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EXHIBIT 2
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of February 27, 1997
between the persons listed as Sellers on the signature pages of this Agreement
(the "Sellers"), as the holders of all the shares of capital stock and certain
other securities of Prism Enterprises, Inc., a Delaware corporation (the
"Company"), and Xxxxx Enterprises, Inc., a Delaware corporation (the "Buyer").
WHEREAS, the Sellers desire to sell to the Buyer all of the
shares of Class A Common Stock, par value $0.01 per share, and all of the
Warrants to acquire shares of Class B Common Stock, par value $0.01 per share,
of the Company, and the Buyer desires to purchase such shares and Warrants from
the Sellers on the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual promises herein set forth, the parties agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Action": any charge, claim, lawsuit, complaint, request for
investigation, report of alleged violation of law or regulation, or
legal proceeding of any nature filed with or made to any court,
Governmental Authority or organization having jurisdiction or authority
over the Company or any Subsidiary, their assets, the Business, their
property or the operations occurring thereon.
"Affiliate": with respect to any Person means (i) any Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person;
(ii) any officer, director, partner, employee, agent, or representative
or direct or indirect beneficial or legal owner of any 5% or greater
equity or voting interest of such Person; or (iii) any entity for which
a Person described in (ii) above acts in any such capacity.
"Agent": Xxxxx X. Xxxxx, as agent for the Sellers.
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this "Agreement": this Stock Purchase Agreement and all
Schedules and Exhibits hereto, as the same may be amended, supplemented
or otherwise modified from time to time.
"BT": BT Capital Partners, Inc., a Delaware corporation.
"Business": the business now carried on by the Company and its
Subsidiary under the names "Prism Technologies" and "PrisTech" at its
locations in San Antonio, Texas, and Rancho Cucamonga, California.
"Closing": the closing of the transactions contemplated by
this Agreement.
"Closing Date": the date of the Closing.
"Code": the Internal Revenue Code of 1986, as amended.
"Consent": any consent, waiver, approval or authorization of,
notice to, or designation, registration, declaration or filing with,
any Person.
"Contract": any written or oral contract, agreement,
understanding, lease, license, note, plan, instrument, commitment,
restriction, arrangement, obligation, undertaking, practice or
authorization of any kind or character or other document to which a
Person is a party, that is binding on such Person or its securities,
assets or business.
"December Balance Sheet": the unaudited balance sheet of the
Company as of December 31, 1996 included in the Financial Statements.
"Default": (1) a breach of, default under, or
misrepresentation in or with respect to any Contract, (2) the
occurrence of an event that with the passage of time or the giving of
notice or both would constitute a breach of, default under, or
misrepresentation in any Contract, or (3) the occurrence of an event
that with or without the passage of time or the giving of notice or
both would give rise to a right to terminate, change the terms of or
renegotiate any Contract or to accelerate, increase, or impose any
Liability under any Contract.
"Environmental Laws": all Laws relating to pollution or
protection of human health or the
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environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without
limitation, the Comprehensive Environmental Response Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et
seq. ("RCRA"), and other Laws relating to emissions, discharges,
releases or threatened releases of any Hazardous Substance, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Hazardous
Substance.
"Environmental Litigation": any Litigation against the
Company, any Subsidiary, the Business or the assets of the Company
(including, without limitation, notice or other communication, written
or oral, by any Person alleging potential liability for investigatory
costs, cleanup costs, private or governmental response or remedial
costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based upon, or resulting from (i) any
Environmental Matter or (ii) any circumstances or state of facts
forming the basis of any Liability or alleged Liability under, or
violation or alleged violation of, any Environmental Law.
"Environmental Matter": any matter or circumstances related in
any manner whatsoever to (i) the emission, discharge, disposal, release
or threatened release of any Hazardous Substance into the environment,
or (ii) the transportation, treatment, storage, recycling or other
handling of any Hazardous Substance or (iii) the placement of
structures or materials into waters of the United States, or (iv) the
presence of any Hazardous Substance, including, but not limited to,
asbestos, in any building, structure or workplace or on any real
property leased by the Company or any Subsidiary.
"ERISA": the Employee Retirement Income Security Act of 1974
(and any sections of the Code amended by it) and all regulations
promulgated thereunder, as amended.
"Escrow Agent": Texas Commerce Bank National Association, and
its successors and assigns under the Escrow Agreement.
"Escrow Agreement": the Escrow Agreement dated as of the
Closing Date among the Sellers, the Buyer, the
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Agent and the Escrow Agent, substantially in the form of Exhibit A
attached hereto, as the same may be amended, supplemented or otherwise
modified from time to time.
"Financial Statements": the audited financial statements of
the Company for the fiscal years ended December 31, 1994 and 1995, and
the unaudited financial statements of the Company for the 12-month
period ended December 31, 1996.
"GAAP": generally accepted accounting principles.
"Governmental Authority" means any federal, state, county,
local, foreign or other governmental or public agency, instrumentality,
commission, authority, board or body.
"Hazardous Substance": (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance or toxic substance (as
those terms are defined by any applicable Environmental Laws) and (ii)
any chemicals, pollutants, contaminants, petroleum, petroleum products,
or oil.
"Improvements": all buildings, structures, fixtures and other
improvements located on or included in any real property.
"Intellectual Property": the Company's (i) Patents and
Trademarks, (ii) trade secrets, know-how, inventions, formulae and
processes, whether trade secrets or not, (iii) copyrights and any
registrations and applications therefor, (iv) technology rights and
licenses, and (v) computer software and other intellectual property, to
the extent proprietary in nature and not in the public domain.
"knowledge" or "known": with respect to the Sellers means (a)
the actual knowledge of Xxxxxx Xxxxxxxxxx or Xxxx X. Xxxxx, without
having made any inquiry, or (b) the actual knowledge of Xxxxx X. Xxxxx
or Xxxxxxxxxxx X. Xxxxx, after due inquiry of the officers of the
Company and its Subsidiaries responsible for the matters as to which
knowledge pertains.
"Laws": (i) all Federal, state, local or foreign laws, rules
and regulations; (ii) all Orders; (iii) all Permits; and (iv) all
agreements with Federal, state, local or foreign regulatory
authorities.
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"Leased Real Property": the real property identified on
Schedule 3.12.
"Liability": any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, expense (including,
without limitation, costs of investigation, collection and defense),
claim, deficiency, guaranty or endorsement of or by any Person (other
than endorsements of notes, bills and checks presented to banks for
collection or deposit in the ordinary course of business) of any type,
whether known, unknown, accrued, absolute, contingent, liquidated,
unliquidated, matured, unmatured or otherwise.
"Lien": any mortgage, pledge, deed of trust, transfer
restriction, option, escrow, hypothecation, lien, security interest,
financing statement, lease, charge, encumbrance, easement, conditional
sale or other title retention or security agreement or any other
similar restriction, claim or right of others whether arising by
Contract, operation of Law or otherwise.
"Litigation Expense": any reasonable expense incurred in
connection with investigating, defending or asserting any Action
incident to any matter indemnified against hereunder (including without
limitation rights to indemnification hereunder), including, without
limitation, court filing fees, court costs, arbitration fees or costs,
witness fees, and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, accountants and other professionals.
"Litigation": any action, administrative or other proceeding,
arbitration, cause of action, claim, complaint, criminal prosecution,
hearing, governmental or regulatory investigation, governmental or
regulatory charge or litigation, by any Person alleging potential
Liability relating to or affecting the Company or any Subsidiary, its
assets (including, without limitation, Contracts relating to the
Company or any Subsidiary), the Business or the transactions
contemplated by this Agreement.
"Loss": any and all direct or indirect demands, claims,
payments, obligations, recoveries, deficiencies, fines, penalties,
interest, assessments, actions, causes of action, suits, losses, and
liabilities, and interest on any amount payable to a
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Third Party as a result of the foregoing, other than Litigation
Expense.
"Material Adverse Effect": as to any Person, any material
adverse change in or effect on (i) the business, operations, assets,
Liabilities, condition (financial or otherwise) or results of
operations of such Person, (ii) the ability of such Person to
consummate the transactions contemplated by this Agreement or any of
the other Transaction Documents to which it is or will be a party, or
(iii) the ability of such Person to perform any of its obligations
under this Agreement or any of the other Transaction Documents to which
it is or will be a party.
"Order": any decree, injunction, judgment, order, ruling,
writ, quasi-judicial decision or award or administrative decision or
award of any federal, state, local, foreign or other court, arbitrator,
tribunal, administrative agency or Governmental Authority to which any
Person is a party or that is or may be binding on any Person or its
securities, assets or business.
"Patents and Trademarks": the Company's U.S. and foreign (a)
patents and pending patent applications together with any and all
continuations, continuations in part, divisions, reissues,
re-examinations, extensions and renewals thereof, and (b) trade names,
trademarks, service marks, logos, assumed names, brand names and all
registrations and applications therefor together with the goodwill of
the Business symbolized thereby.
"Permits": all Federal, state, local or foreign permits,
licenses, approvals, franchises, notices, authorizations,
registrations, certifications and similar filings.
"Permitted Liens": (a) carriers', warehousemen's, workers',
materialmen's, brokers' or customs' or other like Liens arising in the
ordinary course of business with respect to obligations which are not
due; and (b) liens and other title exceptions set forth on Schedule
3.11.
"Person": a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a business
association, corporation, general partnership, joint venture, limited
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partnership, limited liability company, trust, or any person acting in
a representative capacity.
"Purchase Price": as defined in Section 2.3.
"Related Person": with regard to any natural Person, his or
her spouse, parent, sibling, child, aunt, uncle, niece, nephew, in-law,
grandparent and grandchild (including by adoption) and any trustees or
other fiduciaries for the benefit of such relatives.
"Shares": (i) shares of the Company's Class A Common Stock,
par value $0.01 per share ("Class A Common Stock"), (ii) shares of
Class B Common Stock, par value $0.01 per share ("Class B Common
Stock"), and (iii) Warrants.
"Subsidiary": with respect to any Person, (i) any corporation
of which more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of
directors of such corporation is at the time, directly or indirectly
owned by such Person, or (ii) any partnership, limited liability
company or joint venture or other entity of which more than fifty
percent (50%) of the outstanding equity interests are at the time,
directly or indirectly, owned by such Person.
