERTAIN RESTRICTIONS. Love will cause the Company and the
Subsidiaries to refrain from:
(a) amending their certificates or articles of incorporation or
by-laws (or other comparable corporate charter documents) or taking any
action with respect to any such amendment or any recapitalization,
reorganization, liquidation or dissolution of any such corporation;
(b) authorizing, issuing, selling or otherwise disposing of any
shares of capital stock of or any Option with respect to the Company or any
Subsidiary, or modifying or amending any right of any holder of outstanding
shares of capital stock of or Option with respect to the Company or any
Subsidiary, other than the issuance of options under the Company's option
plan;
(c) declaring, setting aside or paying any dividend or other
distribution in respect of the capital stock of the Company or any Subsidiary
not wholly owned by the Company, or directly or indirectly redeeming,
purchasing or otherwise acquiring any capital stock of or any Option with
respect to the Company or any Subsidiary not wholly owned by the Company;
(d) acquiring or disposing of, or incurring any Lien (other than
a Permitted Lien) on,
any Assets and Properties, other than in the ordinary course of business
consistent with past practice;
(e) (i) except in the ordinary course of business, consistent with
past practice, entering into, amending, modifying, terminating (partially or
completely), granting any waiver under or giving any consent with respect to
(A) any Contract that would, if in existence on the date of this Agreement,
be required to be disclosed in the Disclosure Schedule pursuant to SECTION
2.19(a) or (B) any material License or (ii) granting any irrevocable powers
of attorney;
(f) violating, breaching or defaulting under in any material
respect, or taking or failing to take any action that (with or without notice
or lapse of time or both) would constitute a material violation or breach of,
or default under, any term or provision of any material License held or used
by the Company or any Subsidiary or any material Contract to which the
Company or any Subsidiary is a party or by which any of their respective
Assets and Properties is bound;
(g) (i) incurring Indebtedness in an aggregate principal amount
exceeding $100,000 (net of any amounts of Indebtedness discharged during such
period), except as reasonably necessary for the ordinary operation of the
Company's or its Subsidiaries' business in a manner, and in amounts,
consistent with historical practice, or (ii) voluntarily purchasing,
canceling, prepaying or otherwise providing for a complete or partial
discharge in advance of a scheduled payment date with respect to, or waiving
any right of the Company or any Subsidiary under, any Indebtedness of or
owing to the Company or any Subsidiary;
(h) engaging with any Person in any merger or other business
combination;
(i) making capital expenditures or commitments for additions to
property, plant or equipment constituting capital assets in an aggregate
amount exceeding $50,000, without Purchaser's consent which shall not be
unreasonably withheld;
(j) making any change in the lines of business in which they
participate or are engaged;
(k) writing off or writing down any of their Assets and Properties
outside the ordinary course of business consistent with past practice; or
(l) entering into any Contract to do or engage in any of the
foregoing.
4.08 AFFILIATE TRANSACTIONS. Except as set forth in SECTION 4.08
OF THE DISCLOSURE SCHEDULE, immediately prior to the Closing, all
Indebtedness and other amounts owing under Contracts between Love, any
officer, director, Affiliate (other than the Company or any Subsidiary) or
Associate of Love or any Associate of any such officer, director or
Affiliate, on one part, and the Company or any of the Subsidiaries, on
another part, will be paid in full, and Love will terminate and will cause
any such officer, director, Affiliate or Associate to terminate each Contract
with the Company or any Subsidiary, without expense or liability to the
Company. Prior to the Closing, neither the Company nor any Subsidiary will
enter into any Contract or amend or modify any existing Contract, and will
not engage in any transaction outside the ordinary course of business
consistent with past practice or not on an arm's-length basis (other than
pursuant to Contracts disclosed pursuant to SECTION 2.19(a)(vii) OF THE
DISCLOSURE SCHEDULE), with Love or any such officer, director, Affiliate or
Associate.
4.09 BOOKS AND RECORDS. On the Closing Date, Love will deliver or
make available to Purchaser at the offices of the Company and the
Subsidiaries all of the Books and Records, and if at any time after the
Closing Love discovers in its possession or under its control any other Books
and Records,
it will forthwith deliver such Books and Records to Purchaser. Love shall
also cooperate with Purchaser in including financial statements of the Company
and its Subsidiaries for the fiscal years ending in ________________ via the
Purchaser's parent corporation's filings with the Securities and Exchange
Commission.
4.10 NONCOMPETITION.
(a) Each Seller who owns at least three percent (3%) of the
outstanding capital stock of the Company will, for a period of five (5) years
from the Closing Date, refrain from, either alone or in conjunction with any
other Person, or directly or indirectly through its present or future
Affiliates:
(i) employing, engaging or seeking to employ or engage any Person
who within the prior twenty-four (24) months had been an officer or
employee of the Company or a Subsidiary, unless such officer or employee
(A) resigns voluntarily (without any solicitation from any Seller or any
of their Affiliates) or (B) is terminated by the Company or any Subsidiary
or Purchaser other than for cause after the Closing Date;
(ii) causing or attempting to cause (A) any client, customer or
supplier of the Company or any Subsidiary to terminate or materially reduce
its business with the Company and the Subsidiaries or (B) any officer,
employee or consultant of the Company or any Subsidiary to resign or
sever a relationship with the Company or a Subsidiary;
(iii) disclosing (unless compelled by judicial or administrative
process) or using any confidential or secret information relating to the
Company or any of the Subsidiaries or any of their respective clients,
customers or suppliers; or
(iv) participating or engaging in (other than through the ownership
of five percent (5%) or less of any class of securities registered under
the Securities Exchange Act of 1934, as amended), or otherwise lending
assistance (financial or otherwise) to any Person participating or engaged
in, any of the lines of business in which the Company or any of the
Subsidiaries is participating or engaged on the Closing Date in any
jurisdiction.
(b) The parties hereto recognize that the Laws and public policies
of the various states of the United States and foreign jurisdictions may
differ as to the validity and enforceability of covenants similar to those
set forth in this Section. It is the intention of the parties that the
provisions of this Section be enforced to the fullest extent permissible
under the Laws and policies of each jurisdiction in which enforcement may be
sought, and that the unenforceability (or the modification to conform to such
Laws or policies) of any provisions of this Section shall not render
unenforceable, or impair, the remainder of the provisions of this Section.
Accordingly, if any provision of this Section shall be determined to be
invalid or unenforceable, such invalidity or unenforceability shall be deemed
to apply only with respect to the operation of such provision in the
particular jurisdiction in which such determination is made and not with
respect to any other provision or jurisdiction.
(c) The parties hereto acknowledge and agree that any remedy at
Law for any breach of the provisions of this Section would be inadequate, and
each Seller hereby consents to the granting by any court of an injunction or
other equitable relief, without the necessity of actual monetary loss being
proved, in order that the breach or threatened breach of such provisions may
be effectively restrained.
4.11 NOTICE AND CURE. Love will notify Purchaser in writing (where
appropriate, through updates to the Disclosure Schedule) of, and
contemporaneously will provide Purchaser with true
and complete copies of any and all information or documents relating to, and
will use all commercially reasonable efforts to cure before the Closing, any
event, transaction or circumstance, as soon as practicable after it becomes
Known to Love, occurring after the date of this Agreement that causes or will
cause any covenant or agreement of any Seller under this Agreement to be
breached or that renders or will render untrue any representation or warranty
of any Seller contained in this Agreement as if the same were made on or as
of the date of such event, transaction or circumstance. Love also will
notify Purchaser in writing (where appropriate, through updates to the
Disclosure Schedule) of, and will use all commercially reasonable efforts to
cure, before the Closing, any violation or breach, as soon as practicable
after it becomes Known to Love, of any representation, warranty, covenant or
agreement made by any Seller in this Agreement, whether occurring or arising
before, on or after the date of this Agreement. No notice given pursuant to
this Section shall have any effect on the representations, warranties,
covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein or shall in any
way limit Purchaser's right to seek indemnity under ARTICLE XI.
4.12 FULFILLMENT OF CONDITIONS. Love will each execute and deliver
at the Closing each Operative Agreement that such Seller is required hereby
to execute and deliver as a condition to the Closing, will take all
commercially reasonable steps necessary or desirable and proceed diligently
and in good faith to satisfy each other condition to the obligations of
Purchaser contained in this Agreement and will not, and will not permit the
Company or any Subsidiary to, take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Sellers that, at all times from
and after the date hereof until the Closing, Purchaser will comply with all
covenants and provisions of this ARTICLE V, except to the extent any Seller
may otherwise consent in writing.
