Exhibit 10.4
STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT (the "Agreement"), dated as of May
8, 2003, between AMERICAN ACCESS TECHNOLOGIES, INC., a Florida corporation (the
"Company") and CHATSWORTH PRODUCTS, INC., a Delaware corporation ("Purchaser"),
W I T N E S S E T H:
WHEREAS, the Company and Purchaser desire to effect the sale and purchase
of newly issued shares of Common Stock of the Company, par value $0.001 per
share (the "Common Stock"), as described herein, which sale and purchase will be
accomplished in one or more installments and will result in Purchaser owning not
more than 9.9% of the capital stock of the Company outstanding, on a fully
diluted basis, after completion of all installments of such sale and purchase;
and
WHEREAS, as the first installment of such sale and purchase, the Company
will issue to Purchaser, and Purchaser will purchase from the Company, 215,517
newly issued shares of Common Stock (the "Shares"), on the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, representations and
warranties and the mutual covenants and agreements set forth herein and other
good and valuable consideration the receipt of which is hereby acknowledged,
each of the parties hereto agrees as follows:
ARTICLE 1.
PURCHASE AND SALE OF SHARES;
CLOSINGS; DEFINITIONS
1.1 Purchase and Sale of the Shares. Subject to the applicable terms and
conditions set forth herein, the Company hereby agrees to issue and sell to
Purchaser, and Purchaser hereby agrees to purchase from the Company, the Shares.
In consideration for the Shares, Purchaser hereby agrees to pay to the Company,
in cash, a purchase price of $1.16 per share for the Shares, for an aggregate
purchase price of $250,000 (the "Purchase Price"), payable as follows: $50,000
upon the Initial Closing and four (4) additional installments of $50,000 each at
subsequent 90 day intervals following the Initial Closing.
1.2 Closings. (a) The closing of the issuance of the Shares (the "Initial
Closing") shall take place at the offices of the Company, on the date of
execution of this Agreement (the "Initial Closing Date") or such other place or
date as the parties may mutually agree. At the Initial Closing, Purchaser shall
pay $50,000 of the Purchase Price to the Company by wire transfer of immediately
available funds to the account or accounts of the Company previously specified
by the Company to Purchaser, and the Company shall deliver to Purchaser
certificates representing 43,103 shares of the Shares registered in the name of
Purchaser and bearing the legend described in Section 4.10 hereof (the "Initial
Shares"). The balance of the Shares (the "Remaining Shares)
will be held in escrow by the Company and will be delivered to the Purchaser at
the rate of $1.16 per share as each installment of the purchase price is paid to
the Company as set forth in Section 1.1.
(b) The closing of the issuance of any Remaining Shares (each, an
"Additional Closing") shall take place at the location specified in paragraph
(a) above, on the day (the "Additional Closing Date") which is the third
business day following satisfaction, or waiver by the affected party, of each
condition to the obligations of Purchaser and the Company to consummate such
issuance as specified in this Agreement, or such other place or date as the
parties may mutually agree. At each Additional Closing, Purchaser shall pay the
applicable portion of the Purchase Price for the Remaining Shares to the Company
by wire transfer of immediately available funds to the account or accounts of
the Company previously specified by the Company to Purchaser, and the Company
shall deliver to Purchaser certificates representing each installment of the
Remaining Shares, registered in the name of Purchaser and bearing the legend
described in Section 4.10 hereof.
1.3 Definitions. Certain terms not otherwise defined in this Agreement
shall have the meanings ascribed thereto in Article 7 hereof.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as follows:
2.1 Organization and Qualification; Subsidiaries.
2.1.1 Each of the Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
2.1.2 Each of the Company and each of its subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
(including any foreign country) in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed and
in good standing would not reasonably be expected to have a Material Adverse
Effect.
2.1.3 The Company has made available to Purchaser complete and correct
copies of the Articles of Incorporation and By-Laws, or other equivalent
organizational documents, as amended, for the Company and each of its
subsidiaries. Such organizational documents are in full force and effect and no
other organizational documents are applicable to or binding upon the Company or
any of its subsidiaries. None of the Company or any of its subsidiaries is in
violation of any of the provisions of its respective organizational documents.
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2.1.4 Except as set forth on Schedule 2.1.4 and except for the
ownership of the capital stock of its subsidiaries by the Company, none of the
Company or any of its subsidiaries owns any direct or indirect economic or
voting interest in any person.
2.2 Capitalization of the Company and Its Subsidiaries. The authorized
capital stock of the Company consists of (i) 30,000,000 shares of Common Stock,
par value $.01 per share, of which, as of the date of this Agreement, 5,843,612
shares of Common Stock are issued and outstanding and (ii) 1,000,000 shares of
Preferred Stock, par value $.001 per share, of which, as of the date of this
Agreement, no shares are issued and outstanding. All outstanding shares of
Common Stock have been duly authorized and validly issued, and are fully paid
and nonassessable. As of the date of this Agreement, the Company has 6,926,976
outstanding options and warrants to purchase common stock at exercise prices
ranging from $0.56 to $25.00. Of this total, 5,457,528 are options and warrants
outstanding to employees and officers/directors. The shares of Common Stock
underlying such warrants, options and all other similar rights have been duly
reserved for issuance. Except as set forth above and except as set forth on
Schedule 2.2, there are outstanding (i) no shares of capital stock or other
voting securities of the Company, (ii) no securities of the Company or any of
its subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of the Company, (iii) no written or oral options,
subscriptions, warrants, convertible securities, calls, preemptive or rescission
rights or other rights to acquire from the Company or any of its subsidiaries,
and no obligation of the Company or any of its subsidiaries to issue, deliver or
sell, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company, and (iv) no
equity equivalents (including, without limitation, stock appreciation rights),
interests in the ownership or earnings of the Company or other similar rights
(collectively, "Company Securities"). There are no outstanding obligations of
the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities. Except as set forth on Schedule 2.2, each of the
outstanding shares of capital stock of each of the Company's subsidiaries is
duly authorized, validly issued, fully paid and nonassessable and is directly or
indirectly owned by the Company, free and clear of all Liens. There are no
existing options, calls or commitments of any character relating to the issued
or unissued capital stock or other securities of any subsidiary of the Company.
No bonds, debentures, notes or other indebtedness of the Company or any of its
subsidiaries having the right to vote (or convertible into, or exchangeable for
securities having the right to vote) on any matters on which the stockholders of
the Company may vote are issued or outstanding. There are no stockholders
agreements, voting agreement or similar agreements with respect to the Company
Securities to which the Company or any of its subsidiaries are a party to, or to
the knowledge of the Company, by or between any stockholders of the Company or
any of its affiliates. The Shares being purchased by the Purchaser hereunder
have been duly authorized and will, upon issuance pursuant to the terms hereof,
be validly issued, fully paid and nonassessable.
2.3 Authority Relative to This Agreement. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Company (the "Board") and no other
corporate proceedings on the part of the Company are necessary to authorize this
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Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by the Company and constitutes a
legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms and the other agreements and instruments to
be executed, delivered and performed by the Company in connection with the
transactions contemplated hereby will constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms. Upon the issuance thereof, the Shares shall have been duly
authorized and validly issued, and will be fully paid, nonassessable and free of
all Liens, other than any created by Purchaser, and free of all preemptive and
rescission rights.
