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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of October 15,
1999, is by and among ALTERNATIVE MATERIALS TECHNOLOGY, a Nevada corporation
("BUYER"), U.S. CELLULOSE CO., a California corporation (the "COMPANY"), and
XXXXXXXXX XXXXXXXXX ("SELLER"). Hereafter, the Company and Seller are
collectively referred to herein as the "SELLER PARTIES."
RECITALS
1. The Company is engaged in the business of development, production and
sale of water-based and other coatings to industrial users (the "BUSINESS").
2. Seller owns twenty-six thousand two hundred fifty (26,250) shares of the
Company's capital stock, par value One Dollar ($1.00) per share, which
constitutes one hundred percent (100%) of the issued and outstanding shares of
capital stock of the Company (the "SHARES").
3. Buyer desires to purchase the Shares from Seller, and Seller desires to
sell the Shares to Purchaser, on the terms and conditions set forth in this
Agreement.
4. Seller desires that the Company's Employee Severance Plan (defined
below) is guaranteed upon sale of the Shares to Buyer.
5. Buyer is a wholly-owned subsidiary of POLYMER SOLUTIONS, INC., ("PSI") a
Nevada corporation.
NOW, THEREFORE, the parties hereto, in consideration of the agreement and
covenants contained herein and subject to the satisfaction of the conditions set
forth herein, hereby agree as follows:
ARTICLE I -- DEFINITIONS
1.1 "ACQUISITION DOCUMENTS" shall have the meaning set forth in Section 7.1.
1.2 "AFFILIATE" shall mean any other Person, directly or indirectly,
controlling or controlled by or under direct common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the meanings "controlling" and
"controlled" shall have meanings correlative to the foregoing.
1.3 "AGREEMENT" shall mean this Stock Purchase Agreement, by and among Buyer,
the Company and Seller, together with any and all exhibits and schedules hereto.
1.4 "AGREEMENT NOT TO COMPETE" shall have the meaning set forth in Section
6.1(n).
1.5 "AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in Section
4.1(e).
1.6 "BUSINESS" shall have the meaning set forth in Recital A.
1.7 "BUYER" shall mean Alternative Materials Technology, a California
corporation.
1.8 "BUYER'S DOCUMENTS" shall have the meaning set forth in Section 4.2(b).
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1.9 "BUYER'S LOSS" shall have the meaning set forth in Section 7.2.
1.10 "CLOSING" shall have the meaning set forth in Section 3.1.
1.11 "CLOSING DATE" shall have the meaning set forth in Section 3.1.
1.12 "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985.
1.13 "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, together with any and all rules and regulations promulgated thereunder.
1.14 "COMPANY" shall mean U.S. Cellulose Co., a California corporation.
1.15 "COMPANY INFORMATION" shall have the meaning set forth in Section 5.1.
1.16 "COMPANY'S INTELLECTUAL PROPERTY RIGHTS" shall have the meaning set forth
in Section 4.1(k)(2).
1.17 "COMPANY'S LOSS" shall have the meaning set forth in Section 7.3.
1.18 "CONSULTANTS" shall have the meaning set forth in Section 4.1(o).
1.19 "CONTRACTS" shall have the meaning set forth in Section 4.1(k).
1.20 "DOLLARS" or "$" shall mean the lawful currency of the United States of
America.
1.21 "EMPLOYEE PLANS" shall mean any "employee benefit plan", as that term is
defined in Section 3(3) of ERISA, as well as any other oral or written, formal
or informal plan, program, contract or arrangement involving direct or indirect
compensation, under which the Company or any other entity has any present or
future obligations or liability on behalf of the Company's present employees or
former employees or their dependents or beneficiaries, including without
limitation, each retirement, pension, profit sharing, thrift, savings, employee
stock ownership, cash or deferred arrangement, cafeteria, dependent care,
multiple employer, multi-employer or other similar plan, program or arrangement,
each deferred or incentive compensation, bonus, stock option, employee stock
purchase, phantom stock or stock appreciation right plan, program or
arrangement, each other program providing payment or reimbursement for or of
medical, dental or visual care, psychiatric counseling, or vacation, sick,
personal, disability or severance pay and each other "fringe benefit" plan,
program or arrangement.
1.22 "EMPLOYEES" shall have the meaning set forth in Section 4.1(o).
1.23 "ENVIRONMENTAL LAWS" shall mean any federal, state, county, district, or
local law, regulation, guideline, policy, code, ordinance, rule, resolution,
order or decree regulating the presence, use, generation, handling, storage,
treatment, transport, recycling, manufacture, maintaining, deposit, spill,
discharge, release, decontamination, cleanup, remediation, removal,
encapsulation, enclosure, abatement or disposal of or response to any Hazardous
Material, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq., the
Toxic Substance Control Act, 15 U.S.C. Sections 2601, et seq., the Clean Water
Act, 33 U.S.C. Sections 1251 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. Sections 1801 et seq., the Clean Air Act, 42 U.S.C. Sections 7401
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et seq., the California Hazardous Waste Control Act, California Health and
Safety Code Sections 25100 et seq., the California Hazardous Substance Account
Act, California Health and Safety Code Sections 25330 et seq., the California
Safe Drinking Water and Toxic Enforcement Act, California Health and Safety Code
Sections 25249.5 et seq., California Health and Safety Code Sections 25280, et
seq. (Underground Storage of Hazardous Substances), the California Hazardous
Waste Management Act, California Health and Safety Code Sections 25170.1 et
seq., California Health and Safety Code Sections 25501 et seq. (Hazardous
Materials Release Response Plans and Inventory), the California Xxxxxx-Cologne
Water Quality Control Act, California Water Code Sections 13000 et seq.,
California Health and Safety Code Section 26316, and any other federal, state,
county, district, or local statute, law, regulation, guideline, policy, code,
ordinance, rule, resolution, order or decree relating to, or imposing liability
or standards of conduct concerning any Hazardous Material, as now or at any time
hereafter in effect, all as amended or hereafter amended.
1.24 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.25 "FINANCIAL STATEMENTS" shall have the meaning set forth in Section 4.1(e).
1.26 "GAAP" shall mean generally accepted accounting principles in the United
States as applied on a basis consistent with past practices of the entity or
entities in question.
1.27 "GOVERNMENTAL AUTHORITY" shall mean any federal, state, local, foreign or
other governmental, quasi-governmental, regulatory or administrative authority
or agency, including, without limitation, those created by statute, regulation,
ordinance, decree or otherwise.
1.28 "GOVERNMENT APPROVAL" shall mean any approval, authorization, consent,
order, waiver, permit, notice, filing, license, registration or other action
required to be obtained from or issued or granted by, filed with or taken by any
Governmental Authority in order to enable the parties legally to effect the
transactions contemplated by this Agreement, the performance of all material
obligations pursuant to this Agreement or the consummation of the transactions
contemplated hereby.
1.29 "HAZARDOUS MATERIAL" shall mean petroleum, any petroleum product or
fraction thereof, friable asbestos, or any material containing asbestos, any
substance, product, waste or other material of any nature whatsoever which is or
becomes regulated or listed by any local, state or federal governmental
authority, entity or agency pursuant to any Environmental Law, including,
without limitation, any substance defined as "hazardous substances," "hazardous
materials" or "toxic materials" by any Environmental Law, any substance,
product, waste or other material of any nature whatsoever which may give rise to
any liability under any Environmental Law and any substance, product, waste or
other material otherwise defined as a Hazardous Material that gives rise to
liability under any statutory or common law theory based on negligence,
trespass, intentional tort, nuisance or strict liability or under any reported
decisions of the California state or federal court.
1.30 "INCOME TAX RETURNS" shall have the meaning set forth in Section 4.1(i)(2).
1.31 "INDEMNITEE" shall have the meaning set forth in Section 7.4(a).
1.32 "INDEMNITOR" shall have the meaning set forth in Section 7.4(a).
1.33 "INTELLECTUAL PROPERTY" shall mean any and all interests in registered and
unregistered trademarks, trademark registrations and applications therefor,
registered and unregistered service marks, service xxxx registrations and
applications therefor, registered and unregistered trade names
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and applications therefor, registered and unregistered copyrights, copyright
registrations and applications therefor and patents and patent right
applications, inventions, processes, technical information, software, licenses,
designs, logos, customer and supplier lists and formulae owned by the Company.
1.34 "IRS" shall mean the United States Internal Revenue Service.
1.35 "LIABILITY" shall mean any debt, liability, commitment or obligation of any
kind, character or nature whatsoever, whether known or unknown, secured or
unsecured, accrued, fixed, absolute, potential, contingent, or otherwise, and
whether due or to become due.
1.36 "LICENSES" shall have the meaning set forth in Section 4.1(r).
1.37 "LIEN" shall mean all liens, security interests or agreements, mortgages,
deeds of trust, claims, charges, pledges, indentures, rights of first refusal,
options, restrictions, easements, rights of way, escrows, conditions, sale
agreements or other title retention agreements and any other encumbrance of
whatever kind or nature, recorded or unrecorded, and shall include, without
limitation, when used with respect to shares of capital stock or other
securities of a corporation, proxies, voting agreements, voting trusts,
subscriptions, preemption rights and any other limitations on such stock or
securities (other than any such limitations arising due to the absence of the
registration or qualification of such stock or securities under applicable
securities laws).
1.38 "LOSS" or "LOSSES" shall have the meaning set forth in Section 7.4(a).
1.39 "MATERIAL CONTRACT" shall mean any contract or agreement, whether written
or oral, to which the Company is a party that involves an amount greater than
Five Thousand Dollars ($5,000) (other than customer contracts or purchase orders
in the ordinary course of business), any customer contract providing for
revenues to the Company of more than Two Thousand Five Hundred Dollars ($2,500)
per month, any employment contract or employee benefit plan or agreement, any
guarantee, any noncompetition agreement or any other contract which is otherwise
material to the Company.
1.40 "PERSON" shall mean any individual, corporation, limited liability company,
association, partnership, trust, unincorporated association, business or other
legal entity.
1.41 "PLAN" shall have the meaning set forth in Section 4.1(p).
1.42 "PURCHASE PRICE" shall have the meaning set forth in Section 2.2.
1.43 "RELEASE" shall mean any release, issuance, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment or into or out of any property,
including the movement of Hazardous Substances through or in the air, soil,
surface water, groundwater or property other than in compliance with all
Environmental Laws.
1.44 "REPRESENTATIVES" shall have the meaning set forth in Section 5.1.