5.01 REGULATORY AND OTHER APPROVALS. Purchaser will (a) take all
commercially reasonable steps necessary or desirable, and proceed diligently
and in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make all
filings with and to give all notices to Governmental or Regulatory
Authorities or any other Person required of Purchaser to consummate the
transactions contemplated hereby and by the Operative Agreements, including
those described in SECTIONS 3.03 AND 3.04 OF THE DISCLOSURE SCHEDULE hereto,
(b) provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as Sellers or such Governmental or
Regulatory Authorities or other Persons may reasonably request in connection
therewith and (c) cooperate with Sellers, the Company and the Subsidiaries as
promptly as practicable in obtaining all consents, approvals or actions of,
making all filings with and giving all notices to Governmental or Regulatory
Authorities or other Persons required of Sellers, the Company or any
Subsidiary to consummate the transactions contemplated hereby and by the
Operative Agreements. Purchaser will provide prompt notification to Sellers
when any such consent, approval, action, filing or notice referred to in
clause (a) above is obtained, taken, made or given, as applicable, and will
advise Sellers of any communications (and, unless precluded by Law, provide
copies of any such communications that are in writing) with any Governmental
or Regulatory Authority or other Person regarding any of the transactions
contemplated by this Agreement or any of the Operative Agreements.
5.02 HSR FILINGS. In addition to and without limiting Purchaser's
covenants contained in SECTION 5.01, if required under applicable Law,
Purchaser will (a) take promptly all actions
necessary to make the filings required of Purchaser or its Affiliates under
the HSR Act, (b) comply at the earliest practicable date with any request for
additional information received by Purchaser or its Affiliates from the
Federal Trade Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act and (c) cooperate with Sellers in connection
with Sellers' filing under the HSR Act and in connection with resolving any
investigation or other regulatory inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal Trade
Commission or the Antitrust Division of the Department of Justice or state
attorneys general.
5.03 NOTICE AND CURE. Purchaser will notify Sellers in writing of,
and contemporaneously will provide Sellers with true and complete copies of
any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing, any event,
transaction or circumstance, as soon as practicable after it becomes known to
Purchaser, occurring after the date of this Agreement that causes or will
cause any covenant or agreement of Purchaser under this Agreement to be
breached or that renders or will render untrue any representation or warranty
of Purchaser contained in this Agreement as if the same were made on or as of
the date of such event, transaction or circumstance. Purchaser also will
notify Sellers in writing of, and will use all commercially reasonable
efforts to cure, before the Closing, any violation or breach, as soon as
practicable after it becomes known to Purchaser, of any representation,
warranty, covenant or agreement made by Purchaser in this Agreement, whether
occurring or arising before, on or after the date of this Agreement. No
notice given pursuant to this Section shall have any effect on the
representations, warranties, covenants or agreements contained in this
Agreement for purposes of determining satisfaction of any condition contained
herein or shall in any way limit Seller's right to seek indemnity under
ARTICLE XI.
5.04 FULFILLMENT OF CONDITIONS. Purchaser will execute and deliver
at the Closing each Operative Agreement that Purchaser is hereby required to
execute and deliver as a condition to the Closing, will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good
faith to satisfy each other condition to the obligations of Seller contained
in this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.
5.05 REGISTRATION OF PDT SHARES. Purchaser will cause the resale
of the PDT Shares by the Sellers to be registered with the Securities and
Exchange Commission and listed on the NASDAQ National Market System, or the
then-applicable exchange, prior to the Closing.
5.06 ADVANCE BY PURCHASER TO THE COMPANY. After execution of this
Agreement, Purchaser agrees to advance to the Company sufficient funds for
its working capital needs for the period preceding the Closing. The advance
will be reflected in a Promissory Note at the Purchaser's bank borrowing
rate, plus one percent (1%). If this transaction does not close through the
fault of the Sellers, the Promissory Note will be due and payable within
ninety (90) days of the termination of this Agreement. If this transaction
does not close through the fault of the Purchaser, the Promissory Note will
be due and payable one hundred eighty (180) days of the date of Closing.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Shares are
subject to the fulfillment, at or before the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part
by Purchaser in its sole discretion):
6.01 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by the Company and Sellers in this Agreement (other than
those made as of a specified date earlier than the Closing Date) shall be
true and correct in all material respects on and as of the Closing Date as
though such representation or warranty was made on and as of the Closing
Date, and any representation or warranty made as of a specified date earlier
than the Closing Date shall have been true and correct in all material
respects on and as of such earlier date.
6.02 PERFORMANCE; NO DEFAULT. The Company and Sellers shall have
performed and complied with, in all material respects, each agreement,
covenant and obligation required by this Agreement to be so performed or
complied with by the Company and any Seller at or before the Closing and no
Default shall have occurred and be continuing.
6.03 OFFICERS' CERTIFICATES. Each Seller shall have delivered to
Purchaser a certificate, dated the Closing Date (and executed by the Chairman
of the Board or the President of any corporate Seller and by all trustees of
any trust with respect to any trustee Seller), substantially in the form and
to the effect of EXHIBIT B hereto.
6.04 ORDERS AND LAWS. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by
this Agreement or any of the Operative Agreements or which could reasonably
be expected to otherwise result in a material diminution of the benefits of
the transactions contemplated by this Agreement or any of the Operative
Agreements to Purchaser, and there shall not be pending or threatened on the
Closing Date any Action or Proceeding or any other action in, before or by
any Governmental or Regulatory Authority which could reasonably be expected
to result in the issuance of any such Order or the enactment, promulgation or
deemed applicability to Purchaser, the Company, any Subsidiary or the
transactions contemplated by this Agreement or any of the Operative
Agreements of any such Law.
6.05 REGULATORY CONSENTS AND APPROVALS. All consents, approvals
and actions of, filings with and notices to any Governmental or Regulatory
Authority necessary to permit Purchaser and Sellers to perform their
obligations under this Agreement and the Operative Agreements and to
consummate the transactions contemplated hereby and thereby (a) shall have
been duly obtained, made or given, (b) shall be in form and substance
reasonably satisfactory to Purchaser, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (d)
shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this Agreement and
the Operative Agreements, including under the HSR Act, if applicable, shall
have occurred.
6.06 THIRD PARTY CONSENTS. The consents (or in lieu thereof
waivers) listed in SECTION 6.06 OF THE DISCLOSURE SCHEDULE and all other
consents (or in lieu thereof waivers) to the performance by Purchaser and
Sellers of their obligations under this Agreement and the Operative
Agreements or to the consummation of the transactions contemplated hereby and
thereby as are required under any Contract to which Purchaser, any Seller,
the Company or any Subsidiary is a party or by which any of their respective
Assets and Properties are bound (a) shall have been obtained, (b) shall be in
form and substance reasonably satisfactory to Purchaser, (c) shall not be
subject to the satisfaction of any condition that has not been satisfied or
waived and (d) shall be in full force and effect, except where the failure to
obtain any such consent (or in lieu thereof waiver) could not reasonably be
expected, individually or in the aggregate with other such failures, to
materially adversely affect Purchaser or the Business or Condition of the
Company or otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement and the Operative Agreements to
Purchaser.
6.07 OPINION OF COUNSEL. Purchaser shall have received the opinion
of Stradling, Yocca, Xxxxxxx and Xxxxx, counsel to Sellers and the Company,
dated the Closing Date, substantially in the form and to the effect of
EXHIBIT C hereto, and to such further effect as Purchaser may reasonably
request.
6.08 GOOD STANDING CERTIFICATES. Sellers shall have delivered to
Purchaser (a) copies of the certificates or articles of incorporation (or
other comparable corporate charter documents), including all amendments
thereto, of the Company and each Subsidiary certified by the Secretary of
State or other appropriate official of the jurisdiction of incorporation, (b)
certificates from the Secretary of State or other appropriate official of the
respective jurisdictions of incorporation to the effect that each of the
Company and the Subsidiaries is in good standing or subsisting in such
jurisdiction, listing all charter documents of the Company and such
Subsidiaries on file and attesting to its payment of all franchise or similar
Taxes, and (c) a certificate from the Secretary of State or other appropriate
official in each jurisdiction in which the Company and the Subsidiaries are
qualified or admitted to do business to the effect that the Company or the
applicable Subsidiary is duly qualified or admitted and in good standing in
such jurisdiction.
6.09 SPECIAL PROCEDURES REPORT. Purchaser shall have received the
Audited Financial Statements of the Company as of ________________ and for the
year then ended, together with the unqualified opinion of _____________________
thereon (but with explanatory language with respect to the Company's ability to
continue as a going concern), and the Company shall have received, and shall
deliver to the Purchaser a copy of, a special procedures report, dated the
Closing Date, of ______________________________, substantially in the form and
to the effect of EXHIBIT D hereto.
6.10 RESIGNATIONS OF DIRECTORS AND OFFICERS. Such members of the
boards of directors and such officers of the Company and the Subsidiaries as
are designated in a written notice delivered at least two (2) Business Days
prior to the Closing Date by Purchaser to Seller shall have tendered,
effective at the Closing, their resignations as such directors and officers.