2.4 Non-Contravention; Required Filings and Consents.
2.4.1 The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (i) contravene or conflict with, result in the breach of any of the
terms or conditions of, or constitute a default under, the organizational
documents of the Company or any of its subsidiaries; (ii) assuming that all
consents, authorizations and approvals contemplated by Section 2.4.2 have been
obtained and all filings described therein have been made, contravene or
conflict with or constitute a violation of any provision of any law, statute,
regulation, rule, ordinance, judgment, injunction, writ, award, order or decree
binding upon or applicable to the Company, any of its subsidiaries or any of
their respective properties; (iii) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without the
giving of notice or the lapse of time or both) under, or give rise to any right
of modification, termination, cancellation, or loss of any benefit to which the
Company or any of its subsidiaries is entitled under any provision of, any
agreement, contract, license or other instrument binding upon the Company, any
of its subsidiaries or any of their respective properties, or allow the
acceleration of the performance or maturity of any obligation of the Company or
any of its subsidiaries under any indenture, mortgage, deed of trust, lease,
license, contract, instrument or other agreement to which the Company or any of
its subsidiaries is a party or by which the Company, any of its subsidiaries or
any of their respective assets or properties is subject or bound; or (iv) result
in the creation or imposition of any Lien on any asset or property of the
Company or any of its subsidiaries.
2.4.2 Except as set forth on Schedule 2.4, the execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby require no action by or in respect of, or
filing with, or notice to, any governmental body, agency, official or authority
(either domestic or foreign) other than compliance with any applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act")
2.5 SEC Reports.
2.5.1 The Company has filed all required forms, reports and documents
with the SEC since December 31, 2002 (collectively, the "SEC Reports"), each of
which has complied with applicable requirements of the Securities Act and the
Exchange Act. As of their respective dates, none of the SEC Reports, including,
without limitation, any financial statements or
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schedules included therein, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated financial statements
and unaudited consolidated interim financial statements of the Company included
in the SEC Reports or otherwise furnished to the Purchaser fairly present, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements).
2.5.2 Except as reflected or reserved against in the consolidated
balance sheet of the Company and its subsidiaries as of December 31, 2002
previously provided to Purchaser by the Company (the "December 31 Financials"),
the Company and its subsidiaries have no liabilities of any nature (whether
arising out of contract, tort, statute or otherwise and whether direct or
indirect, accrued, matured or unmatured, asserted or unasserted, absolute,
contingent or otherwise) which would be required to be reflected on a balance
sheet prepared in accordance with generally accepted accounting principles (all
of such liabilities being collectively referred to as "Liabilities"), except for
Liabilities incurred in the ordinary course of business since December 31, 2002
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
2.6 Absence of Certain Changes. Since December 31, 2002, except as
specifically disclosed in the SEC Reports filed on or prior to the date of this
Agreement or as disclosed in the December 30 Financials, neither the Company nor
any of its subsidiaries has entered into any transaction, or conducted its
business or operations, other than in the ordinary course of business consistent
with past practice. Since December 31, 2002, except as specifically disclosed in
the SEC Reports filed on or prior to the date of this Agreement or as disclosed
in the December 31 Financials, there has not been any material adverse change in
the business, assets, liabilities, results of operations, properties, financial
or operating condition or prospects of the Company and its subsidiaries, taken
as a whole, nor has there been any material adverse change in the ability of the
Company to perform its obligations under this Agreement or consummate the
transactions contemplated hereby.
2.7 Brokers. No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
2.8 Absence of Litigation. Except as specifically disclosed in the SEC
Reports filed on or prior to the date of this Agreement or as set forth on
Schedule 2.8 to this Agreement, there is no action, suit, claim, arbitration,
investigation or proceeding pending against, or to the knowledge of the Company,
threatened against or affecting, the Company or any of its subsidiaries or any
of their respective businesses or properties before any court or arbitrator or
any administrative, regulatory or governmental body, or any agency or official
which (i) individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect on the Company; (ii) in any manner challenges or seeks
to prevent, enjoin, alter or delay any of
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the transactions contemplated hereby; or (iii) alleges criminal action or
inaction by the Company, any of its subsidiaries or any of their directors,
officers or employees. Except as specifically disclosed in the SEC Reports filed
on or prior to the date of this Agreement, or as set forth on Schedule 2.8 to
this Agreement, neither the Company nor any of its subsidiaries nor any of their
respective businesses or properties are subject to any order, writ, judgment,
injunction, decree, determination or award having, or which would reasonably be
expected to have, a Material Adverse Effect on the Company or which would
interfere with the consummation of the transactions contemplated by this
Agreement.
2.9 Taxes. Each of the Company and its subsidiaries has filed all federal,
state, county, local and foreign tax returns and reports, or requests for
extensions to file such returns and reports, which the Company and its
subsidiaries were required to have filed on or before the date hereof. All tax
returns and reports filed by the Company or its subsidiaries are complete and
accurate, except where the failure so to be complete and accurate would not
reasonably be expected to have a Material Adverse Effect. The Company and each
of its subsidiaries have paid (or the Company has paid on behalf of its
subsidiaries) or has made adequate provision for the payment of all taxes shown
as due on such returns and reflected in the most recent financial statements
contained in the SEC Reports for all taxable periods and portions thereof
accrued through the date of such financial statements. No deficiencies for any
taxes or any penalties, interest or assessments have been proposed, asserted or
assessed against the Company or its subsidiaries that are not adequately
reserved for, pursuant to such returns or reports or pursuant to any assessment
received with respect thereto. Except as set forth on Schedule 2.9, there is no
pending audit or examination of any tax return of the Company or any of its
subsidiaries by any Governmental Authority, nor has the Company or any of its
subsidiaries received written notice of any such audit or examination and there
are no unexpired waivers or agreements for the extension of time for the
assessment of taxes on the Company or any of its subsidiaries or extension of
any statute of limitations with respect to any taxes, and there are no pending
nor has the Company or any of its subsidiaries received any written notice of
any threatened actions, proceedings or investigations by any Governmental
Authority with respect to taxes.
2.10 Employee Benefits.
2.10.1 The Company has delivered to the Purchaser true, complete and
accurate copies (or if the same do not exist in written form, descriptions) of
each formal, informal, oral or written bonus, deferred compensation, incentive
compensation, stock purchase, stock option, restricted stock purchase or other
issuance, severance or termination pay, hospitalization or other medical, life
or other insurance (or similar self-insurance), supplemental unemployment
benefits, profit-sharing, employee stock ownership, pension, or retirement plan,
program, agreement or arrangement, and each other employee benefit plan,
program, agreement or arrangement whether for the benefit of present or former
officers, employees, agents, directors or independent contractors of the Company
or any of its subsidiaries or any ERISA Affiliate, sponsored, maintained or
contributed to or required to be contributed to by the Company or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"), that together
with the Company would be deemed a "single employer" within the meaning of
Section 4001(b) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or Section 414 of the Code
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(collectively, the "Plans"). Each of the Plans that is an "employee benefit
plan," as that term is defined in section 3(3) of ERISA is collectively referred
to herein as "ERISA Plans."
2.10.2 No material liability under Title IV of ERISA has been incurred
by the Company or any ERISA Affiliate that has not been satisfied in full, and
no condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring a material liability under such Title, other than
liability for premiums due the Pension Benefit Guaranty Corporation ("PBGC")
(which premiums have been paid when due). To the extent this representation
applies to sections 4064, 4069 or 4204 of Title IV of ERISA, it is made not only
with respect to each ERISA Plan but also with respect to any employee benefit
plan, program, agreement or arrangement subject to Title IV of ERISA to which
the Company or any ERISA Affiliate made, or was required to make, contributions
during the five-year period ending on the Initial Closing Date. Neither the
Company nor any ERISA Affiliate is required to contribute to a "multiemployer
plan" (as defined in Section 4001 (a) (3) of ERISA) or has withdrawn from any
multiemployer plan where such withdrawal has resulted or would result in any
"withdrawal liability" (within the meaning of Title IV of ERISA) that has not
been fully paid.
2.10.3 The PBGC has not instituted proceedings to terminate any ERISA
Plan and no condition exists that presents a material risk that such proceedings
will be instituted.