"Taxes": all taxes, charges, duties, fees, levies, penalties
or other assessments imposed by any taxing authority, including, but
not limited to, income, excise, property, sales or transfer taxes,
including any interest, penalties or additions attributable thereto.
"Tax Returns": all returns, reports, filings, declarations and
statements relating to Taxes that are required to be filed, recorded,
or deposited with any Governmental Authority, including any attachment
thereto or amendment thereof.
"Third Party" or "Third Parties" means any Person that is not
the Buyer, the Company or a Seller or an Affiliate of the Buyer, the
Company or a Seller.
"Transaction Documents": this Agreement and the Escrow
Agreement.
"12% Note": the 12% Note due April 1, 2001, issued by the
Company to BT in the original principal amount of $6,750,000.
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"Warrants": the Company's Warrants for the acquisition of up
to 3,000 shares of its Class B Common Stock, $0.01 par value,
originally issued to BT on May 21, 1992.
2. Sale and Purchase of Stock.
2.1 Sale and Purchase. At the Closing, which shall occur at
the offices of Xxxxxx & Bird, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx, xx
the date this Agreement is executed and delivered, or such other place or date
as the parties shall mutually agree in writing, each Seller shall sell,
transfer, assign, convey and deliver the Shares owned by it to the Buyer or its
designee(s), and the Buyer or its designee(s) will purchase, accept and acquire
the Shares from the Sellers.
2.2 Deliveries at Closing. At the Closing, each Seller shall
cause the Shares held by him or it to be transferred to the Buyer or its
designee(s) by delivering to the Buyer or its designee(s) certificates
representing such Shares, duly endorsed for transfer or accompanied by duly
executed forms of assignment, and the Buyer shall pay to the Sellers the
Purchase Price for the Shares in accordance with Section 2.3 hereof.
2.3 Purchase Price and Payment.
(a) Purchase Price. The purchase price payable by the Buyer for
the Shares (the "Purchase Price") shall be a total of $19,500,000 minus the
amount of the Company's indebtedness for principal (but not accrued interest) to
banks and other lenders to be paid and discharged on the Closing Date pursuant
to Section 2.3(c)(i),(ii) and (iii). The Purchase Price shall be allocated among
the Sellers as set forth in Exhibit B attached hereto. Any indemnity payment
made pursuant to Section 5 of this Agreement shall be deemed an adjustment to
the Purchase Price.
(b) Payment. At the Closing, in payment of the Purchase Price:
(i) the Buyer shall pay $500,000, by wire transfer of
immediately available funds, to the Escrow Agent to be held in escrow
pursuant to the Escrow Agreement.
(ii) the Buyer shall pay the balance of the Purchase Price to the
Sellers, by wire transfer of
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immediately available funds to the account(s) designated in writing by
the Sellers.
(c) Indebtedness of the Company to be Discharged. At the Closing, the
Buyer shall cause the Company to pay and discharge all long-term indebtedness
(including the current portion, if any, thereof) of the Company owing on the
Closing Date, including that owing:
(i) to BT for principal and accrued interest on
the 12% Note,
(ii) to Texas Commerce Bank National Association for
principal, accrued interest and other amounts under the Credit
Agreement dated as of February 20, 1996, and
(iii) to Xxxxxx X. Xxxxxxxxx, Successor Trustee of the Xxxxxxx
X. Xxxxxxx Trust, for principal and accrued interest under the
Promissory Note Dated September 14, 1995, in the original principal
amount of $100,000, payable by the Company to such Trustee.
3. Representations and Warranties of the Sellers. The Sellers,
jointly and severally (subject to Section 5.3(h) hereof), represent and warrant
to the Buyer as follows:
3.1 Organization; Good Standing. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and has all requisite
corporate power and authority to own, operate and lease its properties, and to
carry on its business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the failure to be so qualified
would have a Material Adverse Effect. The Company and its Subsidiaries are duly
qualified or licensed to transact business as foreign corporations in good
standing in the jurisdictions listed on Schedule 3.1.
3.2 Authorization; Validity. Each of the Sellers has the full
power and capacity necessary to enter into and perform his or its obligations
under this Agreement and the other Transactions Documents to which he or it is a
party and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and the Transactions
Documents have been approved by all necessary action of the Board of Directors
and stockholders of the Company and the Board of Directors
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and stockholders of BT. This Agreement has been and the other Transaction
Documents to which any of the Sellers is a party will be when executed and
delivered, duly executed and delivered by the Sellers and each such agreement
constitutes, or will constitute when executed and delivered, a legal, valid and
binding obligation of the Sellers, except as enforceability thereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws of general
application affecting the enforceability of creditors' rights generally or by
general principles of equity.
3.3 Title to Shares; Other Rights. Each of the Sellers is the
owner of all right, title and interest (record and beneficial) in and to that
number of shares of Class A Common Stock or Warrants set forth next to his or
its name on Schedule 3.3, free and clear of all Liens, except as disclosed on
Schedule 3.3. Except for the agreements described in Schedule 3.3 which are to
be terminated at or before Closing, no Person has any Contract or any right or
privilege (whether preemptive or contractual) capable of becoming a Contract for
the purchase from any of the Sellers of any Shares. Except for agreements
effectively terminated at or before Closing, none of the Sellers is a party to,
or bound by, any other agreement, instrument or understanding restricting the
transfer of his or its Shares.
3.4 No Conflict. Subject to obtaining the Consents and Permits
listed on Schedule 3.4, neither the execution nor the delivery of the
Transaction Documents by the Sellers nor the consummation of the transactions
contemplated hereby will (a) conflict with or result in any violation of or
constitute a breach of or default under any terms, conditions or provisions of
(i) the organizational documents or by-laws of the Company or any Subsidiary, or
(ii) any applicable Laws, or (iii) any Contract listed on Schedule 3.18, or (b)
result in the creation of any Lien on any of the Shares or any of the assets of
the Company or any Subsidiary.
3.5 Capitalization. All of the authorized, issued and
outstanding shares of capital stock of the Company, and the record and
beneficial holders thereof, are as set forth in Schedule 3.5 attached hereto.
All of the Shares are duly authorized, validly issued, fully paid and
non-assessable, and were issued pursuant to a valid exemption from registration
under the Securities Act of 1933, as amended (the "Securities Act"), and all
applicable state securities laws. Except as set forth in Schedule 3.5, there are
no outstanding rights of subscription, pre-emptive rights, warrants, calls,
options, conversion or exchange
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rights or other Contracts with respect to any securities of the Company or
pursuant to which any Person has an interest in its capital or profits, and
there are no Contracts as to the voting of the Company's securities. Except as
set forth in Schedule 3.5, there are no outstanding rights to either demand
registration of any Shares under the Securities Act or to sell any Shares in
connection with such registration of shares.
3.6 Subsidiaries. The Company does not own, beneficially or of
record, any capital stock or other equity securities of any corporation or other
entity or have any direct or indirect equity, ownership or voting interest in
any other Person, except the capital stock of its Subsidiary, PrisTech, Inc., a
Delaware corporation. The Company owns of record and beneficially all of the
issued and outstanding shares of capital stock of such Subsidiary.
3.7 Financial Statements. The Financial Statements are
attached to Schedule 3.7. All of the Financial Statements were prepared from the
books and records of the Company and its Subsidiaries, which are correct and
complete in all material respects and have been maintained in accordance with
good business practices. Except as disclosed on Schedule 3.7, the audited
Financial Statements have been prepared in accordance with GAAP consistently
applied during each period and from period to period covered by the audited
Financial Statements, and fairly present the consolidated financial position
and results of operations of the Company and its Subsidiaries as of the dates
thereof and for the periods then ended. The unaudited Financial Statements were
prepared in a manner not inconsistent with the basis of presentation used in
the audited Financial Statements, and fairly present the consolidated financial
position and results of operation of the Company and its Subsidiaries as of the
dates thereof and for the periods then ended, subject to normal year-end
adjustments.
3.8 Absence of Undisclosed Liabilities. Neither the Company
nor any Subsidiary has any liabilities or obligations, of a kind that in
accordance with GAAP would be required to be included on the consolidated
balance sheet of the Company or disclosed in the footnotes thereto, whether
accrued, absolute or contingent, and whether due or to become due, except (a)
liabilities reflected or reserved against on the December Balance Sheet included
in the Financial Statements, (b) liabilities arising in the ordinary course of
business since the date of such balance sheet, and (c) liabilities and
obligations disclosed on Schedule 3.8.
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3.9 No Material Adverse Change. To the Sellers' knowledge,
since December 31, 1996 there has not been (i) any material adverse change in
the financial condition, operations, business, properties, assets or liabilities
of the Company or any Subsidiary, or (ii) any material damage, destruction or
loss to any of the properties or assets of the Company or any Subsidiary,
whether or not covered by insurance, which has materially and adversely affected
or impaired the ability of the Company or any Subsidiary to conduct the
Business.
3.10 Taxes. Except as provided in Schedule 3.10:
(a) Each of the Company and its Subsidiaries has timely filed
or caused to be filed all Tax Returns required to be filed by it. All such Tax
Returns are true, complete and correct in all material respects, and all Taxes
shown thereon and all deficiencies or other assessments of tax, interest or
penalties and all estimated taxes due by the Company or its Subsidiaries or with
respect to its business have been paid. The charges, accruals and reserves, if
any, in respect of Taxes (including import duties) set forth in the Financial
Statements are adequate. No extensions of time with respect to any date on which
any Tax Return was or is to be filed by the Company or any Subsidiary are in
force.
(b) None of the Company's Tax Returns have ever been audited
by the IRS or any other Governmental Authority and the Company has neither
waived any statute of limitations in respect of Taxes nor agreed to a Tax
assessment or deficiency. The Company has not filed any consent under Section
341(f) of the Code relating to collapsible corporations. No Tax is required to
be withheld pursuant to Section l445 of the Code as a result of any of the
transfers contemplated by this Agreement and the Company will provide any
certificate requested by Buyer at Closing with respect thereto.
