EXHIBIT 10.1
THE SECURITIES TO BE ISSUED AND SOLD PURSUANT TO THIS INVESTMENT AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS PROMULGATED
THEREUNDER, ANY SUCH STATE SECURITIES LAWS OR THE PROVISIONS OF THIS
AGREEMENT.
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT (the "Agreement") dated as of September 8, 1997, by
and between XXXX XXXX GROUP PLC, a company incorporated in the United Kingdom
and registered in Scotland ("Investor") and ERC INDUSTRIES, INC., a Delaware
corporation ("ERC").
WHEREAS, ERC needs an infusion of cash in order to pursue its business
interests; and
WHEREAS, Investor is willing to purchase shares of common stock, par value
$0.01 per share of ERC (the "ERC Common Stock") on the terms and conditions
described in this Agreement; and
WHEREAS, ERC desires to sell to Investor and Investor desires to purchase
from ERC, shares of ERC Common Stock subject to the terms and conditions herein;
NOW, THEREFORE, in reliance upon the representations and warranties made
herein and in consideration of the premises and the mutual covenants and
conditions herein contained, the parties agree as follows:
ARTICLE 1
SALE AND PURCHASE OF THE SHARES; CLOSING
1.1 SALE OF SHARES.
At the Closing (as defined in Section 1.3 hereof), and subject to the terms
and conditions hereof, ERC will issue and sell to Investor and Investor
will purchase from ERC 6,250,000 shares of ERC Common Stock (the "ERC
Shares").
1.2 DELIVERIES AT CLOSING.
(a) At the Closing, ERC shall deliver to Investor a certificate duly
issued in the name of Investor representing the ERC Shares purchased
by Investor and the documents contemplated by Section 2.1 below.
(b) At the Closing, Investor shall pay to ERC $10,000,000.00 (the "ERC
Stock Purchase Price"), by wire transfer of immediately available
funds, to such account as ERC may specify in writing prior to the
Closing Date.
(c) At the Closing, ERC shall execute and deliver the Registration Rights
Agreement in the form attached to this Agreement as Exhibit A.
1.3 THE CLOSING.
(a) The closing of the purchase and sale of the ERC Shares hereunder (the
"Closing"), shall be held at the offices of Xxxxxx and Xxxxx, L.L.P.,
0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000. The Closing
shall occur on the day and at the time (the "Closing Date") at which
ERC notifies Investor that all conditions to ERC's purchase of the ERC
Shares shall have been satisfied.
ARTICLE 2
CONDITIONS TO CLOSING
2.1 CONDITIONS TO CLOSING OF INVESTOR. The obligation of Investor to purchase
the ERC Shares on the Closing Date hereunder is subject to the satisfaction
of the following conditions:
(a) The representations and warranties of ERC contained in this Agreement
shall be true and correct in all material respects on and as of the
Closing Date as though made on and as of such date (except for those
made as of a specified date, which shall be true and correct as of
such date) and ERC shall have performed in all material respects its
obligations hereunder required to be performed on or before the
Closing Date and Investor shall have received from ERC an Officers'
Certificate signed by its Chief Executive Officer and its Chief
Financial Officer to the effect of the foregoing;
(b) There shall not have occurred (i) any general suspension of trading in
securities on NASDAQ; or (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States;
(c) There shall not be any temporary or permanent order, injunction or
decree entered or enforced, by or before any United States or U.K.