1.45 "REQUIRED CONSENT" shall mean any consent, waiver or approval required to
be obtained from or granted by any person or entity other than a Governmental
Authority in order to enable (a) the parties to effect the transactions
contemplated by this Agreement, to perform their respective obligations pursuant
to the terms of this Agreement or to consummate the transactions contemplated by
this Agreement, and/or (b) the Company to continue to enjoy the use, benefit and
possession of
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its assets and properties and all the rights and benefits relating thereto
immediately after the Closing without violating, breaching, conflicting with or
giving rise to any right of termination or acceleration or the imposition of any
Lien under the terms of any contract, lease, mortgage, deed of trust, indenture,
license or other agreement to which the Company is a party or subject or by
which it or its assets or properties are bound or affected.
1.46 "SAN XXXX PROPERTIES" shall mean the real properties located at the
following addresses, (a) 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 which is
owned by Seller and leased to the Company (the "520 XXXXXXX PROPERTY"), and (b)
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 which is leased by the Company
from a third-party (the "530 PARROTT PROPERTY").
1.47 "SELLER" shall mean Xxxxxxxxx Xxxxxxxxx.
1.48 "SELLER DOCUMENTS" shall have the meaning set forth in Section 4.1(c).
1.49 "SELLER PARTIES" shall mean, collectively, the Company and Seller.
1.50 "SEVERANCE PLAN" shall mean the U.S. CELLULOSE CO. EMPLOYEE SEVERANCE PLAN,
dated as of the Closing Date [October 15, 1999].
1.51 "SHARES" shall have the meaning set forth in Recital B.
1.52 "SUNSET DATE" shall have the meaning set forth in Section 3.1.
1.53 "TAXES" or "TAX" or "TAXABLE" shall have the meaning set forth in Section
4.1(i)(1). "TAX RETURNS" shall mean any return, estimate, report, information
return or other document (including any related or supporting information) filed
or required to be filed with any Governmental Authority in connection with the
determination, assessment or collection of any Tax or the administration of any
laws, regulations or administrative requirements relating to any Tax.
1.54 "TAX RETURNS" shall have the meaning set forth in Section 5.3.
1.55 "THIRD PARTY CLAIM" shall have the meaning set forth in Section 7.4(c).
1.56 "UNAUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.1(e).
ARTICLE II -- PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares. Subject to the terms and conditions set forth
in this Agreement and on the basis of and in reliance upon the representations,
warranties, obligations, covenants and agreements set forth in this Agreement,
on the Closing Date, Seller shall convey, sell, transfer, assign and deliver to
Buyer, and Buyer shall purchase and accept from Seller, all of Seller's right,
title and interest in and to the Shares.
2.2 Purchase Price. The total purchase price to be paid to Seller by Buyer for
the Shares acquired pursuant to this Agreement (the "PURCHASE PRICE") shall be
One Million Dollars ($1,000,000).
2.3 Payment of Purchase Price. The Purchase Price shall be paid by Buyer to
Seller in cash or by wire-transfer of immediately available funds on the Closing
Date.
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ARTICLE III -- CLOSING
3.1 Closing. Subject to the satisfaction of all of the conditions set forth in
Article VI of this Agreement (any or all of which may be waived in writing by
the respective parties whose performance is conditioned upon satisfaction of
such conditions), the purchase and sale of the Shares shall be consummated at a
closing (the "CLOSING") to be held on such date and at such time that the Seller
Parties and Buyer shall mutually agree (the "CLOSING DATE"); provided, that the
Closing Date shall occur on or before September 30, 1999 (the "SUNSET DATE"),
unless such date is extended upon the mutual agreement of the Seller Parties and
Buyer. The Closing shall take place jointly at the offices of Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxxx LLP, 0000 X Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxx, 00000
and Xxxxxx Law Firm LLP, 0000 Xx Xxxxxx Xxxx, Xxxxxxx Xxxx, Xxxxxxxxxx,
00000-0000, or at such other location as may be agreed to by Buyer and the
Seller Parties.
3.2 Deliveries by Seller. At the Closing, Seller shall deliver to Buyer the
following, in form and substance reasonably satisfactory to Buyer:
(1) All of the documents, instruments and opinions required to be
delivered or cause to be delivered by any of the Seller Parties pursuant to
Section 6.1.
(2) The original stock certificate or stock certificates representing the
Shares registered in the name of Seller, duly endorsed by Seller for transfer or
accompanied by a separate assignment of the Shares duly executed by Seller. On
submission of such certificate or certificates to the Company for transfer, the
Company shall issue to Buyer a certificate representing the Shares registered in
the name of Buyer.
(3) All Government Approvals and Required Consents, which shall be in form
and substance reasonably satisfactory to Buyer.
(4) A certificate signed by Seller and by the President of the Company
stating that: (i) the representations and warranties of the Seller Parties set
forth in this Agreement are true and correct as of the Closing Date; (ii) each
of the Seller Parties has performed and complied with all agreements and
conditions required by this Agreement to be performed and complied with by such
party prior to or as of the Closing Date; and (iii) all Government Approvals and
Required Consents have been obtained and any other action required to be taken
by any Seller Party or any other party in connection with the execution and
delivery of this Agreement by the Seller Parties or the performance by each of
the Seller Parties of its respective obligations under this Agreement.
(5) Certificates of incumbency for every officer of the Company executing
any document, certificate or other instrument pursuant to this Agreement.
(6) Resignations of all directors and officers of the Company, effective
as of the Closing Date.
(7) Original Articles of Incorporation, Bylaws, stock ledger, minute book
and all other organizational documents of the Company, as amended to date.
(8) Such other documents and items as Buyer may reasonably require in
order to close the transactions contemplated by this Agreement.
3.3 Deliveries by Buyer. At the Closing, Buyer shall deliver the following
items and documents, in form and substance reasonably satisfactory to Seller:
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(1) All of the documents, instruments and opinions required to be
delivered or caused to be delivered by the Buyer pursuant to Section 6.2.
(2) Cash in the amount equal to the Purchase Price.
(3) A certificate signed by the President of Buyer stating that: (i) the
representations and warranties of Buyer set forth in this Agreement are true and
correct as of the Closing Date; (ii) Buyer has performed and complied with all
agreements and conditions required by this Agreement to be performed and
complied with by such party prior to or as of the Closing Date; and (iii) all
Government Approvals and Required Consents have been obtained and any other
action required to be taken by Buyer or any other party in connection with the
execution and delivery of this Agreement by Buyer or the performance by Buyer of
its obligations under this Agreement.
(4) Certificates of incumbency for every officer of Buyer executing any
document, certificate or other instrument pursuant to this Agreement.
(5) Such other documents and items as the Seller Parties may reasonably
require in order to close the transactions contemplated by this Agreement.
3.4 Further Assurances. After the Closing Date, each party shall each prepare,
sign and deliver, at the expense of such party, such further instruments of
conveyance, sale, assignment or transfer and shall take or cause to be taken
such other or further action as any party shall reasonably request of any other
party at any time or from time to time in order to perfect, confirm or evidence
the transfer of title in and to the Shares to Buyer or otherwise to consummate,
in any other manner, the terms and provisions of this Agreement.
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Seller Parties. Seller and the
Company hereby jointly and severally represent and warrant to Buyer as follows:
(1) Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and has all requisite power and authority to conduct the Business in
all of the locations where the Business is now conducted and to own, lease and
operate its assets, as now conducted, owned, leased and operated. The Company is
not qualified or licensed, and is not required to qualify or obtain a license,
to do business in any other jurisdiction other than the State of California. The
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, association, partnership, limited liability company or
other business entity. The Company has delivered to Seller a true, correct and
complete copy of the articles of incorporation and bylaws of the Company, each
as amended to date.
(2) Capitalization; Title to Shares. The authorized capital stock of the
Company consists of seventy-five thousand (75,000) shares of capital stock, One
Dollar ($1.00) per share par value. The Shares constitute all of the issued and
outstanding shares of capital stock of the Company. All of the Shares are duly
authorized, validly issued, fully paid and nonassessable, and are owned by
Seller, beneficially and of record, free and clear of all Liens and are free of
any preemptive rights. To the best knowledge of the Seller Parties, after
diligent inquiry and investigation, the issuance and sale of all of the Shares
are in full compliance with all applicable federal and state securities laws. To
the best knowledge of the Seller Parties, after diligent inquiry and
investigation, there are no outstanding subscriptions, options, warrants,
rights, convertible debt or equity, or other agreements
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or commitments obligating the Company to issue shares of its capital stock or
other securities, or to enter into or grant any such agreement or commitment.
(3) Authority of the Seller Parties. Each of the Seller Parties has the
full legal right, power, capacity and authority to execute and deliver this
Agreement and all other agreements, instruments and documents to be executed and
delivered by such Seller Party in connection herewith (the "SELLER DOCUMENTS"),
and to carry out its respective obligations hereunder and thereunder.
(4) Authorization and Noncontravention.
(1) This Agreement has been, and by the Closing each other Seller
Document shall have been, duly authorized, executed and delivered by the Seller
Parties that are parties thereto and constitutes or shall constitute by the
Closing, the valid, legal and binding obligations of each of the Seller Parties
that are parties thereto, enforceable in accordance with their respective terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or affecting creditors'
rights, and to general equity principles (including, without limitation,
concepts of mutuality, reasonableness, good faith and fair dealing, and the
possible unavailability of specific performance or injunctive relief, regardless
of whether the issue of enforceability is considered in a proceeding in equity
or law). All corporate acts or other proceedings required to be taken by the
Company to authorize it to carry out this Agreement and the transactions
contemplated herein have been properly taken, and with respect to the other
Seller Documents shall have been properly taken by the Closing.
(2) The execution and delivery by the Seller Parties of this
Agreement do not, and with respect to the other Seller Documents to be executed
and delivered by the Seller Parties in connection herewith shall not, and the
performance of obligations pursuant hereto or thereto and the consummation of
the transactions contemplated hereby and thereby shall not, (a) violate any
provisions of the articles of incorporation or bylaws of the Company or (b)
subject only to obtaining the Government Approvals and Required Consents
described in SECTIONS 6.1(f) and 6.2(e), (A) violate any provision of, conflict
with, or result in the termination or acceleration of, or entitle any party to
accelerate (whether after the filing of notice or lapse of time or both) any
material obligation under, or result in the creation or imposition of any Lien
upon the Shares pursuant to any provision of, any mortgage, lien, lease,
agreement, license, contract, deed of trust, indenture or instrument, or (B)
violate any law, regulation, order, arbitration award, judgment, or decree, in
each case to which any Seller Party is a party or is subject or by which any
property of any Seller Party is bound or affected.
