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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made as of
June 12, 1998, by and among Nu-Wave Health Products, Inc., a Florida corporation
("Nu-Wave"), Nu-Wave Acquisition, Inc., a Florida corporation ("Nu-Wave Sub"),
Energy Factors, Inc., a Florida corporation (the "Company"), U.S. Diversified
Technologies, Inc., a Florida corporation (the "Shareholder"), Xxxx Xxxxxxxxxx,
an individual resident at 0000 Xxxxxx Xxxxx Xxxx., Xxxxxxxx, Xxxxxxx 00000,
Xxxxx Xxxxxxx, an individual resident at 00000 Xxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxx,
and Xxxxxx Deutsch, an individual resident at 000 XxXxxxxxxx, Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000 (the "Parent Shareholders").
RECITALS
This Agreement contemplates a tax-free merger of the Nu-Wave Sub with
and into the Company in a reorganization pursuant to IRC Section 368(a)(1)(A).
The Shareholder will receive capital stock in Nu-Wave in exchange for its
capital stock in the Company. Nu-Wave is the owner of 100% of the issued and
outstanding capital stock of the Nu-Wave Sub. The Nu-Wave Sub and the Company
expect that the Merger will further certain of their business objectives,
including without limitation, providing expanded manufacturing facilities for
Nu-Wave and additional sales for the Company.
The Shareholder owns 100% of the issued and outstanding capital stock
of the Company and the Parent Shareholders collectively own approximately 90% of
the issued and outstanding capital stock of the Shareholder.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACQUIRED COMPANIES" -- the Company and its Subsidiaries,
collectively.
"AMENDMENT" -- as defined in Section 12.1.
"APPLICABLE CONTRACT" -- any Contract (a) under which any
Acquired Company has or may acquire any rights, (b) under which any Acquired
Company has or may become subject to any obligation or liability, or (c) by
which any Acquired Company or any of the assets owned or used by it is or may
become bound.
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"APPROVAL DATE" -- the date that, under the FBCA, an amendment
to Article III of the Nu-Wave Articles of Incorporation becomes effective, which
date shall not be sooner than the date that Nu-Wave shareholder consents to such
amendment are effective as permitted under SEC Rule 14c-2(b).
"AVERAGE CLOSING PRICE" -- the average closing price of the
Nu-Wave common stock on the Nasdaq Stock Market, or in the event the Nasdaq
Stock Market is not the principal market on which the Nu-Wave common stock is
then traded or quoted, any principal stock exchange or market where the Nu-Wave
common stock is listed or included, for a period of 20 consecutive trading days
prior to the date 2 years after the date of this Agreement.
"ARTICLES OF MERGER" -- as defined in Section 2.3(c).
"BALANCE SHEET" -- as defined in Section 3.4.
"BEST EFFORTS" -- the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible.
"BREACH" -- a "Breach" of a representation, warranty,
covenant, obligation, or other provision of this Agreement or any instrument
delivered pursuant to this Agreement will be deemed to have occurred if there is
or has been (a) any inaccuracy in or breach of, or any failure to perform or
comply with, such representation, warranty, covenant, obligation, or other
provision, or (b) any claim (by any Person) or other occurrence or circumstance
that is or was inconsistent with such representation, warranty, covenant,
obligation, or other provision, and the term "Breach" means any such inaccuracy,
breach, failure, claim, occurrence, or circumstance.
"NU-WAVE SUB" -- as defined in the first paragraph of this
Agreement.
"NU-WAVE SUB SHARE" -- any share of common stock, $.01 per
share, of Nu-Wave Sub.
"CLOSING" -- as defined in Section 2.2.
"CLOSING DATE" -- the date and time as of which the Closing
actually takes place.
"COMPANY" -- as defined in the Recitals of this Agreement.
"COMPANY SHARES" -- the issued and outstanding shares of
common stock, no par value, of the Company.
"CONSENT" -- any approval, consent, ratification, waiver, or
other authorization (including any Governmental Authorization).
