1
Exhibit 1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("Agreement") dated January __, 1996, by and
among Xxxxxx General Corporation, a California corporation ("Purchaser"), on
the one hand, and Xxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxxxxx X. Xxxxxxxx ("F
Xxxxxxxx"), Xxxxxxx X. Xxxxxxxxx ("Xxxxxxxxx") and Xxxxx X. Xxxxxxxx
("Xxxxxxxx") (Xxxxxxxx, F Xxxxxxxx, Xxxxxxxxx and Xxxxxxxx are sometimes
referred to herein individually as a "Seller" and collectively as the
"Sellers"), on the other hand, and EnviroQuest Technologies, Ltd., a Missouri
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Sellers own all of the issued and outstanding shares of
capital stock of the Company, consisting of 948,906 shares (the "Shares") of
Common Stock, $0.01 par value (the "Common Stock"), and all of the outstanding
options to purchase shares of Common Stock, consisting of options to purchase
49,879 shares of Common Stock (the "Options") (the Shares and Options are
sometimes referred to herein collectively as the "Securities"); and
Whereas, Sellers desire to sell, and Purchaser desires to purchase,
all of the Securities on the terms and conditions herein set forth; and
Whereas, this Agreement shall replace the agreement in principle dated
September 14, 1995 between the Sellers and Purchaser (the "Agreement in
Principle");
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
l. Sale and Purchase of Common Stock. On the terms and subject to the
conditions of this Agreement, and in reliance upon the representations and
warranties contained herein, at the Closing (as defined in Section 3), each
Seller shall sell to Purchaser and Purchaser shall purchase from each Seller the
number of Shares set forth in Schedule 4.4 annexed hereto. As the purchase price
for the Shares, Purchaser shall at the Closing pay, against delivery to
Purchaser of certificates for the Shares duly endorsed in blank or accompanied
by stock powers duly endorsed in blank, together with the minute books, stock
certificate books, stock ledgers and other corporate records of the Company, an
aggregate of (a) One Million Twenty Thousand Dollars ($1,020,000.00), of which
$220,000 shall be in the form of a non-interest-bearing promissory note (the
"Note") due on the second anniversary of the Closing, and (b) a number of shares
of the Common Stock of Purchaser (the "Xxxxxx Stock") equal to (i) One Million
(1,000,000) shares of Xxxxxx Stock, less (ii) the number of shares of Xxxxxx
Stock issued to acquire SIRAS North Central (such number not to exceed 50,000
shares) in accordance with Schedule 7.7 annexed hereto. The consideration
represented by (a) and (b) shall sometimes hereinafter be referred to
collectively as the "Purchase Price." The Purchase Price shall be allocated
among the Sellers pro rata based upon the number of Shares held by each Seller
unless written instructions setting forth a different allocation and executed by
all affected Sellers are received by the Purchaser prior to the Closing. The
cash portion of the Purchase Price shall be reduced by the Thirty-Five Thousand
Dollars ($35,000.00) previously paid by Purchaser to the Sellers pursuant to the
agreement in principle dated September 14, 1995 among Purchaser and Sellers. The
Xxxxxx Stock shall be unregistered, but the Sellers shall have registration
rights with respect to the Xxxxxx Stock as set forth in Exhibit 1 hereto, which
Exhibit is hereby incorporated herein by this reference.
1
2
2. Additional Obligations.
2.1 Employment Agreements. At the Closing, the Company and
Xxxxxxxx shall enter into an employment agreement in substantially the form of
Exhibit 2.1(a) attached hereto, and the Company and F Xxxxxxxx shall enter into
an employment agreement in substantially the form of Exhibit 2.1(b) attached
hereto.
2.2 Seller Notes. At the Closing, the Company shall forgive
any notes payable to the Company by any Sellers which were outstanding as of
the date hereof which have not been paid as of the Closing in an aggregate
amount which shall not exceed Forty Thousand Dollars ($40,000.00). In the event
Sellers' notes shall exceed said sum, then they shall be forgiven based upon
the amount of each note made by each Seller unless written instructions setting
forth a different allocation is executed by all affected Sellers and received
by the Purchaser prior to the Closing shall be forgiven; provided, however,
that notwithstanding the foregoing, no portion of notes in excess of $40,000 to
the extent incurred after the date of this Agreement without the prior written
consent of the Purchaser.
2.3 Personal Guarantees of Sellers. After the Closing, the
Company shall use its reasonable best efforts to release the personal
guarantees of Sellers which are set forth in Schedule 2.3 annexed hereto and
which relate to certain obligations of the Company.
2.4 Election of Xxxxxxxx and Sherwood to Board of Directors
of Purchaser. At the Closing, Purchaser's Board of Directors shall elect
Xxxxxxxx and Xxxxxxxx to the Board of Directors of Purchaser, and the Company
shall use its reasonable best efforts to cause Xxxxxxxx and Sherwood to remain
on the Board of Directors of Purchaser until the earlier of the third
anniversary of the Closing or such time as Xxxxxxxx or Xxxxxxxx, as the case
may be, is not employed by any of the Company, Purchaser or a subsidiary of
Purchaser.