(5) Financial Statements. The Company has provided access to its financial
information to certified public accountants engaged by Buyer, who have prepared
an audited balance sheet of the Company as of March 31, 1999, the audited
Statement of Operations and Changes in Retained Earnings for the Company for the
nine month period ended March 31, 1999 and the audited Statement of Cash Flows
for the Company for the nine month period ended March 31, 1999, together with
the notes to such financial statements and the related opinion of its certified
public accountants (the "AUDITED FINANCIAL STATEMENTS"), and the Company has
furnished to Buyer true, correct and complete copies of the unaudited balance
sheet of the Company as of September 30, 1999, and the unaudited statement of
operations for the Company for the periods then ended (the "UNAUDITED FINANCIAL
STATEMENTS"). The Audited Financial Statements and the Unaudited Financial
Statements are collectively referred to herein as the "Financial Statements." To
the best knowledge of the Seller Parties, after diligent inquiry and
investigation, the Unaudited Financial Statements have been prepared in
accordance with the books and records of the Company and GAAP and fairly present
the financial position of the Company for the dates and periods covered. The
Company has no outstanding indebtedness or guaranties and is not a party to any
mortgage, deed of trust,
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indenture, loan or credit agreement or similar instrument or agreement, and owns
no notes receivable and has no material liability (whether accrued, absolute,
contingent or otherwise) which is not shown or provided for in the Financial
Statements. The Company owns good and marketable title to all assets reflected
on the Audited Financial Statements or acquired after the date thereof (except
for assets sold in the ordinary course of business consistent with past
practices or as otherwise permitted pursuant to the express terms of this
Agreement), free and clear of all Liens. To the best knowledge of the Seller
Parties, after diligent inquiry and investigation, the Company is not liable
upon or with respect to or obligated in any other way to provide funds in
respect of or to guarantee or assume in any manner any debt, obligation, or
dividend of any other person which is not set forth in the Audited Financial
Statements.
(6) Undisclosed Liabilities. There is no material debt, claim, liability
or obligation that is in an amount equal to or exceeding Five Thousand Dollars
($5,000) with respect to the Company and/or the Business, liquidated,
unliquidated, accrued, absolute, contingent or otherwise, that is not identified
in the Audited Financial Statements or otherwise disclosed in any of the
disclosure schedules attached to this Agreement.
(7) Personal Property, Inventory and Equipment. SCHEDULE 4.1(G) lists all
of the inventory owned by the Company and the tangible personal property owned
by the Company or with respect to which the Company is a lessee which, singly or
in the aggregate with other property of the same category, has a book value or a
fair market value in excess of One Thousand Dollars ($1,000) or is capitalized
by the Company. SCHEDULE 4.1(g) identifies such property as owned or leased. All
of the property set forth on SCHEDULE 4.1(g) is in good operating condition and
repair, ordinary wear and tear excepted. Except as described in SCHEDULE 4.1(g),
the Company has good and marketable title to the owned personal property listed
in SCHEDULE 4.1(g) free and clear of all Liens, and a valid, subsisting and
enforceable leasehold interest in the leased personal property, free and clear
of all Liens. Neither the Company nor, to the best knowledge of the Seller
Parties, after diligent inquiry and investigation, any other party to any of the
personal property leases is in material default of its respective obligations
under such leases nor has any event occurred which with notice or the lapse of
time or both would become such a material default by the Company or, to the best
knowledge of the Seller Parties, after diligent inquiry and investigation, any
other party thereto.
(8) Real Property. The Company does not own fee title to any real
property, and the Company is not a United States real property holding company
as defined in Section 897 of the Code. SCHEDULE 4.1(h) lists all real property
leased by the Company and indicates all lease expiration dates. All structures,
fixtures and improvements located on such property, taken as a whole, are in
good operation, condition and repair, ordinary wear and tear excepted. In the
case of each lease of real property listed, the Company has a valid, subsisting
and enforceable leasehold estate free and clear of any Liens. Neither the
Company nor, to the best knowledge of the Seller Parties, after diligent inquiry
and investigation, any other party to any of the leases is in material default
of its respective obligations under such leases nor has any event occurred which
with notice or the lapse of time or both would become such a material default by
the Company or, to the best knowledge of the Seller Parties, after diligent
inquiry and investigation, any other party thereto.
(9) Taxes/Tax Returns.
(1) The Company has materially completed and duly filed (or has
received an extension of time to file and will complete and file in such
extended time) in materially correct form with the appropriate United States,
state and local governmental agencies and with the appropriate foreign countries
and political subdivisions thereof, all Taxes (as defined below) returns and
reports required to be filed by the Company; all of such returns and reports are
accurate and complete; and the Company has paid in full or made adequate
provision on the financial statements of the
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Company for all Taxes, assessments or deficiencies shown to be due on such Tax
returns and reports or claimed to be due by any taxing authority or, to the best
knowledge of the Seller Parties, after diligent inquiry and investigation,
otherwise due or owing. To the best knowledge of the Seller Parties, after
diligent inquiry and investigation, the Company has made all payments of
estimated income Tax necessary to avoid any penalty through the date hereof and
all withholdings of Tax required to be made under all applicable United States,
foreign, state and local tax laws and regulations, and such withholdings have
either been paid to the respective governmental agencies or set aside in
accounts for such purpose or accrued, reserved against and entered upon the
books of the Company. The assets of the Company are not subject to any liens for
Taxes, except liens for current Taxes not yet due. For purposes of this
Agreement, "TAX" (and, with correlative meaning, "TAXES" and "TAXABLE") means
(i) any net income, alternative or add-on minimum tax, gross income, gross
receipts, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
governmental, regulatory or administrative entity or agency responsible for the
imposition of any such tax (domestic or foreign), (ii) any liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined, unitary or other group for any
Taxable period and (iii) any liability for the payment of any amounts of the
type described in (i) or (ii) as a result of any express or implied obligation
to indemnify any other person.
(2) Seller has delivered to Buyer corporate income tax returns for
the Company for each of the five (5) years immediately preceding June 30, 1998
("INCOME TAX RETURNS"). Seller acknowledges that Buyer is relying on the
accuracy of these Income Tax Returns in connection with its decision to purchase
the Shares.
(10) Compliance with Law. The Company has complied, and is in compliance,
with all applicable federal, state and local laws, statutes, licensing
requirements, rules and regulations, and judicial or administrative decisions
applicable to the Business, except where failure to be in compliance therewith
would not have a material adverse effect upon the Business and/or the Shares.
The Company has been granted all permits from federal, state, and local
government regulatory bodies necessary to own its assets and to carry on the
Business, all of which are currently valid and in full force and effect, not
including, any permits the failure of which to obtain would not have a material
adverse effect upon the Business and/or the Company's assets. There is no order
issued, investigation or proceeding pending or, to the best knowledge of the
Seller Parties after diligent inquiry and investigation, threatened, or notice
served with respect to any violation of any law, ordinance, order, writ, decree,
rule or regulation issued by any federal, state, local or foreign court or
governmental or regulatory agency or instrumentality applicable to the Company
or the Business that may have a material adverse effect on the Business.
(11) Intellectual Property.
(1) To the best knowledge of the Seller Parties, after diligent
inquiry and investigation, the Company is licensed or is otherwise entitled to
exercise, without restriction, all rights to all the Company's Intellectual
Property Rights (as defined below), and all other tangible and intangible
information or material in any form, as used or currently proposed to be used by
the Company in the Business, without any conflict with or infringement of the
rights of others.
(2) Listed on SCHEDULE 4.1(k) attached hereto are: (i) all software
(including source code and object code), copyrights, copyright registrations,
applications to register copyrights, patents, patent applications, patent
disclosures, trademarks, service marks, trade names, trademark and service xxxx
registrations, applications to register trademarks or service marks, and other
company, product or service identifiers owned by, exclusively or non-exclusively
licensed, or that the
PAGE -10-
11
Company has otherwise been granted permission to use (collectively, the
"COMPANY'S INTELLECTUAL PROPERTY RIGHTS"); (ii) the jurisdiction(s) in which an
application for patent or application for registration of each of the Company's
Intellectual Property Rights has been made, including the respective application
numbers and dates; (iii) the jurisdiction(s) in which each of the Company's
Intellectual Property Rights has been patented or registered, including the
respective patent or registration numbers and dates; (iv) for each piece of
software, whether such software has been published and whether such software has
a copyright notice; (v) all licenses, sublicenses and other agreements to which
Company is a party and pursuant to which any other party is authorized to use,
exercise, or receive any benefit from any of the Company's Intellectual Property
Rights; and (vi) all parties to whom Company and/or Seller has delivered copies
of the Company's source code or object code, whether pursuant to an escrow
arrangement or otherwise, or parties who have the right to receive such source
code or object code. Seller has delivered to Buyer copies of all licenses,
sublicenses and other agreements identified pursuant to clause (v) of this
section.
(3) To the best knowledge of the Seller Parties, after diligent
inquiry and investigation, the Company is the owner, or licensee of, with all
right, title and interest in and to, free and clear of any Liens, the Company's
Intellectual Property Rights, and has the rights to use, sell, license, assign,
transfer, convey or dispose thereof or the products, processes and materials
covered thereby. Any rights Seller may have had with respect to Intellectual
Property relating to the Business have been transferred to the Company prior to
the date of this Agreement.
(4) The Company is not, nor will it, as a result of the signing and
delivery of this Agreement or the performance of its obligations hereunder, be
in violation of, nor shall it lose or in any way impair, any material rights
pursuant to any license, sublicense or agreement described on SCHEDULE 4.1(k).
If required by the terms of any licenses, sublicenses or other agreements with
respect to the Company's Intellectual Property Rights, the Company has secured
or shall promptly secure valid written consents from the licensors of such
Company's Intellectual Property Rights.
(5) Seller knows of no claims to the effect that the manufacture,
marketing, license, sale or use of any product or service as now used or offered
or proposed for use or sale by the Company infringes any copyright, patent,
trademark, service xxxx, trade secret or other intellectual property right of
any third party or violates any license or agreement with any third party.
(6) Neither Seller nor the Company has entered into any agreement to
indemnify any other person against any charge of infringement of any third party
intellectual property right or the Company's Intellectual Property Rights.
(12) Contracts and Commitments.
(1) SCHEDULE 4.1(l) lists all Material Contracts entered into by the
Company that relate to the Business, setting forth the parties thereto and the
dates thereof that relate to the Business, whether or not in writing, to which
the Company is a party.
(2) The Company has performed all of its obligations under the terms
of each Contract, and is not in default thereunder. No event or omission has
occurred which, but for the giving of notice or lapse of time or both, would
constitute a default by the Company, or to the best knowledge of the Seller
Parties, after diligent inquiry and investigation, any other party thereto under
any such Contract, where such default by any party could have a material adverse
effect on the Company, or its Business. Each such Contract is in full force and
effect and valid and binding on all parties thereto. None of the Seller Parties
has received any notice of default, cancellation or termination in connection
with any such Contract and has no knowledge that any such action is currently
contemplated or threatened.