Government Entity, or any statute, rule or regulation enacted or
promulgated, that would prohibit the transactions contemplated
hereunder;
(d) Since the date of this Agreement, neither ERC and its Subsidiaries,
taken as a whole, nor ERC shall have undergone or suffered any long-
term material adverse change in its business, financial condition or
results of operations;
(e) ERC shall have obtained all consents and approvals which are legally
required to be obtained prior to consummation of the purchase of the
ERC Shares hereunder, which if not obtained would have a material
adverse effect on ERC and its Subsidiaries, taken as a whole;
(f) The Board of Directors of Investor shall have approved this Agreement
and the transactions contemplated hereunder and thereunder on or
before September 8, 1997;
(g) Xxxxxxxx Xxxxxx Refsnes, Inc. shall have issued and delivered a
fairness opinion to ERC and its Special Committee of the Board of
Directors in a form which is reasonably acceptable to the Investor and
which opines that the purchase price of the ERC Shares being purchased
pursuant to this Agreement is reasonable and fair to both ERC and its
stockholders from a financial point of view and such opinion shall not
have been withdrawn, revoked or modified in any material respect; and
(h) ERC shall have delivered a certified copy of the resolutions of its
Special Committee of the Board of Directors and its full Board of
Directors authorizing and approving (1) this Agreement and the
Registration Rights Agreement, (2) the transaction contemplated by
this Agreement and the Registration Rights Agreement, (3) such further
actions as such officers deem necessary or
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appropriate in order to consummate the transaction contemplated by
this Agreement and the Registration Rights Agreement, and further
directing ERC's proper officers to execute and deliver this Agreement
and the Registration Rights Agreement and such other agreements,
certificates and papers as may be necessary or appropriate to
consummate the transactions contemplated by this Agreement and the
Registration Rights Agreement.
The foregoing conditions are for the sole benefit of Investor and may be
asserted by Investor in its sole discretion or may be waived by Investor in
whole or in part at any time in the sole discretion of Investor.
2.2 CONDITIONS TO CLOSING OF ERC. The obligation of ERC to sell the ERC Shares
on the Closing Date hereunder is subject to the satisfaction of the
following conditions:
(a) The representations and warranties of Investor contained in this
Agreement shall be true and correct in all material respects on and as
of the Closing Date as though made on and as of such date (except for
those made as of a specified date, which shall be true and correct as
of such date) and Investor shall have performed in all material
respects its obligations hereunder required to be performed on or
before the Closing Date and ERC shall have received from Investor an
Officers' Certificate signed by one of its representative directors to
the effect of the foregoing;
(b) There shall not have occurred (i) any general suspension of trading in
securities on NASDAQ; or (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States;
(c) There shall not be any temporary or permanent order, injunction or
decree entered or enforced, by or before any United States or U.K.
Government Entity, or any statute, rule or regulation enacted or
promulgated, that would prohibit the transactions contemplated
hereunder;
(d) Each of ERC and Investor shall have obtained all consents and
approvals which are legally required to be obtained prior to the sale
of the ERC Shares hereunder, which if not obtained would have a
material adverse effect on ERC and its Subsidiaries, taken as a whole;
(e) The Board of Directors of Investor shall have approved this Agreement
and the transactions contemplated hereunder and thereunder on or
before September 8, 1997;
(f) Xxxxxxxx Xxxxxx Refsnes, Inc. shall have issued and delivered a
fairness opinion to ERC and its Special Committee of the Board of
Directors in a form which is reasonably acceptable to the Investor and
which opines that the purchase price of the ERC Shares being purchased
pursuant to this Agreement is reasonable and fair to both ERC and its
stockholders from a financial point of view and such opinion shall not
have been withdrawn, revoked or modified in any material respect; and
(g) Investor shall have delivered a certified copy of the resolutions of
its Board of Directors authorizing and approving (1) this Agreement
and the Registration Rights Agreement, (2) the transaction
contemplated by this Agreement and the Registration Rights Agreement,
(3) such further actions as its officers deem necessary or appropriate
in order to consummate the transaction contemplated by this Agreement
and the Registration Rights Agreement, and further directing
Investor's proper officers to execute and deliver this Agreement and
the Registration Rights Agreement and such other agreements,
certificates and papers as may be necessary or appropriate to
consummate the transactions contemplated by this Agreement and the
Registration Rights Agreement.