3. Closing. The closing of the sale and purchase provided for herein
(the "Closing") will take place at such time and place as shall be fixed by
mutual agreement of the parties (such time and date of Closing herein called the
"Closing Date"), but in no event shall the Closing take place later than January
31, 1996 without the express written consent of Purchaser and Sellers except as
follows: If Purchaser desires to extend the Closing, Purchaser shall notify
Sellers on or before January 22, 1996 of its intention to extend the Closing and
shall pay to Xxxxxxxx, on behalf of Sellers, $165,000 on or before January 31,
1996, at which time Purchaser shall have the right to extend the Closing Date to
not later than February 22, 1996. If the Closing does not occur after such
extension other than due to failure of Sellers to meet their Closing obligations
pursuant to this Agreement, then the $165,000 payment shall be nonrefundable. If
the Closing occurs during such extended period, then the $165,000 payment shall
be applied to reduce the cash payment otherwise due to the Sellers at the
Closing pursuant to Section 1. If all of the conditions to Purchaser's
obligation to close have not been satisfied by January 31, 1996 (or February 22,
1996 in the event of an extension by Purchaser) as set forth in Section 7 of
this Agreement, then the Closing shall be extended, without cost to Purchaser,
until such date as all such conditions have been satisfied.
4. Representations, Warranties and Covenants of Sellers
Sellers jointly and severally represent, warrant and covenant to Purchaser as
follows:
4.1 Due Incorporation and Qualification, Etc. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Missouri. The Company has full corporate power and
authority to own, lease and operate its assets, properties and business and to
carry on its business as now conducted. The Company is duly qualified or
2
3
licensed to do business and is in good standing in Missouri. Neither the
character of the properties owned or leased by the Company nor the nature of
the business conducted by it requires the qualification of the Company to do
business in any other jurisdiction, except as set forth on Schedule 4.1 or
where the failure to be so qualified would not have a material adverse effect
on the condition (financial or otherwise), operations, business or properties
of the Company. The copies of the Articles of Incorporation and By-Laws of the
Company, and all amendments of each, that have been delivered to Purchaser by
Sellers are true, correct and complete.
4.2 Capitalization. The authorized capital stock of the
Company consists of 3,000,000 shares of Common Stock, of which 948,906 shares
are validly issued and outstanding, and are fully paid and nonassessable and,
except as set forth in Schedule 4.2 annexed hereto, owned by the Sellers free
and clear of any liens, pledges, encumbrances, charges, agreements or claims
and the remainder of which are not outstanding. In addition, as of the date of
this Agreement there are outstanding Options to purchase an aggregate of 49,879
shares of Common Stock, all of which Options shall be exercised prior to the
Closing; at the Closing, all of the shares of the Common Stock issued upon
exercise of the Options shall be validly issued and outstanding, fully paid and
nonassessable and, except as set forth in Schedule 4.2 annexed hereto, owned by
the Sellers free and clear of any liens, pledges, encumbrances, charges,
agreements or claims and the remainder of which are unissued. At the Closing,
there will be no authorized or outstanding options, warrants, rights, calls,
agreements, contracts, commitments, acquisition rights or any other rights or
claims of any character obligating the Company to issue, transfer or redeem any
securities, including securities convertible into or evidencing the right to
purchase any securities, of the Company, or which restrict the transfer of any
securities of the Company.
4.3 Subsidiaries. Except as set forth in Schedule 4.3
annexed hereto, the Company does not own any shares of capital stock or other
interest, direct or indirect, in any company, partnership or other
organizational enterprise.
4.4 Ownership of Shares of Common Stock. Except as set forth
in Schedule 4.4 annexed hereto, each Seller (a) is the record and beneficial
owner, free and clear of any liens, pledges, encumbrances, charges, agreements
or claims, of that number of shares of Common Stock set forth on Schedule 4.4
for such Seller and (b) has full right, power, and authority to execute and
deliver this Agreement and to perform its or his obligations under this
Agreement. Upon payment of the Purchase Price set forth in Section 1 at the
Closing, Purchaser will acquire valid title to the Shares, free and clear of
any liens, pledges, encumbrances, charges, agreements or claims. This
Agreement has been duly executed and delivered by each Seller and constitutes
the legal, valid and binding agreement and obligation of each Seller,
enforceable against each Seller in accordance with its terms.
4.5 No Consents, Approvals, Violations or Breaches. Except
as set forth in Schedule 4.5 annexed hereto, neither the execution and delivery
of the Agreement by any Seller, nor the consummation by any Seller of the
transactions contemplated hereby, nor compliance by any Seller with any
provision hereof, will (a) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, (b) violate any provision of the certificate or articles of
incorporation or by-laws of the Company, (c) violate any statute, law,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Company or any of its properties or assets, (d) violate,
conflict with, or result in a breach of any provisions of, or constitute a
default (or any event which, with or without due notice or lapse of time, or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed or trust, license,
lease, agreement or other instrument or obligation to which any Seller or the
Company is a party or by which any Seller, the Company or
3
4
any of their respective properties or assets may be bound or affected, except
where such violation, conflict, breach, default termination, or acceleration
would not have a material adverse effect on the business, operations or
financial condition of the Company, or (e) result in the creation or imposition
of any material claim, lien, charge, or encumbrance of any nature whatsoever
upon, or give to others any material claim, interest or rights, including
rights of termination or cancellation in, or with respect to, any of the
property, assets, contracts, licenses or business of the Company. The Company
is not in violation of, or default under, any terms or provisions of its
certificate of incorporation or by-laws or any material lien, mortgage, lease,
indenture, agreement, instrument, order, judgment, decree or law to which it is
a party or by which it is or any of its properties or assets are bound.