3.11 Good Title; No Liens. Except as set forth on Schedule
3.11, each of the Company and its Subsidiaries has good and marketable title to
all the properties and assets, real and personal, tangible and intangible,
purported to be owned by it (including all property and assets reflected in the
Financial Statements, except as disposed of after the date thereof in the
ordinary course of business), subject to no Liens other than Permitted Liens. No
material item of the property used in the Company's or any Subsidiary's
operations or business is owned by an Affiliate of the Company.
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3.12 Leases. Schedule 3.12 sets forth a list of all leases of
real property and all leases of (or other arrangements for the use of) any item
of personal property, to which the Company or any Subsidiary is a party, either
as lessor or lessee. Except as indicated on Schedule 3.12, neither the Company
nor any Subsidiary is in breach, violation or default of any lease with respect
to or as a result of which the other party thereto has the right to terminate
the same, and neither the Company nor any Subsidiary has received any notice of
any claim that it is in breach, violation or default with respect to any lease.
3.13 Insurance. All of the assets and the operations of the
Company and its Subsidiary of an insurable nature are insured by the Company or
its Subsidiary in such amounts and against such losses, casualties or risks as
is (i) required by any Law applicable to the Company, its Subsidiary or the
Business, or (ii) required by any Contract. Schedule 3.13 contains a complete
and accurate list of all insurance policies held or owned by the Company or its
Subsidiary and now in force and such Schedule indicates the name of the insurer,
the type of policy, the risks covered thereby, the amount of the premiums, the
term of each policy, the policy number and the amounts of coverage and
deductible in each case and all outstanding claims thereunder. Correct and
complete copies of all such policies have been delivered to Buyer by the Company
on or before the date of this Agreement. All such policies are in full force and
effect. Neither the Company nor its Subsidiary is in Default regarding the
provisions of any such policy, including, without limitation, failure to make
timely payment of all premiums due thereon, and neither has failed to give any
notice or present any claim thereunder in due and timely fashion. Neither, the
Company nor its Subsidiary has been refused or denied renewal of any insurance
coverage.
3.14 Patents, Trademarks, etc. Schedule 3.14 sets forth a list
of all Patents and Trademarks owned, licensed or used by the Company or any
Subsidiary during the past five years and any applications or registrations
therefor which are currently either pending or issued and not expired. Except as
set forth on Schedule 3.14, the Company or the relevant Subsidiary owns the
entire unencumbered right, title and interest in and to all such Patents and
Trademarks free of all Liens other than Permitted Liens, and no rights or
licenses to or from others have been granted with respect to such Patents and
Trademarks. The Company has taken all action reasonably necessary to protect its
rights with respect to the Patents and Trademarks. All of the Patents and
registrations of
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Trademarks are valid, subsisting and in full force and effect. The Company and
each Subsidiary own, or possess the right to use, all the Intellectual Property
necessary for the conduct of its business as now conducted, without any known
infringement on, violation of or conflict with the rights of others. To the
Sellers' knowledge, no Third Party is using any of the Intellectual Property or
engaging in any activity that infringes on, violates or conflicts with the
rights of the Company or any Subsidiary with respect to the Intellectual
Property. No Affiliate of the Company or any Subsidiary owns or possesses any
rights in or to any Intellectual Property used by the Company or any Subsidiary
in its business.
3.15 Litigation, etc. (a) Except as set forth on Schedule
3.15, there is no pending or, to the Sellers' knowledge, threatened Action or
governmental investigation or inquiry against or involving the Company or any
Subsidiary or its assets or operations, and to the Sellers' knowledge no event
has occurred which could reasonably be expected to result in an Action or
governmental investigation or inquiry against or involving the Shares, the
Company, or any Subsidiary or its assets or operations, and (ii) there are no
outstanding Orders binding upon the Shares, the Company, any Subsidiary, any of
their assets, or the Business.
(b) Except as disclosed on Schedule 3.15, the Company has not
been advised by any attorney representing it that there are any "loss
contingencies" (as defined in Statement of Financial Accounting Standards No. 5
issued by the Financial Accounting Standards Board in March 1975 ("FASB No.
5")), which would be required by FASB No. 5 to be disclosed or accrued in
financial statements of the Company, were such financial statements prepared as
of the date hereof.
3.16 Permits. The Company and each Subsidiary have all
material Permits necessary for the conduct of their business as presently
conducted, and all such Permits are listed on Schedule 3.16.
3.17 Compliance with Laws. Except as set forth on Schedule
3.17, the Company and each of the Subsidiaries is in compliance in all material
respects with, and none of them have received any notice that it or the plants
or properties where the Business is conducted are in any material respect in
violation of, or have any material liability under, any Laws, Orders or Permits.
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3.18 Contracts, etc. Set forth on Schedule 3.18
are complete and accurate lists of the following:
(a) all bonus, incentive compensation, profit-sharing,
retirement, group insurance, death benefit or other fringe benefit
plans, deferred compensation and post-termination obligations or trust
agreements of the Company and its Subsidiaries in effect or under which
any amounts remain unpaid on the date hereof or which are to become
effective after the date hereof;
(b) each Contract defining the terms on which indebtedness for
borrowed money, or other indebtedness evidenced by bonds, notes or
similar instruments, of the Company and its Subsidiaries or guarantees
thereof by the Company or any Subsidiary have been or may be issued;
(c) all Contracts, oral or written, to which the Company or
any Subsidiary is a party and in which any Affiliate of the Company has
any interest, direct or indirect;
(d) all bank accounts, safe deposit boxes, money market funds,
certificates of deposit, stocks, bonds, notes and other securities in
the name of or owned or controlled by the Company or any Subsidiary,
and the names of the persons having access thereto;
(e) all powers of attorney granted by the Company or any
Subsidiary to others;
(f) all other Contracts to which the Company or any Subsidiary
is a party, except ones that are terminable on less than 60 days'
notice, or do not involve aggregate remaining payments or unpaid
obligations of $25,000 or more, and except purchase orders for
inventory and sales orders for products and services of the Company or
any Subsidiary entered into in the ordinary course of business.
Except as set forth on Schedule 3.18, none of the Company's or any Subsidiary's
rights under any Contract listed on Schedule 3.18 will be materially adversely
affected by the transactions contemplated hereby. Except as set forth on
Schedule 3.18 neither the Company nor any Subsidiary has given or received
notice of, or has any knowledge of, any material default or claimed or purported
or alleged default of a material nature on the part of the Company, its
Subsidiaries or any other party in the performance or
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payment of any obligation to be performed or paid under any Contract listed on
Schedule 3.18.
3.19 Governmental and other Consents, etc. No Consent or
Permit of any Person is required to be obtained by the Company, any of its
Subsidiaries or the Sellers in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby, or
to carry on the Company's business as now being conducted, other than (a) under
Contracts being terminated at or before Closing which are identified on Schedule
3.19, and (b) the Consents and Permits specified in Schedule 3.19, all of which
have been obtained.
3.20 Employee Benefits; ERISA. (a) Schedule 3.20 hereto lists
every Employee Benefit Plan (as hereinafter defined) of the Company. True and
complete copies of each Employee Benefit Plan listed on Schedule 3.20 hereto
including: (i) all trust agreements or other funding arrangements for such
Employee Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such Employee Benefit Plans or amendments, all
determination letters, rulings, opinion letters, information letters, or
advisory opinions issued by the Internal Revenue Service or the Department of
Labor, (iii) annual reports or returns, audited or unaudited financial
statements, actuarial valuations and reports, and summary annual reports
prepared for any Employee Benefit Plan with respect to the most recent three
plan years, and (iv) the most recent summary plan descriptions (and any material
modifications thereto) have heretofore been furnished to Buyer.
(b) Except as disclosed in Schedule 3.20, all of the
Employee Benefit Plans and the related trusts subject to ERISA and the Code
(as hereinafter defined) comply with and have been administered in compliance
with (i) the provisions of ERISA, (ii) all provisions of the Code relating to
qualification and tax exemption under Code Sections 401(a) and 501(a) or
otherwise applicable to secure intended tax consequences, (iii) all applicable
state or federal securities laws, and (iv) all other applicable laws, rules,
regulations or ordinances, and the Company has not received any notice from
any Governmental Authority (as hereinafter defined) questioning or challenging
such compliance. All available government approvals for the Employee Benefit
Plans have been obtained, including, but not limited to, timely determination
letters on the qualification of the ERISA Plans (as hereinafter defined) and
tax exemption of related trusts, as applicable under the Code, and all such
government approvals continue in full force and effect. No
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event has occurred which will or could give rise to disqualification of any such
plan or loss of intended tax consequences under the Code or to any tax under
Section 501 of the Code. No event has occurred for which, and to the knowledge
of the Sellers, no condition or set of circumstances exist under which the
Company or any tax-qualified Employee Benefit Plan could be subject to any
liability under ERISA Section 502(i) or Code Section 4975.
(c) Except as disclosed in Schedule 3.20, no oral or written
representation or communication with respect to any aspect of the Employee
Benefit Plans has been made to employees of the Company prior to the date hereof
which is not in accordance with the written or otherwise preexisting terms and
provisions of such plans. Neither the Company nor any administrator or fiduciary
of any Employee Benefit Plan (or any agent of any of the foregoing) has engaged
in any transaction, or acted or failed to act in any manner which could subject
the Company or Buyer to any direct or indirect liability (by indemnity or
otherwise) for breach of any fiduciary, co-fiduciary or other duty under ERISA.
There are no unresolved claims or disputes under the terms of, or in connection
with, the Employee Benefit Plans other than claims for benefits which are
payable in the ordinary course of business and no action, proceeding,
prosecution, inquiry, hearing or investigation has been commenced with respect
to any Employee Benefit Plan.
(d) Except as disclosed in Schedule 3.20, all Employee Benefit
Plan documents and annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports, and summary plan
descriptions issued with respect to the Employee Benefit Plans are correct and
complete, have been timely filed with the Internal Revenue Service, the
Department of Labor or distributed to participants under the Employee Benefit
Plans (as required by law), and there have been no changes in the information
set forth therein.
(e) Except as disclosed in Schedule 3.20, no "party in
interest" (as defined in ERISA Section 3(14)) or "disqualified person" (as
defined in Code Section 4975(e)(2)) of any Employee Benefit Plan has engaged in
any nonexempt "prohibited transaction" (described in Code Section 4975(c) or
ERISA Section 406).