6.11 ENVIRONMENTAL SURVEY. Purchaser shall have received an
environmental survey and assessment in form and substance reasonably
satisfactory to Purchaser prepared by a firm of licensed engineers (familiar
with the identification of Hazardous Materials) reasonably satisfactory to
Purchaser, such environmental survey and assessment to be based upon physical
on-site inspections by such firm of each of the existing sites and facilities
owned, operated and leased by the Company and the Subsidiaries, as well as a
historical review of the uses of such sites and facilities and of the
business and operations of the Company and the Subsidiaries (including any
former Subsidiaries or divisions of the Company or any Subsidiary which have
been disposed of prior to the date of such survey and assessment and with
respect to which the Company or any Subsidiary may have retained liability
for environmental matters).
6.12 PROCEEDINGS. All proceedings to be taken on the part of
Sellers in connection with the transactions contemplated by this Agreement
and all documents incident thereto shall be reasonably satisfactory in form
and substance to Purchaser, and Purchaser shall have received copies of all
such documents and other evidences as Purchaser may reasonably request in
order to establish the consummation of such transactions and the taking of
all proceedings in connection therewith.
6.13 EMPLOYMENT AND NONCOMPETITION AGREEMENTS. Purchaser shall
have received the Employment Agreements and the noncompetition agreements
listed in SECTION 6.13 OF THE DISCLOSURE SCHEDULE in form and content
acceptable to Purchaser, duly signed by the respective parties thereto.
6.14 EQUITY RIGHTS. Purchaser shall have received satisfactory
evidence of the
exercise, termination or cancellation of all Options identified in SECTION
2.04 OF THE DISCLOSURE SCHEDULE.
6.15 RELEASES. Purchaser shall have received satisfactory evidence
of the termination of all Contracts identified in SECTION 4.09 OF THE
DISCLOSURE SCHEDULE, including releases in favor of the Company and its
Subsidiaries in form and substance and from such Person as is satisfactory to
Purchaser.
6.16 COMPLETION OF DUE DILIGENCE; FINANCIAL STATEMENTS. Purchaser
shall have completed its due diligence investigation of the Company, the
Business or Condition of the Company, the Audited Financial Statements and
Sellers to its satisfaction.
6.17 JOINDER. All holders of Options relating to the Company's
securities shall have executed and delivered such documents joining in and
becoming a party to this Agreement as Purchaser shall reasonably request.
6.18 AUDITED FINANCIAL STATEMENTS. Purchaser shall have received a
satisfactory undertaking of ______________________ to the effect that they
shall provide manually signed Audited Financial Statements of the Company for
the years ended _________________________________ when reasonably requested
by Purchaser.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers hereunder to sell the Shares are subject
to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Sellers
in their sole discretion):
7.01 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by Purchaser in this Agreement (other than those made as
of a specified date earlier than the Closing Date) shall be true and correct
in all material respects on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date, and any
representation or warranty made as of a specified date earlier than the
Closing Date shall have been true and correct in all material respects on and
as of such earlier date.
7.02 PERFORMANCE. Purchaser shall have performed and complied
with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by Purchaser
at or before the Closing.
7.03 OFFICERS' CERTIFICATES. Purchaser shall have delivered to
Seller a certificate, dated the Closing Date and executed by the Chairman of
the Board, the President, the Chief Financial Officer or any Vice President
of Purchaser, substantially in the form and to the effect of EXHIBIT E
hereto, and a certificate, dated the Closing Date and executed by the
Secretary or any Assistant Secretary of Purchaser, substantially in the form
and to the effect of EXHIBIT F hereto.
7.04 ORDERS AND LAWS. There shall not be in effect on the Closing
Date any Order or Law that became effective after the date of this Agreement
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any
of the Operative Agreements.
7.05 REGULATORY CONSENTS AND APPROVALS. All consents, approvals
and actions of,
filings with and notices to any Governmental or Regulatory Authority
necessary to permit Sellers and Purchaser to perform their obligations under
this Agreement and the Operative Agreements to which they are a party and to
consummate the transactions contemplated hereby and thereby (a) shall have
been duly obtained, made or given, (b) shall be in form and substance
reasonably satisfactory to the Agent, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (d)
shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this Agreement and
the Operative Agreements, including, if applicable, under the HSR Act, shall
have occurred.
7.06 THIRD PARTY CONSENTS. All consents (or in lieu thereof
waivers) to the performance by Sellers of their obligations hereunder and to
the consummation of the transactions contemplated hereby as are required
under the Contracts listed in SECTION 7.06 OF THE DISCLOSURE SCHEDULE (a)
shall have been obtained, (b) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (c) shall be in full
force and effect.
7.07 OPINION OF COUNSEL. Sellers shall have received the opinion
of counsel, Nida & Xxxxxxx, to Purchaser, dated the Closing Date, substantially
in the form and to the effect of EXHIBIT G hereto.
7.08 PROCEEDINGS. All proceedings to be taken on the part of
Purchaser in connection with the transactions contemplated by this Agreement
and all documents incident thereto shall be reasonably satisfactory in form
and substance to Sellers, and Sellers shall have received copies of all such
documents and other evidences as Sellers may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
7.09 GOOD STANDING CERTIFICATES. Purchaser shall have delivered to
Sellers (a) copies of the certificates or articles of incorporation (or other
comparable corporate charter documents), including all amendments thereto, of
Purchaser certified by the Secretary of State or other appropriate official
of the jurisdiction of incorporation, (b) certificates from the Secretary of
State or other appropriate official of the respective jurisdictions of
incorporation to the effect that Purchaser is in good standing or subsisting
in such jurisdiction, listing all charter documents of Purchaser on file and
attesting to its payment of all franchise or similar Taxes, and (c) a
certificate from the Secretary of State or other appropriate official in each
jurisdiction in which Purchaser is qualified or admitted to do business to
the effect that Purchaser is duly qualified or admitted and in good standing
in such jurisdiction.
7.10 EMPLOYMENT AGREEMENTS AND CONSULTING AGREEMENTS. The Company
shall have entered into Employment Agreements and Consulting Agreements to
the satisfaction of the Company. Employment Agreements would be required for
***** if they are still employed by the Company at the time that this
Agreement is executed, together with any other managers that Purchaser wishes
to retain. The Employment Agreements will provide for customary provisions
and shall include six (6) months' severance for termination without cause,
and no severance if termination is for cause. *****. Any of the foregoing
agreements will be terminable in the event of a breach of the covenants not
to compete.
*****Confidential Treatment Requested
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01 INDEMNIFICATION. Love jointly and severally indemnifies,
defends and holds harmless Purchaser Indemnified Parties in accordance with
Section 10.01.
8.02 CONTROL OF CONTEST. Each party shall have the right, at its
own expense, to control any audit or determination by any authority, initiate
any claim for refund or amended return, and contest, resolve and defend
against any assessment, notice of deficiency or other adjustment or proposed
adjustment of Taxes for any taxable period for which that party (or any of
its Affiliates) is charged with responsibility for filing a Tax Return and
paying Taxes under this Agreement; provided, however, that neither party
shall have the right to agree to any assessment, deficiency, settlement or
other adjustment or proposed adjustment of Taxes that would adversely affect
the interests of the other party without such other party's written consent,
which consent shall not be unreasonably withheld, and provided, further, that
in the event that a party not charged with the responsibility for filing a
Tax Return under this Agreement is paid a refund, such party shall pay such
refund to the party so charged within seven (7) days of receipt of such
refund by the first party. Purchaser shall promptly forward to Sellers all
written notifications and other written communications from any taxing
authority received by the Company relating to any liability for Taxes for any
taxable period for which Sellers are charged with payment responsibility
under this Agreement and Purchaser shall execute or cause to be executed any
powers of attorney or other documents reasonably requested by Sellers to
enable Sellers to take any and all necessary actions with respect to any
proceedings for any such period.
8.03 ACCESS TO INFORMATION. Each of Purchaser and Sellers will
provide the other, and Purchaser shall cause the Company to provide Sellers,
with the right, at reasonable times and upon reasonable notice, to have
access to, and to copy and use, any records or information and personnel
which may be relevant in connection with the preparation of any Tax Returns,
any audit or other examination by any authority, or any judicial or
administrative proceedings relating to liability for Taxes. The party
requesting assistance hereunder shall reimburse the other party for
reasonable expenses incurred in providing such assistance. Any information
obtained pursuant to this SECTION 8.03 shall be held in strict confidence and
shall be used solely in connection with the reason for which it was requested.
8.04 RETENTION OF RECORDS. For a period of four (4) years from the
Closing Date, Sellers shall not dispose of or destroy any of the business
records and files of Sellers or the Company relating to Taxes in existence on
the Closing Date without first offering to turn over possession thereof to
Purchaser by written notice to Purchaser at least thirty (30) days prior to
the proposed date of such disposition or destruction.