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The foregoing conditions are for the sole benefit of ERC and may be
asserted by ERC in its sole discretion or may be waived by ERC in whole or in
part at any time in the sole discretion of ERC.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES AS TO ERC
ERC hereby represents and warrants to Investor as follows:
3.1 ORGANIZATION, ETC., OF ERC. ERC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and proposed by ERC
to be conducted, to enter into this Agreement, and to carry out the
provisions of this Agreement, and to consummate the transactions
contemplated hereby and thereby. ERC is duly qualified and in good standing
in each jurisdiction in which the property owned, leased or operated by it
or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified has or would be
reasonably expected (so far as can be foreseen at the time) to have a
material adverse effect on the business, results of operations or financial
condition of ERC and its Subsidiaries taken as a whole. Except as described
in the ERC SEC Reports filed prior to the date hereof or Schedule 3.1 of
the Disclosure Schedule, ERC is not subject to any order, complaint,
proceeding or investigation pending or, to the knowledge of the Responsible
Officers of ERC, threatened, which affects or would be reasonably expected
(so far as can be foreseen at the time) to affect the validity of any
approvals or licenses or impair the renewal thereof, except where the
invalidity of any approvals or licenses or the non-renewal thereof does not
have and would not be reasonably expected (so far as can be foreseen at the
time) to have a material adverse effect on the business, results of
operations or financial condition of ERC and its Subsidiaries taken as a
whole.
3.2 OPERATIONS OF SUBSIDIARIES. Each Subsidiary of ERC is:
(a) a corporation or other legal entity duly organized, validly existing
and (if applicable) in good standing under the laws of the
jurisdiction of its organization and has the requisite corporate or
other organizational power and authority to own its properties and
conduct its business and operations as currently conducted, except
where the failure to be duly organized, validly existing and in good
standing does not have, and would not be reasonably expected (so far
as can be foreseen at the time) to have, a material adverse effect on
the business, results of operations or financial condition of ERC and
its Subsidiaries taken as a whole,
(b) duly qualified and in good standing (if applicable) in each
jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified does not have
and would not be reasonably expected (so far as can be foreseen at the
time) to have a material adverse effect on the business, results of
operations or financial condition of ERC and its Subsidiaries taken as
a whole, and
(c) is subject to no order, complaint, proceeding or investigation pending
or, to the knowledge of ERC's Responsible Officers, threatened, which
would be reasonably expected (so far as can be foreseen at the time)
to affect the validity of any approvals or licenses or impair the
renewal thereof, except where the invalidity of any approvals or
licenses or the non-renewal thereof does not have and would not be
reasonably expected (so far as can be foreseen at the time) to have a
material adverse effect on the business, results of operations or
financial condition of ERC and its Subsidiaries taken as a whole.
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3.3 AUTHORIZATION. This Agreement and all other agreements which are to be
executed and delivered by ERC in connection with the transactions
contemplated by this Agreement, and the consummation of the transactions
contemplated hereby and thereby, have been unanimously approved by the
special committee of the Board of Directors of ERC and have been duly
authorized by all other necessary corporate action on the part of ERC. This
Agreement and all other agreements which are to be executed and delivered
in connection with the consummation of the transactions contemplated by
this Agreement, upon execution and delivery thereof will be, duly executed
and delivered by a duly authorized officer of ERC and this Agreement and
such other agreements constitute valid and binding agreements of ERC,
enforceable against ERC in accordance with their terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws of general application which may affect the
enforcement of creditors' rights generally and by general equitable
principles. ERC has delivered to Investor true and correct copies of
resolutions adopted by the Special Committee and entire Board of Directors
of ERC approving this Agreement.
3.4 CAPITAL STOCK.
(a) The authorized capital stock of ERC consists of (i) 30,000,000 shares
of common stock, par value $0.01 per share, of which 21,248,272 shares
are outstanding as of the date hereof, and (ii) 10,000,000 shares of
serial preferred stock, par value $1.00 per share, none of which are
issued or outstanding as of the date hereof. All outstanding shares of
ERC Common Stock are duly authorized, validly issued, fully paid and
non-assessable, and no class of capital stock of ERC is entitled to
preemptive rights.