(f) The Company has never maintained or contributed to an
ERISA Plan which is a "defined benefit plan," as defined in ERISA Section 3(35).
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(g) All contributions, premiums and payments required to be
made under the terms of any Employee Benefit Plan for all plan years ending on
or prior to the Closing Date have been made or will be made prior to the Closing
Date.
(h) The Company has never maintained an Employee Benefit Plan
that provides welfare benefits (as defined in ERISA Section 3(1)) to employees
after retirement or other separation of service except to the extent required
under Part 6 of Title I of ERISA or Code Section 4980B or their successors. No
tax under Code Sections 4980B or 5000 has been incurred with respect to any
Employee Benefit Plan and no circumstances exist which could give rise to such
taxes.
(i) Except as disclosed on Schedule 3.20, neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby will (i) entitle any current or former employee
or director of the Company to severance pay, unemployment compensation, golden
parachute or any payment contingent upon a change in control or ownership of the
Company, (ii) increase or enhance any benefits payable under any Employee
Benefit Plan, or (iii) accelerate the time of payment or vesting, or increase
the amount, of any compensation due to any such employee or former employee.
(j) Except as otherwise noted in Schedule 3.20, all
individuals participating in (or eligible to participate in) any Employee
Benefit Plan maintained (or contributed to) by the Company are common-law
employees.
(k) Neither the Company nor any member of a group of trades or
businesses under common control (as defined in ERISA Sections 4001(a)(14) and
4001(b)(1)) with the Company have ever had an "obligation to contribute" (as
defined in ERISA Section 4212) to a "multiemployer plan" (as defined in ERISA
Sections 4001(a)(3) and 3(37)(A)).
(l) All liabilities arising out of or related to Employee
Benefit Plans of the Company are reflected on the Financial Statements in
accordance with GAAP.
(m) When used in this Section 3.20, the words and phrases set
forth below shall have the following meanings:
"Employee Benefit Plan" means collectively, each pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other incentive plan, any other
written or unwritten employee program, arrangement, agreement or
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understanding, whether arrived at through collective bargaining or otherwise,
any medical, vision, dental or other health plan, any life insurance plan, or
any other employee benefit plan or fringe benefit plan, including, without
limitation, any "employee benefit plan," as that term is defined in Section 3(3)
of ERISA currently or previously adopted, maintained by, sponsored in whole or
in part by, or contributed to by the Company for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries are eligible to
participate. Employee Benefit Plans include (but are not limited to) "employee
benefit plans" as defined in Section 3(3) of ERISA and any other plan, fund,
policy, program, practice, custom, understanding or arrangement providing
compensation or other benefits to any current or former officer or employee or
director or independent contractor of the Company, or any dependent or
beneficiary thereof, maintained by the Company or under which the Company has
any obligation or liability, whether or not they are or are intended to be (i)
covered or qualified under the Code, ERISA or any other applicable law, (ii)
written or oral, (iii) funding or unfunded, (iv) actual or contingent, or (v)
generally available to any or all employees (or former employees) of the Company
(or their beneficiaries or dependents), including, without limitation, all
incentive, bonus, deferred compensation, flexible spending accounts, cafeteria
plans, vacation, holiday, medical, disability, share purchase or other similar
plans, policies, programs, practices or arrangements.
"ERISA Plan" means any Employee Benefit Plan which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, or an
"employee welfare benefit plan" as that term is defined in Section 3(1) of
ERISA.
3.21 Labor and Employment Matters.
(a) Schedule 3.21 contains a correct and complete list of (i)
all employees whose direct annual compensation exceeds $50,000 and (ii) a list
of all other employees in each job classification employed by the Company in the
Business. Except as disclosed in Schedule 3.21, the employment of all employees
is terminable at will by the Company without any penalty or severance obligation
of any kind on the part of the Company.
(b) Except as set forth in Schedule 3.21, the Company has not
received any notice prior to the date of this Agreement that any of the officers
or other senior
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level personnel of the Company, will terminate or contemplates terminating his
or her employment currently or at any time before or within 60 days after the
Closing Date or will otherwise not be available to the Buyer, or not agree to
employment by the Buyer, on the same terms and conditions as his or her current
employment by the Company on the date hereof.
(c) Within the twelve months prior to the date of this
Agreement, the Company has not with respect to the Business effectuated (i) a
"plant closing," as defined in the Worker Adjustment and Retraining Notification
Act (the "WARN Act"); or (ii) a "mass layoff" (as defined in the WARN Act); and
the Company has not engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local Law.
3.22 Environmental Matters. Except as set forth in Schedule
3.22:
(a) There is no Environmental Litigation (or any Litigation
involving Environmental Matters against any Person whose Liability, or any
portion thereof, for Environmental Matters or under any Environmental Laws the
Company has or may have retained or assumed, contractually or by operation of
Law) pending or threatened with respect to (i) the ownership, use, condition or
operation of the Business, the Leased Real Property or any other asset of the
Company or any asset formerly held for use or sale by the Company or any of its
predecessors or any of its current or former Subsidiaries, or (ii) any violation
or alleged violation of or Liability or alleged Liability under any
Environmental Law or any Order related to Environmental Matters. Neither the
Company nor its predecessors nor its current or former Subsidiaries is in
violation of (i) any Environmental Law, or (ii) any Order related to
Environmental Matters, in connection with its ownership, use or operation of the
Business, the Leased Real Property or any other asset of the Company or any
asset formerly held for use or sale by the Company or any of its predecessors or
any of its current or former Subsidiaries. There are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, any Environmental Matter, that are reasonably likely to form the
basis of any Environmental Litigation (or any Litigation involving Environmental
Matters against any Person whose Liability (or any portion thereof) for
Environmental Matters or under any Environmental Laws the Company has or may
have retained or assumed, contractually or by operation of Law. Neither the
Company nor any of its predecessors or any of its current or former Subsidiaries
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nor to the knowledge of the Sellers anyone else has used any assets or premises
of the Company or any of its predecessors or any of its current or former
Subsidiaries or any part thereof for the handling, treatment, storage, or
disposal of any Hazardous Substances other than ordinary consumer or office
materials used in ordinary consumer or office quantities in full compliance with
all applicable Laws.
(b) No release, discharge, spillage or disposal of any
Hazardous Substances has occurred or is occurring at any assets owned, leased,
operated or managed, directly or indirectly, by the Company or any of its
predecessors or any of its current or former Subsidiaries or any part thereof
while or before such assets were owned, leased, operated or managed, directly or
indirectly, by the Company.
(c) No soil or water in, under or adjacent to any assets
owned, leased, operated or managed, directly or indirectly, by the Company or
assets formerly held for use or sale by the Company or, in either case, any of
its predecessors or any of its current or former Subsidiaries has been
contaminated by any Hazardous Substance while or before such assets were owned,
leased, operated or managed, directly or indirectly, by the Company or any of
its predecessors or any of its current or former Subsidiaries.
(d) All waste containing any Hazardous Substances generated,
used, handled, stored, treated or disposed of (directly or indirectly) by the
Company or any of its predecessors or any of its current or former Subsidiaries
has been released or disposed of in compliance with all applicable reporting
requirements under any Environmental Laws and there is no Environmental
Litigation with respect to any such release or disposal.
(e) All underground tanks and other underground storage
facilities presently located at any real property owned, leased, operated or
managed by the Company or any of its predecessors or any of its current or
former Subsidiaries are listed together with the capacity and contents (former
and current) of each such tank or facility in Schedule 3.22 None of such
underground tanks or facilities is leaking or has ever leaked, and neither the
Company nor any of its predecessors or any of its current or former Subsidiaries
holds any responsibility or liability for any underground tanks or underground
facilities at any other location.
(f) All waste, hazardous or otherwise, has been removed from
all real property of the Company and its predecessors and its current and former
Subsidiaries.
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(g) The Company and each of its predecessors and each of its
current or former Subsidiaries has complied with all applicable reporting
requirements under all Environmental Laws concerning the disposal or release of
Hazardous Substances and neither the Company nor any of its predecessors or any
of its current or former Subsidiaries has made any such reports concerning the
operations or activities of the Company or any of its predecessors or any of its
current or former Subsidiaries.
(h) No building or other Improvement or any real property
owned, leased, operated or managed, directly or indirectly, by the Company
contains any asbestos-containing materials.
(i) No on-site or off-site locations where the Company or any
of its predecessors or any of its current or former Subsidiaries has stored,
disposed or arranged for the disposal of Hazardous Substances are listed on any
federal, state or local government lists of abandoned disposal sites or sites
where Hazardous Substances have or may have occurred, and no polychlorinated
biphenyls ("PCB's") are used or stored on or in any real property owned, leased,
operated or managed, directly or indirectly, by the Company or any of its
predecessors or any of its current or former Subsidiaries.
(j) Schedule 3.22 contains a correct and complete list of all
environmental site assessments and other studies relating to the investigation
of the possibility of the presence or existence of any Environmental Matter with
respect to the Company, the Business, any assets owned, leased, operated or
managed, directly or indirectly, by the Company or any of its predecessors or
any of its current or former Subsidiaries, and the Company has previously
delivered to Buyer a correct and complete copy of each such assessment and
study.
Notwithstanding anything to the contrary in the foregoing, the representations
and warranties made in this Section 3.22 are made only to the knowledge of the
Sellers, to the extent such representations and warranties relate to (i)
predecessors of either the Company or any Subsidiary, (ii) acts or omissions of
Persons other than the Company or a Subsidiary, or any of their respective
Affiliates, or (iii) the use or operation of Leased Real Property by owners,
lessees or other occupants prior to the use or occupancy thereof by the Company
or a Subsidiary, or any conditions or circumstances that arose during such prior
use or occupancy.
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3.23 Prospective Changes. Except as described in Schedule
3.23, to the Sellers' knowledge, there has been no event or occurrence relating
to the Company, the Business, relations with employees, relations with customers
or suppliers, or governmental actions or Laws directly applicable to the
Business, which can reasonably be expected to have a Material Adverse Effect.