8.05 RESOLUTION OF DISAGREEMENTS AMONG PARTIES. If Sellers and
Purchaser disagree as to the matters governed by this ARTICLE VIII, Sellers
and Purchaser shall promptly consult with each other in an effort to resolve
such dispute. If any such disagreement cannot be resolved within fifteen
(15) days, either party shall assert in writing that such dispute cannot be
resolved by arbitration as set forth in SECTION 10.03(d) hereof.
8.06 TAX RETURNS. Without limiting the foregoing, Sellers shall be
fully responsible for the filing of all Tax Returns, including delinquent Tax
Returns with respect to any period ending on or before the Closing Date, and
will pay all fines and penalties due in connection with such Tax Returns.
8.07 PRE-FILING APPROVAL OF TAX RETURNS AND REPORTS. For any
period that includes days on or before the Closing, Tax Returns and reports
prepared or caused to be prepared by Purchaser for the Company or the
Subsidiaries, shall be prepared in accordance with generally accepted tax
accounting principles and in a manner consistent with past tax filing
practices of the Company and the subsidiaries, to the extent not inconsistent
with the Code, state and local tax statutes, and the applicable regulations.
Purchaser shall supply copies of the Tax Returns to Agent within ten (10)
days of filing. Any Tax Return or report which relates to any period that
includes days on or before the Closing prepared or caused to be prepared by
Purchaser for Company or the Subsidiaries, shall also be subject to
pre-filing approval by Agent, for and on behalf of Seller. Unless otherwise
agreed to by the parties, Tax Returns and reports subject to pre-filing
approval shall be submitted by Purchaser to Agent at least forty-five (45)
days prior to the due date (including extensions) of the Tax Return or
report, and Seller shall either approve or provide written comment on the Tax
Return or report within fifteen (15) days of receipt of the Tax Return or
report. In the event Sellers shall dispute any determination by the
accountants, Sellers shall notify (through the Agent) Purchaser within a
reasonable time not to exceed 10 days (taking into account the deadline for
filing the Tax Return or report) of such dispute. In such event, such
dispute shall be submitted by Purchaser to an independent certified public
accountant of recognized national standing not performing services for
Purchaser, Sellers, the Company or any of their respective Affiliates. Such
accountant's determination shall be final and binding. In the event the tax
liability for the periods on or before the Closing, as determined by such
accountants, are materially different than that determined by Purchaser's
auditors (plus or minus more than five percent), then the costs and expenses
of such accountants shall be borne by Purchaser. In the event the tax
liability for the periods on or before the Closing as determined by such
accountants are not materially different than that determined by Purchaser's
auditors, then the costs and expenses of such accountants shall be borne by
Sellers.
8.08 COMPANY'S FINAL RETURNS. Purchaser files consolidated returns
with its subsidiaries and as of the date of closing, the Company will become
part of Purchaser's consolidated group. The Company and its Subsidiaries
will be required to file returns for the fiscal year ending the day before
the Closing. Notwithstanding the provisions of SECTION 8.06, it is Sellers'
responsibility to prepare such returns and the Company will pay the costs
therefor. The Company will make its personnel reasonably available, after
the Closing, for such return preparation.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
9.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Notwithstanding any right of Purchaser (whether or not exercised)
to investigate the affairs of the Company and the Subsidiaries or any right
of any party (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this
Agreement, Sellers and Purchaser have the right to rely fully upon the
representations, warranties, covenants and agreements of the other contained
in this Agreement. The representations, warranties, covenants and agreements
of Sellers and Purchaser contained in this Agreement will survive the Closing
for two (2) years.
ARTICLE X
INDEMNIFICATION
10.01 TAX INDEMNIFICATION. Love shall, jointly and severally,
indemnify, defend and hold harmless the Purchaser Indemnified Parties from
and against any and all Losses arising from or incurred as a result of Taxes
owed by the Company (or any Subsidiary) with respect to any taxable
period ending on or prior to the Closing Date in excess of the amount accrued
for taxes on the Company's Audited Financial Statements, provided that the
Sellers shall have received an Indemnity Notice from Purchaser in a timely
manner enabling Sellers to investigate and defend any alleged Tax Losses, or
if they so elect, assume control of the defense of any claim, action or
proceeding with respect thereto.
10.02 OTHER INDEMNIFICATION.
(a) Subject to the other Sections of this ARTICLE X and excluding
the indemnity under SECTION 10.01 above, Love shall jointly and severally,
and the remaining Sellers on an individual basis shall severally, indemnify
the Purchaser Indemnified Parties in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or sustained
by any of them or to which any of them becomes subject, resulting from,
arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement made by
such Seller contained in this Agreement.
(b) Subject to the other Sections of this ARTICLE X, Purchaser
shall indemnify the Seller Indemnified Parties in respect of, and hold each
of them harmless from and against, any and all Losses suffered, incurred or
sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to any misrepresentation, breach of warranty
or nonfulfillment of or failure to perform any covenant or agreement on the
part of Purchaser contained in this Agreement.
10.03 METHOD OF ASSERTING CLAIMS. All claims for indemnification
by any Indemnified Party under SECTION 10.02 will be asserted and resolved as
follows:
(a) No claims will be made hereunder unless the total amount of
such claims exceeds $100,000 at which time claims in excess of such amount
will be subject to indemnification.
(b) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under SECTION 10.02 is asserted
against or sought to be collected from such Indemnified Party by a Person
other than Sellers, the Company, any Subsidiary, Purchaser or any Affiliate
of any Seller or Purchaser (a "THIRD PARTY CLAIM"), the Indemnified Party
shall deliver a Claim Notice with reasonable promptness to the Indemnifying
Party. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such
Third Party Claim, the Indemnifying Party will not be obligated to indemnify
the Indemnified Party with respect to such Third Party Claim to the extent
that the Indemnifying Party's ability to defend has been irreparably
prejudiced by such failure of the Indemnified Party. The Indemnifying Party
will notify the Indemnified Party as soon as practicable within the Dispute
Period whether the Indemnifying Party disputes its liability to the
Indemnified Party under SECTION 10.02 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party
against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this
SECTION 10.03(a), then the Indemnifying Party will have the right to
defend, with counsel reasonably satisfactory to the Indemnified Party, at
the sole cost and expense of the Indemnifying Party, such Third Party Claim
by all appropriate proceedings, which proceedings will be vigorously and
diligently prosecuted by the Indemnifying Party to a final conclusion or
will be settled at the discretion of the Indemnifying Party (but only with
the consent of the Indemnified Party in the case of any settlement that
provides for any relief other than the payment of monetary damages). The
Indemnifying Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; PROVIDED, HOWEVER, that the
Indemnified Party may, at the sole cost and expense of the Indemnified
Party, at any
time prior to the Indemnifying Party's delivery of the notice referred to
in the first sentence of this clause (i), file any motion, answer or other
pleadings or take any other action that the Indemnified Party reasonably
believes to be necessary or appropriate to protect its interests; and
PROVIDED FURTHER, that if requested by the Indemnifying Party, the
Indemnified Party will, at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the Indemnifying Party in
contesting any Third Party Claim that the Indemnifying Party elects to
contest. The Indemnified Party may participate in, but not control, any
defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this clause (i), and except as provided in
the preceding sentence, the Indemnified Party will bear its own costs and
expenses with respect to such participation. Notwithstanding the
foregoing, the Indemnified Party may take over the control of the defense
or settlement of a Third Party Claim at any time if it irrevocably waives
its right to indemnity under SECTION 10.02 with respect to such Third Party
Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend the
Third Party Claim pursuant to SECTION 10.03(a), or if the Indemnifying
Party gives such notice but fails to prosecute vigorously and diligently or
settle the Third Party Claim, or if the Indemnifying Party fails to give
any notice whatsoever within the Dispute Period, then the Indemnified Party
will have the right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate proceedings,
which proceedings will be prosecuted by the Indemnified Party in a
reasonable manner and in good faith or will be settled at the discretion of
the Indemnified Party (with the consent of the Indemnifying Party, which
consent will not be unreasonably withheld). The Indemnified Party will
have full control of such defense and proceedings, including any compromise
or settlement thereof; PROVIDED, HOWEVER, that if requested by the
Indemnified Party, the Indemnifying Party will, at the sole cost and
expense of the Indemnifying Party, provide reasonable cooperation to the
Indemnified Party and its counsel in contesting any Third Party Claim which
the Indemnified Party is contesting. Notwithstanding the foregoing
provisions of this clause (ii), if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the Indemnifying Party
disputes its liability hereunder to the Indemnified Party with respect to
such Third Party Claim and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in clause (iii) below, the
Indemnifying Party will not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party will reimburse the Indemnifying Party in
full for all reasonable costs and expenses incurred by the Indemnifying
Party in connection with such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by
the Indemnified Party pursuant to this clause (ii), and the Indemnifying
Party will bear its own costs and expenses with respect to such
participation.