(b) There are outstanding on the date hereof no options, warrants or other
rights to acquire or other securities convertible into or exchangeable
for capital stock of ERC. Except as disclosed in ERC SEC Reports filed
prior to the date hereof or Schedule 3.4 of the Disclosure Schedule,
all outstanding shares of capital stock of the Subsidiaries of ERC are
owned by ERC or a direct or indirect wholly-owned Subsidiary of ERC,
free and clear of all Liens (other than Liens described in Schedule
3.4 of the Disclosure Schedule).
(c) Immediately following the consummation of the transactions to be
completed at the Closing, Investor will hold shares representing
approximately 88.5% of the issued and outstanding shares of ERC Common
Stock and there will be no outstanding options, warrants and other
rights to acquire or other securities convertible into or exchangeable
for capital stock of ERC.
3.5 LITIGATION. Except as disclosed in the ERC SEC Reports filed prior to the
date hereof or in Schedule 3.5 of the Disclosure Schedule and except for
any rulemaking proceeding in the ordinary course of business, there are no
actions, suits, investigations or proceedings pending or, to the knowledge
of the Responsible Officers of ERC, threatened against ERC or any of its
Subsidiaries, or any property of ERC or any such Subsidiary, in any court
or before any arbitrator or before or by any Government Entity, except
actions, suits, investigations or proceedings which, in the aggregate, do
not have and would not be reasonably expected (so far as can be foreseen at
the time) to have a material adverse effect on (i) the business, results of
operations or financial condition of ERC and its Subsidiaries taken as a
whole, or (ii) as of the date hereof, the ability of ERC to perform its
obligations under this Agreement.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Except where the violation of such
an agreement or other document would not have a material adverse effect on
the business, results of operations or financial condition of ERC and its
Subsidiaries taken as a whole, neither ERC nor any Subsidiary of ERC is in
violation of any term of:
(a) its charter, by-laws or other organizational documents,
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(b) any material agreement or instrument including any such related to
Indebtedness,
(c) any applicable law, ordinance, rule or regulation of any Government
Entity, or
(d) any applicable order, judgment or decree of any court, arbitrator or
Government Entity, the consequences of which violation, whether
individually or in the aggregate, have or would be reasonably expected
(so far as can be foreseen at the time) to have a material adverse
effect on (i) the business, results of operations or financial
condition of ERC and its Subsidiaries taken as a whole, or (ii) the
ability of ERC to perform its obligations under this Agreement. Except
as set forth on Schedule 3.6 of the Disclosure Schedule, the
execution, delivery and performance of this Agreement by ERC will not
result in any violation of or conflict with, constitute a default
under, or require any consent under any term of the charter, bylaws or
other organizational document of ERC (or any of its Subsidiaries) or
any such agreement, instrument, law, ordinance, rule, regulation,
order, judgment or decree or result in the creation of (or impose any
obligation on ERC or any of its Subsidiaries to create) any Lien upon
any of the properties or assets of ERC or any of its Subsidiaries
pursuant to any such term, except where such violation, conflict or
default, or the failure to obtain such consent, individually or in the
aggregate, does not have and would not be reasonably expected (so far
as can be foreseen at the time) to have a material adverse effect on
(i) the business, results of operations or financial condition of ERC
and its Subsidiaries taken as a whole, or (ii) the ability of ERC to
perform its obligations under this Agreement.
3.7 TAXES. ERC and its Subsidiaries have filed all federal, state, county,
local and material foreign tax returns required to be filed by them, and
have paid all taxes shown to be due thereon, other than taxes appropriate
reserves for which have been made in ERC's financial statements to the
extent required under generally accepted accounting principles in the
United States, except where the failure to file such tax returns or to have
paid such taxes would not, singly or in the aggregate have a material
adverse effect on the business, results of operations or financial
condition of ERC and its Subsidiaries, taken as a whole. There are no
assessments or adjustments that have been asserted in writing against ERC
or its Subsidiaries for any period for which ERC has not made appropriate
reserves in ERC's financial statements to the extent required by generally
accepted accounting principles in the United States.