4.6 Taxes. The Company has filed all federal, state, local
and foreign returns and reports which were required to be filed in respect of
all taxes, levies, imposts, duties, license and registration fees, charges,
assessments, fines or withholding of any nature whatsoever ("Taxes"), all such
returns and reports are true and correct to Sellers' best knowledge and belief
and, to the extent that any liabilities of the Company for Taxes and penalties
and interest thereon have not been charged fully, adequate reserves have been
established. No federal, state, local or foreign returns or reports relating
to any Taxes of the Company are presently under audit. No waiver of any
statute of limitations is in effect in respect of any Taxes. The Company is
not in default in the payment of any Taxes due and payable or on any
assessments received in respect thereof. To Sellers' best knowledge, all Taxes
not yet due have been fully accrued on the books of the Company or adequate
reserves have been established therefore. Nothing in this Section 4.6 shall
create a breach by any of Sellers of this representation, warranty and covenant
relating to Taxes in the event a taxing authority shall determine that
additional taxes are due for periods prior to the Closing unless there is a
showing that there was a material misrepresentation or fraud by the Company
with respect to the subject period(s).
4.7 Financial Statements. Sellers have heretofore furnished
to Purchaser copies of the financial statements of the Company which are
annexed hereto as Schedule 4.7 (such financial statements are herein
collectively referred to as the "Financial Statements"). The Financial
Statements, including the notes thereto, are true, correct and complete and in
accordance with the books and records of the Company and present fairly the
financial position and the results of operations and changes in the financial
position of the Company as at the dates and for the periods specified, in
conformity with generally accepted accounting principles applied on a
consistent basis.
4.8 Absence of Undisclosed Liabilities. Except as and to the
extent reflected or reserved against in the balance sheet of the Company at
September 30, 1995 included in the Financial Statements (the "September Balance
Sheet") or set forth in Schedule 4.8 annexed hereto, the Company does not have
any liability, contingent or otherwise, arising out of any state of facts
existing on or prior to the date hereof, nor has the Company or any Seller
mortgaged, pledged or subjected to lien, charge or other encumbrance any of the
assets of the Company, tangible or intangible, except as otherwise disclosed on
exhibits and schedules annexed hereto. The Company does not have any power of
attorney outstanding or any obligation or liability as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise in respect of the
obligations of any person, corporation, partnership, joint venture,
association, organization or entity, except for a guarantee to Xxxxxxx'x First
National Bank on behalf of Chesapeake Bay Financial LLC.
4.9 Ownership of Assets; Title to Properties; Absence of
Liens and Encumbrances, Etc. The Company does not own any real property.
Schedule 4.9 annexed hereto contains a complete and correct list of all real
property leased or used in connection with the operations of the Company.
Except as set forth in Schedule 4.9, the Company has good and marketable title
to, and the right to use, all of its properties and assets, free and clear of
all liens,
4
5
security interests and encumbrances, except as set forth on exhibits and
schedules annexed hereto, and the current use of all real properties by the
Company complies in all material respect with all applicable zoning laws and
building and use restrictions except as otherwise disclosed on exhibits and
schedules annexed hereto. Schedule 4.9 sets forth a list by class and location
of all fixed assets, equipment, furniture, fixtures, vehicles and other
tangible assets having a gross cost in excess of $1,000 which are owned, leased
or used by the Company at the date hereof. The Company has the exclusive right
to use all such assets subject, in the case of leased property, to its
continuing obligations under the leases described in Schedule 4.9. Each lease
to which the Company is a party is in good standing and is in full force and
effect and there is no default under any such lease nor to any facts exist
which with the giving of notice or the passage of time or both would give rise
to a default under any such lease. Sellers have delivered or made available to
Purchaser complete and correct copies of all leases. Purchaser and the Company
agree that the lease between the Company and Xxxxxxxx and F Xxxxxxxx relating
to 0000 Xxxxxxx, Xxxxxx Xxxx, Xxxxxxxx, a complete and correct copy of which
has been provided to Purchaser, shall continue in accordance with its terms
after the Closing, except for the modifications described in Section 7.8
hereinafter.
4.l0 Employee Benefit Plans. Schedule 4.l0 annexed hereto
sets forth each pension, retirement, profit-sharing, deferred compensation,
bonus or other incentive plan, or other employee benefit program, arrangement,
agreement or understanding, or medical, vision, dental or other health plan, or
life insurance plan, or any other employee benefit plan including without
limitation, any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of l974, as amended ("ERISA"), to which
the Company either contributes or is a party or is bound or under which it may
have liability or under which its past or present employees (or their
beneficiaries) or any thereof are eligible to participate or derive a benefit
(collectively, the "Plans"), all trust agreements or funding agreements,
including insurance contracts, relating thereto, and all amendments thereto.
Sellers have delivered or made available to Purchaser complete and correct
copies of all plans. There is no unfunded past service credit liability with
respect to any Plan, and there is no other liability with respect to any Plan
other than the liability to pay benefits pursuant to the terms of the Plan.
All payments for vacation pay, sick pay and other employee benefits pursuant to
each Plan or otherwise have been made or otherwise accrued for or reserved
against in the September Balance Sheet except for such payments or benefits
accrued in the ordinary course of business since September 30, 1995 which have
been made or otherwise accrued for or reserved against on the books of the
Company. All reports required to be filed on or before the Closing Date with
the Department of Labor, the Pension Benefit Guaranty Corporation and the
Internal Revenue Service under ERISA and the Code, have been filed with respect
to each Plan. All reports to be distributed to employees prior to the Closing
Date under ERISA or the Code with respect to each Plan have been distributed
and all such reports have been correctly and properly completed. No Plan has
engaged in a "prohibited transaction" (as defined in ERISA Section 406 and
Section 4975 of the Code) with a "party in interest" (as defined in ERISA
Section 3(14) or a "disqualified person" (as defined in Section 4975(e)(2) of
the Code) for which an exemption has not been received from the Department of
Labor and/or the Internal Revenue Service, as applicable, and no "reportable
event" (as that term is defined in ERISA Section 4043) has occurred with
respect to any Plan subject to Title IV of ERISA except as otherwise disclosed
on exhibits and schedules annexed hereto. All funds in the Plans have been
distributed in accordance with requirements thereof. The Company has not
participated in any "multiemployer" Plan as described under Section 4001(a)(3)
of ERISA except as set forth in Schedule 4.10, and the Company has not incurred
any withdrawal liability under any "multiemployer" Plan.