(iii) If the Indemnifying Party notifies the Indemnified Party that it
does not dispute its liability to the Indemnified Party with respect to the
Third Party Claim under SECTION 10.02 or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes its
liability to the Indemnified Party with respect to such Third Party Claim,
the Loss in the amount specified in the Claim Notice will be conclusively
deemed a liability of the Indemnifying Party under SECTION 10.02 and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand. In the event any payments under this Agreement are then
due by the Indemnified Party to the Indemnifying Party (whether as a direct
obligation or a joint and several obligation together with other Persons),
then the Indemnified Party may, at its election, set off amounts payable
under this ARTICLE X against such amounts as they become due. If the
Indemnifying Party has timely disputed its liability with respect to such
claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute shall be resolved
by arbitration in accordance with paragraph (c) of this SECTION 10.03.
(c) In the event any Indemnified Party should have a claim under
SECTION 10.02 against any Indemnifying Party that does not involve a Third
Party Claim, the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party. The failure by any
Indemnified Party to give the Indemnity Notice shall not impair such party's
rights hereunder except to the extent that an Indemnifying Party demonstrates
that it has been irreparably prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim described
in such Indemnity Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the claim described in
such Indemnity Notice, the Loss in the amount specified in the Indemnity
Notice will be conclusively deemed a liability of the Indemnifying Party
under SECTION 10.02 and the Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. In the event any payments under
this Agreement, including any installments payable under clauses (b), (c) OR
(d) OF SECTION 1.02, are then or thereafter due by the Indemnified Party to
the Indemnifying Party (whether as a direct obligation or a joint and several
obligation together with other Persons), then the Indemnified Party may, at
its election, set off amounts payable under this ARTICLE X against such
amounts as they become due. If the Indemnifying Party has timely disputed
its liability with respect to such claim, the Indemnifying Party and the
Indemnified Party will proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through negotiations within the Resolution
Period, such dispute shall be resolved by arbitration in accordance with
paragraph (c) of this SECTION 10.03.
(d) Any dispute submitted to arbitration pursuant to this SECTION
10.03 shall be finally and conclusively determined by the decision of a
single arbitrator through Jams Endispute (hereinafter sometimes called the
"ARBITRATOR") selected as hereinafter provided. The arbitrator shall be
selected by Jams Endispute upon application made to it for such purpose by
the Indemnified Party. The arbitrability of any dispute, claim or
controversy shall likewise be determined in such arbitration. Such
arbitration proceeding shall be conducted in as expedited a manner as is then
permitted by the commercial arbitration rules (formal or informal) of Jams
Endispute. The Arbitrator shall conduct its hearings in Santa Barbara,
California, and shall reach and render a decision in writing with respect to
the amount, if any, which the Indemnifying Party is required to pay to the
Indemnified Party in respect of a claim filed by the Indemnified Party. In
connection with rendering its decisions, the Arbitrator shall adopt and
follow such rules and procedures as it deems necessary or appropriate. To
the extent practical, decisions of the Arbitrator shall be rendered no more
than thirty (30) days following commencement of proceedings with respect
thereto. The Arbitrator shall cause its written decision to be delivered to
the Indemnified Party and the Indemnifying Party. Any decision made by the
Arbitrator (either prior to or after the expiration of such thirty (30)
calendar day period) shall be final, binding and conclusive on the
Indemnified Party and the Indemnifying Party and entitled to be enforced to
the fullest extent permitted by law and entered in any court of competent
jurisdiction. Until any award of costs or expenses, including reasonable
attorneys' fees, by the Arbitrator, each party to any arbitration shall bear
its own expense in relation thereto, including but not limited to such
party's attorneys' fees, if any, and one-half of the expenses and fees of the
Arbitrator (which shall be a joint and several obligation of multiple
Indemnifying or Indemnified Parties, as the case may be). The parties and
the Arbitrator shall have all of the rights and duties relating to discovery
provided by Section 1283.05 of the California Code of Civil Procedure, which
is hereby made a part of this Agreement, except that the Arbitrator shall
have the right to disapprove or to limit any discovery which such Arbitrator
deems to be for purposes of delay or otherwise unnecessarily burdensome or
oppressive.
(e) The maximum amount of claims made hereunder shall not exceed
the lesser of:
(i) the Purchaser's total investment in the Company (including loans or
advances), or (ii) $5,000,000, except in the case of fraud by the Sellers, in
which case there is no maximum. The maximum liability of any Seller, other
than Love, shall be the portion of the Purchase Price received by such Seller.
(f) No claim may be made more than two (2) years from the date of
the Closing.
ARTICLE XI
TERMINATION AND DEFAULT
11.01 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
Sellers and Purchaser;
(b) at any time before the Closing, by Sellers or Purchaser, in
the event (i) of a material breach hereof by the non-terminating party if
such non-terminating party fails to cure such breach within five (5) Business
Days following notification thereof by the terminating party or (ii) upon
notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations under
this Agreement becomes impossible or impracticable with the use of
commercially reasonable efforts if the failure of such condition to be
satisfied is not caused by a breach hereof by the terminating party;
(c) at any time after ninety (90) days from exercise by Sellers or
Purchaser upon notification of the non-terminating party by the terminating
party if the Closing shall not have occurred on or before such date and such
failure to consummate is not caused by a breach of this Agreement by the
terminating party; or
(d) by Purchaser if there shall have occurred (i) any general
suspension of, or limitation on prices for, trading in securities on the New
York Stock Exchange, (ii) a declaration of a banking, moratorium or any
suspension of payments in respect to banks in the United States, (iii) a
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any
limitation by federal or state authorities on the extension or credit by
lending institutions which materially and adversely affects Purchaser or (v)
in the case of any of the foregoing existing at the date of this Agreement, a
material acceleration or worsening thereof, upon notification of the
non-terminating party by the terminating party.
11.02 EFFECT OF TERMINATION.
(a) If this Agreement is validly terminated pursuant to SECTION
11.01, this Agreement will forthwith become null and void, and there will be
no liability or obligation on the part of Sellers or Purchaser (or any of
their respective officers, directors, employees, agents or other
representatives or Affiliates), except as provided in this SECTION 11.02 and
except that the provisions with respect to expenses in SECTION 13.03 and
confidentiality in SECTION 13.05 will continue to apply following any such
termination and except that the covenants contained in SECTION 4.04 will
continue to apply until thirty (30) days following such termination.
Notwithstanding any other provision in this Agreement to the contrary, upon
termination of this Agreement pursuant to SECTION 11.01(b), (c) or (d),
Sellers will remain liable to Purchaser for any breach of this Agreement by
Sellers existing at the time of such termination, and Purchaser will remain
liable to Sellers for any breach of this Agreement by Purchaser
existing at the time of such termination, and Sellers or Purchaser may seek
such remedies, including damages and fees of attorneys, against the other
with respect to any such breach as are provided in this Agreement or as are
otherwise available at Law or in equity.
(b) In the event the Sellers or the Company breaches SECTION 4.04
and, within twelve (12) months after such breach, Sellers or the Company
closes a transaction relating to the acquisition of a material portion of the
Shares, the Company, its assets, securities or its business, in whole or in
part, whether through direct purchase, merger, consolidation or other
business combination (other than sales of inventory or immaterial portions of
the Company's assets in the ordinary course), then, immediately upon any such
closing, the Company and Sellers shall pay to Purchaser the sum of Two
Million Dollars ($2,000,000).
ARTICLE XII
DEFINITIONS
12.01 DEFINITIONS.
(a) DEFINED TERMS. As used in this Agreement, the following
defined terms have the meanings indicated below:
"ACQUISITION PROPOSAL" means any proposal for a merger or other
business combination to which the Company or any Subsidiary is a party or the
direct or indirect acquisition of any equity interest in, or a substantial
portion of the assets of, the Company or any Subsidiary, other than the
transactions contemplated by this Agreement.
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"AFFILIATE" means any Person that directly, or indirectly through
one of more intermediaries, controls or is controlled by or is under common
control with the Person specified. For purposes of this definition, control
of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract
or otherwise and, in any event and without limitation of the previous
sentence, any Person owning ten percent (10%) or more of the voting
securities of another Person shall be deemed to control that Person.
"AGENT" means Xxxxxxx X. Love appointed as agent of the Sellers
pursuant to SECTION 13.15.
"AGREEMENT" means this Stock Purchase Agreement and the Exhibits,
the Disclosure Schedule and the Schedules hereto and the certificates
delivered in accordance with SECTIONS 6.03 and 7.03, as the same shall be
amended from time to time.
"ARBITRATOR" has the meaning ascribed to it in SECTION 10.03(d).