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"CONTEMPLATED TRANSACTIONS" -- all of the transactions
contemplated by this Agreement, including:
(a) the Merger;
(b) the execution, delivery, and performance
of the Employment Agreement, the Noncompetition Agreements, the Releases,
the Lockup Agreement, and the Option Agreement; and
(c) the performance by Nu-Wave Sub, Nu-Wave,
the Shareholder, the Parent Shareholders and the Company of their respective
covenants and obligations under this Agreement.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES" -- as defined in Section 10.2.
"DISCLOSURE LETTER" -- the disclosure letter delivered by the
Company to Nu-Wave Sub concurrently with the execution and delivery of this
Agreement.
"DISSENTING SHARE" -- any Company Share which any shareholder
of the Company who or which has exercised his or its appraisal rights under the
FBCA holds of record.
"EFFECTIVE TIME" -- as defined in Section 2.4(a).
"EMPLOYMENT AGREEMENT" -- as defined in Section 7.4(e).
"ENCUMBRANCE" -- any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life, and any
other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" -- any cost,
damages, expense, liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to:
(a) any environmental, health, or safety
matters or conditions (including on-site or off-site contamination,
occupational safety and health, and regulation of chemical substances or
products);
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(b) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings, damages, losses, claims,
demands and response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental
Law or Occupational Safety and Health Law for cleanup costs or corrective
action, including any investigation, cleanup, removal, containment, or other
remediation or response actions ("Cleanup") required by applicable Environmental
Law or Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or
(d) any other compliance, corrective,
investigative, or remedial measures required under Environmental Law or
Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW" -- any Legal Requirement that requires or
relates to:
(a) advising appropriate authorities, employees,
and the public of intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or other prohibitions
and of the commencements of activities, such as resource extraction or
construction, that could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels
the release of pollutants or hazardous substances or materials into the
Environment;
(c) reducing the quantities, preventing the
release, or minimizing the hazardous characteristics of wastes that are
generated;
(d) assuring that products are designed,
formulated, packaged, and used so that they do not present unreasonable
risks to human health or the Environment when used or disposed of;
(e) protecting resources, species, or ecological
amenities;
(f) reducing to acceptable levels the risks
inherent in the transportation of hazardous substances, pollutants, oil, or
other potentially harmful substances;
(g) cleaning up pollutants that have been
released, preventing the threat of release, or paying the costs of such
clean up or prevention; or
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(h) making responsible parties pay private
parties, or groups of them, for damages done to their health or the
Environment, or permitting self-appointed representatives of the public interest
to recover for injuries done to public assets.
"ERISA" -- the Employee Retirement Income Security Act of 1974
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"FACILITIES" -- any real property, leaseholds, or other
interests currently or formerly owned or operated by any Acquired Company and
any buildings, plants, structures, or equipment (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned or operated by any Acquired
Company.
"FBCA" -- the Florida Business Corporation Act, as amended.
"FORM 10" -- the Form 10-SB dated August 18, 1997 filed by
Nu-Wave with the SEC under Section 12(g) of the Securities Exchange Act of 1934.
"GAAP" -- generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the Balance
Sheet and the other financial statements referred to in Section 3.4(b) were
prepared.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
"GOVERNMENTAL BODY" -- any:
(a) nation, state, county, city, town, village,
district, or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign,
or other government;
(c) governmental or quasi-governmental authority
of any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.
"HAZARDOUS ACTIVITY" -- the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, or use
(including any withdrawal or other use of groundwater) of Hazardous Materials
in, on, under, about, or from the Facilities or any part thereof into the
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Environment, and any other act, business, operation, or thing that increases the
danger, or risk of danger, or poses an unreasonable risk of harm to persons or
property on or off the Facilities, or that may affect the value of the
Facilities or the Acquired Companies.
"HAZARDOUS MATERIALS" -- any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"INTELLECTUAL PROPERTY ASSETS" -- as defined in Section 3.22.
"INTERIM BALANCE SHEET" -- as defined in Section 3.4.
"IRC" -- the Internal Revenue Code of 1986 or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
"IRS" -- the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
"KNOWLEDGE" -- an individual will be deemed to have
"Knowledge" of a particular fact or other matter if:
(a) such individual is actually aware of such
fact or other matter; or
(b) a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the
course of conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"LOCKUP AGREEMENT" -- as defined in Section 7.4(h).