2.10.4 Neither the Company nor any ERISA Affiliate, nor any ERISA
Plan, nor any trust created thereunder, nor any trustee or administrator thereof
has engaged in a transaction in connection with which the Company or any ERISA
Affiliate, any ERISA Plan, any such trust, or any trustee or administrator
thereof, or any party dealing with any ERISA Plan or any such trust could
reasonably be subject to either a material civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a material tax imposed pursuant to section
4975 or 4976 of the Code.
2.10.5 No ERISA Plan or any trust established thereunder has incurred
any "accumulated funding deficiency" (as defined in section 302 of ERISA and
section 412 of the Code), whether or not waived, as of the last day of the most
recent fiscal year of each ERISA Plan, which could reasonably be expected to
result in a material liability to the Company; and all contributions required to
be made with respect thereto (whether pursuant to the terms of any ERISA Plan or
otherwise) have been timely made.
2.10.6 Each Plan has been operated and administered in accordance with
its terms and applicable law in all material respects, including, but not
limited to, ERISA and the Code. No Plan is subject to any material dispute or
proceeding other than relating to a routine claim for benefits.
2.10.7 Except as set forth on Schedule 2.10.7, there are no material
pending or (to the knowledge of the Company) threatened claims by or on behalf
of any Plan, by any employee or beneficiary covered under any such Plan, or
otherwise involving any such Plan (other than routine claims for benefits)
2.10.8 No fact exists that could reasonably be expected to result in
the disqualification of any Plan that is intended to be qualified under Section
401(a) of the Code.
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2.11 Intellectual Property. Except as set forth on Schedule 2.11 and other
than any such exceptions to any of the following representations as would not
reasonably be expected to result in a Material Adverse Effect: (1) the Company
and each of its subsidiaries owns, or is licensed to use (in each case, free and
clear of any Liens), all Intellectual Property used in or necessary for the
conduct of its business as currently conducted; (2) to the knowledge of the
Company, the use of any Intellectual Property by the Company and its
subsidiaries does not infringe on or otherwise violate the rights of any person;
and (3) to the knowledge of the Company, no person is challenging, infringing on
or otherwise violating any right of the Company or any of its subsidiaries with
respect to any Intellectual Property owned by and/or licensed to the Company or
any of its subsidiaries.
2.12 Material Contracts. Except as set forth on Schedule 2.12, the Company
has provided or made available to Purchaser (i) true and complete copies of all
written contracts, agreements, commitments, arrangements, leases (including with
respect to personal property) and other instruments to which it or any of its
subsidiaries is a party or by which it or any such subsidiary is bound (A) which
require payments to be made in excess of $500,000 per year for goods and/or
services (including, without limitation, services performed by employees and
independent contractors) , (B) do not by their terms expire and are not subject
to termination (without penalty to the Company or its subsidiaries as the case
may be) within six months from the date of the execution and delivery thereof
and require payments to be made in excess of $500,000, (C) to which any
director, officer or holder of more than 5% of the outstanding shares of Common
Stock or any of their respective affiliates (other than the Company and its
subsidiaries) are a party, or (D) which are otherwise material to the business
and operations of the Company (the agreements set forth in (A) through (D) being
collectively referred to herein as "Material Contracts") . Except as set forth
on Schedule 2.12, each Material Contract is in full force and effect,
enforceable in accordance with its terms, and neither the Company nor any of its
subsidiaries is, or has received any notice or has any knowledge that any other
party is, in default in any material respect under or in material breach of any
such Material Contract; and there has not occurred any event that with the lapse
of time or the giving of notice or both would constitute such a material default
or breach. To the Company's knowledge, no party to any Material Contract has
threatened to terminate such contract.
2.13 Compliance. Except as set forth on Schedule 2.13 and other than any
such exceptions to any of the following representations as would not reasonably
be expected to result in a Material Adverse Effect: (a) neither the Company nor
any of its subsidiaries is in violation of, nor has the Company or any of its
subsidiaries violated, any applicable provisions of any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company, any of its subsidiaries or any of their
respective properties are bound or affected; (b) the Company and each of its
subsidiaries has in effect all federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights ("Permits") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, and there
has occurred no default under any such Permit; (c) except as disclosed in the
SEC Reports filed on or prior to the date of this Agreement, the
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Company and its subsidiaries are in compliance with all applicable statutes,
laws, ordinances, rules, orders and regulations of any Governmental Authority,
including, without limitation, those that govern the operation of restaurants;
and (d) except as disclosed in the SEC Reports filed on or prior to the date of
this Agreement, as of the date of this Agreement, no investigation by any
Governmental Authority with respect to the Company or any of its subsidiaries is
pending or threatened.
2.14 Related Party Transactions. Except as set forth on Schedule 2.14 or
except as disclosed in the SEC Reports, no director, officer, shareholder that
beneficially owns more than 5% equity interest in the Company or affiliate of
the Company or any of its subsidiaries (i) has borrowed any monies from or has
outstanding any indebtedness or other similar obligations to the Company or any
of its subsidiaries; or (ii) is otherwise a party to any contract, arrangement
or understanding with the Company or any of its subsidiaries, in all cases other
than travel and other expenses and reimbursements, company car charges and other
similar transactions which are customary in amount and in the ordinary course of
business. Except as set forth on Schedule 2.14 or except as disclosed in the SEC
Reports, no director, officer, affiliate of the Company or any of its
subsidiaries or any person directly or indirectly owns more than a 5% equity
interest in, or is a director, officer, employee, partner, affiliate or
associate of, or consultant or lender to, or borrower from, or has the right to
participate in the management, operations or profits of, any person which is a
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of the Company or any of its subsidiaries
2.15 Real Property.
2.15.1 The Company and each of its subsidiaries has good and
marketable title to each parcel of real property owned by it free and clear of
all Liens, except (1) to the extent reflected or reserved against in the most
recent balance sheet of the Company included in the SEC Reports filed on or
prior to the date of this Agreement; (2) taxes and general and special
assessments not in default and payable without penalty and interest or being
contested in good faith; (3) mechanics', carriers', workmen's, repairmen's or
other like Liens arising or incurred in the ordinary course of business with
respect to liabilities that are not yet due or delinquent, or which are being
contested in good faith by appropriate proceedings; (4) leases to third parties;
(5) as set forth on Schedule 2.15; and (6) other liens, mortgages, pledges,
encumbrances and security interests which do not materially interfere with the
Company's, or any of its subsidiaries', use and enjoyment of such real property
or materially detract from or diminish the value thereof.
2.15.2 The Company has made available to Purchaser correct and
complete copies of all leases, subleases and other agreements (the "Real
Property Leases") under which the Company or any of its subsidiaries uses or
occupies or has the right to use or occupy, now or in the future, any real
property (including all modifications, amendments and supplements thereto) Each
Real Property Lease is valid, binding and in full force and effect and, to the
knowledge of the Company, no termination event or condition or uncured default
on the part of the Company or any such subsidiary or the landlord, exists under
any Real Property Lease. Each of the Company and its subsidiaries has a good and
valid leasehold interest in each parcel of real property leased by it free and
clear of all Liens, except (i) to the extent reflected or reserved
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against in the most recent balance sheet of the Company included in the SEC
Reports filed on or prior to the date of this Agreement, (ii) taxes and general
and special assessments not in default and payable without penalty and interest
or being contested in good faith; (iii) mechanics', carriers', workmen's,
repairmen's or other like Liens arising or incurred in the ordinary course of
business with respect to liabilities that are not yet due or delinquent, or
which are being contested in good faith by appropriate proceedings, (iv) leases
to third parties, (v) as set forth on Schedule 2.15, and (vi) other liens,
mortgages, pledges, encumbrances and security interests which do not materially
interfere with the Company's or any of its subsidiaries' use and enjoyment of
such real property or materially detract from or diminish the value thereof. All
of the real property owned by the Company or its subsidiaries together with all
real property subject to the Real Property Leases is collectively referred to as
the "Real Property".