PAGE -11-
12
(13) Approvals and Consents; Continued Enjoyment. Except as described in
SCHEDULE 4.1(m), no Government Approvals or Required Consents are required for
(a) the execution and delivery by the Seller Parties of this Agreement and the
other Seller Documents or the consummation by the Seller Parties of the
transactions contemplated hereby and thereby; or (b) the continued use, benefit
and possession by Buyer immediately following the Closing of (i) the real
property leased by the Company as listed in SCHEDULE 4.1(h), (ii) the Licenses
listed in SCHEDULE 4.1(r), (iii) the Contacts listed in SCHEDULE 4.1(k), or (iv)
any asset, property, permit, license, franchise or other right material to the
continued conduct of the business and operations of the Company as currently
conducted.
(14) Litigation. Except as set forth in SCHEDULE 4.1(N), (a) no Seller
Party has been notified of any, and to the best knowledge of the Seller Parties,
after diligent inquiry and investigation, there is no action, suit or proceeding
pending or, to the best knowledge of the Seller Parties, threatened against the
Seller Parties or any of its Properties before any court or arbitral tribunal,
domestic or foreign, or before any Governmental Authority; (b) no Seller Party,
and, to the best knowledge of the Seller Parties after diligent inquiry and
investigation, no officer or executive employee of the Company is currently
charged with or, to the best knowledge of the Seller Parties after diligent
inquiry and investigation, is under investigation with respect to any material
violation of any law, statute, arbitration award, decree or judgment or
administrative regulation or order of any Governmental Authority; (c) no Seller
Party is a party to, bound by, subject to or in default in any material respect
under any order, arbitration award, judgment or decree entered in a lawsuit or
proceeding brought by any Governmental Authority or by any other person in
respect of any business practices or the acquisition of any property or the
conduct of the Business by the Company; and (d) to the best knowledge of the
Seller Parties after diligent inquiry and investigation, no facts exist which
form the basis for any latent claim against the Company which, if asserted,
would be likely to involve the assertion of a claim or claims for more than Five
Thousand Dollars ($5,000) in damages or would otherwise be material to the
business, financial condition or results of operations of the Company.
(15) Labor Relations. With respect to the Business:
(1) Except as disclosed on SCHEDULE 4.1(o), to the best knowledge of
the Seller Parties after diligent inquiry and investigation, there are no
written or oral employment, separation, severance or golden parachute agreements
or understandings with any of the employees of the Company or the service
providers of the Business.
(2) SCHEDULE 4.1(o) lists, as of the date of this Agreement, all of
the employees of the Company (the "EMPLOYEES"), and all of the consultants to
the Company (the "CONSULTANTS"), who provide services for the Company or the
Business and the cost of whose applicable health and welfare insurance have been
paid by the Company or accrued as a liability of the Company on the Financial
Statements.
(3) Except as listed on SCHEDULE 4.1(o), all severance, bonus and
vacation payments by the Company which are or were due under the terms of any
agreement have been paid or accrued as a liability on the Financial Statements.
(16) Employees and Employee Benefit Plans.
(1) Except as set forth on SCHEDULE 4.1(p), the Company is not a
party to any pension, profit sharing, savings, retirement or other deferred
compensation plan, or any bonus (whether payable in cash or stock) or incentive
program, or any group health plan (whether insured
PAGE -12-
13
or self-funded), or any disability or group life insurance plan or other
employee welfare benefit plan, or to any collective bargaining agreement or
other agreement, written or oral, with any trade or labor union, employees
association or similar organization (a "PLAN"). The Company is not a party to,
nor has it made any contribution to or otherwise incurred any obligation under
any "multi-employer plan" as defined in Section 3(37) of ERISA.
(2) There are no strikes or labor disputes pending or, to the best
knowledge of the Seller Parties after diligent inquiry and investigation,
threatened by, or any attempts at union organization of, any of Employees. None
of the Employees whose continued services are material to the Business as
presently conducted has terminated employment, and the Company has not received
any notice that any such Employee intends to do so.
(3) To the best knowledge of the Seller Parties after diligent
inquiry and investigation, none of the Employees is or will be in violation of
any judgment, decree or order, or any term of any employment contract, or other
contract or agreement relating to the relationship of any of such Employees with
the Company or any other party because of the nature of the business conducted
by the Company or of the use by any of the Employees of such Employee's best
efforts with respect to such business.
(4) The Company has not violated any of the health care continuation
coverage requirements of COBRA, and will not do so, prior to the Closing.
(17) Occupational Safety and Health Matters; Environmental Matters.
(1) Except as disclosed in SCHEDULE 4.1(q), to the best knowledge of
the Seller Parties after diligent inquiry and investigation, the Company and its
operations have been and are now in compliance with all applicable Environmental
Laws. Neither the Seller nor the Company has assumed, contractually or through
merger, any known Liabilities, whether by indemnity or otherwise, under any
Environmental Law.
(2) Except as disclosed in SCHEDULE 4.1(q), to the best knowledge of
the Seller Parties after diligent inquiry and investigation, no Hazardous
Material was placed, stored, generated, used, manufactured, maintained, treated,
deposited, spilled, discharged, recycled, released, or disposed of on, under, or
at any real property leased, used, or occupied by the Company except as
authorized pursuant to Environmental Law.
(3) Except as disclosed in SCHEDULE 4.1(q), to the best knowledge of
the Seller Parties after diligent inquiry and investigation, no Hazardous
Material has been transported off real property leased, used, or occupied by the
Company except as authorized pursuant to Environmental Law.
(4) Except as disclosed in SCHEDULE 4.1(q), to the best knowledge of
the Seller Parties after diligent inquiry and investigation, the Company has not
arranged for the transportation, treatment, recycling, disposal or release of
Hazardous Material except as authorized by Environmental Law.
(5) Except as disclosed in SCHEDULE 4.1(q), no notice of claim,
claim, demand, citation, summons, order, or notice of violation has been
received by the Seller or the Company, no notice has been given by the Seller or
the Company, and no complaint has been filed, no penalty has been assessed that
remains outstanding and, to the best knowledge of the Seller Parties after
diligent inquiry and investigation, no investigation or review is pending or
threatened by any Governmental Authority or third person with respect to the
Seller, the real property leased, used or
PAGE -13-
14
occupied by the Company at any time, or the Company arising from either one or
more of the following:
(1) any actual or alleged violation of Environmental Law;
(2) the placement, storage, generation, use, manufacture,
maintaining, treatment, depositing, spill, discharge, recycling, release,
transportation, or disposal of Hazardous Materials;
(3) the arranging for the transportation, treatment, recycling,
disposal, or release of Hazardous Materials.
(6) Except as disclosed in SCHEDULE 4.1(q), neither the Seller nor
the Company has received from an Governmental Authority any request for
information, notice of claim, notice of violation, demand, or notification that
the Seller or the Company is or might be a "potentially responsible party" with
respect to any investigation, remediation, or cleanup of any threatened or
actual release of Hazardous Materials.
(7) Except as disclosed in SCHEDULE 4.1(q), to the best knowledge of
the Seller Parties after diligent inquiry and investigation, there are no
underground or above-ground storage tanks, whether or not in use, located at,
on, or under any real property which the Company leases, uses, or occupies, or
has leased, used, or occupied.
(8) Except as disclosed in SCHEDULE 4.1(q), no notice has been
received by the Seller or the Company with respect to the listing or proposed
listing of any real property, which the Company leases, uses, or occupies or
real property or which the Company has leased, used, or occupied, pursuant to
Environmental Law (such as CERCLA) or any similar state law listing sites which
require investigation or cleanup.
(9) Except as disclosed in SCHEDULE 4.1(q), to the best knowledge of
the Seller Parties after diligent inquiry and investigation, there have been no
environmental inspections, investigations, studies, tests, reviews or other
analyses conducted in relation to the Seller or the Company or any real property
which was or is now leased, used, or occupied by the Seller or the Company, the
results of which identify a condition which could reasonably expect, either
individually or in the aggregate, to influence adversely the Buyer's decision to
enter in this Agreement.
(10) SCHEDULE 4.1(q), to the best knowledge of the Seller Parties
after diligent inquiry and investigation, is an accurate list of all permits,
orders, and approvals required of the Seller or the Company pursuant to
Environmental Law relating to the placement, storage, generation, use,
manufacture, maintaining, treatment, deposit, spill, discharge, recycling,
release, or disposal of Hazardous Materials.
(11) There is no pending or, to the best knowledge of the Seller
Parties after diligent inquiry and investigation, threatened administrative or
judicial proceeding against the Seller or the Company where such proceeding is
based on or involves an actual or alleged violation of or liability arising
under Environmental Law.
(18) Permits, Licenses, Variances and Laws. SCHEDULE 4.1(r) attached hereto
contains a complete, current and correct list of all governmental licenses,
permits, franchises, rights and privileges required for the business of the
Company as currently conducted (the "LICENSES"). All of such Licenses are in
full force and effect, and there is no pending revocation or material limitation
PAGE -14-
15
thereof. Except as disclosed in SCHEDULE 4.1(r), all permits, licenses or
variances which are required for the conduct of the business of the Company as
currently conducted have been obtained and are valid and subsisting and in full
force and effect. Except as disclosed in SCHEDULE 4.1(r), to the best knowledge
of the Seller Parties after diligent inquiry and investigation, no portion of
the business of the Company has been, or is being conducted in violation of any
laws, regulations, permits, licenses or variances issued by Governmental
Authorities having jurisdiction over them where the failure to so comply would
have a material adverse effect on the business, financial condition or results
of operations of the Company.
(19) Changes in the Business or Financial Condition of the Company. Except
as described in SCHEDULE 4.1(s) and except as otherwise contemplated by this
Agreement, since March 31, 1999, there has not been any material adverse change
in the business, financial condition or results of operations of the Company.