"ASSETS AND PROPERTIES" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person, including cash,
cash equivalents, Investment Assets, accounts and notes receivable, chattel
paper, documents, instruments, general intangibles, real estate, equipment,
inventory, goods and Intellectual Property.
"ASSOCIATE" means, with respect to any Person, any corporation or
other business organization of which such Person is an officer or partner or
is the beneficial owner, directly or indirectly, of ten percent (10%) or more
of any class of equity securities, any trust or estate in which such Person
has a substantial beneficial interest or as to which such Person serves as a
trustee or in a similar capacity and any relative or spouse of such Person,
or any relative of such spouse, who has the same home as such Person.
"AUDITED FINANCIAL STATEMENT DATE" means the last day of the most
recent fiscal year of the Company for which Financial Statements are
delivered to Purchaser pursuant to SECTION 2.09.
"AUDITED FINANCIAL STATEMENTS" means the Financial Statements for
the most recent fiscal year of the Company delivered to Purchaser pursuant to
SECTION 2.09.
"BENEFIT PLAN" means any Plan established by the Company or any
Subsidiary, or any predecessor or Affiliate of any of the foregoing, existing
at the Closing Date or prior thereto, to which the Company or any Subsidiary
contributes or has contributed, or under which any employee, former employee
or director of the Company or any Subsidiary or any beneficiary thereof is
covered, is eligible for coverage or has benefit rights.
"BOOKS AND RECORDS" means all files, documents, instruments,
papers, books and records relating to the Business or Condition of the
Company, including financial statements, Tax Returns and related work papers
and letters from accountants, budgets, pricing guidelines, ledgers, journals,
deeds, title policies, minute books, stock certificates and books, stock
transfer ledgers, Contracts, Licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental
studies and plans.
"BUSINESS DAY" means a day other than Saturday, Sunday or any day
on which banks located in the State of California are authorized or obligated
to close.
"BUSINESS OR CONDITION OF THE COMPANY" means the business,
condition (financial or otherwise), results of operations, Assets and
Properties and prospects of the Company and the Subsidiaries taken as a whole.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the rules and
regulations promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response and
Liability Information System, as provided for by 40 C.F.R. Section 300.5.
"CLAIM NOTICE" means written notification pursuant to SECTION
10.03(a) of a Third Party Claim as to which indemnity under SECTION 10.02 is
sought by an Indemnified Party, enclosing a copy of all papers served, if
any, and specifying the nature of and basis for such Third Party Claim and
for the Indemnified Party's claim against the Indemnifying Party under
SECTION 10.02, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of such Third
Party Claim.
"CLOSING" means the closing of the transactions contemplated by
SECTION 1.03.
"CLOSING DATE" means (a) the fifth Business Day after the day on
which the last of the consents, approvals, actions, filings, notices or
waiting periods described in or related to the filings
described in SECTIONS 6.04 through 6.07 and SECTIONS 7.04 through 7.07 has
been obtained, made or given or has expired, as applicable, or (b) such other
date as Purchaser and Seller mutually agree upon in writing.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"COMMON STOCK" means the common stock, no par value, of the Company.
"COMPANY" has the meaning ascribed to it in the forepart of this
Agreement.
"CONTRACT" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract
(whether written or oral).
"DEFINED BENEFIT PLAN" means each Benefit Plan which is subject to
Part 3 of Title I of ERISA, Section 412 of the Code or Title IV of ERISA.
"DISCLOSURE SCHEDULE" means the record delivered to Purchaser by
Seller herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required
to be included therein by Seller pursuant to this Agreement.
"DISPUTE PERIOD" means the period ending ninety (90) days following
receipt by an Indemnifying Party of either a Claim Notice or an Indemnity
Notice.
"EMPLOYMENT AGREEMENTS" shall mean the employment agreements
between the Company and the Persons identified in SECTION 6.15 OF THE
DISCLOSURE SCHEDULE, in form and substance acceptable to Purchaser.
"ENVIRONMENTAL CLAIM" means, with respect to any Person, any
written or oral notice, claim, demand or other communication (collectively, a
"CLAIM") by any other Person alleging or asserting such Person's liability
for investigatory costs, cleanup costs, Governmental or Regulatory Authority
response costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a)
the presence, or Release into the environment, of any Hazardous Material at
any location, whether or not owned by such Person, or (b) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law. The term "Environmental Claim" shall include any claim by
any Governmental or Regulatory Authority for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive
relief resulting from the presence of Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" means any Law or Order relating to the
regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes into the environment (including ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means any Person who is in the same controlled
group of corporations or who is under common control with Seller or, before
the Closing, the Company or any Subsidiary (within the meaning of Section 414
of the Code).
"ESTOPPEL CERTIFICATE" means the written certification, issued not
more than twenty (20) days prior to the Closing Date by a lessor, sublessor
or other party to a lease or occupancy agreement, stating (a) that such lease
or occupancy agreement is (i) in full force and effect and (ii) has not been
modified or amended except as described therein, (b) the date to which rental
has been paid, (c) that no default or event of default exists thereunder and
(d) that to the best of the knowledge of the issuer thereof, no event has
occurred which, with the giving of notice or lapse of time or both, would be
a default or event of default thereunder.
"FINANCIAL STATEMENTS" means the consolidated financial statements
of the Company and its consolidated Subsidiaries delivered to Purchaser
pursuant to SECTION 2.09 or 4.06.
"GAAP" means generally accepted accounting principles, consistently
applied throughout the specified period and in the immediately prior
comparable period.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality
of the United States, any foreign country or any domestic or foreign state,
county, city or other political subdivision.
"HAZARDOUS MATERIAL" means (A) any petroleum or petroleum products,
flammable explosives, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (B) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants" or words of similar import under any
Environmental Law; and (C) any other chemical or other material or substance,
exposure to which is now or hereafter prohibited, limited or regulated by any
Governmental or Regulatory Authority under any Environmental Law.
"HSR ACT" means Section 7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and the
rules and regulations promulgated thereunder.
"INDEBTEDNESS" of any Person means all obligations of such Person
(i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iv) under capital leases and (v) in the nature of guarantees of
the obligations described in clauses (i) through (iv) above of any other
Person.
"INDEMNIFIED PARTY" means any Person claiming indemnification under
any provision of ARTICLE X, including a Person asserting a claim pursuant to
paragraph (c) of SECTION 10.03.
"INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of ARTICLE X, including
a Person against whom a claim is asserted pursuant to paragraph (c) of
SECTION 10.03.
"INDEMNITY NOTICE" means written notification pursuant to SECTION
10.03(b) of a claim for indemnity under ARTICLE X by an Indemnified Party,
specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the
estimated amount, determined in good faith, of such claim.
"INTELLECTUAL PROPERTY" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service xxxx rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights,
trade dress, business and product names, logos, slogans, trade secrets,
industrial models, processes, designs, methodologies, computer programs
(including all source codes) and related documentation, technical
information, manufacturing, engineering and technical drawings, know-how and
all pending applications for and registrations of patents, trademarks,
service marks and copyrights.
"INVESTMENT ASSETS" means all debentures, notes and other evidences
of Indebtedness, stocks, securities (including rights to purchase and
securities convertible into or exchangeable for other securities), interests
in joint ventures and general and limited partnerships, mortgage loans and
other investment or portfolio assets owned of record or beneficially by the
Company or any Subsidiary and issued by any Person other than the Company or
any Subsidiary (other than trade receivables generated in the ordinary course
of business of the Company and the Subsidiaries).
"IRS" means the United States Internal Revenue Service.
"LAWS" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental or Regulatory Authority.
"LIABILITIES" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"LICENSES" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"LOSS" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including interest, court costs, fees of
attorneys, accountants and other experts or other expenses of litigation or
other proceedings or of any claim, default or assessment).
"NPL" means the National Priorities List under CERCLA.
"OPERATIVE AGREEMENTS" means the Option Agreement, the Investment
Agreement, the Employment Agreements and any support or other agreements to
be entered into in connection with the transaction.
"OPTION" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares
of capital stock of such Person or any security of any kind convertible into
or exchangeable or exercisable for any shares of capital stock of such Person
or (ii) receive or exercise any benefits or rights similar to any rights
enjoyed by or accruing to the holder of shares of capital stock of such
Person, including any rights to participate in the equity or income of such
Person or to participate in
or direct the election of any directors or officers of such Person or the
manner in which any shares of capital stock of such Person are voted.
"ORDER" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA.
"PENSION BENEFIT PLAN" means each Benefit Plan which is a pension
benefit plan within the meaning of Section 3(2) of ERISA.
"PERMITTED LIEN" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, (ii)
any statutory Lien arising in the ordinary course of business by operation of
Law with respect to a Liability that is not yet due or delinquent and (iii)
any minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens does not materially impair the value of the
property subject to such Lien or the use of such property in the conduct of
the business of the Company or any Subsidiary.