2.15.3 Except as set forth on Schedule 2.15 and other than any such
exceptions to any of the following representations as would not reasonably be
expected to result in a Material Adverse Effect: (a) none of the Real Property
or the businesses conducted by the Company and its subsidiaries thereon are in
material violation of any use or occupancy restriction, limitation, condition or
covenant of record or any zoning or building law, code or ordinance or public
utility easement; (b) there are no material challenges or appeals pending
regarding the amount of the taxes on, or the assessed valuation of, the Real
Property and no special arrangements or agreements exist with any governmental
authority with respect thereto; (c) there are no condemnation proceedings
pending or, to the best of the Company's knowledge, threatened with respect to
any portion of the Real Property; and (d) there is no tax assessment (in
addition to the normal, annual general real estate tax assessment) pending or,
to the best of the Company's knowledge, threatened with respect to any portion
of the Real Property.
2.16 Labor Matters. Except as set forth on Schedule 2.16 and other than any
such exceptions to any of the following representations as would not result in a
Material Adverse Effect: (a) the Company and each of its subsidiaries is (i) in
compliance with all federal and state laws respecting (A) employment and
employment practices (including immigration laws relevant to employment), and
(B) terms and conditions of employment and wages and hours, and (ii) not engaged
in any unfair labor practice; (b) there is no unfair labor practice charge or
complaint against the Company or any of its subsidiaries pending, before the
National Mediation Board, the National Labor Relations Board, or any comparable
state or local agency or to the knowledge of the Company, otherwise threatened,
(c) there is no (x) labor strike, dispute, slow down or stoppage actually
pending or, to the knowledge of the Company, threatened against or involving the
Company or any of its subsidiaries, or (y) labor grievance or pending
arbitration involving the Company or any of its subsidiaries; (d) neither the
Company nor any of its subsidiaries has experienced any work stoppage or other
material labor difficulty during the three-year period prior to the date of this
Agreement; (e) there are no collective bargaining agreements, union contracts or
similar types of agreements by which the Company or any of its subsidiaries is
bound or covered; (f) there are no union representation petitions pending before
the National Labor Relations Board, and no union within the past three years has
sought or demanded recognition by the Company or any of its subsidiaries; and
(g) there is no union organizing activity, to the knowledge of the Company,
currently in progress involving the Company or any of its subsidiaries.
10
2.17 Voting Requirements. The vote of the holders of any class or series of
the Company's securities is not required under the SEC Act, the rules and
regulations of any applicable exchange or listing service on which the
securities of the Company is or will be traded or listed, the laws of the State
of Florida or any other Governmental Authority to approve this Agreement and the
transactions contemplated hereby.
2.18 Compliance with Securities Laws. The Company has not taken, and will
not take, any action which would subject the sale of the Shares pursuant to this
Agreement to the provisions of Section 5 of the Securities Act, or violate the
registration or qualification provisions of any securities or blue sky laws of
any applicable jurisdiction, and, based in part on the representations of
Purchaser in Section 3.6 hereof, the sale of the Shares pursuant to this
Agreement complies is exempt from the registration and delivery requirements of
the Securities Act and with all applicable requirements of federal and state
securities and blue sky laws. The Company has not, directly or indirectly,
issued, offered or sold any shares of Common Stock (including for this purpose
any securities of the same or a similar class as the Common Stock or any
securities convertible into or exchangeable or exercisable for the Common Stock
or any such other securities) within the six (6) month period preceding the date
hereof or taken any other action, or failed to take any action, that, in any
such case, would (x) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale of the Securities, as contemplated hereby, or (y) cause the
offering of the Securities pursuant to this Agreement to be integrated with
prior offerings by the Company for purposes of the Securities Act or any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchanges or listings on which the Common Stock
of the Company is traded or listed, as applicable. The Company shall not,
directly or indirectly, take, and shall not permit any of its directors,
officers or affiliates, directly or indirectly, to take, any action (including,
without limitation, any offering or sale to any person or entity of any of the
Common Stock) that will make unavailable the exemption from registration under
the Securities Act being relied upon by the Company for the offer and sale to
the Purchasers of the Shares, as contemplated by this Agreement, including,
without limitation, the filing of a registration statement under the Securities
Act. No form of general solicitation or advertising within the meaning of Rule
502(c) under the Securities Act has been used or authorized by the Company or
any of its officers, directors or affiliates in connection with the offer or
sale of the Shares, as contemplated by this Agreement. The Company undertakes to
timely file with the SEC a Form D promulgated under the Securities Act, as
required under Regulation D promulgated under the Securities Act, with respect
to the Offering.
2.19 No Bad Acts. To the Company's knowledge and except as disclosed in the
Company's SEC Reports, none of its directors or officers is or has been the
subject of, or a defendant in: (a) an enforcement action or prosecution (or
settlement in lieu thereof) brought by a governmental authority relating to a
violation of securities, fiduciary or criminal laws, or (b) a civil action (or
settlement in lieu thereof) brought by stockholders or investors for violation
of duties owed to the stockholders or investors, except a shareholder suit
disclosed in the Company's filings with the SEC which was dismissed, in either
case, which would be required to be disclosed in the Company's SEC Reports or
which would eliminate the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer and sale of
the Shares, as contemplated hereby.
11
2.20 Insurance. The Company maintains insurance of the type and in the
amount reasonably adequate for its business, including, but not limited to,
insurance covering all real and personal property owned or leased by the Company
against theft, damage, destruction, acts, vandalism, and all other risks
customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company as follows:
3.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Purchaser
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.
3.2 Authority Relative to this Agreement. The Purchaser has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Purchaser and no other corporate
proceeding on the part of Purchaser is necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchaser and constitutes a legal, valid
and binding agreement of Purchaser, enforceable against Purchaser in accordance
with its terms.
3.3 Non-Contravention; Required Filings and Consents.
3.3.1 The execution, delivery and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (i) contravene or conflict with the organizational documents of
Purchaser; or (ii) assuming that all consents, authorizations and approvals
contemplated by Section 3.3.2 have been obtained and all filings described
therein have been made, contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Purchaser or any of its properties.
3.3.2 The execution, delivery and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby require
no action by or in respect of, or filing with, or notice to, any governmental
body, agency, official or authority (either domestic or foreign) other than
compliance with any applicable requirements of the HSR Act, the Securities Act,
the Exchange Act or any other applicable federal and state securities laws.
12
3.4 Brokers. No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Purchaser.
3.5 Absence of Litigation. As of the date hereof, there is no action, suit,
claim, investigation or proceeding pending against, or to the knowledge of
Purchaser, threatened against or affecting Purchaser or any of its properties
before any court or arbitrator or any administrative, regulatory or governmental
body, or any agency or official which in any manner challenges or seeks to
prevent, enjoin, alter or delay any of the transactions contemplated hereby. As
of the date hereof, neither Purchaser nor any of its properties is subject to
any order, writ, judgment, injunction, decree, determination or award, which
would prevent or delay the consummation of the transactions contemplated hereby.
3.6 Investment Intent. Purchaser is purchasing the Shares for its own
account for investment, and not with a view to, or for resale in connection
with, any public distribution of the Shares.
ARTICLE 4.
COVENANTS
4.1 Conduct of the Business. During the period from the date of this
Agreement and continuing through the Initial Closing and each Additional
Closing, the Company agrees as to the Company and its subsidiaries that (except
to the extent that Purchaser shall otherwise consent in writing)
4.1.1 The Company and each of its subsidiaries shall carry on its
business in the usual, regular and ordinary course in substantially the same
manner as previously conducted and shall use all reasonable efforts to preserve
intact its present business organization, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it.