3.24 Compliance with the Immigration Reform and Control Act.
Neither the Company nor any of its Subsidiaries has failed to comply with or
violated the terms and provisions of the Immigration Reform and Control Act of
1986, and all related regulations promulgated thereunder (the "Immigration
Laws") in any way which can reasonably be expected to result in the imposition
of a fine or penalty on it. With respect to each employee (as defined in Section
274a.1(f) of Title 8, Code of Federal Regulations) of the Company or any
Subsidiary for whom compliance with the Immigration Laws by an employer (as
defined in Section 274a.1(g) of Title 8, Code of Federal Regulations) is
required, the Company has supplied, to Buyer such employee's Form I-9
(Employment Eligibility Verification Form) and all other records, documents or
other papers which are retained with the Form I-9 by the employer pursuant to
the Immigration Laws. The Company has never been the subject of any inspection
or investigation relating to its compliance with or violation of the Immigration
Laws, nor has it been warned, fined or otherwise penalized by reason of any
failure to comply with the Immigration Laws, nor is any such proceeding pending
or threatened.
3.25 Interested Transactions. Except as set forth in Schedule
3.25, the Company is not a party to any Contract or other transaction with any
Affiliate of the Company, any Related Person of any Affiliate of the Company
(other than as a shareholder or employee of the Company), or any Person in which
any of the foregoing (individually or in the aggregate) beneficially or legally
owns, directly or indirectly, five percent (5%) or more of the equity or voting
interests. Except as described in Schedule 3.25, none of the Persons (other than
BT and its Affiliates) described in the first sentence of this Section 3.25
owns, or during the last three years has owned, directly or indirectly,
beneficially or legally, (individually or in the aggregate) five percent (5%) or
more of the equity or voting interests of any Person that competes with the
Company or the Business.
3.26 Product Warranty. Schedule 3.26 sets forth
all written, express warranties and guarantees made by the
Company, any Subsidiary or the Business.
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3.27 Absence of Certain Developments. (a) Except as set forth
on Schedule 3.27 or as contemplated by this Agreement, since January 1, 1997, or
with respect to (ii) and (iii) below, since January 1, 1996, the Company has
conducted the Business only in the ordinary course and has not:
(i) made or committed to make any capital expenditures or
capital additions or betterments in excess of an aggregate of $35,000;
(ii) encountered any labor union organizing activity with
respect to non-union workers, had any actual or, to the knowledge of the
Sellers, threatened employee strikes, or, to the knowledge of the Sellers, any
material work stoppages, slowdown or lock-outs related to any labor union
organizing activity or any actual or, to the knowledge of the Sellers,
threatened employee strikes;
(iii) instituted any litigation, action or proceeding before
any court, governmental body or arbitration tribunal relating to it or its
property, except for litigation, actions or proceedings instituted in the
ordinary course of business and consistent with prior practice;
(iv) acquired, or agreed 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;
(v) increased, or agreed or promised to increase, the
compensation of any officer, employee or agent of the Company, directly or
indirectly, including by means of any bonus, pension plan, profit sharing,
deferred compensation, savings, insurance, retirement, or any other employee
benefit plan, except in the ordinary courses of business and consistent with
prior practice;
(vi) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except liabilities or
obligations incurred in the ordinary course of business and consistent with
prior practice;
(vii) declared or paid any dividends or made any other
distributions to its stockholders or holders of Warrants as such; or made any
redemption or repurchase of the Company's capital stock or Warrants;
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(viii) paid, discharged or settled any liabilities of the
Company for Taxes, other than payments required for the current year that are
not in dispute;
(ix) prepaid any principal of its long-term debt;
(x) amended its Certificate of Incorporation or by-laws;
(xi) canceled or compromised any material debt or claim or
waived or released any material right, except for adjustments or settlements
made in the ordinary course of business consistent with past practice; or
(xii) made a loan to any person other than with respect to
accounts receivable created by unaffiliated third parties in the ordinary course
of business.
3.28 Products Liability of the Business. Except as set forth
on Schedule 3.28, the Company has received no written claim, and, to the
knowledge of the Sellers, no claim has been threatened or alleged, that (a) any
line or category of products of the Business manufactured, designed, sold or
delivered by the Company, any predecessor or any of its current or former
Subsidiaries contains any general defect in manufacture or design, or (b) any
product of the Company, any predecessor or any of its current or former
Subsidiaries, has failed in any manner that has resulted in any personal injury
(including death) or property damage.
3.29 Federal Food, Drug and Cosmetic Act. Except as set forth
in Schedule 3.29, no products manufactured, assembled, sold or distributed by
the Company or any Subsidiary are "medical devices" for the purposes of the
federal Food, Drug and Cosmetic Act, as amended (the "FFD&CA"). Except as set
forth on Schedule 3.29, since January 1, 1994, neither the Company nor any
Subsidiary has filed any medical device reports under the FFD&CA or any similar
state law. Except as set forth on Schedule 3.29, to the knowledge of the
Sellers, neither the United States Food and Drug Administration (the "FDA") nor
any similar state agency (i) has commenced or is considering any investigation
or inquiry concerning any product of the Company, any predecessor or any current
or former Subsidiary or (ii) is considering any rulemaking or other proceeding
that would subject any product of the Business to the FFD&CA or any similar
state law or to any requirement that the FDA or any state agency approve any
product of the Business as a condition of its sale in the manner that such
product is currently sold in the ordinary course of the Business. Except as set
forth on Schedule 3.29, to the knowledge of
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the Sellers, the products of the Business currently sold by the Company
substantially conform to all applicable codes and standards imposed by any
federal or state governmental agency and to accepted codes and standards
relating to the manufacture, distribution and sale of medical devices in the
United States.
3.30 Clearance Letters. Attached to Schedule 3.30 are copies
of all Section 510(k) clearance letters from the FDA issued to the Company, any
Subsidiary or any predecessor ("510(k)s") and a copy of any applications or
registrations currently pending before the FDA. Except as set forth on Schedule
3.30 the Company or the relevant Subsidiary owns the entire unencumbered right,
title and interest in and to all such 510(k)s free of all Liens other than
Permitted Liens, and no rights or licenses to or from others have been granted
with respect to such 510(k)s. The Company has taken all action reasonably
necessary to protect its rights with respect to the 510(k)s. All of the 510(k)s
are valid, subsisting and in full force and effect. The Company and each
Subsidiary own, or possess the right to use, all the rights 510(k) authorization
provides and as necessary for the conduct of the Company's business as now
conducted, without any known infringement on, violation of or conflict with the
rights of others.
3.31 Absence of Questionable Payments. Neither the Company,
any Subsidiary or, to the Sellers' knowledge any predecessor thereof, or any
director, officer, agent, employee or other Person acting on behalf of the
Company or any Subsidiary, or to the Sellers' knowledge, any predecessor
thereof, has used, or authorized the use of, any corporate or other funds for
unlawful contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds in violation of any
applicable laws, rules or regulations relating to foreign trade practices.
Neither the Company nor any predecessor or any current or former Subsidiary or
any current director, officer, agent, employee or other Person acting on behalf
of any of such Persons, has accepted or received any unlawful contributions,
payments, gifts or expenditures.
3.32 BT Net Worth. BT has a net worth, as determined in
accordance with GAAP consistently applied, of at least $50,000,000.
3.33 Disclosure. The Company has made available or caused to
be made available to Buyer complete and correct copies of all agreements,
instruments and documents set
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forth in the Schedules hereto or underlying a disclosure set forth in the
Schedules hereto.
3.34 Statements True and Correct. No representation or
warranty made by the Sellers with respect to themselves or the Company in any of
the Transaction Documents or in any certificate of the Sellers or the Company
delivered pursuant thereto contains or will contain any untrue statement of
material fact or omits or will omit to state a material fact necessary to make
the statements contained therein not misleading in light of the circumstances in
which made.
4. Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Sellers as follows:
4.1 Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power to own, operate and lease its properties
and assets, to carry on its business as now being conducted and to enter into
this Agreement and perform its obligations hereunder.
4.2 Authorization. The execution, delivery and performance of
this Agreement by the Buyer have been duly authorized by all requisite corporate
action and no other corporate proceedings on the part of the Buyer are necessary
to approve the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Buyer, and this Agreement
constitutes the valid and binding obligation of the Buyer, enforceable in
accordance with the terms hereof, except as enforceability thereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws of general
application affecting the enforceability of creditors' rights generally or by
general principles of equity.
4.3 No Conflict. Neither the execution nor the delivery of
this Agreement by the Buyer nor the consummation of the transactions
contemplated hereby will conflict with or result in any violation of or
constitute a breach of or default under any terms, conditions or provisions of
its organizational documents or by-laws or any Law or Contract by which it is
bound or to which it or its assets are subject.
4.4 Buyer's Investigation. The Buyer has conducted
inspections of the properties and financial and other records of the Company
and its Subsidiaries and other
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due diligence with respect to the Company and its Subsidiaries and the Business.
The Buyer has had an opportunity to ask questions of the Sellers and the
officers of the Company and its Subsidiaries relating to their business,
management and financial affairs, which questions were answered to the Buyer's
satisfaction, and to examine all books and records of the Company and its
Subsidiaries. Based on such inspections and inquiries, the Buyer has no
knowledge of any inaccuracies or breaches in the Sellers' representations and
warranties set forth in this Agreement. For purposes of this Section 4.4, the
Buyer's knowledge means the actual knowledge of Xxxxxxxx X. Xxxxxx, Xxxx X.
Xxxxx, Xx. and Xxxxx X. Xxxxxxxx, Xx.
4.5 Investment Intent. The Buyer is aware that the Shares it
is purchasing hereunder are not registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any state securities law. The Buyer is
acquiring the Shares for investment purposes only, for its own account not with
a view to, or in connection with, the public distribution thereof in violation
of the Securities Act.
4.6 Governmental and other Consents, etc. No Consent or Permit
of any Person is required to be obtained by the Buyer in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
4.7 Litigation, etc. There is no pending or, to the Buyer's
knowledge, threatened Action or governmental investigation against or involving
the Buyer that would, if adversely determined, materially and adversely affect
the transactions contemplated hereby.