4.11 Litigation. Except as set forth in Schedule 4.11
annexed hereto, there is no suit, action or legal, administrative, arbitration
or other proceeding or governmental investigation pending, or to the knowledge
of any Seller threatened, against the Company or the property of the Company.
5
6
4.12 Brokers. None of the Sellers or the Company has engaged
any broker in connection with the transactions contemplated by this Agreement
and no person or entity acting on behalf of the Company or any Seller is or
will be entitled to any brokerage fee, commission, finder's fee or financial
advisory fee, directly or indirectly, from the Company or any Seller in
connection with the transactions contemplated by this Agreement.
4.13 Material Contracts. Schedule 4.13 annexed hereto
contains a complete and correct list and summary description of all material
(as defined below) contracts, agreements, leases, licenses and other
commitments (hereinafter collectively called "Commitments") of the Company at
the date of this Agreement. All such Commitments are in full force and effect.
Except as otherwise noted and reserved against in the September Balance Sheet
or as otherwise disclosed on the schedules and exhibits annexed hereto, none of
the Commitments is in default and none of the Commitments will, based upon
present facts and circumstances, result in the successful assertion or claim of
any liability on the part of the Company, whether arising out of any contract
or otherwise, in excess of those anticipated in the normal course of business
or covered by insurance. Except as otherwise disclosed in writing to Purchaser
prior to the date of this Agreement: no present or prior contract or agreement
of the Company (including but not limited to any contract or agreement to which
any governmental agency or instrumentality is or was a party) and under which
the Company has completed work is subject to any adverse renegotiation or
adjustment that would require a payment by the Company, and to the best
knowledge of Sellers, no such present contract or agreement under which work is
not complete will be subject to any such adverse renegotiation or adjustment.
For purposes of this Section 4.13 only, "material" shall mean having a value or
requiring the payment of amounts in excess of $5,000.
4.14 Insurance. Schedule 4.14 annexed hereto sets forth a
list of the policies of fire, liability, title, workers' compensation,
officer's life, director's and officer's liability and all other forms of
insurance carried by the Company.
4.15 No Material Change. Except as set forth in Schedule
4.15 annexed hereto, in any other schedule or exhibit annexed hereto, or as
specifically authorized by this Agreement, since September 30, 1995 there has
not been:
(a) any material adverse change in the financial
position, operations, assets, liabilities or the business of the Company nor
has there been any material change in the prospects of the Company;
(b) any declaration, setting aside or payment of any
dividend, or any distribution with respect to the capital stock of the Company
or any direct or indirect redemption, purchase or other acquisition by the
Company of any such stock;
(c) any extraordinary transaction or payments
between (i) any Seller and (ii) the Company;
(d) any material obligations or liabilities
incurred, except trade obligations incurred by the Company in the ordinary
course of business ; or
(e) any transfer or lease of any of the assets or
properties of the Company except in the ordinary course of business, or any
mortgage, pledge, lien, charge, security interest or other encumbrance, or any
damage, destruction or loss, whether or not covered by insurance, to any such
assets or properties.
6
7
4.16 Indebtedness. Except as set forth in Schedule 4.16
annexed hereto, the Company does not have any obligations for money borrowed or
under any guarantees nor does the Company have any agreements or arrangements
to borrow money or to enter into any such guarantee.
4.17 Employees and Consultants. Schedule 4.17 annexed hereto
contains a true and complete list of all current employees and consultants of
the Company showing the rate and frequency of pay for each such person entitled
to receive compensation from the Company. Except for salary increases granted
in the ordinary course of business or as set forth in Schedule 4.17, no
increases in the salaries, bonuses or other employee benefits listed in
Schedule 4.17 have been given or promised. Except as set forth in Schedule
4.17 annexed hereto, the Company is not a party to any contract with any of its
employees, agents, consultants, officers or other representatives that is not
cancelable by the Company without penalty or premium on not more than thirty
days' notice. Neither the Company nor any Seller has received notice from any
employee or consultant of the Company that any such employee or consultant is
terminating his or her employment with the Company, nor to the best knowledge
of each Seller (without having made specific inquiries of employees) does any
such employee or consultant intend to terminate his or her employment with the
Company as a result of the transactions contemplated hereby.
4.18 Compliance with Environmental Law. The Company's
business, as currently conducted, conforms in all material respects to all
applicable environmental laws and regulations.
4.19 No Infringements. Neither the Company nor any Seller
has received any notice of any infringement by the Company of patents,
trademarks, trade name rights, copyrights or publication rights or others.
4.20 Restrictive Agreements. The Company is not restricted
by agreement from carrying on its business anywhere in the world.
4.21 Banks; Brokerage Firms. Schedule 4.21 annexed hereto
contains a list of (a) the names and addresses of all banks and brokerage firms
in which the Company has accounts, safe deposit boxes, lock boxes or vaults and
the account numbers relating thereto, and (b) the name of each person
authorized to draw on any such account or to have access to such boxes or
vaults.
4.22 Accounts Receivable. Except as set forth in Schedule
4.22 annexed hereto, all accounts receivable (billed and unbilled) of the
Company (net of reserves) are believed in good faith by Sellers to be
collectible in the ordinary course of business, and no amount included in the
accounts receivable of the Company as of September 30, 1995 has been or will
have been at the Closing released for an amount less than the value at which it
was included. The foregoing is not intended to be a guarantee by Sellers of
the collectibility of the Company's accounts receivable.