4.1.2 The Company shall not, nor shall it permit any of its
subsidiaries to: (i) declare, set aside or pay any dividends on or make any
other distributions in respect of any of its capital stock (whether in cash,
stock, or property or any combination thereof); (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; or (iii) redeem, repurchase or otherwise
acquire any of its securities or any securities of its subsidiaries, except as
required by the terms of its securities outstanding on the date hereof, as
contemplated by this Agreement or as contemplated by employee benefit and
dividend reinvestment plans as in effect on the date hereof.
4.1.3 The Company shall not, and shall cause its subsidiaries not to,
amend or propose to amend its Articles of Incorporation or By-Laws or the
Standstill Agreement, elect or appoint any person a director of any of them who
is not serving as such on the date hereof.
13
4.1.4 The Company shall not, nor shall it permit any of its
subsidiaries to acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, except for such
transactions which involve aggregate consideration of less than $500,000.
4.1.5 Other than dispositions in the ordinary course of business
consistent with past practice which are not material, individually or in the
aggregate, to the Company and its subsidiaries taken as a whole and dispositions
of Real Property that have been approved by the Board of Directors of the
Company prior to the date hereof, and except for any other such transactions
which involve aggregate consideration of less than $500,000, the Company shall
not, nor shall it permit any of its subsidiaries to, sell, lease, encumber or
otherwise dispose of, or agree to sell, lease (whether such lease is an
operating or capital lease) , encumber or otherwise dispose of, any of its
assets.
4.1.6 The Company shall not authorize, recommend, propose or announce
an intention to adopt a plan of complete or partial liquidation or dissolution
of the Company or any of its subsidiaries.
4.1.7 The Company shall not, and shall not permit any of its
subsidiaries to, enter into any agreement providing for the acceleration of
payment or performance or other consequences as a result of any of the
transactions contemplated by this Agreement.
4.1.8 The Company shall not, and shall not permit any of its
subsidiaries to, enter into any new lines of business or otherwise make material
changes to the operation of its business.
4.2 Notification of Certain Matters. The Company shall promptly provide
Purchaser (or its counsel) with copies of all filings made by the Company with
the SEC or any other Governmental Authority in connection with this Agreement
and the transactions contemplated hereby.
4.3 Access to Information. Subject to applicable law, between the date
hereof and the Additional Closing Date, the Company will give each of Purchaser
and its counsel, financial advisors, auditors, and other authorized
representatives reasonable access to all employees, plants, offices, warehouses
and other facilities and to all books and records of the Company and its
subsidiaries, will permit each of Purchaser and its counsel, financial advisors,
auditors and other authorized representatives to make such inspections as
Purchaser may reasonably request and will cause the Company's and its
subsidiaries' officers to furnish Purchaser or its representatives with such
financial and operating data and other information with respect to the business
and properties of the Company and its subsidiaries as Purchaser may from time to
time reasonably request. All such information obtained pursuant to this Section
shall be subject to the Confidentiality Agreement.
4.4 Reasonable Best Efforts. Subject to the terms and conditions herein
provided, and subject to the fiduciary duties of the Company's Board of
Directors to stockholders under
14
applicable law, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, Purchaser
and the Company shall cooperate with one another (i) in the preparation and
filing of any required filings under the HSR Act, the Securities Act, the
Exchange Act and any other federal or state securities laws; (ii) in determining
whether action by or in respect of, or filing with, any Governmental Authority
is required, proper or advisable or any actions, consents, waivers or approvals
are required to be obtained from parties to any contracts, in connection with
the transactions contemplated by this Agreement; and (iii) in seeking timely to
obtain any such actions, consents and waivers and to make any such filings.
4.5 Public Announcements. The Company and Purchaser will consult with each
other before issuing any press release or otherwise making any public statements
with respect to the transactions contemplated by this Agreement (including any
announcements to employees of the Company or its subsidiaries) and shall not
issue any such press release or make any such public statement prior to such
consultation, provided that nothing in this Section 4.5 shall prevent any of the
parties from making such public statements as may be required by applicable law
or by applicable rules of any securities exchange or inter-dealer quotation
system, but to the extent not inconsistent with such obligations, it shall
provide the party with an opportunity to review and comment on any proposed
public announcement regarding the transaction contemplated by this Agreement
before it is made.
4.6 NASDAQ Stock Market Listing. As promptly as practicable following the
execution of this Agreement, the Company will apply to the NASDAQ Stock Market
to list the Shares and the Company will use its reasonable efforts to cause the
Shares to be listed on the NASDAQ Stock Market at the Initial Closing Date or
the Additional Closing Date, as applicable, subject to official notice of
issuance.
4.7 Limitations on Transfer of Shares. (a) Purchaser agrees not to sell,
transfer, assign, offer, pledge or otherwise dispose of all or any portion of
the Shares unless (i) Purchaser is in compliance with the provisions of the
Standstill Agreement and (ii) either (A) a registration statement relating
thereto has been duly filed and becomes effective under the Securities Act and
all applicable state securities laws or (B) such sale, transfer, assignment,
offer, pledge or other disposition is exempt from the registration and
prospectus delivery requirements of the Securities Act and such laws (as
evidenced by an opinion of counsel for Purchaser reasonably satisfactory in form
and substance to the Company or, in the case of a transfer by Purchaser to any
of its affiliates, other evidence reasonably satisfactory to the Company)
(b) Purchaser also agrees to the placing on the certificates representing
the Shares of a legend, in substantially the following form, referring to the
restrictions set forth in the immediately foregoing paragraph:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or applicable
state securities laws and may not be sold, transferred, assigned, offered,
pledged or otherwise disposed
15
of unless (i) there is an effective registration statement under such Act
and such laws covering such securities or (ii) such sale, transfer,
assignment, offer, pledge or other disposition is exempt from the
registration and prospectus delivery requirements of such Act and such
laws. The securities evidenced by this certificate are subject to the
restrictions on transfer and voting contained in the Standstill Agreement
dated as of May 8, 2003 to which the Company is a party, as amended,
supplemented or otherwise modified from time to time, and may not be
transferred except in compliance therewith."
ARTICLE 5.
CONDITIONS PRECEDENT
5.1 Conditions to Each Party's Obligations with Respect to Sale and
Purchase of the Shares. The respective obligations of each party hereto to
consummate the sale and purchase of the Shares are subject to the satisfaction
at or prior to the Initial Closing and any Additional Closing, as applicable, of
the following conditions:
5.1.1 There shall not be in effect any order, decree or ruling or
other action restraining, enjoining or otherwise prohibiting the issuance of the
Shares or any of the other transactions contemplated by this Agreement which
order, decree, ruling or action shall have been issued or taken by any court of
competent jurisdiction or other Governmental Authority.
5.1.2 All regulatory approvals necessary for the consummation of the
issuance of the Initial Shares and any Remaining Shares shall have been obtained
and there shall have been no material modification to the terms of the
transactions contemplated by this Agreement.
5.1.3 The parties shall have entered into a Standstill Agreement with
respect to the Shares in the form of Exhibit A hereto (the "Standstill
Agreement") and the Manufacturing and Marketing Agreement in the form of Exhibit
B hereto.
5.1.4 The Company shall have performed in all material respects and
shall not be in default or breach of any of its covenants, agreements and
obligations under this Agreement, the Standstill Agreement, the Confidentiality
Agreement and the Manufacturing and Marketing Agreement at and as of the date of
the Initial Closing and each Additional Closing as though newly made at and as
of that time.
5.2 Conditions to the Obligation of Purchaser with Respect to Purchase of
the Shares. The obligation of Purchaser to consummate the purchase of the Shares
is subject to the satisfaction at or prior to the Initial Closing and any
Additional Closing, as applicable, of the following further conditions:
5.2.1 The Company shall have performed in all material respects its
covenants, agreements and obligations under this Agreement up to the Initial
Closing and each Additional Closing, as applicable. Prior to the Initial Closing
or any Additional Closing, as applicable, no
16
event having or that will result in Material Adverse Effect with respect to the
Company shall have occurred
5.2.2 Except as otherwise contemplated by this Agreement, the
representations and warranties of the Company contained in this Agreement which
are qualified as to materiality shall be true and correct, and which are not so
qualified shall be true and correct in all material respects, in each case, as
of the date when made and at and as of the Initial Closing or any Additional
Closing, as applicable, as though newly made at and as of that time.