3.8 INFORMATION SUPPLIED.
(a) ERC has filed all reports and schedules (including without limitation
proxy statements) required to be filed with the SEC since December 31,
1995 (collectively, the "ERC SEC Reports"). None of the ERC SEC
Reports, as of their respective dates (as amended through the date
hereof), contained any untrue statement of material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading. All of the ERC SEC Reports, as of
their respective dates (as amended through the date hereof), complied
in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the
applicable rules and regulations thereunder.
3.9 BROKERS AND FINDERS. Except for the fees and expenses payable to Xxxxxxxx
Xxxxxx Refsnes, Inc., or except as shown on Schedule 3.9, ERC has not
employed any investment banker, broker, finder, consultant or intermediary
in connection with the transactions contemplated by this Agreement which
would be entitled to any investment banking, brokerage, finder's or similar
fee or commission in connection with this Agreement, or the transactions
contemplated hereby.
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3.10 IMPROPER AND OTHER PAYMENTS. To the best knowledge of the Responsible
Officers of ERC,
(a) none of ERC, any wholly-owned Subsidiary of ERC or any director,
officer, employee, agent or representative of ERC or any such
Subsidiary of ERC or any person or entity acting on behalf of any of
them, has made, paid or received any bribes, kickbacks or other
similar payments to or from any person or entity, whether lawful or
unlawful;
(b) no improper foreign payment (as defined in the Foreign Corrupt
Practices Act) has been made; and
(c) the internal accounting controls of ERC and its Subsidiaries are
adequate to detect any of the foregoing, except in each case as would
not have a material adverse effect on the business, results of
operations or financial condition of ERC and its Subsidiaries, taken
as a whole.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor represents and warrants to ERC and ERC as follows:
4.1 ORGANIZATION, ETC., OF INVESTOR. Investor is a corporation duly organized,
validly existing and in good standing under the laws of the United Kingdom
and has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and proposed by
Investor to be conducted, to enter into this Agreement and to carry out the
provisions of this Agreement and to consummate the transactions
contemplated hereby.
4.2 AUTHORIZATION. This Agreement and all other agreements which are to be
executed and delivered by Investor in connection with the transactions
contemplated by this Agreement, and the consummation of the transactions
contemplated hereby and thereby, have been approved by the Board of
Directors of Investor and have been duly authorized by all other necessary
corporate action on the part of Investor. This Agreement and all other
agreements which are to be executed and delivered in connection with the
consummation of the transactions contemplated by this Agreement, upon
execution and delivery thereof will be, duly executed and delivered by a
duly authorized officer of Investor and this Agreement and such other
agreements constitute valid and binding agreements of Investor, enforceable
against Investor in accordance with their terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws of general application which may affect the enforcement of
creditors' rights generally and by general equitable principles. Investor
has delivered to ERC true and correct copies of resolutions adopted by the
Board of Directors of Investor approving this Agreement.
4.3 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The execution, delivery and
performance of this Agreement by Investor will not result in any violation
of or conflict with, constitute a default under, or require any consent
under any term of, the charter, by-laws or other organizational documents
of Investor or any of its Subsidiaries or any agreement to which Investor
is a party or by which it is bound or any applicable law, ordinance, rule,
regulation, order, judgment or decree, except where such violation,
conflict or default, or the failure to obtain such consent, individually or
in the aggregate, does not have and would not be reasonably expected (so
far as can be foreseen at the time) to have a material adverse effect on
the ability of Investor to perform its obligations under this Agreement.