4.8 No Implied Warranties. It is understood and agreed that
none of the Sellers are making, and none have made, any representation or
warranty of any kind, express or implied, to the Buyer except for those
specifically provided in Sections 3 and 6.1 of this Agreement. Except for the
matters which are expressly covered by such representations and warranties, and
upon which the Buyer intends to rely, the Buyer is relying on its own
investigation and analysis in entering into this Agreement and consummating the
transactions contemplated hereby. Without limiting the generality of the
foregoing, and notwithstanding any otherwise express representations and
warranties made by the Sellers in Sections 3 and 6.1 hereof, the Sellers make no
representation or warranty to the Buyer regarding (a) any projections, estimates
or budgets heretofore delivered or made available to the Buyer of future
revenues, expenses or
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expenditures, future results of operations (or any component thereof), future
cash flows or future financial condition (or any component thereof) of the
Company or any Subsidiary or the future business operations of the Company or
any Subsidiary; or (b) any other information or documents made available to the
Buyer or its counsel, accountants or advisors with respect to the Company or any
Subsidiary or the business or operations of the Company or any Subsidiary,
except as expressly set forth in or furnished pursuant to Sections 3 and 6.1
hereof.
5. Indemnification.
5.1 Obligation of the Sellers. Subject to the limitations set
forth in Section , each of the Sellers shall indemnify and save harmless the
Buyer and its successors and assigns from, against, for and in respect of:
(a) any Loss incurred or required to be paid which arises out
of or relates to (i) a state of facts as a result of which any
representation or warranty made by such Seller in this Agreement is
untrue, inaccurate or misleading in any respect, or (ii) the breach of
any covenant or agreement made by the Seller in this Agreement or any
Transaction Document;
(b) any Loss incurred or required to be paid which arises out
of or relates to any deficiency in Taxes, and penalties and interest
relating thereto, assessed in connection with the Company's deductions
for amortization of the Non-Competition and Consulting Agreement dated
as of May 19, 1992 between the Company and Xxxxxxx X. Xxxxxx, as
reported in all Tax Returns of the Company subsequent to the date of
such NonCompetition Agreement;
(c) any Loss incurred or required to be paid which arises out
of or relates to the Company's failure to have in effect, on or at any
time prior to the Closing Date, a "Device Distributor and Device
Manufacturer License" or any other license required under Chapter 431
of the Texas Health and Safety Code; and
(d) any Litigation Expense incurred or required to be paid in
connection with any Action incident to any matter indemnified against
in paragraph (a), (b) or (c).
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5.2 Obligation of the Buyer. Subject to the limitations set
forth in Section 5.3, the Buyer shall indemnify and save harmless the Sellers
from, against, for and in respect of:
(a) any Loss incurred or required to be paid which arises out
of or relates to (i) a state of facts as a result of which any
representation or warranty made by the Buyer in this Agreement is
untrue, inaccurate or misleading in any respect, provided that the
Sellers did not know that such representation or warranty was untrue,
inaccurate or misleading in any respect on the Closing Date, or (ii)
the breach of any covenant or agreement made by the Buyer in this
Agreement or in any Transaction Document;
(b) any liability arising out of a violation by the Buyer or
the Company after the Closing of the Worker Adjustment and Retraining
Notification Act or any state or local "plant closing" or similar laws
in connection with the transactions contemplated hereby; and
(c) any Litigation Expense incurred or required to be paid in
connection with any Action incident to any matter indemnified against
in Section 5.2 (a) or (b) above.
5.3 Limitation on Indemnity. The indemnification obligations
of the parties under Sections 5.1 and 5.2 shall be subject to the following:
(a) Time Bar. (i) The Buyer shall not be entitled to make any
claim against the Sellers for any Loss or Litigation Expense unless a notice of
such claim shall have been given to the Agent or the Sellers in accordance with
Section 11.1 hereof
(A) on or before the first (1st) anniversary of the Closing
Date, in the case of any claim for Loss arising under Section 5.1(a)(i)
hereof (and any Litigation Expense under Section 5.1(d) hereof related
to such Loss), other than a claim relating to the untruth, inaccuracy
or misleading nature of a representation or the breach of a warranty,
covenant or agreement made by the Sellers with respect to the matters
set forth in Sections 3.2, 3.3 and 3.5 of this Agreement; and
(B) on or before the first (1st) anniversary of the date on
which a covenant or agreement is to be
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performed hereunder or under any other Transaction Document, in the
case of any claim for Loss arising under Section 5.1(a)(ii) hereof (and
any Litigation Expense under Section 5.1(d) hereof related to such
Loss); and
(C) on or before the expiration of the applicable statute of
limitations, in the case of (1) any claim for Loss arising under
Section 5.1(a)(i) hereof (and any Litigation Expense under Section
5.1(d) hereof related to such Loss) because of the untruth, inaccuracy
or misleading nature of a representation or the breach of a warranty,
covenant or agreement made by any Seller in Sections 3.2, 3.3 or 3.5 of
this Agreement, and (2) any claim for Loss arising under Section 5.1(b)
or Section 5.1(c) hereof (and any Litigation Expense under Section
5.1(d) hereof related to such Loss).
(ii) The Sellers shall not be entitled to make a claim against
the Buyer for any Loss or Litigation Expense relating thereto unless a notice of
such claim shall have been given to the Buyer in accordance with Section 11.1
hereof
(A) on or before the first (1st) anniversary of the Closing
Date in the case of any claim for Loss arising under Section 5.2(a)(i)
hereof (and any Litigation Expense under Section 5.2(c) hereof related
to such Loss), or
(B) on or before the first (1st) anniversary of the date on
which a covenant or agreement is to be performed hereunder or under any
other Transaction Document, in the case of any claim for Loss arising
under Section 5.2(a)(ii) hereof (and any Litigation Expense under
Section 5.2(c) hereof related to such Loss); and
(C) prior to the expiration of the applicable statute of
limitations, in the case of any claim for Loss arising under Section
5.2(b) hereof (and any Litigation Expense under Section 5.2(c) hereof
related to such Loss).
(b) Deductible. (i) The Buyer shall be entitled to indemnity
for Losses or Litigation Expenses with respect to any claim arising under
Section 5.1(a)(i) or Section 5.1(c) only to the extent that the aggregate amount
of its Losses and Litigation Expenses with respect to all claims arising under
such Sections exceeds $100,000, provided that
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the limitations of this Section 5.3(b) shall not apply to indemnity with respect
to Losses arising out of or relating to a state of facts as a result of which a
representation or warranty set forth in Sections 3.2, 3.3 or 3.5 is untrue or
inaccurate.
(c) Limitations on Damages. Any indemnifiable claim with
respect to any breach or nonperformance by any party of a representation,
warranty, covenant or agreement shall be limited to the amount of direct, actual
damages sustained by the indemnified party by reason of such breach or
nonperformance. No party or its Affiliates shall in any event be liable to any
other party or its Affiliates for any consequential damages. Each party further
agrees that it shall not seek punitive damages as to any matter relating to this
Agreement or the transactions contemplated by it. The foregoing limitations with
respect to consequential and punitive damages shall not be deemed to prevent
indemnification of a party to this Agreement for consequential or punitive
damages sought by a Third Party from the party seeking indemnification.
(d) Escrow. The Sellers have deposited certain funds with the
Escrow Agent pursuant to the Escrow Agreement, to be held as security for
certain Losses indemnifiable pursuant to Section 5.1(b) and Litigation Expenses
incurred in connection with such Losses.
(e) Maximum Liability. (i) The aggregate liability of the
Sellers in connection with all claims for Loss or Litigation Expense hereunder,
to the extent in excess of the deductible provided for in Section 5.3(b), shall
not exceed $1,000,000. (ii) BT shall not be liable for indemnification under
Section 5.1 in an amount in excess of $750,000 and the other Sellers shall not
be liable for indemnification under Section 5.1 in an amount in excess of
$250,000. (iii) With respect to each item of Loss or Litigation Expense
indemnifiable by the Sellers, the liability of BT shall be limited to 75%
thereof and the liability of the other Sellers shall be limited to 25% thereof
(and the liability of such other Sellers shall be joint and several as to such
25%). Subject, however, to Section 5.3(h), the limitations on a Seller's
liability in (i) and (ii) above shall not apply to any Loss or Litigation
Expense that results from, arises out of or relates to a state of facts as a
result of which any representation or warranty of a Seller set forth in Section
3.2, 3.3 or 3.5 is untrue or inaccurate, or any Loss (or Litigation Expense
relating thereto) indemnifiable under Section 5.1(b).
(f) Insurance Proceeds; Recoveries; Tax Benefits.
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An indemnified party's indemnifiable Loss hereunder shall be deemed reduced by
the amount of any insurance proceeds, indemnities or recoveries from third
parties recoverable by such indemnified party with respect to such Loss, and by
the value of any tax benefits to the indemnified party from such Loss, and shall
be deemed increased by income Taxes payable by the indemnified party with
respect to the indemnity payments to be received in connection with such Loss.
(g) Exclusivity. The sole and exclusive remedy of the parties
hereto for any claim resulting from a breach by any of the parties hereto of its
respective representations, warranties, covenants or agreements made herein or
the failure by any party to perform its respective obligations under this
Agreement shall be a claim under this Section 5. The parties hereby waive any
provision of law to the extent that it would limit or restrict the agreement
contained in this Section 5.3(g).
(h) Several Liability of the Sellers. Notwithstanding anything
to the contrary herein, the representations and warranties made in Section 3.2,
3.3 and 3.4 of this Agreement shall be deemed made by each Seller severally, not
jointly, and no Seller shall have any liability under this Section 5 with
respect to any inaccuracy in such representations or breach of such warranties
that relates to the title, ownership, capacity, rights, obligations or any
action or inaction of any other Seller. Neither Section 5.3(e) nor this Section
5.3(h) shall require the Buyer to proceed against all of the Sellers or any of
them in connection with any claim for indemnification; all such claims may be
asserted independently, subject to the limitations on any Seller's liability set
forth herein.