5.2.3 The Company shall have executed and delivered, or caused to be
executed and delivered to Purchaser, such certificates, opinions and other
documents related to the consummation of the transactions contemplated hereby as
may be reasonably requested by Purchaser.
5.3 Conditions to the Obligation of the Company with Respect to Sale of the
Shares. The obligation of the Company to consummate the sale of the Shares is
subject to the satisfaction at or prior to the Initial Closing and any
Additional Closing, as applicable, of the following further conditions:
5.3.1 Purchaser shall have performed in all material respects its
covenants, agreements and obligations under this Agreement up to the Initial
Closing and each Additional Closing, as applicable.
5.3.2 Except as otherwise contemplated by this Agreement, the
representations and warranties of Purchaser contained in this Agreement which
are qualified as to materiality shall be true and correct, and which are not so
qualified shall be true and correct in all material respects, in each case, as
of the date when made and at and as of the Initial Closing or any Additional
Closing, as applicable, as though newly made at and as of that time.
5.3.3 Purchaser shall have executed and delivered, or caused to be
executed and delivered, to the Company, such certificates, opinions and other
documents related to the consummation of the transactions contemplated hereby as
may be reasonably requested by the Company.
ARTICLE 6.
INDEMNIFICATION; REMEDIES
6.1 Survival of Representations and Warranties. Subject to Section 6.8
hereof, all representations and warranties specifically set forth in this
Agreement will survive the Initial Closing and each Additional Closing and will
survive for the periods specified in Section 6.4.
6.2 Indemnification and Payment of Damages by the Company. Subject to
Section 6.8 hereof, the Company will indemnify and hold harmless Purchaser for,
and will pay to the Purchaser the amount of, any loss, liability, claim, damage
or expense (including reasonable attorneys' fees and expenses) or diminution of
value (collectively, "Damages") actually incurred
17
by the Indemnified Persons, arising, directly or indirectly, from or in
connection with: (a) any breach of any representation or warranty specifically
made by the Company in this Agreement; (b) any breach by the Company of any
covenant or obligation of the Company specifically contained in this Agreement;
(c) any claim by any Person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by any such Person with the Company (or any Person acting on behalf of the
Company) in connection with any of the transactions contemplated hereby. A
diminution of the value of Purchaser's holdings of the Company's Common Stock
will be included in the definition of Damages actually incurred in the preceding
sentence if and to the extent that, but only if and to the extent that, it can
be established that such diminution of value was caused by one or more events or
conditions which also constitute one or more of the matters referred to in
clauses (a), (b) and (c) of this Section 6.2. The remedies provided in this
Section 6.2 will be the sole remedies available to Purchaser with respect to the
matters referred to in clauses (a), (b) and (c) of this Section 6.2, provided
that the foregoing shall not limit any right to specific performance or
injunctive relief or any other rights under Section 8 hereof that the Purchaser
may otherwise have.
6.3 Indemnification and Payment of Damages by Purchaser. Subject to Section
6.8 hereof, the Purchaser will indemnify and hold harmless the Company, and will
pay to the Company the amount of any Damages actually incurred by the Company,
arising, directly or indirectly, from or in connection with (a) any breach of
any representation or warranty specifically made by Purchaser in this Agreement,
(b) any breach by Purchaser of any covenant or obligation of Purchaser
specifically contained in this Agreement, or (c) any claim by any Person for
brokerage or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such Person with
Purchaser (or any Person acting on its behalf) in connection with any of the
transactions contemplated hereby. The remedies provided in this Section 6.3 will
be the sole remedies available to the Company with respect to the matters
referred to in clauses (a), (b) and (c) of this Section 6.3, provided that the
foregoing shall not limit any right to specific performance or injunctive relief
or any other rights under Section 8 hereof that a party may otherwise have.
6.4 Time Limitations. Subject to Section 6.8 hereof, the Company will have
no liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Initial Closing Date or an Additional Closing Date,
as applicable, unless on or before the first anniversary of the Additional
Closing Date (or the first anniversary of the Initial Closing Date if the
Additional Closing shall not have occurred by such anniversary date), Purchaser
notifies the Company of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Purchaser; a claim with respect to
Section 2.9 may be brought at any time on or before the fourth anniversary of
the Additional Closing Date (or the fourth anniversary of the Initial Closing
Date if the Additional Closing shall not have occurred by such anniversary date)
.. If the Initial Closing and/or the Additional Closing shall occur, Purchaser
will have no liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Initial Closing Date or the Additional Closing Date,
unless on or before the first anniversary of the Additional Closing Date (or the
first anniversary of the Initial Closing Date if the Additional Closing shall
not have occurred by such anniversary
18
date) the Company notifies Purchaser of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by the Company.
6.5 Limitations On Amount. (a) The Company will have no liability to
Purchaser pursuant to clause (a) of Section 6.2, and, with respect to Section
4.1 hereof, pursuant to clause (b) of Section 6.2, until the total of all
Damages with respect to such matters exceeds $25,000, and then only for the
amount by which such Damages exceed $25,000. The liability of the Company to
Purchaser pursuant to clause (a) of Section 6.2 and, with respect to Section 4.1
hereof, pursuant to clause (b) of Section 6.2, shall not exceed $250,000 in the
aggregate.
(b) Purchaser will have no liability to the Company pursuant to clause
(a) of Section 6.3 until the total of all Damages with respect to such matters
exceeds $25,000, and then only for the amount by which such Damages exceed
$25,000. The liability of Purchaser to the Company pursuant to clause (a) of
Section 6.3 shall not exceed $250,000 in the aggregate.
6.6 Other Limitations. The Company will have no liability to Purchaser for
any breach of representation or warranty to the extent that the Company can
establish that Purchaser had actual knowledge of the facts, which form the basis
of such claim prior to the Initial Closing Date or the applicable Additional
Closing Date. Purchaser will have no liability to the Company for any breach of
representation or warranty to the extent that Purchaser can establish that the
Company had actual knowledge of the facts which form the basis of such claim
prior to the Initial Closing Date or the applicable Additional Closing Date.
6.7 Procedure for Indemnification. Promptly upon an indemnified party under
Section 6.2 or 6.3 becoming aware of a claim it may have against an indemnifying
party under such Section, such indemnified party will if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party, but the failure so to notify the indemnifying party will not
relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that it shall have been materially prejudiced by the indemnifying party's
failure to give such notice. The parties shall cooperate in resolving questions
as to Damages payable under Section 6.2 or 6.3 and determining the amount of any
Damages payable. If the parties shall not be able, for a period of 30 days, to
concur and agree upon the amount of Damages payable under said Section, as
applicable, either party may, upon the expiration of such number of days, submit
such difference to a court of competent jurisdiction in the United States of
America for final determination. The final determination of such court with
respect to any difference so submitted, after all appeals have been taken or the
time to appeal shall have expired (the "Final Determination"), shall be
conclusive and binding upon the parties. Promptly after the exact amount and
nature of any Damages under Section 6.2 or 6.3 payable has been determined or
agreed upon by the parties or fixed by a Final Determination, the indemnifying
party shall pay such Damages to the indemnified party.
6.8 Other Agreements. Notwithstanding anything to the contrary herein, the
terms and provisions of this Article 6 shall not supersede nor limit the
indemnification and other rights of the Purchaser set forth in the Standstill
Agreement, the Manufacturing and Marketing Agreement and the Confidentiality
Agreement.