"MERGER" -- as defined in Section 2.1.
"NONCOMPETITION AGREEMENTS" -- defined in Section 7.4(f).
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"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"OPTION AGREEMENT" -- as defined in Section 7.4(j).
"ORDER" -- any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a
Person will be deemed to have been taken in the "Ordinary Course of Business"
only if:
(a) such action is consistent with the past
practices of such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person;
(b) such action is not required to be authorized
by the board of directors of such Person (or by any Person or group of
Persons exercising similar authority) and is not required to be specifically
authorized by the parent company (if any) of such Person; and
(c) such action is similar in nature and
magnitude to actions customarily taken, without any authorization by the
board of directors (or by any Person or group of Persons exercising similar
authority), in the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate
of incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"PERSON" -- any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.
"PLAN" -- as defined in Section 3.13.
"PLAN OF MERGER" -- as defined in Section 2.3(c).
"PREFERRED STOCK" -- the shares of Nu-Wave Convertible Series
A Preferred Stock created pursuant to the Articles of Amendment in the form of
Exhibit 1.
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"PROCEEDING" -- any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"REGISTRATION RIGHTS AGREEMENT" -- as defined in
Section 7.4(h).
"RELATED PERSON" -- with respect to a particular individual:
(a) each other member of such individual's
Family;
(b) any Person that is directly or indirectly
controlled by such individual or one or more members of such individual's
Family;
(c) any Person in which such individual or
members of such individual's Family hold (individually or in the aggregate)
a Material Interest; and
(d) any Person with respect to which such
individual or one or more members of such individual's Family serves as a
director, officer, partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly
controls, is directly or indirectly controlled by, or is directly or
indirectly under common control with such specified Person;
(b) any Person that holds a Material Interest
in such specified Person;
(c) each Person that serves as a director,
officer, partner, executor, or trustee of such specified Person (or in a
similar capacity);
(d) any Person in which such specified Person
holds a Material Interest;
(e) any Person with respect to which such
specified Person serves as a general partner or a trustee (or in a similar
capacity); and
(f) any Related Person of any individual
described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse and former spouses, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 20% of the
outstanding voting power of a
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Person or equity securities or other equity interests representing at least
20% of the outstanding equity securities or equity interests in a Person.
"RELEASE" -- any spilling, leaking, emitting, discharging,
depositing escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
"RELEASES" -- as defined in Section 7.4(c).
"REPRESENTATIVE" -- with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"SEC" -- the Securities and Exchange Commission.
"SECURITIES ACT" -- the Securities Act of 1933 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"SELLER" -- as defined in the first paragraph of this
Agreement.
"SUBSIDIARY" -- with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"SURVIVING CORPORATION" -- as defined in Section 2.1.
"TARGET PRICE" -- as defined in Section 14.
"TAX RETURN" -- any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE" -- a substantial likelihood of a Release
that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.
"THREATENED" -- a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or statement has
been made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or
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any other circumstances exist, that would lead a prudent Person to conclude
that such a claim, Proceeding, dispute, action, or other matter is likely to be
asserted, commenced, taken, or otherwise pursued in the future.
2. BASIC TRANSACTION; CLOSING
2.1 THE MERGER. On and subject to the terms and conditions of
this Agreement, (i) the Nu-Wave Sub will merge with and into the Company (the
"Merger") at the Effective Time, (ii) the Company will be the corporation
surviving the Merger (the "Surviving Corporation"), and (iii) the 60 outstanding
Company Shares will be exchanged for 400,000 shares of Preferred Stock.
2.2 CLOSING. The closing of the Merger (the "Closing") will
take place at the offices of Nu-Wave Sub's counsel at 000 Xxxxx Xxxxx Xxxxxx,
Xxxxx 0000, Xxxxx, Xxxxxxx 00000 at 4:00 p.m. (local time) or at such other time
and place as the parties may agree. Subject to the provisions of Section 9,
failure to consummate the Contemplated Transactions provided for on the date and
time and at the place determined pursuant to this Section 2.2 will not result in
the termination of this Agreement and will not relieve any party of any
obligation under this Agreement.