5.4 Notice and Defense of Claims. The obligations and
liabilities of each indemnifying party hereunder with respect to claims
resulting from the assertion of liability by another party or third parties
shall be subject to the following terms and conditions:
(a) Notice. The indemnified party shall give prompt written
notice to the indemnifying party of any claim or event known to it which does or
may give rise to a claim by the indemnified party against the indemnifying party
based on this Agreement, stating the nature and basis of said claims or events
and the amounts thereof, to the extent known, and in the case of any Action
brought by any third party, a copy of any documentation with respect thereto
promptly after any such documentation is received by the indemnified party. The
claims notice may be amended on one
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or more occasions with respect to the amount or description of the asserted
liability or the Loss at any time prior to final resolution of the obligation to
indemnify relating to the asserted liability or the Loss. If a claims notice is
not provided promptly as required by this Section 5.4(a), the indemnified party
nonetheless shall be entitled to indemnification by the indemnifying party to
the extent that the indemnifying party has not established that it has been
prejudiced by such late receipt of the claims notice.
(b) Third Party Claims or Actions. (i) In the event any Action
is brought by any third party against an indemnified party, with respect to
which an indemnifying party may have liability under this Agreement, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, to assume the defense thereof, with independent counsel
reasonably satisfactory to such indemnified party.
(ii) If the indemnifying parties elect to assume the defense
of any such third-party Action, the indemnifying parties shall have the sole
right to contest, pay, settle or compromise any such Action on such terms and
conditions as the indemnifying parties may determine; provided, however, that
the indemnifying party shall not without the indemnified party's written consent
(which shall not be unreasonably withheld) settle or compromise any Action or
consent to the entry of any judgment that does not include an unconditional term
releasing the indemnified party from all liability in respect of such asserted
liability. After notice from the indemnifying parties to such indemnified party
of the indemnifying parties' election so to assume the defense thereof, the
indemnifying parties shall not be liable to such indemnified party for any legal
or other expenses incurred after the date of receipt of such notice by the
indemnified party. The indemnified party shall have the right to employ its own
counsel and such counsel may participate in such Action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party, when
and as incurred.
(iii) If the indemnifying parties do not elect to assume the
defense of any such Action, the indemnified party may engage counsel selected by
the indemnified party to assume the defense and may contest and pay, and, with
the consent of the indemnifying parties (which shall not be unreasonably
withheld), may settle or compromise any such claim. The fees and disbursements
of such counsel shall constitute Litigation Expense hereunder.
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(iv) The indemnified party and the indemnifying parties, as
the case may be, shall be kept fully informed of such Action at all stages
thereof whether or not such party is represented by its own counsel.
(v) The Sellers have elected to defend the Action currently
pending in which certain federal income tax liabilities have been asserted
against the Company, for which the Buyer is entitled to indemnification under
Section 5.1(b). The Sellers retain the sole right to defend, contest, pay,
settle or compromise such Action or any subsequent or related Action involving
such federal income tax liabilities. The Buyer will cause the Company, after the
Closing, to provide all cooperation and assistance reasonably required for the
proper and adequate defense of such Action or any such subsequent or related
Action.
5.5 Cooperation. The parties hereto agree to render to each
other such assistance as they may reasonably require of each other and to
cooperate in good faith with each other in order to ensure the proper and
adequate defense of any Action brought by any third party.
5.6 Confidentiality. The parties agree to make reasonable
efforts to preserve in full the confidentiality of all proprietary or
confidential business records and the attorney-client and work product
privileges. In connection therewith, each party agrees that: (a) it will make
reasonable efforts, in any Action in which it has assumed or participated in the
defense, to avoid production of confidential business records; and (b) all
communications between any party hereto and counsel responsible for or
participating in the defense of any Action shall, to the extent possible, be
made so as to preserve any applicable attorney-client or work-product privilege.
5.7 Survival of Representations and Warranties. All covenants,
representations and warranties and agreements made in this Agreement or in any
Exhibit, Schedule, certificate or document delivered herewith or at the Closing
shall survive the execution and delivery thereof and the Closing hereunder;
provided, however, that any claim for the breach of any such covenant,
representation, warranty or agreement shall be subject to the applicable
limitations set forth in this Section 5.
6. Other Agreements of the Parties.
6.1 Brokers. Each party represents and warrants that all
actions by it relative to this Agreement and the transactions contemplated
hereby were carried out in such
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manner as not to give rise to any valid claim for finders fees, brokerage
commissions or similar payments.
6.2 Elections. Neither the Buyer nor any Affiliate of the
Buyer shall make any election pursuant to the Code that is inconsistent with any
election made by the Company, its Subsidiaries or any affiliate for any prior
year which would materially adversely affect the Sellers, the Company or its
Subsidiaries, or file any amended tax return of the Company or its Subsidiaries
so as to materially adversely affect the Company, its Subsidiaries or the
Sellers as to any taxable year ending on or before the Closing Date, without the
prior written consent of the Sellers.
6.3 No Modifications. (a) For a period of two (2) years after
the Closing, the Buyer shall not amend the Certificate of Incorporation or
By-Laws of the Company or any Subsidiary in any way that would, relative to the
provisions thereof in effect prior to the Closing, tend to increase the
liabilities of directors and officers prior to the Closing, or impair, lessen or
reduce the provisions thereof relating to indemnification of directors and
officers, or (b) in the event any such amendment is made during such two-year
period, the Buyer shall provide indemnification to such directors and officers,
with respect any claim arising during such period, comparable in all material
respects to that which would have been available to them had such amendment not
been made; provided that, in no event shall the Buyer's obligations under this
Section 6.3, in the aggregate, exceed $100,000 in the aggregate for all
directors and officers of the Company and its Subsidiaries.
6.4 Post-Closing Cooperation. After the Closing Date, the
Sellers and the Buyer shall provide each other timely access to information and
reasonable assistance and cooperation, during normal business hours, necessary
for the preparation of any tax returns or other filings or conducting or
responding to tax audit or other proceedings. All pertinent books of account,
papers, and records shall be retained by the parties until either the statute of
limitations to which they relate has expired, by lapse of time or by the terms
of any agreement for extension of the period of limitations. If at any time any
records of the Company or any Subsidiary relating to the period prior to the
Closing Date are to be destroyed, the Buyer shall use its best efforts to so
notify the Agent at least thirty (30) days prior to such destruction and, at the
request of the Agent, shall deliver such records to the Agent.
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7. Further Assurances. Following the Closing, at the request
of any party, the other parties shall execute and deliver such further
documents, and take such other action, as may be necessary or appropriate to
give full effect to the transactions contemplated by this Agreement, including
without limitation to confirm the sale, transfer, assignment and conveyance of
the Shares hereunder and to vest in the Buyer all the Sellers' right, title and
interest in and to the Shares or as may otherwise be required to carry out the
provisions of this Agreement.
8. Conditions Precedent.
8.1 Conditions to Obligations of the Sellers. All obligations
of the Sellers under this Agreement are subject to the fulfillment, unless
waived in writing at the sole option of the Sellers, at or prior to the Closing
Date, of each of the following conditions precedent:
(a) Buyer's Representations and Warranties. The
representations and warranties of the Buyer herein contained shall be
true on and as of the Closing Date with the same force and effect as
though made on and as of said date, except as affected by the
transactions contemplated or permitted by this Agreement.
(b) Buyer's Covenants. The Buyer shall have performed all its
obligations and agreements and complied with all its covenants
contained in this Agreement to be performed and complied with by the
Buyer at or prior to the Closing Date.
(c) Buyer's Closing Certificate. The Sellers shall have
received a certificate of the Buyer, executed on behalf of the Buyer by
any duly authorized representative of the Buyer, dated the Closing
Date, in form and substance reasonably satisfactory to the Sellers,
certifying as to the fulfillment of the matters mentioned in paragraphs
(a) and (b) of this Section 8.1.
(d) Buyer's Counsel's Opinion. Xxxxxx & Bird, counsel to the
Buyer, shall have delivered to the Sellers an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to counsel
for the Sellers, as to the matters set forth in Exhibit C-1 hereto. In
giving such opinion such counsel may rely, as to matters of fact, upon
certificates of duly authorized representatives of the Buyer and, as to
matters of law, upon the opinions of other counsel
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reasonably satisfactory to the Sellers; provided that copies thereof
are delivered to the Sellers at or prior to the Closing.
(e) Consents and Approvals. The Sellers and the Company shall
have received all approvals, consents, authorizations and waivers
listed on Schedule 3.19.
(f) Other Documents. The Sellers shall have received all
certificates, corporate documents, evidence of authorization, and other
agreements, instruments and documents in respect of any aspect or
consequence of the transactions contemplated by this Agreement as the
Agent may reasonably request, all of which shall be in form and
substance reasonably satisfactory to the Agent.
(g) No Litigation. No Action before any court or any
governmental or regulatory authority shall have been commenced and
still be pending, no investigation by any governmental or regulatory
authority shall have been commenced and still be pending, and no Action
by any governmental or regulatory authority shall have been threatened
against the Sellers or the Buyer seeking to restrain, prevent or change
the transactions contemplated hereby or questioning the validity or
legality of any of such transactions.
8.2 Conditions to the Obligations of the Buyer. All
obligations of the Buyer under this Agreement are subject to the fulfillment,
unless waived in writing at the sole option of the Buyer, at or prior to the
Closing Date, of each of the following conditions precedent:
(a) Sellers' Representations and Warranties. The
representations and warranties of the Sellers herein contained shall be
true on and as of the Closing Date with the same force and effect as
though made on and as of said date, except as affected by transactions
contemplated or permitted by this Agreement.
(b) Sellers' Covenants. The Sellers shall have performed all
of the obligations and agreements and complied with all of the
covenants contained in this Agreement to be performed and complied with
by the Sellers on or prior to the Closing Date.
(c) Sellers' Closing Certificate. The Buyer shall have
received one or more certificates of the Sellers, dated the Closing
Date, in form and substance reasonably satisfactory to the Buyer,
certifying as to
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the fulfillment of the matters mentioned in paragraphs (a) and (b) of
this Section 8.2.
(d) Consents. The Buyer shall have received evidence,
satisfactory to the Buyer and its counsel, that all of the Consents
disclosed in Schedule 3.19 have been duly obtained.