4.23 No Union Contract. The Company is not a party to any
collective bargaining agreement covering or relating to any of its employees
and it has not recognized or received a demand for recognition by any
collective bargaining representative.
4.24 Employment and Working Conditions. To the Sellers' best
knowledge, the Company has complied with all applicable laws, rules and
regulations relating to employment, including those relating to equal
employment, wages, hours, collective bargaining, the withholding and payment of
taxes and contributions, and the Occupational Safety and Health Act, except as
to claim of Xxxxx Xxxxxxxx. The Company has not received any notice of any
violation of any such law, rule or regulation. The Company has, and will have
at the Closing,
7
8
withheld all amounts required to have been withheld from the salaries of its
employees and there are no arrearages of wages nor is there any tax or penalty
for failure to comply with the foregoing owed by the Company with respect to
employees.
4.25 Trademarks and Licenses. The Company owns or has all
appropriate authority for the use of all trademarks and licenses necessary for
the operation of its business as presently being conducted, which trademarks
and licenses are described on Schedule 4.25 annexed hereto. Such trademarks
and licenses are subject to no pending, or to the best knowledge of Sellers,
threatened challenge. Schedule 4.25 annexed hereto indicates which of such
trademarks and licenses are used but not owned by the Company..
4.26 Investment Intent. Each Seller is purchasing the Xxxxxx
Stock for investment purposes only and not with a view to the resale or public
distribution of any such Shares, and such Seller will not sell or otherwise
dispose of any such Xxxxxx Stock in violation of the Securities Act of 1933, as
amended, or applicable state securities laws.
4.27 Information Concerning Purchaser. Each Seller has
received a copy of Purchaser's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 1995, and Purchaser's proxy statement dated March 30,
1995, and has had the opportunity to ask questions of and obtain information
from the officers of Purchaser in connection with the business, operations and
prospects of Purchaser.
4.28 Transfer of Interests by Xxxxxxxx and F Xxxxxxxx Prior
to Closing. Prior to the Closing, Xxxxxxxx and F Xxxxxxxx shall transfer to
the Company their personal interest, including without limitation any interest
held for either of them, in ventures or businesses related to the Company,
including without limitation LaSIR Technology, L.L.C. ("LLC") and SIRAS North
Central, except as otherwise provided in accordance with Schedule 7.7 annexed
hereto.
4.29 No Negotiations with Others Prior to Closing. Prior to
the Closing, the Sellers shall not, and shall cause the Company not to,
negotiate with or enter into any agreements with any other party or enter into
any transaction with respect to the stock of the Company, the LLC, SIRAS North
Central, or any material assets or businesses of any of the foregoing.
4.30 Negotiations with Xxxxx. Sellers shall fully cooperate
with the Purchaser and the Company in negotiations with Xxxx Xxxxx ("Xxxxx")
with respect to the Company's current commitment to issue to Xxxxx or his
designates a 30% interest in the LLC and with respect to all other matters
between Xxxxx and the Company. Sellers do not guarantee that the commitment to
issue Xxxxx or his designates a 30% interest in the LLC can be altered through
negotiation.
5. Representations, Warranties and Covenants of Purchaser.
Purchaser represents, warrants and covenants to Sellers as follows:
5.1 Due Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California with full corporate power and authority to execute, deliver and
perform this Agreement and the transactions contemplated hereby. This
Agreement has been duly authorized and approved by all necessary and proper
corporate action and contains the legal, valid and binding agreement and
obligation of Purchaser.
5.2 Investment Intent. Purchaser represents that it is
purchasing the Shares for investment purposes only and not with a view to the
resale or public distribution of any such Shares, and Purchaser will not sell
or otherwise dispose of any such Shares in violation of the Securities Act of
1933, as amended, or applicable state securities laws.
8
9
5.3 No Consents, Approvals, Violations or Breaches. Except as
set forth in Schedule 5.3 annexed hereto, neither the execution and delivery of
the Agreement by Purchaser, nor the consummation by Purchaser of the
transactions contemplated hereby, nor compliance by Purchaser with any provision
hereof, will (a) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, (b)
violate any provision of the certificate or articles of incorporation or by-laws
of Purchaser, (c) violate any statute, law, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Purchaser or any of
its properties or assets, (d) violate, conflict with, or result in a breach of
any provisions of, or constitute a default (or any event which, with or without
due notice or lapse of time, or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
or trust, license, lease, agreement or other instrument or obligation to which
Purchaser is a party or by which Purchaser or any of its properties or assets
may be bound or affected, except where such violation, conflict, breach, default
termination, or acceleration would not have a material adverse effect on the
business, operations or financial condition of Purchaser, or (e) result in the
creation or imposition of any material claim, lien, charge, or encumbrance of
any nature whatsoever upon, or give to others any material claim, interest or
rights, including rights of termination or cancellation in, or with respect to,
any of the property, assets, contracts, licenses or business of Purchaser.
Purchaser is not in violation of, or in default under, any terms or provisions
of its certificate of incorporation or by-laws or any material lien, mortgage,
lease, indenture, agreement, instrument, order, judgment, decree or law to which
it is a party or by which it is or any of its properties or assets are bound.
5.4 Brokers. None of Purchaser or its affiliates has engaged
any broker in connection with the transactions contemplated by this Agreement
and no person or entity acting on behalf of Purchaser is or will be entitled to
any brokerage fee, commission, finder's fee or financial advisory fee, directly
or indirectly, from Purchaser or any of its affiliates in connection with the
transactions contemplated by this Agreement.