2.3 ACTIONS AT THE CLOSING. At the Closing:
(a) The Company will deliver to the Nu-Wave
Sub the various certificates, instruments, and documents referred to in
Section 7.4;
(b) The Nu-Wave Sub will deliver to the Company
the various certificates, instruments, and documents referred to in
Section 8.4; and
(c) The Nu-Wave Sub and the Company will file
with the Secretary of State of the State of Florida Articles of Merger and a
Plan of Merger as an exhibit thereto in the form attached as Exhibit 2.3(c) (the
"Articles of Merger").
2.4 EFFECT OF MERGER.
(a) The Merger shall become effective at the
time (the "Effective Time") the Nu-Wave Sub and the Company file the
Articles of Merger with the Secretary of State of the State of Florida. The
Merger shall have the effect set forth in the FBCA. The Surviving Corporation
may, at any time after the Effective Time, take any action (including execution
and delivering any document) in the name and on behalf of either the Nu-Wave Sub
or the Company in order to carry out and effectuate the transactions
contemplated by this Agreement;
(b) The Articles of Incorporation of the Company
as amended as provided for in the Articles of Merger will become the
Articles of Incorporation of the Surviving Corporation;
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(c) The Bylaws of the Nu-Wave Sub in effect at
and as of the Effective Time will become the Bylaws of the Surviving Corporation
without any modification or amendment in the Merger;
(d) The directors and officers of the Nu-Wave
Sub in office at and as of the Effective Time will become the directors and
officers of the Surviving Corporation (retaining their respective positions and
terms of office);
(e) At and as of the Effective Time, all 60
issued and outstanding Company Shares collectively shall be exchanged for, after
the Approval Date, a total of 400,000 shares of Preferred Stock upon the
Approval Date. The Company Shares shall not be deemed to be outstanding or to
have any rights other than those set forth above in this Section 2.4(e) after
the Effective Time; and,
(f) Each Nu-Wave Sub Share issued and
outstanding at and as of the Effective Time will, without more, be converted
into and exchanged for one share of common stock of Energy Factors.
2.5 DELIVERY OF CERTIFICATE. As soon as practicable after the
Approval Date, Nu-Wave shall issue and deliver to the Shareholder a certificate
for the Preferred.
2.6 CLOSING OF TRANSFER RECORDS. After the close of business
on the Closing Date, transfers of the Company Shares outstanding prior to the
Effective Time shall not be made on the stock transfer books of the Surviving
Corporation.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE SHAREHOLDER, AND
THE PARENT SHAREHOLDERS. The Company, the Shareholder, and the Parent
Shareholders jointly and severally represent and warrant to Nu-Wave Sub as
follows:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Disclosure Letter contains
a complete and accurate list for each Acquired Company of its name, its
jurisdiction of incorporation, other jurisdictions in which it is authorized to
do business, and its capitalization (including the identity of each stockholder
and the number of shares held by each). Each Acquired Company is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under Applicable Contracts. Each Acquired Company is duly qualified to do
business as a foreign corporation and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
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(b) The Company has delivered to Nu-Wave Sub
copies of the Organizational Documents of each Acquired Company, as currently in
effect.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid,
and binding obligation of the Company, the Shareholder, and the Parent
Shareholders, enforceable against the Shareholder and the Parent Shareholders in
accordance with its terms. Upon the execution and delivery by the Shareholder
and the Parent Shareholders, the Company's and Shareholders' Releases, and the
Noncompetition Agreements (collectively, the "Company's Closing Documents"), the
Company's Closing Documents will constitute the legal, valid, and binding
obligations of the Shareholder and the Parent Shareholders, enforceable against
the Shareholder and the Parent Shareholders in accordance with their respective
terms. The Company, the Shareholder and the Parent Shareholders have the
absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Company's Closing Documents and to perform their
obligations under this Agreement and the Company's Closing Documents.