4.4 INVESTMENT. Investor is acquiring the ERC Shares for investment for its
own account and not with the view to, or for resale in connection with, any
distribution thereof. Investor is an "accredited investor" as such term is
defined by Regulation D under the Securities Act. Investor understands
that (i) the ERC Shares have not been registered under the Securities Act
of 1933, as amended (the "Securities Act") by reason of exemption from the
registration provisions of the Securities Act which depends upon, among
other things,
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the bona fide nature of its investment intent as expressed herein, and (ii)
the stock certificate or certificates representing the ERC Shares will
contain an appropriate Securities Act restrictive legend.
4.5 BROKERS AND FINDERS. Investor has not employed any investment banker,
broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby or
thereby.
4.6 FINANCING. Investor has sufficient funds to perform its obligations
hereunder.
ARTICLE 5
TERMINATION
5.1 TERMINATION. This Agreement may be terminated at any time on or before the
Closing Date:
(a) by mutual written consent of ERC and Investor;
(b) by Investor, by written notice to ERC, if
(i) there shall have been any material breach of any representation
or warranty, or any material breach of any covenant or
agreement, of ERC hereunder, and such breach shall not have been
remedied before the Closing, or
(ii) the Special Committee of the Board of Directors of ERC shall
withdraw or modify in any manner materially adverse to Investor
its approval or recommendation of this Agreement, or resolve by
Board resolution to take such action;
(c) by ERC, by written notice to Investor, if there shall have been any
material breach of any representation or warranty, or any material
breach of any covenant or agreement, of Investor hereunder, and such
breach shall not have been remedied before the Closing;
(d) by Investor if the Board of Directors of Investor shall not have
approved this Agreement and the transactions contemplated hereunder on
or before the Closing Date; or
(e) by either ERC or Investor if the Special Committee of the Board of
Directors of ERC shall not have received, within five business days
prior to the Closing Date, the opinion of Xxxxxxxx Xxxxxx Refsnes,
Inc. to the effect that the consideration to be received by ERC in
exchange for the ERC Shares is fair to ERC and its stockholders from a
financial point of view.
5.2 EFFECT OF TERMINATION. In the event of termination of this Agreement in
compliance with Section 5.1, there shall be no liability on the part of any
party hereto or any of their respective officers or directors hereunder.
ARTICLE 6
INDEMNIFICATION
6.1 INDEMNIFICATION. ERC shall, until the expiration of the applicable statute
of limitations, indemnify Investor and its Affiliates and each director,
officer, employee, advisor and agent of investor and its Affiliates
(collectively, the "Investor Indemnified Parties") against, and hold
Investor Indemnified Parties harmless from, all losses, claims, damages,
liabilities, costs (including the costs of attorneys' fees) and expenses
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relating to or in connection with any third party claim or suit and
including any and all attorneys' fees and expenses and costs of
investigation and litigation incurred in enforcing this Section 6.1
(collectively, "Investor Losses"), arising out of or related to (i) a
breach by ERC of any agreement, covenant, representation or warranty
contained in this Agreement, or (ii) any untrue or alleged untrue statement
of a material fact contained in any ERC SEC Filings, the Disclosure
Schedule or any other instruments, agreement, statement, schedule or
document, or the omission or the alleged omission to state therein a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
whether or not the transactions contemplated by this Agreement are
consummated, and whether or not an investigation or proceeding requires the
participation of, or is commenced or filed against, Investor because of
this Agreement or the transactions contemplated hereby or thereby,
provided, however, that ERC shall not be liable in any such case set forth
in clause (ii) to the extent but only to the extent that any Investor Loss
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with investor information furnished by Investor expressly for
use in such ERC SEC Filings or any other instruments, agreements,
statements, schedules or documents, if any.
ERC agrees to reimburse Investor Indemnified Parties promptly for all such
Investor Losses as they are incurred by Investor Indemnified Parties, including
in connection with the investigation of, preparation for, or defense of, any
pending or threatened claim, whether or not such claim, action or proceeding is
initiated or brought by or on behalf of ERC. The obligations of ERC under this
Section 6.1 shall survive the repurchase or redemption of the ERC Shares, any
transfer of the ERC Shares by Investor and the termination of this Agreement.