Except as described in SCHEDULE 4.1(s) and except as otherwise contemplated by
this Agreement, since March 31, 1999, there has not been:
(1) any failure to conduct the Company's business in accordance with
the ordinary course of business, consistent with past practices and in
compliance in all material respects with all applicable laws, statutes,
regulations, decrees and orders;
(2) any incurrence or assumption of indebtedness for borrowed money
by the Company, nor any guarantee or endorsement by the Company of any
indebtedness for borrowed money of any other Person or any other express written
guarantee of the obligations of any Person (other than the endorsement of
negotiable instruments for deposit or collection or other similar transactions
in the ordinary course of business and consistent with past practices);
(3) any imposition of a Lien on any assets or property of the
Company;
(4) any change in or deviation from the accounting principles,
procedures, methods or practices of the Company;
(5) any declaration, setting aside, or payment of, any dividend, or
the making of any other distribution of payment in respect of the Company's
capital stock or any transfer, reacquisition or issuance of any shares of
capital stock or other securities, or rights to acquire any shares of capital
stock or other securities, of the Company;
(6) any sale or transfer or other disposition of any material asset
of the Company, or any cancellation, release or assignment of any material
indebtedness owed to the Company;
(7) any entry into, material modification of, or voluntary
termination by the Company of (i) any agreement or contract involving an
aggregate payment (A) by the Company reasonably estimated by the Company to
exceed Five Thousand Dollars ($5,000) or (B) to the Company reasonably estimated
by the Company to exceed Five Thousand Dollars ($5,000); (ii) any customer
contract providing for revenues to the Company of more than Five Thousand
Dollars ($5,000) per month; or (iii) any contract which is otherwise material to
the business of the Company;
(8) any increase in any manner in the compensation or fringe benefits
payable or to become payable by the Company to any of the Company's officers,
employees or agents; or any bonus, percentage of compensation, or other like
contingent benefit paid or accrued to, or for the credit of, any of the
officers, employees, or agents of the Company;
(9) any cancellation or termination of any insurance policy insuring
the assets or operations of the Company unless simultaneously replacement
policies providing substantially the same coverage were in full force and
effect;
PAGE -15-
16
(10) any transfer of cash or cash equivalents from the Company or any
of its Affiliates, except in the ordinary course of business and consistent with
past practices;
(11) any settlement or compromise of any action, suit, proceeding,
litigation or claim (i) on terms which required or shall require the Company to
pay any amount or (ii) on any other terms material to the Company;
(12) any investment by the Company in any other person or entity;
(13) any capital expenditures or commitment therefore in excess of an
aggregate amount of Ten Thousand Dollars ($10,000); or
(14) to the best knowledge of the Seller Parties after diligent
inquiry and investigation, any Release of any Hazardous Substance in, on or
under any real property leased by the Company.
(20) Transactions with Affiliates. Except as disclosed on SCHEDULE 4.1(t),
neither the Company nor any of its Affiliates, has any interest, directly or
indirectly, in any lease, lien, contract, license, encumbrance, loan or other
agreement to which the Company is a party, any interest (other than as a
stockholder) in any properties or assets of the Company or any interest in any
competitor, supplier or customer of the Company.
(21) Insurance. SCHEDULE 4.1(u) lists all cargo, casualty, liability,
property, health, errors and omissions and other insurance policies held by the
Company, specifying with respect to each policy the type and amount of coverage,
deductibles, policy number, insurer, annual premium, additional insureds and
expiration date. SCHEDULE 4.1(u) also contains a true and complete list of the
loss runs under the Company's xxxxxxx'x compensation insurance and a list of all
casualty losses reported under applicable insurance policies for the past three
(3) fiscal years. Except as set forth in SCHEDULE 4.1(u), all such insurance
policies are written on an occurrence basis and, to the knowledge of the Seller
Parties, there is no threat by any of the insurers to terminate or materially
increase the premiums payable under any of such policies. The Company is in
material compliance with the conditions contained in such policies.
(22) Bank Accounts. SCHEDULE 4.1(v) sets forth a complete and accurate
list of all banks and other lending institutions with which the Company
maintains accounts or has credit arrangements and the name of each person who
has signing authority for such accounts and credit arrangements.
(23) Brokers' and Finders' Fees. Neither Seller Party shall be obligated
to pay any fees or expenses of any broker or finder in connection with the
origin, negotiation or signing of this Agreement or in connection with any
transactions contemplated hereby.
(24) Books and Records. The books and records of the Company to which
Buyer and his accountants and attorneys have been given access are the true
books and records of the Company, and truly and fairly reflect the underlying
facts and transactions in all respects.
(25) Accounts Receivable. Attached hereto as Schedule 4.1(x) is a true,
correct and complete listing of all of the outstanding accounts receivable of
the Company as of June 30, 1999, together with an aging schedule for same.
(26) Complete Disclosure. To the best knowledge of the Seller Parties
after diligent inquiry and investigation, no representation or warranty by the
Seller Parties in this Agreement, and
PAGE -16-
17
no exhibit, schedule, statement, certificate or other writing furnished to Buyer
pursuant to this Agreement or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein and therein in the context in which they were made not
misleading.
4.2 Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the Seller Parties as follows:
(1) Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing, all under the laws of the State of
Nevada, and has all requisite power and authority to conduct its business and to
own, lease and operate its assets, as now conducted, owned, leased and operated.
Buyer is duly qualified or licensed to do business in each of the jurisdictions
in which the nature of its operations or location of its assets requires such
qualification or licensing, and where the failure to be so qualified would have
a material adverse effect on the business or operations of Buyer.
(2) Authority of Buyer. Buyer has full legal right, power, capacity and
authority to enter into this Agreement, together with all other agreements,
instruments and documents to be signed and delivered by it in connection
herewith (the "BUYER DOCUMENTS"), and to carry out its obligations hereunder and
thereunder.
(3) Authorization and Noncontravention. This Agreement has been duly
signed and delivered by Buyer, and this Agreement and the Buyer Documents
constitute legal, valid and binding obligations of Buyer enforceable against
Buyer in accordance with their terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other similar laws of general applicability
relating to or affecting creditors' rights, and to general equity principles
(including, without limitation, concepts of mutuality, reasonableness, good
faith and fair dealing, and the possible unavailability of specific performance
or injunctive relief, regardless of whether the issue of enforceability is
considered in a proceeding in equity or law).
(4) Litigation. There is no claim, litigation, action, suit or proceeding,
administrative or judicial, pending or, to Buyer's knowledge, threatened against
Buyer relating to this Agreement or the transactions contemplated hereunder, at
law or in equity, before any federal, state, local or foreign court, regulatory
agency, or other governmental authority, which could result in the institution
of legal proceedings to prohibit or restrain the consummation or performance of
this Agreement or the transactions contemplated hereby, or any claim of damages
as a result of this Agreement or the transactions contemplated hereby.
(5) No Conflict or Default. Neither the signing and delivery of this
Agreement, nor compliance with the terms and provisions hereof, including the
consummation of the transactions
PAGE -17-
18
contemplated hereby, will conflict with or result in the breach of any term,
condition or provision of any agreement, deed, contract, mortgage, indenture,
writ, order, decree, legal obligation or instrument to which Buyer is a party,
or by which he is or may be bound or constitute a default (or an event which,
with the lapse of time or the giving or notice, or both, would constitute a
default) thereunder, or to Buyer's knowledge, violate any statute, regulation or
ordinance of any governmental authority.
(6) Brokers' and Finders' Fees. Buyer is not obligated to pay any fees or
expenses of any broker or finder in connection with the origin, negotiation or
signing of this Agreement or in connection with any transactions contemplated
hereby.
ARTICLE V -- COVENANTS
5.1 Access to Information. After signing this Agreement, Seller Parties shall
give Buyer and Buyer's agents and/or representatives (the "REPRESENTATIVES")
full access, during normal business hours, to all of the properties, books,
contracts, commitments and records relating to the Business, and generally such
information as Buyer may reasonably request (the "COMPANY INFORMATION");
provided, that such access shall not unreasonably interfere with the normal
operations of the Business; provided, further, that any furnishing of such
information pursuant hereto or any investigation by Buyer shall not affect
Buyer's right to rely on the representations, warranties, agreements and
covenants made by the Seller Parties in this Agreement.
5.2 Governmental Approvals and Required Consents. Seller shall use all
reasonable efforts to obtain all of the Governmental Approvals and Required
Consents prior to the Closing.
5.3 Tax Returns. Seller shall cause the Company to properly file all returns,
statements, reports, forms or other documents (collectively, the "TAX RETURNS")
that are required by any applicable law to file with respect to Taxes arising in
or related to periods ending on or prior to the Closing or related to
transactions or events occurring prior to the Closing and shall cause Company to
pay all such Taxes when due; provided, however, Seller shall be responsible for
all filings with respect to, and the payment of any transfer tax related to, the
issuance of the Shares.
5.4 Conduct of Business in Normal Course. Prior to the Closing, Seller shall:
(1) Cause Company to carry on its Business and activities diligently and
in substantially the same manner as they have previously been carried out, and
shall not make or institute any unusual or novel methods of manufacture, or
purchase, sale, lease, management, accounting, or operation that will vary
materially from those methods used by Company as of the date of this Agreement.
(2) Cause Company to use its best efforts to preserve its business
organization intact, to keep available to Company its present officers and
employees, and to preserve its present relationships with suppliers, customers,
and others having business relationships with it.
(3) Cause Company not to (i) amend its articles of incorporation or
bylaws; (ii) issue any shares of its capital stock; (iii) issue or create any
warrants, obligations, subscriptions, options, convertible securities, or other
commitments under which any additional shares of its capital stock of any class
might be directly or indirectly authorized, issued, or transferred from
treasury, or (iv) agree to do any of the actions listed above.
(4) Cause Company to continue to carry its existing insurance, subject to
variations and amounts required by the ordinary operations of its Business.
PAGE -18-
19
(5) Cause Company not to, without Buyer's written consent, enter into any
contract, commitment or transaction not in the usual and ordinary course of its
Business, including the sale or disposal of any assets of Company.
(6) Cause Company not to (i) declare, set aside, or pay any dividend or
make any distribution in respect to its capital stock; (ii) directly or
indirectly purchase, redeem, or otherwise acquire any shares of its capital
stock; or (iii) enter into any agreement obligating it to do any of the
foregoing prohibited acts.
(7) Cause Company not to do, or agree to do, any of the following acts:
(i) pay any obligation or liability, fixed or contingent, other than current
liabilities; (ii) waive or compromise any right or claim; or (iii) cancel,
without full payment, any note, loan or other obligation owing to Company.
(8) Cause Company not to modify, amend, cancel, or terminate any of its
existing contracts or agreements, or agree to do any of those acts, except in
the ordinary course of Business or with Buyer's written consent.
5.5 Insurance. Seller hereby consents to the Company continuing to carry
coverage under its existing insurance policies listed in SCHEDULE 4.1(u) after
the Closing.
5.6 530 Xxxxxxx Property. Effective December 1, 1999, the Company shall assign
to Seller all of the Company's right, title and interest, and delegate all of
its obligations, under that certain Standard Industrial/Commercial Single-Tenant
Lease -- Gross, dated September 21, 1999, between Xxxx Xxxxxx, as Lessor, and
the Company, as Lessee, pursuant to which the Company leases the 530 Xxxxxxx
Property (the "530 XXXXXXX PROPERTY LEASE"), and Seller hereby agrees to accept
such assignment.