5.5 Sale Or Merger of Company Subsequent to Closing. During
the period that Xxxxxxxx is a substantially full-time employee of the Company
pursuant to the employment agreement annexed hereto as Exhibit 2.1, Purchaser
agrees that (a) the Company will not be sold to or merged with any party other
than a majority-owned subsidiary of the Purchaser without the express written
consent of Xxxxxxxx, (b) the Company's general business activity or primary
technology will not be sold to any party other than a majority-owned subsidiary
of the Purchaser without the express written consent of Xxxxxxxx, and (c) the
cash assets of the Company will not be withdrawn by the Purchaser without the
written consent of Xxxxxxxx, which consent shall not be unreasonably withheld,
keeping in mind the cash needs of the Company to conduct is business activity.
5.6 Interest of Xxxxx in the LLC. With respect to any equity
interest in the LLC to be received by Xxxxx (in an amount not to exceed 30% of
the total interests in the LLC) as described in Section 4.30 above, Purchaser
acknowledges that such equity interest will reduce the Company's equity
interest in the LLC.
5.7 No Termination of Plans. The Purchaser agrees that it
will not cause the Company to terminate any of the Plans set forth in Schedule
4.10 prior to the earlier of (a) twelve months from the Closing, or (b) such
time as the provider of any such Plan either cancels the Plan or increases the
premiums or other payments to be made by the Company for such Plan by more than
10%. In the event any such Plan is terminated other than in accordance with
the foregoing, such Plan shall be replaced with a plan providing reasonably
equivalent benefits.
9
10
5.8 Financial Condition of Purchaser. Purchaser's
performance of its obligations hereunder does not place Purchaser in an
insolvent financial condition subject to an action for voluntary or involuntary
bankruptcy proceedings or receivership.
5.9 Litigation. Except as set forth in Schedule 5.9 annexed
hereto, there is no suit, action or legal, administrative, arbitration or other
proceeding or governmental investigation pending, or to the knowledge of
Purchaser threatened, against Purchaser or a subsidiary or the property of the
Purchaser.
6. Corporate Investigation by Purchaser. During the period between the
date of this Agreement and the Closing, Purchaser will have the right to conduct
such legal, financial and other investigations of the Company as Purchaser may
deem advisable. Sellers shall give, and shall cause the Company and its
officers, directors and employees to give Purchaser, its attorneys, accountants
and other representatives full access to conduct, and shall fully cooperate in,
such investigations and shall make available to Purchaser, its attorneys,
accountants and other representatives all records and information, and such
personnel and professional advisors of the Company, as may be reasonably
requested in connection therewith. In the event that the transaction
contemplated by this Agreement is not consummated, (a) Purchaser will keep
confidential all information furnished to it by the Company or Sellers, except
to the extent any such information may be available to Purchaser from sources
generally available to the public and except as otherwise required by law or
court order and (b) Purchaser will destroy or return to the Company all
documents, instruments, work papers and other materials submitted by the Company
or Seller or any of their respective agents or representatives to Purchaser or
any of its agents or representatives, and will not use any such confidential
information regarding the Company for any purpose whatsoever. Without limiting
the foregoing, the existing confidentiality and non-disclosure agreement between
the parties shall continue in effect until the Closing Date and thereafter in
the event the transaction contemplated by this Agreement is terminated. A copy
of said agreement is attached hereto as Exhibit 6. Except as otherwise required
by law or permitted by this Agreement or the agreement attached as Exhibit 6
hereto, the parties hereto agree not to release or disclose to any third party
except their legal counsel or accountants the information contained in the
schedules and exhibits annexed hereto.
7. Conditions to Obligations of Purchaser. The obligations of Purchaser
hereunder are subject to the satisfaction on or prior to the Closing Date of the
following conditions (unless waived in writing by Purchaser):
7.1 No Proceedings. No investigation, action or proceeding
by or before any court or other governmental body shall have been commenced or
threatened, and no inquiry shall have been received that in the opinion of
Purchaser's counsel may lead to an action or proceeding to restrain or
otherwise challenge any of the transactions contemplated hereby.
7.2 True Representations and Warranties. The representations
and warranties of Sellers shall be true and correct in all material respects on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of the Closing Date, and each and all of
the agreements of Sellers to be performed or complied with pursuant to the
terms of this Agreement shall have been duly performed and complied with and
each Seller shall have delivered to Purchaser at Closing a signed certificate
dated the Closing Date to such effect. For purposes of this Section 7.2 only,
"material" shall mean a value or requiring the payment of amounts in excess,
individually or in the aggregate, of $15,000.
7.3 Employment Agreements. The Company shall have entered
into employment agreements with Xxxxxxxx and F Xxxxxxxx substantially in the
forms annexed hereto as Exhibit 2.1(a) and 2.1(b).
10
11
7.4 Consents. All required consents of third parties and
governmental agencies shall have been obtained and Purchaser shall have
received evidence thereof.
7.5 No Material Adverse Change in Business. There shall have
occurred no material adverse change in the Company's business, prospects,
assets, operating results or financial condition since September 30, 1995,
except as otherwise disclosed in writing to Purchaser by Sellers after said
date and prior to the date of this Agreement.
7.6 Due Diligence. Purchaser shall have approved the results
of the due diligence investigation of the Company and its business undertaken
by Purchaser, its counsel and/or other advisors, which approval shall not be
unreasonably withheld by Purchaser.
7.7 Occurrence of Certain Transactions. The transactions
identified on Schedule 7.7 annexed hereto have occurred on the terms set forth
on Schedule 7.7 or on such other terms as are approved in writing by Purchaser
and Xxxxxxxx.
7.8 Modification of Lease. The lease between the Company and
Xxxxxxxx and F Xxxxxxxx relating to 0000 Xxxxxxx, Xxxxxx Xxxx, Xxxxxxxx shall
be modified in accordance with Schedule 7.8 annexed hereto.