"PERSON" means any natural person, corporation, limited liability
company, general partnership, limited partnership, proprietorship, other
business organization, trust, union, association or Governmental or
Regulatory Authority.
"PLAN" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock
option, stock ownership, stock appreciation rights, phantom stock, leave of
absence, layoff, vacation, day or dependent care, legal services, cafeteria,
life, health, accident, disability, workmen's compensation or other
insurance, severance, separation or other employee benefit plan, practice,
policy or arrangement of any kind, whether written or oral, including, but
not limited to, any "employee benefit plan" within the meaning of Section
3(3) of ERISA.
"PURCHASE PRICE" has the meaning ascribed to it in SECTION 1.02.
"PURCHASER" has the meaning ascribed to it in the forepart of this
Agreement.
"PURCHASER INDEMNIFIED PARTIES" means Purchaser and its officers,
directors, employees, agents and Affiliates.
"QUALIFIED PLAN" means each Benefit Plan which is intended to
qualify under Section 401 of the Code.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the indoor or outdoor environment, including the movement of Hazardous
Materials through ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata.
"REPRESENTATIVES" has the meaning ascribed to it in SECTION 4.03
and shall apply to both Purchaser's Representatives and Sellers'
Representatives.
"RESOLUTION PERIOD" means the period ending thirty (30) days
following receipt by an Indemnified Party of a written notice from an
Indemnifying Party stating that it disputes all or any portion of a claim set
forth in a Claim Notice or an Indemnity Notice.
"SELLER" and "SELLERS" have the meanings ascribed to such terms in
the forepart of this Agreement.
"SELLER INDEMNIFIED PARTIES" means each Seller and its officers,
directors, trustees, employees, agents and Affiliates.
"SHARES" has the meaning ascribed to it in the forepart of this
Agreement.
"SUBJECT DEFINED BENEFIT PLAN" means each Defined Benefit Plan
listed and described in SECTION 2.15(a) OF THE DISCLOSURE SCHEDULE.
"SUBSIDIARY" means any Person in which the Company, directly or
indirectly through Subsidiaries or otherwise, beneficially owns more than
fifty percent (50%) of either the equity interests in, or the voting control
of, such Person.
"TAX" means any foreign, federal, state, county or local income,
gross receipt, capital stock, production, business and occupation, net
proceeds, alternative or add on minimum, ad valorem, value added, turnover,
sales, use, real property, personal property (tangible and intangible),
stamp, leasing, excise, duty, disability, franchise, transfer, license,
withholding, payroll, severance, employment, fuel, excess profits,
environmental, occupational, interest equalization, windfall profits and
severance taxes, and all other like governmental charges and any
deficiencies, penalties, assessments and interest thereon.
"TAX RETURNS" means any foreign, federal, state, county or local
tax report, form, return, information return or other related document
required to be filed by any relevant Tax authority.
"THIRD PARTY CLAIM" has the meaning ascribed to it in SECTION
10.03(a).
"UNAUDITED FINANCIAL STATEMENT DATE" means the last day of the most
recent fiscal quarter of the Company for which Financial Statements are
delivered to Purchaser pursuant to SECTION 2.09.
"UNAUDITED FINANCIAL STATEMENTS" means the Financial Statements for
the most recent fiscal quarter of the Company delivered to Purchaser pursuant
to SECTION 2.09.
(b) CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the context
of this Agreement otherwise requires, (i) words of any gender include each
other gender; (ii) words using the singular or plural number also include the
plural or singular number, respectively; (iii) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (iv)
references to Articles, Sections (or subdivisions of Sections), Exhibits,
Annexes or Schedules are to this Agreement; and (v) the phrases "ordinary
course of business" and "ordinary course of business consistent with past
practice" refer to the business and practice of the Company or a Subsidiary;
(vi) references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments, extensions and other modifications
to such instruments (without, however, limiting any prohibition on any such
amendments, extensions and other modifications by the terms of this Agreement);
(vii) references to statutes or regulations are to be construed as including
all statutory or regulatory provisions consolidating, amending or replacing the
statute or regulation referred to; (viii) references to "writing" include
printing, typing, lithography and other means of reproducing words in a tangible
visible form; (ix) the words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation"; and (x) references to
Persons include their respective
permitted successors and assigns and, in the case of Governmental or
Regulatory Authorities, Governmental or Regulatory Authorities succeeding to
their respective functions and capacities. Whenever this Agreement refers to
a number of days, such number shall refer to calendar days unless Business
Days are specified. All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP.
ARTICLE XIII
MISCELLANEOUS
13.01 NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only
if delivered personally or by facsimile transmission or mailed (first class
postage prepaid) to the parties at the following addresses or facsimile
numbers:
If to Purchaser, to:
PDT Cardiovascular, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: Xxxx X. Xxxxxxx, Ph.D.
with a copy to:
Nida & Xxxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxx X. Xxxx, Esq.
If to any Seller:
Ramus Medical Technologies
0000 Xxx Xxxx, Xxxx 0
Xxxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxxx X. Love, President
with a copy to:
Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxxx X. Xxxxx
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number
as provided in this Section, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given upon receipt
(in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice,
request or other communication is to be delivered pursuant to this Section).
Any party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto; PROVIDED, HOWEVER, that in
no event shall Sellers have more than one address or facsimile number for the
purpose of notices to any or all Sellers.
13.02 ENTIRE AGREEMENT. This Agreement and the Operative
Agreements supersede all prior discussions and agreements between the parties
with respect to the subject matter hereof and thereof, including the Letter
of Intent, and contain the sole and entire agreement between the parties
hereto with respect to the subject matter hereof and thereof.
13.03 EXPENSES. Except as otherwise expressly provided in this
Agreement (including as provided in SECTION 11.02), if the transactions
contemplated hereby are consummated, each party will pay its own costs and
expenses, and the Company shall pay the costs and expenses of the Company and
the Subsidiaries, incurred in connection with the negotiation, execution and
closing of this Agreement, the Operative Agreements and the transactions
contemplated hereby and thereby.
13.04 PUBLIC ANNOUNCEMENTS. At all times at or before the
Closing, Sellers will not issue or make any reports, statements or releases
to the public or generally to the employees, customers, suppliers or other
Persons to whom the Company and the Subsidiaries sell goods or provide
services or with whom the Company and the Subsidiaries otherwise have
significant business relationships with respect to this Agreement or the
transactions contemplated hereby without the consent of Purchaser, which
consent shall not be unreasonably withheld. Sellers and Purchaser will
obtain the other party's prior approval of any press release to be issued
immediately following the Closing announcing the consummation of the
transactions contemplated by this Agreement.
13.05 CONFIDENTIALITY. Each party hereto will hold, and will use
its best efforts to cause its Affiliates, and in the case of Purchaser, any
Person who has provided, or who is considering providing, financing to
Purchaser to finance all or any portion of the Purchase Price, and their
respective Representatives to hold, in strict confidence from any Person
(other than any such Affiliate, Person who has provided, or who is
considering providing, financing or Representative), unless (i) compelled to
disclose by judicial or administrative process (including in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Law or (ii) disclosed in an Action or Proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information
can be shown to have been (a) previously known by the party receiving such
documents or information, (b) in the public domain (either prior to or after
the furnishing of such documents or information hereunder) through no fault
of such receiving party or (c) later acquired by the receiving party from
another source if the receiving party is not aware that such source is under
an obligation to another party hereto to keep such documents and information
confidential; PROVIDED that following the Closing the foregoing restrictions
will not apply to Purchaser's use of documents and information concerning the
Company and the Subsidiaries furnished by Seller hereunder. In the event the
transactions contemplated hereby are not consummated, upon the request of the
other party, each party hereto will, and will cause its Affiliates, any
Person who has provided, or who is considering providing, financing to such
party and their respective Representatives to, promptly (and in no event
later than five (5) Business Days after such request) redeliver or cause to
be redelivered all copies of documents and information furnished by the other
party in connection with this Agreement or the transactions contemplated
hereby and destroy or cause to be destroyed all notes, memoranda,
summaries, analyses, compilations and other writings related thereto or based
thereon prepared by the party furnished such documents and information or its
Representatives.
13.06 FURTHER ASSURANCES; POST-CLOSING COOPERATION.
(a) At any time or from time to time after the Closing, Sellers
shall execute and deliver to Purchaser such other documents and instruments,
provide such materials and information and take such other actions as
Purchaser may reasonably request more effectively to vest title to the Shares
in Purchaser and, to the full extent permitted by Law, to put Purchaser in
actual possession and operating control of the Company and the Subsidiaries
and their Assets and Properties and Books and Records, and otherwise to cause
Seller to fulfill its obligations under this Agreement and the Operative
Agreements to which they are a party.