ARTICLE VI -- CONDITIONS PRECEDENT TO OBLIGATIONS
6.1 Conditions to Obligations of Buyer. Each and every obligation of Buyer to
be performed at the Closing shall be subject to the satisfaction as of or before
the Closing of the following conditions (unless waived in writing by Buyer):
(1) Representations, Warranties and Covenants. The representations and
warranties of the Seller Parties set forth in Section 4.1 of this Agreement
shall have been true and correct when made and shall be true and correct as
updated at and as of the Closing Date as if such representations and warranties
were made as of such date and time; and the covenants and agreements contained
in this Agreement to be complied with by the Seller Parties on or before the
Closing shall have been complied with in all material respects.
(2) Performance of Agreement. All covenants, conditions and other
obligations under this Agreement which are to be performed or complied with by
Seller Parties shall have been fully performed and complied with at or prior to
the Closing, including the delivery of the instruments and documents in
accordance with Section 3.2 above.
(3) No Material Adverse Change. There shall have been no material adverse
change in the financial condition, the Business, or the properties of Company
which materially adversely affects the conduct of the Business, as currently
being conducted.
PAGE -19-
20
(4) Absence of Governmental or Other Objection. There shall be no pending
or threatened investigation, action, suit or proceeding challenging the
transaction by any body or agency of the federal, state or local government or
by any third party, and the consummation of the transaction shall not have been
enjoined by a court of competent jurisdiction as of the Time of Closing and any
applicable waiting period under any applicable federal law shall have expired.
(5) Approval of Documentation. The form and substance of all certificates,
instruments and other documents delivered or to be delivered to Buyer under this
Agreement shall be reasonably satisfactory to Buyer and his counsel in all
respects.
(6) Consents and Approvals. All Government Approvals and Required
Consents, or other actions or proceedings required to be obtained or taken by
the Seller Parties under the laws of any jurisdiction or under this Agreement,
or required to prevent a breach or default by the Seller Parties under any
lease, agreement, contract, insurance policy, promissory note or other document
or instrument by virtue of the transactions contemplated by this Agreement shall
have been obtained, on terms reasonably satisfactory to Buyer, and shall be in
full force and effect.
(7) Opinion of Counsel. At the Closing, Buyer shall have been furnished
with an opinion of the Xxxxxx Law Firm LLP, counsel for the Seller Parties,
dated the Closing Date and addressed to Buyer, in form and substance acceptable
to Buyer and Buyer's counsel.
(8) Absence of Certain Changes. There shall not have occurred prior to the
Closing Date (i) any material adverse change in the business of the Company, the
assets of the Company, or the Shares or in the financial condition of the
Company, (ii) damage or destruction in the nature of a casualty loss, whether
covered by insurance or reinsurance or not, affecting in any material respect
the operation of the business of the Company or the assets of the Company, or
(iii) the legal inability of Seller to convey, assign and transfer to Seller all
of the Shares.
(9) Legislation. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any domestic or foreign government,
governmental or administrative agency or court which would make the transactions
contemplated by this Agreement illegal or otherwise prevent the consummation
thereof.
(10) Corporate Action of the Company. The directors of the Company shall
have taken all corporate action necessary to approve the transactions called for
by this Agreement and certified copies of resolutions duly adopted by the
directors of the Company reasonably satisfactory to counsel for Buyer in
connection with the foregoing shall have been furnished to Buyer on or prior to
the Closing Date.
(11) Corporate Action of Buyer. The directors of Buyer shall have taken all
corporate action necessary to approve the transactions called for by this
Agreement.
(12) Lease. Seller shall have leased to the Company the 520 Xxxxxxx
Property pursuant to a written lease agreement which shall be in form and
substance acceptable to Buyer.
(13) Consulting Agreements. The Company shall have entered into a written
consulting agreement with each of Xxxxxxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxxx,
each of which shall be in form and substance mutually acceptable to Buyer and
Seller.
(14) Covenant Not to Compete. Seller shall execute and deliver to Buyer a
written agreement not to compete, in form and substance of Exhibit A attached
hereto and incorporated herein by reference (the "AGREEMENT NOT TO COMPETE").
PAGE -20-
21
(15) Environmental Due Diligence. On or before September 30, 1999, Buyer
shall have completed and approved its environmental due diligence investigation
of the Company and the Business to the reasonable, good faith satisfaction of
Buyer.
(16) Company and Seller shall have entered into an assignment of the 530
Xxxxxxx Property Lease in form and substance reasonably satisfactory
to Seller and Buyer.
6.2 Conditions to Obligations of the Seller Parties. Each and every obligation
of the Seller Parties to be performed at the Closing shall be subject to the
satisfaction as of or before such time of the following conditions (unless
waived in writing by the Seller Parties):
(1) Representations and Warranties. The representations and warranties of
Buyer set forth in Section 4.2 of this Agreement shall have been true and
correct when made and shall be true and correct at and as of the Closing as if
such representations and warranties were made as of such date and time, other
than such other representations and warranties as are made as of another date,
which shall be true and correct in all material respects as of such other date;
and the covenants and agreements contained in this Agreement to be complied with
by Buyer on or before the Closing shall have been complied with in all material
respects.
(2) Performance of Agreement. All covenants, conditions and other
obligations under this Agreement which are to be performed or complied with by
Buyer shall have been fully performed and complied with at or prior to the
Closing.
(3) Absence of Governmental or Other Objection. There shall be no pending
or threatened lawsuit challenging the transaction by any body or agency of the
federal, state or local government or by any third party, and the consummation
of the transaction shall not have been enjoined by a court of competent
jurisdiction as of the Closing and any applicable waiting period under any
applicable federal law shall have expired.
(4) Approval of Documentation. The form and substance of all certificates,
instruments, opinions and other documents delivered or to be delivered to Seller
under this Agreement shall be reasonably satisfactory to Seller and his counsel
in all respects.
(5) Consents and Approvals. All Government Approvals and Required
Consents, or other actions or proceedings required to be obtained or taken by
Buyer under the laws of any jurisdiction or under this Agreement, or required to
prevent a breach or default by Buyer under any lease, agreement, contract,
insurance policy, promissory note or other document or instrument by virtue of
the transactions contemplated by this Agreement shall have been obtained, on
terms reasonably satisfactory to the Seller Parties, and shall be in full force
and effect.
(6) Opinion of Counsel. At the Closing, Seller shall have been furnished
with an opinion of Xxxxxx Xxxxxx Xxxxx Xxxxxxxxxx LLP, counsel for Buyer, dated
the Closing Date and addressed to Seller, in form and substance acceptable to
the Seller Parties and to the Seller Parties' counsel.
(7) Legislation. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any domestic or foreign government,
governmental or administrative agency or court which would make the transactions
contemplated by this Agreement illegal or otherwise prevent the consummation
thereof.
(8) Corporate Action. The directors of Buyer shall have taken all
corporate action necessary to approve the transactions called for by this
Agreement and certified copies of resolutions duly adopted by the directors of
Buyer reasonably satisfactory to counsel for Seller in connection with the
foregoing shall have been furnished to Seller on or prior to the Closing Date.
PAGE -21-
22
(9) Purchase Price. Buyer shall have delivered the Purchase Price to
Seller.
(10) Severance Plan. Buyer shall have caused Polymer Solutions, Inc., the
parent company of Buyer, to execute and deliver to Seller a written Guarantee of
all of the obligations of the Company under the Severance Plan, in form and
substance acceptable to the Seller Parties and to the Seller Parties' counsel.
ARTICLE VII -- INDEMNIFICATION
7.1 Survival of Representations and Warranties. The representations and
warranties in this Agreement, and all statements contained in this Agreement or
any Exhibit or Schedule or any certificate, financial statement or report or
other document delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby (collectively, the "ACQUISITION DOCUMENTS"),
shall survive the signing and delivery of this Agreement and the Closing
hereunder for a two (2) year period immediately following the Closing,
notwithstanding any investigation made at any time by or on behalf of any party.
If written notice of a specific claim made in good faith has been given pursuant
to Section 7.4(b) on or prior to such date, then the relevant representations
and warranties shall survive as to such claim, until the claim has been finally
resolved.
7.2 Indemnification by Seller. Except as otherwise limited by this Article,
Buyer and each of Buyer's agents, successors and assigns shall be indemnified,
defended and held harmless by Seller for any and all liabilities, damages,
claims, costs and expenses, interest, awards, judgments and penalties (including
reasonable attorneys' and experts' fees and expenses) actually suffered or
incurred by them ("BUYER'S LOSS"), arising out of or resulting from:
(1) the breach of any representation or warranty by Seller or the Company
contained herein or in any document delivered by Seller or the Company pursuant
to this Agreement, or the transactions contemplated hereby; or
(2) the breach of any covenant or agreement by Seller or the Company, or
the breach of any covenant or agreement to be performed prior to the Closing by
Seller or the Company.
7.3 Indemnification by Buyer. Except as otherwise limited by this Article,
Seller, the Company, and each of its officers, directors, agents and successors
and permitted assigns, shall be indemnified, defended and held harmless by Buyer
for any and all liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments, and penalties (including reasonable attorneys' and
experts' fees and expenses) actually suffered or incurred by them ("COMPANY'S
LOSS") arising out of or resulting from:
(1) the breach of any representation or warranty by Buyer contained herein
or in any document delivered by Buyer pursuant to this Agreement, or the
transactions contemplated hereby;
(2) the breach of any covenant or agreement by Buyer, or the breach of any
covenant or agreement to be performed by Buyer contained herein; or
(3) from and after the Closing, and contingent upon the Closing, the
breach by the Company of any of the obligations of the Company under the
Severance Plan.
7.4 General Indemnification Provisions.
PAGE -22-
23
(1) Definitions. For the purposes of this Agreement, the term "INDEMNITEE"
shall refer to the person(s) or entity(ies) indemnified, or entitled, or
claiming to be entitled, to be indemnified, pursuant to the provisions of
Sections 7.2, 7.3 or 7.4, as the case may be, the term "INDEMNITOR" shall refer
to the entity having the obligation to indemnify pursuant to such provisions,
and "LOSS" or "LOSSES" shall refer to the Company's Losses or Buyer's Losses, as
the case may be.
(2) Notice. Within fifteen (15) calendar days of learning of an event that
could require indemnification, an Indemnitee shall give notice to the
Indemnitor, including in such notice a brief description of the facts, stating
the amount of the Loss claimed, and referencing the section of this Agreement
pursuant to which the claim is made.