(b) Except as set forth in Part 3.2 of the
Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result
in a violation of (A) any provision of the Organizational Documents of the
Acquired Companies, or (B) any resolution adopted by the board of directors or
the stockholders of any Acquired Company;
(ii) contravene, conflict with, or result
in a violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which any
Acquired Company or the Shareholder, or any of the assets owned or used by any
Acquired Company, may be subject;
(iii) contravene, conflict with, or result
in a violation of any of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any Acquired Company or that
otherwise relates to the business of, or any of the assets owned or used by, any
Acquired Company;
(iv) cause Nu-Wave Sub or any Acquired
Company to become subject to, or to become liable for the payment of, any Tax;
(v) cause any of the assets owned by any
Acquired Company to be reassessed or revalued by any taxing authority or other
Governmental Body;
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(vi) contravene, conflict with, or result
in a violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract; or
(vii) result in the imposition or creation
of any Encumbrance upon or with respect to any of the assets owned or used by
any Acquired Company.
Except as set forth in Part 3.2 of the Disclosure
Letter, the Company is not or will not be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
(c) The Shareholder is acquiring the Preferred
Stock for its own account and not with a view to its distribution within the
meaning of Section 2(11) of the Securities Act.
3.3 CAPITALIZATION. The authorized equity securities of the
Company consists of sixty (60) shares, no par value, of which sixty (60) shares
are issued, outstanding and owned of record and beneficially by the Shareholder.
The Shareholder is and will be on the Closing Date the record and beneficial
owner and holder of the Company Shares, free and clear of all Encumbrances. With
the exception of the Company Shares (all of which are owned by Shareholder), all
of the outstanding equity securities and other securities of each Acquired
Company are owned of record and beneficially by one or more of the Acquired
Companies, free and clear of all Encumbrances. No legend or other reference to
any purported Encumbrance appears upon any certificate representing equity
securities of any Acquired Company. All of the outstanding equity securities of
each Acquired Company have been duly authorized and validly issued and are fully
paid and nonassessable. There are no Contracts relating to the issuance, sale,
or transfer of any equity securities or other securities of any Acquired
Company. None of the outstanding equity securities or other securities of any
Acquired Company was issued in violation of the Securities Act or any other
Legal Requirement. No Acquired Company owns, or has any Contract to acquire, any
equity securities or other securities of any Person (other than Acquired
Companies) or any direct or indirect equity or ownership interest in any other
business.
3.4 FINANCIAL STATEMENTS. The Company has delivered to
Nu-Wave Sub: (a) audited consolidated balance sheets of the Acquired Companies
as at December 31 in each of the years 1995 through 1996, and the related
audited consolidated statements of income, changes in stockholders' equity, and
cash flow for each of the fiscal years then ended, together with the report
thereon of Xxxx & Company, P.A., independent certified public accountants, (b) a
draft copy of consolidated balance sheet of the Acquired Companies as at
December 31, 1997 (including the notes thereto, the "Balance Sheet"), and the
related consolidated statements of income, changes and stockholders' equity, and
cash flow for the fiscal year then ended, together with the report thereon of
Xxxx & Company, P.A., independent certified public accountants, and (c) an
unaudited consolidated balance sheet of the Acquired Companies as at April 30,
1998 (the "Interim Balance Sheet") and the related unaudited consolidated
statements of income, changes
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in stockholders' equity, and cash flow for the four months then ended. Such
financial statements and notes fairly present the financial condition and the
results of operations, changes in stockholders' equity, and cash flow of the
Acquired Companies as at the respective dates of and for the periods referred to
in such financial statements, all in accordance with GAAP; the financial
statements referred to in this Section 3.4 reflect the consistent application of
such accounting principles throughout the periods involved. No financial
statements of any Person other than the Acquired Companies are required by GAAP
to be included in the consolidated financial statements of the Company.