7.9 Receipt of Audited Financial Statements. Purchaser shall
have received, not less than 24 hours prior to the Closing, a copy of the
audited financial statements of the Company for the twelve months ended
September 30, 1995.
8. Conditions to Obligations of Sellers. The obligations of the Sellers
hereunder are subject to the satisfaction on or prior to the Closing Date of the
following conditions (unless waived in writing by Sellers):
8.1 No Proceedings. No investigation, action or proceeding
by or before any court or other governmental body shall have been received that
in the opinion of Sellers' counsel may lead to an action or proceeding to
restrain or otherwise challenge any of the transactions contemplated hereby.
8.2 True Representations and Warranties. The representations
and warranties of Purchaser shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date, and
each and all of the agreements of Purchaser to be performed or complied with
pursuant to the terms of this Agreement shall have been duly performed and
complied with.
8.3 Employment Agreements. The Company shall have entered
into employment agreements with Xxxxxxxx and F Xxxxxxxx substantially in the
forms annexed hereto as Exhibits 2.1(a) and (b).
8.4 Consents. All required consents of third parties and
governmental agencies shall have been obtained and Sellers shall have received
evidence thereof.
8.5 Escrow Agreement. At the Closing, the Purchaser and the
Sellers shall enter into an escrow agreement in the form of Exhibit 8.5 hereto
and Purchaser shall deliver the Shares to the escrow agent.
9. Conduct of Business Until Closing Date. Sellers covenant and agree
that from the date hereof to the Closing Date, (a) they will take all reasonable
steps to assure that there is no material change in the financial condition of
LLC and SIRAS North Central; (b) they will cause the Company to conduct its
business in a normal manner in accordance with its normal, historical
11
12
business practices with respect to all facets of its operation; and (c) they
will use good faith in their management of the Company and will consult with
Purchaser prior to making any material changes, including without limitation
drawing down on the Company's SBA loan or employing top level executives.
10. Survival of Representations and Warranties. Notwithstanding any
investigation made by or on behalf of Purchaser, the representations and
warranties of the Sellers contained in this Agreement shall be continuing
representations and warranties and shall survive the Closing for a period of
one year after the Closing Date; provided, however, that the representations
and warranties with respect to taxes and tax liabilities of the Company
contained in Section 4.6 and with respect to compliance with environmental laws
contained in Section 4.18 shall be continuing representations and warranties
and shall survive the Closing for a period of five years.
11. Indemnification.
11.1 Indemnification by Xxxxxxxx and F Xxxxxxxx. From and
after the Closing, Xxxxxxxx and F Xxxxxxxx shall indemnify and hold harmless
the Purchaser and the Company from and against any losses, claims, damages,
causes of action, assessments, liabilities, costs or expenses (including
without limitation all interest or penalties which are assessed against the
Company and attorneys' reasonable fees and disbursements) of the Company which
result from actions or inactions by EnviroQuest prior to the Closing and which
are not disclosed in this Agreement and the Schedules hereto as in effect at
the Closing ("Undisclosed Liabilities"), provided that the Undisclosed
Liabilities either (a) were known by Xxxxxxxx prior to the Closing, or (b)
resulted from the intentional misconduct of Xxxxxxxx. As used in this Section
11.1, "intentional misconduct" shall be determined by arbitration pursuant
Section 12.6.
11.2 Indemnification by the Company. From and after the
Closing, the Company shall indemnify and hold harmless Xxxxxxxx and F Xxxxxxxx,
to the extent permitted by law, from and against any losses, claims, damages,
causes of action, assessments, liabilities, costs or expenses (including
without limitation all interest or penalties which are assessed and attorneys'
reasonable fees and disbursements) of Xxxxxxxx or F Xxxxxxxx which result from
actions or inactions by such person which arise out of his or her relationship
with the Company prior to the Closing, other than Undisclosed Liabilities (as
defined in Section 11.1) which either (a) were known by Xxxxxxxx or F Xxxxxxxx
prior to the Closing, or (b) resulted from the intentional misconduct of
Xxxxxxxx or F Xxxxxxxx. In addition, and without limiting the foregoing, the
Company shall indemnify and hold harmless Xxxxxxxx, to the extent permitted by
law, from the claims now pending in the litigation described in Schedule 11.2
annexed hereto, provided that the representations set forth in Schedule 11.2
with respect to the litigation are true and correct in all material respects.
11.3 Notice; Right to Defend. Promptly after service of
notice of any claim or of process by any third person in any matter in respect
of which indemnity may be sought pursuant to this Section 11, the indemnified
party shall notify the indemnifying party of the receipt thereof. Unless the
indemnifying party shall notify the indemnified party that it or they elect to
assume the defense of any such claim or process or the settlement thereof
(such notice to be given as promptly as reasonably possible in view of the
necessity to arrange for such defense and in no event later than ten days
following the aforesaid notice), the indemnified party shall have the exclusive
right to defend, settle or pay the same. The indemnified party shall not be
liable to the indemnifying party for any legal or other expense in connection
with any such defense undertaken by the indemnifying party. The defending
party shall (a) settle or defend such claim or proceeding with reasonable
diligence; (b) cooperate with the other parties in the investigation and
analysis of such claim or proceeding; (c) afford the other parties reasonable
access to such relevant information as it may have in its possession; and (d)
keep the other parties reasonably
12
13
informed regarding such claim or proceeding. The generality of the foregoing
notwithstanding, the indemnified party shall not settle any such claim or
proceeding without the written consent of the indemnifying party, which consent
shall not be unreasonably withheld.