(3) Defense of Third Party Claims. If an Indemnitee shall receive notice
of a claim by a third party (not a party to this Agreement) that may cause the
Indemnitee a Loss (a "THIRD PARTY CLAIM"), the Indemnitee shall give the
Indemnitor notice of such Third Party Claim within ten (10) calendar days
(provided, however, that failure to give such notice shall not preclude
indemnification under this Article 7 unless there is actual and material
prejudice to the rights of the Indemnitor) and shall permit the Indemnitor, at
its option, to participate in the defense of such Third Party Claim by counsel
of its own choice and at its expense. If, however, the Indemnitor acknowledges
in writing its obligation to indemnify the Indemnitee hereunder against any
Losses that may result from such Third Party Claim (subject to the limitations
set forth herein), then the Indemnitor shall be entitled, at its option, to
assume and control the defense of such Third Party Claim at its expense and
through counsel of its choice if it gives notice of its intention to do so to
the Indemnitee within seven (7) calendar days. However, if the Indemnitee shall
determine that its interests conflict with those of the Indemnitor, then the
Indemnitee shall be entitled to be represented at the Indemnitee's expense by
separate counsel of its choice and to participate in the defense of any such
Third Party Claim. Indemnitee and Indemnitor shall cooperate with each other in
such defense and make available to each other, at the Indemnitor's expense, all
witnesses, pertinent records, materials and information in their possession or
under their control relating thereto as is reasonably required. No Third Party
Claim, except the settlement thereof that involves the payment of money only and
for which the Indemnitee is released by the third party claimant and is totally
indemnified by the Indemnitor, may be settled by the Indemnitor without the
written consent of the Indemnitee, which consent shall not be unreasonably
withheld; provided, however, that if a Third Party Claim is brought that relates
in part to matters for which indemnification pursuant to this Agreement may be
available and in part to matters for which such indemnification may not be
available, a party may settle any segregable portion of such Third Party Claim
as to which such indemnification may not be available. Similarly, no Third Party
Claim that is being defended in good faith by the Indemnitor shall be settled by
the Indemnitee without the written consent of the Indemnitor; provided, however,
that, if a Third Party Claim is brought that relates in part to matters for
which indemnification pursuant to this Agreement may be available and in part to
matters for which such indemnification may not be available, a party may settle
any segregable portion of such Third Party Claim to which such indemnification
may not be available.
7.5 Limitations on Indemnification by Seller.
(1) Limitations on Indemnification by Seller. Except as otherwise provided
in this Article VII, Seller expressly disclaims, to the maximum extent
permissible under law, (i) any duty or obligation to indemnify Buyer or Company
for any Losses arising out of the conduct of the Business by the Company giving
rise to matters disclosed or governed by the Schedules pursuant to Section 4.1
of this Agreement, and (ii) any duty or obligation to indemnify Buyer or the
Company for any remediation of hazardous waste or conditions, environmental
claims, occupational safety or health matters, or liabilities of any kind of the
Company under any law or regulation on any theory or cause of action. Buyer
acknowledges and agrees as follows: (i) Buyer is acquiring the Company and the
PAGE -23-
24
Business as is with all associated liabilities and without any indemnification
by Seller except as otherwise provided in this Article VII; and (ii) Seller's
obligation to indemnify Buyer for any of Buyer's Losses arising from the conduct
of the Business by the Company shall be limited to the express provisions of
this Article VII; provided however, that nothing in this Section 7.5(a) shall be
construed to relieve Seller from any liability or obligation Seller may have
under federal or state law in his capacity as owner of the 000 Xxxxxxx Property.
(2) Notwithstanding anything contrary in this Agreement, and with the
exception for Buyer's Losses arising from fraud or willful misconduct by Seller,
Seller shall have no obligation to indemnify Buyer for any Buyer's Losses which
cumulatively total less than Twenty Five Thousand Dollars ($25,000), provided
however that if cumulative Losses exceed Twenty Five Thousand Dollars ($25,000),
Seller shall indemnify, defend and hold Buyer harmless from all such Losses and
provided further that in no event shall any indemnification paid by Seller for
all such Losses pursuant to this Article VII exceed an aggregate of Five Hundred
Thousand Dollars ($500,000).
ARTICLE VIII -- TERMINATION
8.1 Conditions Permitting Termination. The obligations of the parties hereto to
consummate the transactions contemplated hereby may be terminated and abandoned
at any time on or before the Closing Date as follows:
(1) Upon the mutual agreement of all of the parties hereto;
(2) By Buyer, if there has been a material breach by any Seller Party of
any of its representations, warranties or covenants set forth in this Agreement;
(3) By Seller, if there has been a material breach by Buyer of any of its
representations, warranties or covenants set forth in this Agreement;
(4) By Buyer, if any of the conditions precedent set forth in Section 6.2
have not been satisfied or waived by Buyer prior to the Closing;
(5) By Seller, if any of the conditions precedent set forth in Section 6.1
have not been satisfied or waived prior to the Closing; or
(6) Any party, who has not intentionally delayed the Closing, if the
Closing has not occurred on or before the Sunset Date.
ARTICLE IX -- CONCLUDING PROVISIONS
9.1 Notice. All notices, requests, demands and other communications required to
or permitted to be given under this Agreement shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the other
party; or (b) when received when sent by telex or facsimile at the address and
number set forth below (provided that any notice given by telex or facsimile
shall be deemed received on the next business day if such notice is received
after 5:00 p.m. (recipient's time) or on a non-business day); or (c) three (3)
business days after the same have been deposited in a United States post office
with first class or certified mail return receipt requested postage prepaid and
addressed to the parties as set forth below; or (d) the next business day after
same have been deposited with a national overnight delivery service reasonably
approved by the parties (Federal Express and DHL Worldwide Express being deemed
approved by the parties),
PAGE -24-
25
postage prepaid, addressed to the parties as set forth below with
next-business-day delivery guaranteed, provided that the sending party receives
a confirmation of delivery from the delivery service provider:
To Buyer: Alternative Materials Technology
000 Xxxxxxxx Xxxxx, Xxxxx 00
Xxxxx, Xxxxxxxxxx 00000
Attention: X. Xxxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
With a copy to: Xxxxxx Xxxxxx Xxxxx Xxxxxxxxxx LLP
0000 X Xxxxxx, Xxxxx Xxxxx
Attention: Xxxxxxx X. Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
To Seller: Xxxxxxxxx Xxxxxxxxx
0000 Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Facsimile: ________________
With a copy to: Xxxxxx Law Firm LLP
0000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
To the Company: U.S. Cellulose Co.
000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Each party shall make an ordinary, good faith effort to ensure that it will
accept or receive notices that are given in accordance with this Section, and
that any person to be given notice actually receives such notice. A party may
change or supplement the addresses given above, or designate additional
addresses, for purposes of this Section by giving the other parties written
notice of the new address in the manner set forth above.
9.2 Assignment. This Agreement and the various rights and obligations arising
hereunder shall inure to the benefit of and be binding upon Seller, his
successors and permitted assigns, and Buyer and its successors and permitted
assigns. Neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be transferred or assigned (by operation of law or otherwise) by
any of the parties hereto without the prior written consent of the other
parties.
9.3 Expenses. Buyer, the Company and Seller shall each bear and pay all costs
and expenses respectively incurred by each of them on their behalf in connection
with this Agreement, including fees and expenses of their own financial
consultants, accountants and legal counsel. Seller shall pay all applicable
transfer, documentary and any other similar taxes arising out of this Agreement,
or in relation to the transactions referenced herein.
PAGE -25-
26
9.4 Waiver; Consent. This Agreement may not be changed, amended, terminated,
augmented, rescinded, or discharged (other than by performance), in whole or in
part, except by a writing signed by the parties hereto, and no waiver of any of
the provisions or conditions of this Agreement or any of the rights of a party
shall be effective or binding unless such waiver shall be in writing and signed
by the party claimed to have given or consented thereto. Except to the extent
that a party may have otherwise agreed in writing, no waiver by that party of
any condition of this Agreement or breach by the other party of any of its
obligations or representations hereunder or thereunder shall be deemed to be a
waiver of any other condition or subsequent or prior breach of the same or any
other obligation or representation by the other party, nor shall any forbearance
by the first party to seek a remedy for any noncompliance or breach by the other
party be deemed to be a waiver by the first party of its rights and remedies
with respect to such noncompliance or breach.
9.5 Counterparts. This Agreement may be signed simultaneously in multiple
counterparts, each of which shall be deemed an original (including copies sent
to a party by facsimile transmission), but all of which taken together shall
constitute one and the same instrument.
9.6 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement to the extent of its unenforceability, and the balance of the
Agreement shall be interpreted as if such unenforceable provision (to the extent
of its unenforceability) was so excluded, but shall otherwise be enforceable in
accordance with its terms.
9.7 Absence of Third Party Beneficiary Rights. No provisions of this Agreement
are intended, nor shall be interpreted, to provide or create any third party
beneficiary rights or any other rights of any kind in any client, customer,
affiliate, stockholder, partner or employee of any party or any other person or
entity unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof shall be personal solely between the parties to
this Agreement.
9.8 Cooperation and Records Retention. Seller Parties and Buyer shall (a) each
provide the other with such assistance as may reasonably be requested by the
other in connection with the preparation of any Tax Returns, or in connection
with any audit or other examination by any taxing authority or any judicial or
administrative proceedings relating to liability for Taxes, (b) each retain and
provide the other, with any records or other information which may be relevant
to any such Tax Return, audit or examination, proceeding or determination, and
(c) each provide the other with any final determination of any such audit or
examination, proceeding or determination that affects any amount required to be
shown on any Tax Return of the other for any period. Without limiting the
generality of the foregoing, Seller Parties and Buyer shall use reasonable
efforts to retain, until the applicable statute of limitations (including any
extensions) has expired, copies of all Tax Returns, supporting work schedules
and other records or information which may be relevant to such Tax Returns for
all tax periods or portions thereof ending before or including the Closing and
shall not destroy or otherwise dispose of any such records without first
providing the other party with a reasonable opportunity to review and copy the
same.
9.9 Attorneys' Fees. If any party to this Agreement shall take any action to
enforce this Agreement or bring any action or commence any arbitration for any
relief against any other party, declaratory or otherwise, arising out of this
Agreement, the losing party shall pay to the prevailing party a reasonable sum
for attorneys' and experts' fees and costs incurred in bringing such suit or
arbitration and/or enforcing any judgment granted therein, all of which shall be
deemed to have accrued upon the commencement of such action or arbitration and
shall be paid whether or not such action or arbitration is prosecuted to
judgment. Any judgment or order entered in such action or arbitration shall
contain a specific provision providing for the recovery of attorneys' and
experts' fees and costs incurred in enforcing such judgment. For purposes of
this section, attorneys' and experts' fees and costs shall include, without
limitation, fees incurred in the following: (a) post-judgment
PAGE -26-
27
motions and collection actions; (b) contempt proceedings; (c) garnishment, levy,
and debtor and third party examinations; (d) discovery; and (e) bankruptcy
litigation.