(b) Following the Closing, each party will afford the other party,
its counsel and its accountants, during normal business hours, reasonable
access to the books, records and other data relating to the Business or
Condition of the Company in its possession with respect to periods prior to
the Closing and the right to make copies and extracts therefrom, to the
extent that such access may be reasonably required by the requesting party in
connection with (i) the preparation of Tax Returns, (ii) the determination or
enforcement of rights and obligations under this Agreement, (iii) compliance
with the requirements of any Governmental or Regulatory Authority, (iv) the
determination or enforcement of the rights and obligations of any Indemnified
Party or (v) in connection with any actual or threatened Action or
Proceeding. Further, each party agrees for a period extending six (6) years
after the Closing Date not to destroy or otherwise dispose of any such books,
records and other data unless such party shall first offer in writing to
surrender such books, records and other data to the other party and such
other party shall not agree in writing to take possession thereof during the
ten (10) day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations
hereunder, it is necessary that a party be furnished with additional
information, documents or records relating to the Business or Condition of
the Company not referred to in paragraph (b) above, and such information,
documents or records are in the possession or control of the other party,
such other party shall use its best efforts to furnish or make available such
information, documents or records (or copies thereof) at the recipient's
request, cost and expense. Any information obtained by Sellers in accordance
with this paragraph shall be held confidential by Sellers in accordance with
SECTION 13.05.
(d) Notwithstanding anything to the contrary contained in this
Section, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in
accordance with any provision of this Section shall be subject to applicable
rules relating to discovery.
13.07 WAIVER. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition.
No waiver by any party of any term or condition of this Agreement, in any one
or more instances, shall be deemed to be or construed as a waiver of the same
or any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will
be cumulative and not alternative.
13.08 AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
13.09 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under ARTICLE X.
13.10 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party hereto and any
attempt to do so will be void, except (a) for assignments and transfers by
operation of Law and (b) that Purchaser may assign any or all of its rights,
interests and obligations hereunder (including its rights under ARTICLE X) to
(i) a wholly-owned subsidiary, provided that any such subsidiary agrees in
writing to be bound by all of the terms, conditions and provisions contained
herein or (ii) any financial institution providing purchase money or other
financing to Purchaser or the Company from time to time as collateral security
for such financing, but no such assignment referred to in clause (ii) shall
relieve Purchaser of its obligations hereunder. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
13.11 HEADINGS. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
13.12 ARBITRATION. Subject to and without limitation on SECTION
10.03 hereof, in the event of any dispute, claim or controversy between the
parties arising out of or relating to this Agreement or any of the documents
executed pursuant to this Agreement, whether in contract, tort, equity or
otherwise, and whether relating to the meaning, interpretation, effect,
validity, performance or enforcement of this Agreement or any of the documents
executed pursuant to this Agreement, such dispute, claim or controversy shall
be resolved by and through an arbitration proceeding before a single
arbitrator to be conducted under the auspices and the commercial arbitration
rules (formal or informal) of ___________ (or any like organization successor
thereto) at Santa Barbara, California. The arbitrability of such dispute,
claim or controversy shall likewise be determined in such arbitration. Such
arbitration proceeding shall be conducted in as expedited a manner as is then
permitted by the commercial arbitration rules (formal or informal) of
_____________. Both the foregoing agreement of the parties to arbitrate any
and all such disputes, claims and controversies, and the results,
determinations, findings, judgments and/or awards rendered through any such
arbitration shall be final and binding on the parties hereto and may be
specifically enforced by legal proceedings. Subject to and without limitation
on SECTION 10.03 hereof, such arbitration may be initiated by written notice
from either party to the other setting forth a demand for arbitration and
detailing with specificity the nature of the dispute, claim or controversy to
be arbitrated. Time is of the essence of this arbitration procedure, and the
arbitrator shall be instructed and required to render its decision within ten
(10) days following completion of the arbitration. The parties and arbitrator
shall have all of the rights and duties relating to discovery provided by
Section 1283.05 of the California Code of Civil Procedure, which is hereby
made a part of this Agreement, except that the arbitrator shall have the right
to disapprove or to limit any discovery which such arbitrator deems to be for
purposes of delay or otherwise unnecessarily burdensome or oppressive.
13.13 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Each Seller
hereby irrevocably appoints its lawful agent and attorney-in-fact to accept
and acknowledge service of any and all process against it in any action, suit
or proceeding arising out of or relating to this Agreement or any of the
Operative Agreements or any of the transactions contemplated hereby or thereby
and upon whom such
process may be served, with the same effect as if such party were a resident
of the State of California and had been lawfully served with such process in
such jurisdiction, and waives all claims of error by reason of such service,
PROVIDED that in the case of any service upon such agent and attorney-in-fact,
the party effecting such service shall also deliver a copy thereof to the
other party at the address and in the manner specified in SECTION 13.01. Each
Seller will enter into such agreements with such agent as may be necessary to
constitute and continue the appointment of such agent hereunder. In the event
that such agent and attorney-in-fact resigns or otherwise becomes incapable of
acting as such, such party will appoint a successor agent and attorney-in-fact
in Santa Barbara, California, reasonably satisfactory to Purchaser, with like
powers. Each party hereby irrevocably submits to the exclusive jurisdiction
of the United States District Court for the Central District of California or
any court of the State of California located in the City of Santa Xxxxxxx,
County of Santa Xxxxxxx, in any action, suit or proceeding arising out of or
relating to this Agreement or any of the Operative Agreements or any of the
transactions contemplated hereby or thereby, and agrees that any such action,
suit or proceeding shall be brought only in such court, PROVIDED, HOWEVER,
that such consent to jurisdiction is solely for the purpose referred to in
this SECTION 13.13 and shall not be deemed to be a general submission to the
jurisdiction of said courts or in the State of California other than for such
purpose and PROVIDED FURTHER, that such consent to jurisdiction and agreement
shall not limit the parties' agreement to arbitrate disputes under this
Agreement pursuant to SECTIONS 10.03 OR 13.12. Each party hereby irrevocably
waives, to the fullest extent permitted by Law, any objection that it may now
or hereafter have to the laying of the venue of any such action, suit or
proceeding brought in such a court and any claim that any such action, suit or
proceeding brought in such a court has been brought in an inconvenient forum.
Nothing herein shall affect the right of any party to serve process in any
other manner permitted by Law or to commence legal proceedings or otherwise
proceed against the other in any other jurisdiction.
13.14 INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a
part of this Agreement a legal, valid and enforceable provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible.
13.15 AGENT. Each Seller hereby irrevocably appoints and
authorizes the Agent to act as its agent under this Agreement and the other
Operative Documents with such powers as are specifically delegated to the
Agent by the terms of the Operative Documents, together with such other powers
as are reasonably incidental to such powers. Purchaser shall be entitled to
rely upon any certification, notice or other communication (including any made
by telephone, telecopy, telex, telegram or cable) made by Agent and believed
by Purchaser to be genuine and correct and to have been signed or sent by or
on behalf of Sellers. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or under any
Operative Document in accordance with instructions given by Sellers holding a
majority of the Shares on the date hereof, and such instructions of such
Sellers and any action taken or failure to act pursuant to such instructions
shall be binding on all of the Sellers.
13.16 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Law of the State of California applicable to
a Contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
13.17 COUNTERPARTS. This Agreement may be executed in any number
of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
13.18 SIGNATURES. The signatures by a party constituting one of
the Sellers in their capacity as a trustee or a corporate officer will also
constitute the obligation of such party as an individual.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
SELLERS:
SHAREHOLDERS OF
RAMUS MEDICAL TECHNOLOGIES
Signatures on Schedule 1
PURCHASER
PURCHASER CARDIOVASCULAR, INC.,
a Delaware corporation
By:
---------------------------------
Title:
------------------------------
EXHIBITS
Exhibit A - Escrow Agreement
Exhibit B - Officer's Certificate of Sellers
Exhibit C - Opinion of Counsel to Sellers and Company
Exhibit D - Special Procedures Report
Exhibit E - Officer's Certificate of Purchaser
Exhibit F - Secretary's Certificate of Purchaser
Exhibit G - Opinion of Counsel to Purchaser
SCHEDULES
Schedule 1- List of Sellers
SCHEDULE 1
TO STOCK PURCHASE AGREEMENT
List of Sellers
SHAREHOLDER NUMBER OF SHARES SIGNATURE
------------------------------------ ---------
EXHIBIT B
Joinder Agreement
The undersigned option holder or Shareholder of Ramus Medical
Technologies, a California corporation ("Ramus"), irrevocably and
unconditionally agrees to be bound by the terms of that certain Option
Agreement between Xxxxx, Xxxxxxx X. Love, ***** and PDT Cardiovascular, Inc.
Date:
----------------- ------------------------------
Signature
Name (Typed or Printed):
------------------------------
*****Confidential Treatment Requested
SCHEDULE 1
List of Shareholders of Xxxxx
Xxxxxxx S. Love
*****
*****Confidential Treatment Requested