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ARTICLE 7.
DEFINITIONS
7.1 Definitions. The following terms shall have the meanings set forth
below unless otherwise defined herein.
"affiliate" of a person means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the letter agreement dated March 21, 2002
between the Company and Purchaser and attached hereto as Exhibit C.
"Environmental Law" means any legal requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or Hazardous Materials into the environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human health or the
environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of Hazardous Materials, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them,
for damages done to their health or the environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
20
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and all of
the rules and regulations promulgated thereunder.
"generally accepted accounting principles" shall mean the generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession in the United
States, in each case applied on a consistent basis.
"Governmental Authority" means any national, supranational, federal, state or
local legislative body, court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency.
"Intellectual Property" means trademarks, service marks, certification marks,
assumed names, trade names and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdictions to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, processes, discoveries and ideas, whether patentable or not in any
jurisdiction; patents, applications for patents (including, without limitation,
division, continuations, continuations in part and renewal applications) , and
any renewals, extensions or reissues thereof, in any jurisdiction; writings and
other works, whether copyrightable or not in any jurisdiction; registrations or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or proprietary
rights; and any claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing.
"knowledge" of the Company means the actual knowledge of Xxxx Xxxxxxx, Xxxx
Wiisenan, Xxx XxXxxxx or Xxxx Xxxx and the knowledge of the Company's executive
officers or its board of directors, after reasonable inquiry.
"Liens" means security interests, mortgages, liens, claims, pledges, charges,
voting agreements or other encumbrances of any nature whatsoever.
"Material Adverse Effect" with respect to any person means a material adverse
effect on the business, assets, liabilities, results of operations, properties,
financial or operating condition or prospects of such person and its
subsidiaries taken as a whole or the ability of such person (and to the extent
applicable, its subsidiaries) to perform its (or their) obligations under this
Agreement or consummate the transactions contemplated hereby.
"person" means an individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d) (3) of the Exchange Act).
"SEC" means the United States Securities and Exchange Commission.
21
"Securities Act" means the Securities Act of 1933, as amended, and all of the
rules and regulations promulgated thereunder.
"subsidiary" or "subsidiaries" of any person means any corporation, partnership,
limited liability company, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holder of which is generally entitled to vote for the election of the board of
directors or other governing body of such corporation, partnership, limited
liability company, joint venture or other legal entity.
"taxes" shall mean all taxes, however denominated, including, without
limitation, any interest, penalties, assessments or deficiencies or other
additions to tax that may become payable in respect thereof, imposed by any
federal, territorial, state, local or foreign government or any agency or
political subdivision of any such government, which taxes shall include, without
limiting the generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state income taxes) ,
real property gains taxes, payroll and employee withholding taxes, unemployment
insurance taxes, social security taxes, sales and use taxes, ad valorem taxes,
excise taxes, franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes, environmental
taxes, transfer taxes, workers' compensation, Pension Benefit Guaranty
Corporation premiums and other governmental charges, and other obligations of
the same or of a similar nature to any of the foregoing, which is required to be
paid, withheld or collected.
ARTICLE 8.
MISCELLANEOUS
8.1 Termination. This Agreement may be terminated at any time:
(a) by mutual consent of the Company and Purchaser;
(b) by either Purchaser or the Company, if the Initial Closing shall
not have occurred on or before May 15, 2003, unless the absence of such
occurrence shall be due to the failure of the party seeking to terminate the
Agreement to perform in all material respects each of its obligations under this
Agreement required to be performed by it at or prior to the Initial Closing;
(c) by Purchaser, if there has been any breach of any representation
or warranty or any material breach of any covenant of the Company contained
herein, in the Manufacturing and Marketing Agreement, Standstill Agreement and
Confidentiality Agreement and the same has not been cured within 15 days after
notice thereof, (it being understood and agreed by the Purchaser that, in the
case of any representation or warranty of the Company contained herein which is
not hereinabove qualified by application thereto of a materiality standard, such
representation or warranty will be deemed to have been breached for purposes of
22
this Section 8.1(c) only if such representation or warranty was not true and
correct in all material respects at the time such representation or warranty was
made by the Company); or
(d) by the Purchaser, upon termination of the Manufacturing and
Marketing Agreement for any reason; or
(e) by the Company, if there has been any breach of any
representation, warranty or any material breach of any covenant of any Purchaser
contained herein and the same has not been cured within 15 days after notice
thereof (it being understood and agreed by the Company that, in the case of any
representation and warranty of the Purchaser contained herein which is not
hereinabove qualified by application thereto of a materiality standard, such
representation or warranty will be deemed to have been breached for purposes of
this Section 8.1(d) only if such representation or warranty was not true and
correct in all material respects at the time such representation or warranty was
made by the Purchaser).
8.2 Procedure upon Termination. In the event of the termination and
abandonment of this Agreement by a party hereto, written notice thereof shall
promptly be given to the other parties hereto and this Agreement shall terminate
on the date set forth in such notice and the transactions contemplated hereby
shall be abandoned without further action by any of the parties hereto. Any
termination pursuant to this Section 8 shall be without liability on the part of
any party, unless such termination is the result of a material breach of this
Agreement by a party to this Agreement in which case such breaching party shall
remain liable for such breach notwithstanding any termination of this Agreement.
8.3 Amendment. This Agreement may be amended by the parties hereto, but may
only be amended by an instrument or instruments in writing signed and delivered
on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Additional Closing Date,
any party hereto which is entitled to the benefits hereof may (a) extend the
time for the performance of any of the obligations or other acts of any of the
other parties hereto, (b) waive any inaccuracy in the representations and
warranties of any of the other parties hereto contained herein, and (c) waive
compliance with any of the agreements of any of the other parties hereto or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed and delivered on behalf of such party.
8.5 Execution in Counterparts; Facsimile Signatures. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document. A
facsimile copy of a signature of a party to this Agreement or any such
counterpart shall be fully effective as if an original signature.
8.6 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been given or made when
delivered personally or by facsimile (with written confirmation of receipt) or
three business days after having been sent by registered or certified mail,
postage prepaid, return receipt requested, or one business day
23
after having been sent by Federal Express or other comparable nationally
recognized overnight courier service (receipt requested), as follows:
If to the Company: American Access Technologies, Inc.
0000 Xxxxxx Xx.
Xxxxxxxx, XX 00000
Attention: President
Fax: (___)
-----------------
With a copy to: Xxxx Xxxxxxxxx, Esq.
00000 Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxx, XX 00000
Fax: (___)
-----------------
If to Purchaser to: Chatsworth Products, Inc.
00000 Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attn: Chief Executive Officer
Fax: 000-000-0000
With a copy to: Xxxxxxx X. Xxxx, Esq.
Xxxx, Forward, Xxxxxxxx & Scripps LLP
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Fax: 000-000-0000
or to such other persons or at such other addresses as either party shall have
designated by like notice in writing to the other party.
8.7 Waivers. No action taken pursuant to this Agreement shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
8.8 Severability. If any provision of this Agreement shall be declared by
any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect.
8.9 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
8.10 Headings. The headings contained in this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
24
8.11 Entire Agreement. This Agreement, together with the exhibits and
schedules attached hereto, constitute the entire agreement among the parties
hereto and supersede all other prior agreements and understandings, both written
and oral, among the parties hereto with respect to the subject matter hereof.
8.12 Assignment, Etc. Neither this Agreement nor any of the parties'
rights, interests or obligations hereunder shall be assignable by any party
hereto without the prior written consent of the other parties hereto. No
assignment shall relieve the assigning party of any of its obligations
hereunder. Any attempted assignment of this Agreement in breach of this
provision shall be void and of no effect. Subject to the foregoing, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.