9.10 Compulsory Arbitration and Legal Fees. Any controversy, claim and/or
dispute arising out of or relating to this Agreement or the breach hereof or
subject matter hereof (including any action in tort) shall be finally and
exclusively settled by arbitration in San Francisco, California, in accordance
with the then-existing Commercial Arbitration Rules of the American Arbitration
Association (the "AAA"), and judgment upon the award rendered by the arbitrators
may be entered in any court having applicable jurisdiction. Written notice of
demand for arbitration shall be given to the other parties and to the AAA within
six (6) months after the controversy, claim or dispute has arisen or be barred,
and in no event after the date when the institution of court proceedings based
on such dispute would be barred by the applicable statute of limitations.
Controversies, claims and/or disputes shall be resolved by one arbitrator
selected by the mutual agreement of the parties or, failing that agreement
within 45 days after written notice demanding arbitration, by the AAA. There
shall be limited discovery prior to the arbitration hearing as follows: (i)
exchange of witness lists and copies of documentary evidence and documents
related to or arising out of the issues to be arbitrated, and (ii) depositions
of all party witnesses. Depositions shall be conducted in accordance with the
California Code of Civil Procedure, and a court reporter shall record all
hearings, with such record constituting the official transcript of such
proceedings. All decisions of the arbitrator(s) shall be in writing, and the
arbitrator(s) shall provide reasons for the decision. If any arbitration or
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement or to protect the rights obtained under this Agreement, the
prevailing party shall be entitled to its reasonable attorneys' fees, costs and
disbursements in addition to any other relief to which it may be entitled.
9.11 Specific Performance. Notwithstanding Section 9.10, the parties agree that
irreparable damage would occur in the event any provision of this Agreement is
not performed in accordance with the terms hereof, and that the Company and
Buyer shall be permitted to access the court system to obtain injunctive relief
and/or specific performance of the terms hereof.
9.12 Further Action. Each of the parties shall use all reasonable efforts to
take, or cause to be taken, all appropriate action, do or cause to be done all
things reasonably necessary, proper or advisable under applicable laws, and sign
and deliver such documents and other papers, as may be reasonably required to
carry out the provisions of this Agreement, and consummate and make effective
the transactions contemplated by this Agreement.
9.13 Interpretation. As used in this Agreement, the term "PERSON" shall mean and
include any individual, partnership, joint venture, corporation, trust,
unincorporated organization, and government or other department or agency
thereof. Except to the extent the context otherwise requires: (i) any reference
to an Article, Section, Schedule or Exhibit is a reference to an article,
section, schedule or exhibit of this Agreement; (ii) any reference to a section
or a clause is, unless otherwise stated, a reference to a section or a clause of
the Section or subsection in which the reference appears; (iii) the words
"HEREOF", "HEREIN", "HERETO" and the like mean and refer to this Agreement as a
whole, and not merely to the specific Article, Section, subsection, paragraph or
clause in which the respective word appears; (iv) the meaning of defined terms
shall be equally applicable to both the singular and plural forms of the terms
defined; (v) the words "INCLUDING", "INCLUDES" and "INCLUDE" shall be deemed to
always be followed by the words "without limitation"; (vi) references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto; (vii) references to
statutes or regulations are to be construed as including all statutory and
regulatory provisions consolidating, amending or replacing the statute or
regulation referred to; (viii) any table of contents, captions and headings are
for convenience of reference only, and shall not affect the construction of this
Agreement; and (ix) in the computation of periods of time from a specified date
to a later specified date, the word "FROM"
PAGE -27-
28
means "from and including"; the words "TO" and "UNTIL" each mean "to but
excluding"; and the word "THROUGH" means "TO AND INCLUDING"; (x) the word
"KNOWLEDGE" shall mean actual knowledge without a duty to inquire unless the
circumstances are such that a reasonably prudent person would be put on notice
of the need to inquire; and (xi) words having a technical meaning shall be
interpreted with such meaning. No provision of this Agreement shall be construed
against or interpreted to the disadvantage of any of the parties by any court or
other authority by reason of that party having drafted or proposed such
provision.
9.14 Entire Agreement. This Agreement shall be deemed to include the exhibits
and schedules referred to herein. This Agreement, together with the documents
referred to herein, and the documents to be signed and delivered hereunder
contemporaneously with the Closing embody the entire agreement and understanding
of the parties with respect to the subject matter hereof, and supersede and
extinguish all prior agreements, drafts, representations and understandings,
oral or written, relative to such subject matter. Each of the parties hereby
acknowledges that no representations, inducements, promises or agreements,
verbally or otherwise, have been made by any of the parties, or anyone acting on
behalf of any of the parties, which are not embodied in this Agreement, and that
no other agreement, statement or promise not contained in this Agreement shall
be valid or binding. Each of the parties represents and warrants that it has
fully familiarized itself with this Agreement, and that such party has been
fully authorized to sign this Agreement, and all related documents. The parties
agree that this Agreement shall only be binding when signed by the parties in
the blanks immediately below. If the pages of this Agreement are initialed, such
initialing shall be solely for the purpose of identification. If initialing is
on some, but not all, of the pages of this Agreement, that absence of initialing
shall not affect the validity of this Agreement, to the extent it is signed in
the blanks immediately below.
9.15 Public Statement. Prior to the earlier of Closing or the termination of
this Agreement pursuant to Article VIII, none of the parties hereto shall issue
any public statement or communication regarding this Agreement or the
transactions contemplated in this Agreement, except for such disclosures as are
required to comply with applicable law, without the consent of the parties
hereto, which consent shall not be unreasonably withheld.
9.16 Time. Time is of the essence in the performance of this Agreement.
9.17 Drafting. The parties to this Agreement agree that this Agreement is the
product of joint draftsmanship and negotiation and that should any of the terms
be determined by a court, or in any type of quasi-judicial or other proceeding,
to be vague, ambiguous and/or unintelligible, that the same sentences, phrases,
clauses or other wordage or language of any kind shall not be construed against
the drafting party in accordance with California Civil Code Section 1654, and
that each such party to this Agreement waives the effect of such statute.
9.18 Confidentiality.
(1) The parties hereto shall hold in confidence the information contained
in this Agreement and each of them hereby acknowledges and agrees that all
information related to this Agreement, not otherwise known to the public, is
confidential and proprietary and is not to be disclosed to third persons without
the prior written consent of Buyer and Seller except:
(1) to the extent necessary, to comply with any law, rule or
regulation, or the valid order of any governmental agency or any court of
competent jurisdiction;
(2) as part of its normal reporting or review procedure, to its
auditors and its attorneys; or
PAGE -28-
29
(3) as necessary to enforce its rights and perform its agreements and
obligations under this Agreement.
(2) Except as permitted by the Seller Parties, or to the extent necessary
to comply with any law, rule or regulation, or the valid order of any
governmental agency or any court of any governmental agency or any court of
competent jurisdiction, Buyer shall not divulge any information it may have
acquired in the course of its due diligence review of the Company and the
Business prior to Closing, unless and until all the transactions contemplated
hereby have been consummated.
(3) If this Agreement is terminated, Buyer and Seller Parties shall, and
shall use their reasonable, good faith efforts to cause their Representatives
to, destroy or deliver to the originating party, upon request, all documents and
other materials, and all copies thereof, obtained from the originating party in
connection with this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
PAGE -29-
30
(4) The obligations of the parties under this Section 9.18 shall survive
any termination of this Agreement; provided that upon Closing as provided
herein, Buyer shall have no obligation to the Seller Parties under this Section
9.18.
* * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed and
delivered as of the day and year first above written.
BUYER:
ALTERNATIVE MATERIALS TECHNOLOGY, a
Nevada corporation
Date: October 18, 1999 By: /s/ Xxxxxxx Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx
President
Date: October 18, 1999 By: /s/ X. Xxxxxxxx Xxxxxxxx
------------------------------------
X. Xxxxxxxx Xxxxxxxx
Secretary and Treasurer
COMPANY:
U.S. CELLULOSE CO.,
a California corporation
Date: October 18, 1999 By: /s/ Xxxxxxxxx Xxxxxxxxx
------------------------------------
Xxxxxxxxx Xxxxxxxxx
President/Secretary
SELLER:
Date: October 18, 1999 /s/Xxxxxxxxx Xxxxxxxxx
------------------------------------
Xxxxxxxxx Xxxxxxxxx
PAGE -30-
31
SPOUSAL CONSENT
The undersigned ("Spouse"), who is the spouse of XXXXXXXXX XXXXXXXXX
("Xxxxxxxxx"), hereby consents to Xxxxxxxxx'x execution of that certain Stock
Purchase Agreement, dated as of October 15, 1999, by and among ALTERNATIVE
MATERIALS TECHNOLOGY, a Nevada corporation, U.S. CELLULOSE CO., a California
corporation (the "Company"), and Xxxxxxxxx (the "Agreement"). The Spouse
understands that her interest, if any, in the Agreement, in the Company, or in
any of the matters involved in the Agreement is or may be community property of
the Spouse and Xxxxxxxxx. The Spouse acknowledges that the Company is a
business, and that the interest in the Company with which the foregoing
Agreement deals is also a business (that business and that of the Company being
called the "businesses" below) and that the Xxxxxxxxx is operating or managing
the business to the extent provided in the Agreement and has and shall have the
primary management and control of the businesses, to the extent so provided. To
the extent that Spouse may lawfully do so, Spouse confirms that Xxxxxxxxx may
act alone with respect to all matters that the Agreement provides that Xxxxxxxxx
(in any capacity referred to in the Agreement) may act, but Xxxxxxxxx shall give
prior written notice to Spouse of any sale, lease, exchange, encumbrance or
other disposition by Xxxxxxxxx of all or substantially all of the interest of
Xxxxxxxxx and the Spouse in the Agreement or in the Company. The Spouse also
agrees that failure of Xxxxxxxxx to provide any such notice shall not impair,
invalidate, or adversely affect the validity of any transaction or of any
interest transferred as to which notice is above required to be given. The
Spouse also confirms that the authority of Xxxxxxxxx includes transfer of the
stock or assets of the Company pursuant to the Agreement, granting of consents
or entering into agreements pursuant to the Agreement and consenting to and
executing amendments thereof, without further signature or consent of or notice
to Spouse.
Dated: October 18, 1999 /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxxx
PAGE -31-