6.2 INDEMNIFICATION. Investor ("Stockholder Indemnitor") shall, until the
expiration of the applicable statute of limitations, indemnify ERC, and its
Subsidiaries and each director, officer, employee, advisor and agent of ERC
and its respective Subsidiaries (collectively, the "ERC Indemnified
Parties") against, and hold ERC Indemnified Parties harmless from, all
losses, claims, damages, liabilities, costs (including the costs of
attorneys' fees) and expenses relating to or in connection with any third
party claim or suit and including any and all attorneys' fees and expenses
and costs of investigation and litigation incurred in enforcing this
Section 6.2 (collectively, "ERC Losses"), arising out of or related to (i)
a breach by Investor of any agreement, covenant, representation or warranty
contained in this Agreement, or (ii) any untrue or alleged untrue statement
of a material fact contained in this Agreement, or any other instruments,
agreement, statement, schedule or document, or the omission or the alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, whether or not the transactions contemplated by this
Agreement are consummated, and whether or not an investigation or
proceeding requires the participation of, or is commenced or filed against,
ERC because of this Agreement, or the transactions contemplated hereby or
thereby, in each such case set forth in clause (ii) to the extent but only
to the extent that any ERC Loss arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with investor information
furnished by such Stockholder Indemnitor expressly for use in any
instrument, agreement, statement, schedule or document.
Stockholder Indemnitor agrees to reimburse ERC Indemnified Parties promptly
for all such ERC Losses as they are incurred by ERC Indemnified Parties,
including in connection with the investigation of, preparation for, or defense
of, any pending or threatened claim, whether or not such claim, action or
proceeding is initiated or brought by or on behalf of ERC. The obligations of
Stockholder Indemnitor under this Section 6.2 shall survive the repurchase or
redemption of the ERC Shares, any transfer of the ERC Shares by Investor and the
termination of this Agreement.
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ARTICLE 7
MISCELLANEOUS
7.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
7.2 SURVIVAL. None of the representations and warranties made herein shall
survive the earlier of the termination of this Agreement in accordance with
its terms and the Closing Date.
7.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and
permitted assigns. No party hereto shall assign any of its rights,
interests or obligations hereunder without the prior written consent of the
other parties, except that Investor may assign its rights, interests and
obligations hereunder to a wholly-owned, direct or indirect, Subsidiary
provided that Investor remains primarily liable for all of the obligations
of Investor hereunder.
7.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the
Registration Rights Agreement constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof.
Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated except by a written instrument signed by each
party hereto.
7.5 NOTICES, ETC. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, or by express courier, or delivered either by hand or by
messenger or by telecopy (and confirmed by one of the foregoing methods),
addressed as follows:
To Investor, at:
Xxxx Xxxx Group PLC
Xxxx Xxxx House
Xxxxxxxxx Road, East Tullos
Aberdeen AB1 4AX
Scotland
Telecopy No.: 011-44-1-224-871997
Attention: Xxxx Xxxxxx, Esq.
With a copy to:
Xxxxxx and Xxxxx, L.L.P.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
To ERC, at:
00000 Xxxx Xxx
Xxxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
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with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxxxx, Xxxxx 0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
or at such other address as any party shall have furnished to the other parties
in writing.
7.6 SEPARABILITY. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
7.7 PUBLICITY. So long as this Agreement is in effect, except as may be
required by applicable law or requirements or applicable SEC or NASDAQ
requirements, neither of the parties shall, nor shall it permit any of its
respective Subsidiaries, employees, agents, or affiliates to, issue or
cause the publication of any press release or other public announcement
with respect to the transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be unreasonably
withheld.
7.8 EXPENSES. ERC shall pay all of the expenses and legal fees incurred with
respect to this Agreement and the transactions contemplated hereby.