12. Miscellaneous.
12.1 Limitation on Liability of Xxxxxxxxx and Xxxxxxxx.
Notwithstanding anything to the contrary in this Agreement, in no event shall
the liability of Xxxxxxxxx or Sherwood to Purchaser as a result of any material
breach of a representation or warranty by Sellers in this Agreement, or
otherwise relating to this Agreement, exceed the amount of funds actually
received by Xxxxxxxxx or Xxxxxxxx, as the case may be, from Purchaser pursuant
to this Agreement.
12.2 Assignment. Except as otherwise provided herein, this
Agreement may not be assigned by any party without the prior written consent of
the other parties. Notwithstanding the foregoing, however, Purchaser may
assign all or any part of its right, title or interest in this Agreement to a
wholly owned subsidiary of Purchaser, provided however that no such assignment
will release Purchaser from any of its obligations hereunder. This Agreement
shall be binding upon the parties hereto, their successors in interest and
permitted assignees.
12.3 Notices. Any notices or other communications required
or permitted hereunder will be in writing and will be delivered by hand or sent
by prepaid telex, cable or telecopy, or sent, postage prepaid, by registered,
certified or express mail, or by recognized overnight air courier service and
shall be deemed given when so delivered by hand, telexed, cabled or telecopied,
or if mailed, three days after mailing (one business day in the case of express
mail or overnight courier service) as follows:
If to Sellers:
Xxxx Xxxxxxxx
c/o EnviroQuest Technologies, Ltd.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Xxxxxxx X. Xxxxxxxx
Xxxxxxx Reserve 0
Xxxxx 0
Xxxx Xxxxxx, Xxxxxxxx 00000
Xxxxxxx X. Xxxxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxxxxxx 00000
Xxxxx X. Xxxxxxxx
00000 Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxx 00000
with a copy to:
Xxxxx X. Xxxx, Esq.
Phillips, McElligott, Ewan, Hall & Xxxxxxxx, P.C.
000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000-0000
13
14
If to Purchaser:
Xxxxxx General Corporation
00-X Xxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, President
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxxxx
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000
If to the Company:
Xxxxx X. Xxxxxxxx, President
EnviroQuest Technologies, Ltd.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
with a copy to:
Xxxxxxx X Xxxx, Esq.
Phillips, McElligott, Ewan, Hall & Xxxxxxxx, P.C.
000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000-0000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein.
12.4 Entire Agreement. This Agreement, including the
Schedules and Exhibits hereto, constitutes the entire understanding of the
parties relating to the subject agreements and understandings, whether oral or
written, relating to the subject matter hereof. No amendment or modification
of the terms of this Agreement shall be binding or effective unless expressed
in writing and signed by each party.
12.5 No Waiver. The waiver by any party of the breach of any
of the terms and conditions of, or any right under, this Agreement shall not be
deemed to constitute the waiver of any other breach of the same or any other
term or condition or of any similar right. No such waiver shall be binding or
effective unless expressed in writing and signed by the party giving such
waiver.
12.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Missouri.
12.7 Arbitration Any dispute or controversy arising out of
or relating to this Agreement, any document or instrument delivered pursuant
hereto, in connection with, or simultaneously with this Agreement, or any
breach of this Agreement or any such document or instrument shall be resolved
by binding arbitration to be held in Xxxxxxx County, Missouri in accordance
with the commercial rules then in effect of the American Arbitration
Association or any successor thereto. The arbitrator(s) may grant injunctions
or other relief in such dispute or controversy. The decision of the
arbitrator(s) shall be final, conclusive, and binding on the parties to the
arbitration. Judgment may be entered on the decision of the arbitrator(s) in
any
14
15
court having jurisdiction. The losing party in such arbitration shall pay all
the costs and expenses of such arbitration and all the reasonable counsel fees
and expenses of the other party thereto.
12.8 Costs Incident to Agreement. Except as otherwise
expressly provided herein, each of the parties hereto will pay all the costs
incurred by it incident to the preparation, execution or delivery of this
Agreement or the performance of its obligations hereunder, including, without
limitation, the fees and disbursements of its counsel, accountants and
consultants. Notwithstanding the foregoing, the Company shall pay the
reasonable fees and expenses incurred by the Sellers relating to this Agreement
in an amount which shall not exceed Fifty Thousand Dollars ($50,000.00).
12.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
12.10 Pronouns. Any masculine, feminine or neuter personal
pronoun shall be considered to mean the corresponding masculine, feminine or
neuter personal pronoun, as the context requires.
12.11 Headings. The headings in this Agreement are solely
for convenience of reference and shall be given no effect in the construction
or interpretation of this Agreement.
12.12 Modification. This Agreement may be modified only by a
written instrument duly executed by each party.
12.13 Severability. If any provision of this Agreement is
held to be unenforceable for any reason, it shall be adjusted rather than
voided, if possible, to achieve the intent of the parties to the extent
possible. In any event, all other provisions of this Agreement shall be deemed
valid and enforceable to the extent possible.
12.14 Interpretation. The provisions of this Agreement shall
be interpreted in a reasonable manner to effect the intent of the parties.
15
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED
BY THE PARTIES.
PURCHASER:
XXXXXX GENERAL CORPORATION
By: /s/Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X Xxxxx, President
SELLERS:
/s/ Xxxx Xxxxxxxx
-------------------------------
XXXX XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
XXXXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
XXXXXXX X. XXXXXXXXX
/s/ Xxxxx X. Xxxxxxxx
-------------------------------
XXXXX X. XXXXXXXX
COMPANY:
ENVIROQUEST TECHNOLOGIES, LTD.
By /s/ Xxxxx Xxxxxxxx
-------------------------------
Xxxxx Xxxxxxxx, President
16