8.13 No Third-Party Rights. Nothing in this Agreement, expressed or
implied, shall or is intended to confer upon any person other than the parties
hereto or their respective successors or assigns any rights or remedies of any
nature or kind whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by or on behalf
of each of the parties hereto as of the date first above written.
AMERICAN ACCESS TECHNOLGIES, INC.
By:
--------------------------------------
Xxxx Xxxxxxx, President
CHATSWORTH PRODUCTS, INC.
By:
--------------------------------------
Xxxxxx Xxxxxx, Chief Executive Officer
25
EXHIBIT A
STANDSTILL AGREEMENT
[See attachment]
26
EXHIBIT B
MANUFACTURING AND MARKETING AGREEMENT
[See attachment]
27
EXHIBIT C
CONFIDENTIALITY AGREEMENT
(see attachment)
28
MUTUAL NON-DISCLOSURE AGREEMENT
THIS AGREEMENT is entered into on 3/21/2002, between Chatsworth Products, Inc.,
a Delaware corporation, with offices at 00000 Xxxxxx Xxxx, Xxxxxxxx Xxxxxxx, XX
00000 ("CPI") and American Access Technologies, Inc, a Florida corporation,
located at 00 Xxxxxxx Xxxxx, Xxxxx 0000, Xxxx Xxxx, XX 00000 ("AAT").
RECITALS
A. CPI and AAT contemplate substantive discussions regarding a potential
business relationship between them ("Authorized Purpose"). This may involve the
exchange of certain confidential and proprietary inventions, ideas, processes,
methods, copyrights, patents, techniques, computer programs, hardware,
specifications, prototypes, designs, know-how, drawings, marketing plans,
financial data, customer lists, referral and vendor sources, policies, and other
procedures, and other information in written, oral and/or physical/sample from
(collectively "Confidential Information").
B. The parties desire to protect their respective Confidential Information
pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual provisions contained herein,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. Confidential Information. All Confidential Information disclosed by
either party to the other must be in writing and clearly marked by the
disclosing party as "CONFIDENTIAL" or "PROPRIETARY". Confidential Information
disclosed orally or by demonstration shall be so identified to the receiving
party during the disclosure or demonstration and confirmed by the disclosing
party in writing within fifteen (15) business days after the disclosure. Neither
party is obligated to disclose any information or to enter into any further
agreement or business relationship with the other party.
2. Scope. The parties agree that the Confidential Information shall be
reviewed only for the Authorized Purpose, and for no other purpose. Each party
retains the sole and exclusive ownership and intellectual property rights to its
respective Confidential Information, and no license or any other interest in a
party's Confidential Information is granted to the other party. The parties
acknowledge that all Confidential Information received from the other party is
provided without any express or implied representation or warranty by the other
party as to the accuracy or completeness of such Confidential Information or
that such information will be suitable for the receiving party's purposes.
Nothing herein shall impair the right of either party to enter into other
agreements or to develop, make, use, sell or otherwise distribute products or
services that may be competitive with those offered by the other party provided
that in doing so there is no breach of this Agreement.
3. Restrictions. Each party agrees to protect the other party's
Confidential Information with the same degree of care that is uses to protect
its own Confidential Information, but in all events will use at least a
reasonable degree of care. In addition to such degree of care, each party shall
not in any way (a) disclose or otherwise transfer the other party's Confidential
Information to any third party at any time, including consultants and
contractors; (b) use (except as specifically permitted in writing by the other
party), copy, modify and/or transfer the other party's Confidential Information
and/or merge the other party's Confidential Information with any other
technology, software or materials; (c) to the maximum extent permitted by
applicable law, decompile, disassemble, peel semi-conductor components or
otherwise reverse engineer any of the other party's Confidential Information or
products; (d) remove any trademark, copyright, patent or mask work notices
and/or other proprietary legends contained within any of the other party's
Confidential Information; and/or (e) disclose the parties' discussions about
their respective Confidential Information and/or their potential business
relationship to any third party, except each party's consultants and contractors
with a specific need to know of the discussions, and only after advising them of
the provisions of this Agreement. Each party agrees that it will disclose the
Confidential Information of the other party only to its employees who have a
specific need to know regarding the potential business relationship between
29
parties and only to the extent necessary for such purpose. Each party shall be
responsible for any breach of this Agreement by its respective employees. To
further protect each party's interest in their respective Confidential
Information, each party agrees that it shall not in any way incorporate, use
and/or exploit any part of the other party's Confidential Information (disclosed
separately or embodied in the other party's products, equipment or operations)
in its and/or any other party's products or businesses, including without
limitation to develop, produce and/or distribute any products or services that
derive from or use the other party's Confidential Information. The provisions of
this Section 3 shall survive the termination of this Agreement.
4. Exceptions. The obligations and restrictions herein shall not apply to
Confidential Information that falls within any of the following exceptions,
provided a receiving party proves by credible written evidence that such
information:
(a) is or becomes part of the public domain through no fault of a
receiving party;
(b) was known by receiving party prior to the disclosure by the other
party;
(c) was independently developed by or for a receiving party completely
apart from the disclosures hereunder;
(d) has been properly received from a third party who is not under any
obligation to maintain the confidentiality of such information, and without
breach of this Agreement by a receiving party; and/or
(e) is released pursuant to a court order or otherwise required by law
(including without limitations as required under federal or state securities
laws) provided that the receiving party immediately notifies the disclosing
party of such court order or legal requirement, and gives the disclosing party a
reasonable opportunity and cooperates with the disclosing party to contest,
limit or condition the scope of such required disclosure.
5. Enforcement. Both parties agree that each party will be irreparably
harmed and money damages will be inadequate compensation in the event the other
party breaches any provision of this Agreement. Both parties also agree that all
the provisions of this Agreement shall be specifically enforceable against each
other and their agents and/or representatives by injunctive and other relief.
The provisions of this Section 5 shall survive the termination of this
Agreement.
6. Return of Materials. All copies of a party's Confidential Information,
whether in tangible or machine readable form, shall be promptly returned to the
disclosing party upon the disclosing party's request. A receiving party shall
thereafter retain no copies, transcriptions or summaries of any portion of the
disclosing party's Confidential Information.
7. Governing Law/Venue. This Agreement shall be interpreted and enforced
according to the substantive laws of the State of California without application
of its conflicts or choice of law rules.
8. Entire Agreement.This Agreement constitutes the entire agreement between
the parties regarding the subject matter hereof and superseded all prior or
contemporaneous understandings, oral or written. This Agreement can only be
amended by a writing signed by both parties.
9. Assignment. Neither party shall have the right to assign or otherwise
transfer, in whole or in part, any of its rights or obligations under this
Agreement.
10. Validity. If any provision hereof is found by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
shall remain in full force and effect, and the affected provisions shall be
revised so as to reflect the original intent of the parties hereunder to the
maximum extent permitted by applicable law.
11. Attorney's Fees. In the event a dispute arises regarding this
Agreement, the prevailing party shall be entitled to recover reasonable
attorney's fees and costs in addition to any other relief to which it is
entitled.
12. Waiver. The failure to enforce any provisions of this Agreement shall
not be deemed a waiver or a continuing waiver of the same or other provision of
this Agreement unless such waiver is in writing and signed by the party to be
charged.
30
13. Counterparts. This Agreement may be executed in several counterparts
that together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
Dated: Xxxxx 00, 0000 Xxxxxxxxxx Products, Inc.
By:
-----------------------------
Title:
Dated: March 21, 2002 AAT, Inc.
By:
-----------------------------
Title:
31
SCHEDULES
2.1.4 None.
2.2 Company may issue shares pursuant to equity compensation arrangements
from time-to-time.
2.4 After the closing, the Company will file Form D, with SEC and filings
required under California securities laws.
2.8 None.
2.9 None.
2.10.7 None.
2.11 None.
2.12 None.
2.13 None.
2.14 None.
2.15 None.
2.16 None.
32