7.9 TITLES AND GENDER. The titles of the Sections and Subsections of this
Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. Whenever used herein, the
singular member includes the plural, the plural includes the singular, and
the use of either gender shall include both genders.
7.10 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
7.11 DEFINITIONS. Capitalized terms used in this Agreement shall have the
following meanings:
(a) "Affiliate" means, with respect to any person, any other person
directly or indirectly Controlling, Controlled by, or under common
Control with such person. "Control" (including, with correlative
meanings, the terms "Controlled by" and "under common Control with")
as used with respect to any person, means possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through ownership of
voting securities, by contract or otherwise.
(b) "Closing" has the meaning set forth in Section 1.3.
(c) "Closing Date" has the meaning set forth in Section 1.3.
(d) "Disclosure Schedule" means the Disclosure Schedule dated the date
hereof and delivered by ERC to Investor concurrently herewith.
(e) "ERC" means ERC Industries, Inc., a Delaware corporation.
(f) "ERC Common Stock" has the meaning set forth in the Preamble to this
Agreement.
(g) "ERC Loss" has the meaning set forth in Section 6.2.
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(h) "ERC SEC Reports" has the meaning set forth in Section 3.8.
(i) "ERC Shares" has the meaning set forth in Section 1.1(a).
(j) "ERC Stock Purchase Price" has the meaning set forth in
Section 1.2(a).
(k) "Exchange Act" has the meaning set forth in Section 3.8.
(l) "Government Entity" means any court, administrative agency or
commission or government or governmental authority or instrumentality.
(m) "Investor" means Xxxx Xxxx Group PLC, a United Kingdom company
registered in Scotland.
(n) "Investor Indemnified Parties" has the meaning set forth in
Section 6.1.
(o) "Investor Losses" has the meaning set forth in Section 6.1.
(p) "Lien" means any lien, mortgage, charge, encumbrance, security
interest, claim or option of any nature.
(q) "Responsible Officer" means any one of Xxxxxxx X. Xxxxxx or
Xxxxx Xxxxx.
(r) "Stockholder Indemnitor" has the meaning set forth in Section 6.2.
(s) "Subsidiary" of any corporation means a business entity fifty percent
or more of whose voting securities or similar economic interests are
owned directly or indirectly by such corporation.
7.12 JURISDICTION; CONSENT TO SERVICE OF PROCESS; NO JURY TRIAL.
(a) Except as provided in the next paragraph, the parties hereto agree
that all disputes between them arising out of, connected with, related
to, or incidental to the relationship established between them
pursuant to this Agreement, and whether arising in contract, tort,
equity, or otherwise, shall be resolved only by state or federal
courts located in Houston, Texas, but the parties hereto acknowledge
that any appeals from those courts may have to be heard by a court
located outside of Houston, Texas. Each of the parties hereto waives
in all disputes any objection that it may have to the location of the
court considering the dispute including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens.
(b) Each of the parties hereto agrees that the other party to this
Agreement shall have the right, to the extent permitted by applicable
law, to proceed against it or its property in a court in any location
reasonably selected in good faith to enable such other parties to
realize on such property, or to enforce a judgment or other court
order entered in favor of any such other party. Each of the parties
hereto waives any objection that it may have to the location of the
court in which any other party to this Agreement has commenced a
proceeding described in this paragraph including, without limitation,
any objection to the laying of venue or based on the grounds of forum
non conveniens.
(c) The parties hereto each waives any right to have a jury participate in
resolving any dispute, whether sounding in contract, tort, or
otherwise arising out of, connected with, related to or incidental to
the relationship established between them pursuant to this Agreement.
Instead, any disputes resolved in court will be resolved in a bench
trial without a jury.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective proper and duly authorized officers
as of the day and year first above written.
ERC INDUSTRIES, INC.
By: /s/ Xxxxxxx Xxxxxx, President
__________________________________
XXXX XXXX GROUP PLC
By: /s/ J. Xxxxx X. Xxxxx, Director
__________________________________
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