(e) Sellers' Counsel's Opinion. Xxxxx & Xxx Xxxxxx and Xxx &
Xxxxx Incorporated, each counsel for certain of the Sellers, shall have
delivered to the Buyer opinions, dated the Closing Date, in form and
substance reasonably satisfactory to counsel for the Buyer, as to the
matters set forth in Exhibit C-2 hereto. In giving such opinions such
counsel may rely, as to matters of fact, upon certificates of the
Sellers, and, as to matters of law, upon the opinion of other counsel
reasonably satisfactory to the Buyer, provided that copies thereof are
delivered to the Buyer prior to the Closing.
(f) Escrow Agreement. The parties thereto shall have duly
executed and delivered the Escrow Agreement.
(g) Terminations. The Buyer shall have received evidence
reasonably satisfactory to it of the termination of the Contracts and
rights listed on Schedule 8.2.
(h) Other Documents. The Buyer shall have received all
certificates, corporate documents, evidence of authorization, and other
agreements, instruments and documents in respect of any aspect or
consequence of the transactions contemplated by this Agreement as the
Buyer may reasonably request, all of which shall be in form and
substance reasonably satisfactory to the Buyer.
(i) No Litigation. No Action before any court or any
governmental or regulatory authority shall have been commenced and
still be pending, no investigation by any governmental or regulatory
authority shall have been commenced and still be pending, and no Action
by any governmental or regulatory authority shall have been threatened
against the Sellers or the Buyer seeking to restrain, prevent or change
the transactions contemplated hereby or questioning the validity or
legality of any of such transactions.
9. Termination.
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9.1 Termination. (a) This Agreement may be terminated prior
to the Closing and the transactions contemplated hereby may be abandoned:
(i) by the Sellers, upon written notice from the Agent to the
Buyer, if the Closing has not taken place on or before February 28,
1997, other than by reason of a default hereunder of the Sellers;
(ii) by the Buyer, upon written notice to the Agent, if the
Closing has not taken place on or before February 28, 1997, other than
by reason of a default hereunder of the Buyer; or
(iii) by either the Buyer or the Sellers, upon written notice
to the other(s), if there shall be in effect a non-appealable order of
a court of competent jurisdiction permanently prohibiting the
consummation of the transactions contemplated hereby; or
(iv) by the Buyer if any condemnation, destruction or loss due
to fire or other casualty from the date hereof until the Closing Date
is such that the Business is materially interrupted or curtailed or the
assets of the Company are materially affected; provided that if the
Buyer nonetheless elects to close, the Sellers shall remit or assign
the Sellers' rights or the Company's rights to all net condemnation
proceeds or third party insurance proceeds to the Buyer, and the
Sellers shall have no further liability or obligations with respect to
such condemnation, destruction or loss.
9.2 Status of Agreement after Termination. Upon any
termination of this Agreement pursuant to Section 9.1, this Agreement shall
become void and shall have no effect, except that such termination shall not
affect any liability any party may have for any loss, damage, liability, cost or
expense alleged to have been incurred by another as a consequence of the party's
default under this Agreement.
10. Arbitration.
(a) Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules of Commercial Arbitration of the American Arbitration
Association (the "Rules"), and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, arbitration of disputes (i) arising under the
Escrow
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Agreement shall be resolved as provided in the Escrow Agreement; and (ii)
commenced as provided in the Escrow Agreement shall be resolved as provided in
the Escrow Agreement.
(b) The arbitration tribunal shall consist of three
arbitrators, of whom one shall be nominated by Buyer, one shall be nominated by
the Seller, and the third, who shall serve as Chairman, shall be chosen by the
two party-nominated arbitrators or, in the event the party-nominated arbitrators
are unable to designate the third arbitrator, by the American Arbitration
Association.
(c) Any party to this Agreement is authorized to initiate
arbitration by providing written notice of arbitration, in accordance with the
Rules, to the Administrator of the American Arbitration Association and to the
party or parties against whom a claim is being made.
(d) The place of the arbitration shall be New York, New York.
(e) The award of the arbitrators shall be final and binding.
The parties waive any right to appeal the award, to the extent a right to appeal
may be lawfully waived. Each party retains the right to seek judicial
assistance: (i) to compel arbitration; (ii) to obtain interim measures of
protection pending arbitration; and (iii) to enforce any decision of the
arbitrators, including the final award.
11. General Provisions.
11.1 Notices. All waivers, notices, consents, demands,
requests, approvals and other communications which are required or may be given
hereunder shall be in writing and shall be deemed to have been duly given when
hand-delivered, sent by telecopier, delivered by national overnight courier
service, or 72 hours after mailed by certified first class mail, return receipt
requested, postage prepaid, as follows:
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(a) If to BT, to it at:
BT Capital Partners, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
fax: (000) 000-0000
with a copy to:
Xxxxx & Xxx Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
fax: (000) 000-0000
(b) If to Xxxxx X. Xxxxx, individually or as
Agent, or any of the other Sellers (other
than BT), to:
Xxxxx X. Xxxxx
Prism Enterprises, Inc.
0000 Xxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
fax: (000) 000-0000
with a copy to:
Xxx & Xxxxx Incorporated
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000-0000
Attention: Xxx X. Xxxxxxx III, Esq.
fax: (000) 000-0000
(b) If to the Buyer, to it at:
Xxxxx Enterprises, Inc.
One Atlantic Center, Suite 5000
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxx
fax: (000) 000-0000
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with a copy to:
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
fax: (000) 000-0000
or to such other address or addresses as may be designated by a party by written
notice to the other parties hereto.
11.2 Costs; Expenses. Whether or not the transactions are
consummated, the Buyer will bear its own costs and expenses incurred in
negotiating this Agreement and consummating the transactions contemplated
hereby, and the Sellers will bear the costs and expenses incurred by the Sellers
in negotiating this Agreement and consummating the transactions contemplated
hereby.
11.3 Binding Effect, Benefits. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns; provided, however, that nothing in this Agreement shall
be construed to confer any rights, remedies, obligations or liabilities on any
person other than the parties hereto or their respective successors and assigns.
11.4 Public Announcements. The parties hereto shall advise and
consult with each other prior to the making of any public announcement with
respect to the transactions contemplated hereby and, in any event, shall not
issue any press releases, make any public announcement or statement without the
consent of the other parties, except for filings or registrations which may be
required or except as otherwise required by Law.
11.5 Entire Agreement; Amendment. This Agreement, together
with its Schedules and Exhibits, embodies the entire agreement and understanding
of the parties hereto and supersedes any prior agreement or understanding
between the parties with respect to the subject matter of this Agreement. This
Agreement cannot be amended or terminated orally, but only by a writing duly
making specific reference to this Agreement executed by the parties.
11.6 Counterparts. 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.
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11.7 Headings. Headings of the Sections and paragraphs in
this Agreement are for reference purposes only and shall not be deemed to have
any substantive effect.
11.8 Assignment. This Agreement may not be assigned by either
party without the prior written consent of the other. Notwithstanding the
foregoing, the Buyer may, without the consent of the other parties hereto,
assign and delegate its obligations and rights hereunder or any part thereof to
(i) any affiliated company of the Buyer and (ii) any lender of the Buyer as
collateral, but no such assignment shall relieve the Buyer of its obligations
hereunder.
11.9 Applicable Law. This Agreement shall be governed and
construed and interpreted in accordance with the laws of the State of New York,
without regard to choice of laws principles, and the federal laws of the United
States of America.
11.10 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validly or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
11.11 Waivers. Except as otherwise provided herein, no delay
on the part of a Seller or the Buyer in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
a Seller or the Buyer of any right, power or privilege hereunder operate as a
waiver of any other right, power or privilege hereunder, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
11.12 Miscellaneous. The rights and remedies of the Buyer and
the Sellers hereunder are cumulative and not exclusive of any rights or remedies
they would otherwise have.
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IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Stock Purchase Agreement as of the date first set forth above.
BUYER:
XXXXX ENTERPRISES, INC.
By:/s/ X. X. Xxxxxx
-----------------------------
Xxxxxxxx X. Xxxxxx,
President
SELLERS:
THE XXXXX AND XXXXXXX BT CAPITAL PARTNERS, INC.
XXXXX FAMILY FOUNDATION
By: /s/ Xxxxxx Xxxxxxxxxx
----------------------
By: /s/ Xxxxx X. Xxxxx Title:
-----------------------
Xxxxx X. Xxxxx, President
/s/ Xxxxx X. Xxxxx
--------------------------
THE XXXXX AND XXXXXXX Xxxxx X. Xxxxx
XXXXX LIMITED PARTNERSHIP
By: /s/ Xxxxx X. Xxxxx /s/ Xxxx X. Xxxxx
------------------------ --------------------------
Xxxxx X. Xxxxx, general Xxxx X. Xxxxx
partner
/s/ Xxxxxxxxxxx X. Xxxxx
--------------------------
Xxxxxxxxxxx X. Xxxxx
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DISCLOSURE SCHEDULES
Schedule 3.1 Organization; Good Standing
Schedule 3.3 Title to Shares; Other Rights
Schedule 3.4 No Conflict
Schedule 3.5 Capitalization
Schedule 3.7 Financial Statements
Schedule 3.8 Absence of Undisclosed Liabilities
Schedule 3.10 Taxes
Schedule 3.11 Good Title; No Liens
Schedule 3.12 Leases
Schedule 3.13 Insurance
Schedule 3.14 Patents; Trademarks, etc.
Schedule 3.15 Litigation, etc.
Schedule 3.16 Permits
Schedule 3.17 Compliance with Laws
Schedule 3.18 Contracts, etc.
Schedule 3.19 Governmental and Other Consents, etc.
Schedule 3.20 Employee Benefits; ERISA
Schedule 3.21 Labor and Employment Matters
Schedule 3.22 Environmental Matters
Schedule 3.25 Interested Transactions
Schedule 3.26 Product Warranty
Schedule 3.27 Absence of Certain Developments
Schedule 3.28 Products Liability of the Business
Schedule 3.29 Federal Food, Drug and Cosmetics Act
Schedule 3.30 Clearance Letters
Schedule 8.2 Termination of Contracts
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EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Allocation of Purchase Price
Exhibit C-1 Form of Xxxxxx & Bird
Opinion
Exhibit C-2 Opinions of Xxxxx &
XxxXxxxxx and Xxx &
Xxxxx Incorporated
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