3.5 BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other records of the Acquired Companies, all of which
have been made available to Nu-Wave Sub, are complete and correct and have been
maintained in accordance with sound business practices and the requirements of
Section 13(b)(2) of the Securities Exchange Act of 1934, as amended (regardless
of whether or not the Acquired Companies are subject to that Section), including
the maintenance of an adequate system of internal controls. The minute books of
the Acquired Companies contain accurate and complete records of all meetings
held of, and corporate action taken by, the stockholders, the Boards of
Directors, and committees of the Boards of Directors of the Acquired Companies,
and no meeting of any such stockholders, Board of Directors, or committee has
been held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of the Acquired Companies.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. Part 3.6 of the
Disclosure Letter contains a complete and accurate list of all real property,
leaseholds, or other interests therein owned by any Acquired Company. The
Company has delivered or made available to Nu-Wave Sub copies of the deeds and
other instruments (as recorded) by which the Acquired Companies acquired such
real property and interests, and copies of all title insurance policies,
opinions, abstracts, and surveys in the possession of the Company or the
Acquired Companies and relating to such property or interests. The Acquired
Companies own (with good and marketable title in the case of real property,
subject only to the matters permitted by the following sentence) all the
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) that they purport to own located in the facilities owned or operated
by the Acquired Companies or reflected as owned in the books and records of the
Acquired Companies, including all of the properties and assets reflected in the
Balance Sheet and the Interim Balance Sheet (except for assets held under
capitalized leases disclosed or not required to be disclosed in Part 3.6 of the
Disclosure Letter and personal property sold since the date of the Balance Sheet
and the Interim Balance Sheet, as the case may be, in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise acquired
by the Acquired Companies since the date of the Balance Sheet (except for
personal property acquired and sold since the date of the Balance Sheet in the
Ordinary Course of Business and consistent with past practice), which
subsequently purchased or acquired properties and assets (other than inventory
and short-term investments) are listed in Part 3.6 of the Disclosure Letter. All
material properties and assets reflected in the Balance Sheet and the Interim
Balance Sheet are free and clear of all Encumbrances and are not, in the case of
real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except, with
respect to all such properties and
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assets, (a) mortgages or security interests shown on the Balance Sheet or the
Interim Balance Sheet as securing specified liabilities or obligations, with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (b) mortgages or security interests
incurred in connection with the purchase of property or assets after the date of
the Interim Balance Sheet (such mortgages and security interests being limited
to the property or assets so acquired), with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a default)
exists, (c) liens for current taxes not yet due, and (d) with respect to real
property, (i) minor imperfections of title, if any, none of which is substantial
in amount, materially detracts from the value or impairs the use of the property
subject thereto, or impairs the operations of any Acquired Company, and (ii)
zoning laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto. All buildings, plants, and
structures owned by the Acquired Companies lie wholly within the boundaries of
the real property owned by the Acquired Companies and do not encroach upon the
property of, or otherwise conflict with the property rights of, any other
Person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. The buildings,
plants, structures, and equipment of the Acquired Companies are structurally
sound, are in good operating condition and repair, and are adequate for the uses
to which they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The building,
plants, structures, and equipment of the Acquired Companies are sufficient for
the continued conduct of the Acquired Companies' businesses after the Closing in
substantially the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE. All accounts receivable of the
Acquired Companies that are reflected on the Balance Sheet or the Interim
Balance Sheet or on the accounting records of the Acquired Companies as of the
Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the Balance
Sheet or the Interim Balance Sheet or on the accounting records of the Acquired
Companies as of the Closing Date (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserve as of the Closing
Date, will not represent a greater percentage of the Accounts Receivable as of
the Closing Date than the reserve reflected in the Interim Balance Sheet
represented of the Accounts Receivable reflected therein and will not represent
a material adverse change in the composition of such Accounts Receivable in
terms of aging). Subject to such reserves, each of the Accounts Receivable
either has been or will be collected in full, without any set-off, within ninety
days after the day on which it first becomes due and payable. There is no
contest, claim, or right of set-off, other than returns in the Ordinary Course
of Business, under any Contract with any obligor of an Accounts Receivable
relating to the amount or validity of such Accounts Receivable. Part 3.8 of the
Disclosure Letter contains a complete and accurate list of all Accounts
Receivable as of the date of the Interim Balance Sheet, which list sets forth
the aging of such Accounts Receivable.
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3.9 INVENTORY. All inventory of the Acquired Companies,
whether or not reflected in the Balance Sheet or the Interim Balance Sheet,
consists of a quality and quantity usable and salable in the Ordinary Course of
Business, except for obsolete items and items of below-standard quality, all of
which have been written off or written down to net realizable value in the
Balance Sheet or the Interim Balance Sheet or on the accounting records of the
Acquired Companies as of the Closing Date, as the case may be. All inventories
not written off have been priced at the lower of cost or market on a first in,
first out basis. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but are
reasonable in the present circumstances of the Acquired Companies.
3.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Part
3.10 of the Disclosure Letter, the Acquired Companies have no liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) except for liabilities or obligations
reflected or reserved against in the Balance Sheet or the Interim Balance Sheet
and current liabilities incurred in the Ordinary Course of Business since the
respective dates thereof.
3.11 TAXES.
(a) The Acquired Companies have filed or caused
to be filed (on a timely basis since 1986) all Tax Returns that are or were
required to be filed by or with respect to any of them, either separately or as
a member of a group of corporations, pursuant to applicable Legal Requirements.
The Company has delivered to Nu-Wave Sub copies of, and Part 3.11 of the
Disclosure Letter contains a complete and accurate list of, all such Tax Returns
filed since 1992. The Acquired Companies have paid, or made provision for the
payment of, all Taxes that have or may have become due pursuant to those Tax
Returns or otherwise, or pursuant to any assessment received by the Shareholder
or any Acquired Company, except such Taxes, if any, as are listed in Part 3.11
of the Disclosure Letter and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided in the
Balance Sheet and the Interim Balance Sheet.
(b) The United States federal and state income
Tax Returns of each Acquired Company subject to such Taxes have been audited by
the IRS or relevant state tax authorities or are closed by the applicable
statute of limitations for all taxable years through 1996. Part 3.11 of the
Disclosure Letter contains a complete and accurate list of all audits of all
such Tax Returns, including a reasonably detailed description of the nature and
outcome of each audit. All deficiencies proposed as a result of such audits have
been paid, reserved against, settled, or, as described in Part 3.11 of the
Disclosure Letter, are being contested in good faith by appropriate proceedings.
Part 3.11 of the Disclosure Letter describes all adjustments to the United
States federal income Tax Returns filed by any Acquired Company or any group of
corporations including any Acquired Company for all taxable years since 1992,
and the resulting deficiencies proposed by the IRS. Except as described in Part
3.11 of the Disclosure Letter, neither the Shareholder nor any Acquired Company
has given or been requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other Person) of
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any statute of limitations relating to the payment of Taxes of any Acquired
Company or for which any Acquired Company may be liable.
(c) The charges, accruals, and reserves with
respect to Taxes on the respective books of each Acquired Company are adequate
(determined in accordance with GAAP) and are at least equal to that Acquired
Company's liability for Taxes. There exists no proposed tax assessment against
any Acquired Company except as disclosed in the Balance Sheet or in Part 3.11 of
the Disclosure Letter. No consent to the application of Section 341(f)(2) of the
IRC has been filed with respect to any property or assets held, acquired, or to
be acquired by any Acquired Company. All Taxes that any Acquired Company is or
was required by Legal Requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.
(d) All Tax Returns filed by (or that include
on a consolidated basis) any Acquired Company are true, correct, and complete.
There is no tax sharing agreement that will require any payment by any Acquired
Company after the date of this Agreement. No Acquired Company is, or within the
five-year period preceding the Closing Date has been, an "S" corporation.
3.12 NO MATERIAL ADVERSE CHANGE. Since the date of the
Balance Sheet, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of any Acquired Company,
and no event has occurred or circumstance exists that may result in such a
material adverse change.
3.13 EMPLOYEE BENEFITS.
(a) As used in this Section 3.13, the following
terms have the meanings set forth below.
"COMPANY PLAN" means all Plans of which an Acquired
Company or an ERISA Affiliate of an Acquired Company is or was a Plan Sponsor,
or to which an Acquired Company or an ERISA Affiliate of an Acquired Company
otherwise contributes or has contributed, or in which an Acquired Company or an
ERISA Affiliate of an Acquired Company otherwise participates or has
participated. All references to Plans are to Company Plans unless the context
requires otherwise.
"MULTI-EMPLOYER PLAN" has the meaning given in ERISA
Section 3(37)(A).
"OTHER BENEFIT OBLIGATIONS" means all obligations,
arrangements, or customary practices, whether or not legally enforceable, to
provide benefits, other than salary, as compensation for services rendered, to
present or former directors, employees, or agents, other than obligations,
arrangements, and practices that are Plans. Other Benefit Obligations include
consulting agreements under which the compensation paid does not depend upon the
amount of service rendered, sabbatical policies, severance payment policies, and
fringe benefits within the meaning of IRC Section 132.
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"PENSION PLAN" has the meaning given in ERISA
Section 3(2)(A).
"PLAN" has the meaning given in ERISA Section 3(3).
"QUALIFIED PLAN" means any Plan that meets or
purports to meet the requirements of IRC Section 401(a).
"TITLE IV PLANS" means all Pension Plans that are
subject to Title IV of ERISA, 29 U.S.C. Section 1301 et seq., other than
Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary
association under IRC Section 501(c)(9).
"WELFARE PLAN" has the meaning given in ERISA Section
3(1).
(b) The Company has no Company Plan, VEBA,
Multi-Employer Plan, Other Benefit Obligations, Pension Plan, Plan, Qualified
Plan, Title IV Plan, or Welfare Plan.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS.
(a) Except as set forth in Part 3.14 of the
Disclosure Letter:
(i) each Acquired Company is, and at all
times since December 31, 1997 has been, in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct or operation of
its business or the ownership or use of any of its assets;
(ii) no event has occurred or circumstance
exists that (with or without notice or lapse of time) (A) may constitute or
result in a violation by any Acquired Company of, or a failure on the part of
any Acquired Company to comply with, any Legal Requirement, or (B) may give rise
to any obligation on the part of any Acquired Company to undertake, or to bear
all or any portion of the cost of, any remedial action of any nature; and
(iii) no Acquired Company has received, at
any time since December 31, 1997, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible, or potential violation of, or failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of any Acquired Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains
a complete and accurate list of each Governmental Authorization that is held by
any Acquired Company or that otherwise relates to the business of, or to any of
the assets owned or used by, any Acquired Company. Each
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Governmental Authorization listed or required to be listed in Part 3.14 of the
Disclosure Letter is valid and in full force and effect. Except as set forth in
Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at all
times since December 31, 1997 has been, in full compliance with all of the terms
and requirements of each Governmental Authorization identified or required to be
identified in Part 3.14 of the Disclosure Letter;
(ii) no event has occurred or circumstance
exists that may (with or without notice or lapse of time) (A) constitute or
result directly or indirectly in a violation of or a failure to comply with any
term or requirement of any Governmental Authorization listed or required to be
listed in Part 3.14 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization listed or
required to be listed in Part 3.14 of the Disclosure Letter;
(iii) no Acquired Company has received, at
any time since December 31, 1997, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person regarding (A)
any actual, alleged, possible, or potential violation of or failure to comply
with any term or requirement of any Governmental Authorization, or (B) any
actual, proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental Authorization;
and
(iv) all applications required to have
been filed for the renewal of the Governmental Authorizations listed or required
to be listed in Part 3.14 of the Disclosure Letter have been duly filed on a
timely basis with the appropriate Governmental Bodies, and all other filings
required to have been made with respect to such Governmental Authorizations have
been duly made on a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the
Disclosure Letter collectively constitute all of the Governmental Authorizations
necessary to permit the Acquired Companies to lawfully conduct and operate their
businesses in the manner they currently conduct and operate such businesses and
to permit the Acquired Companies to own and use their assets in the manner in
which they currently own and use such assets.
3.15 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 3.15 of the
Disclosure Letter, there is no pending Proceeding:
(i) that has been commenced by or
against any Acquired Company or that otherwise relates to or may affect the
business of, or any of the assets owned or used by, any Acquired Company; or
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(ii) that challenges, or that may have
the effect of preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.
To the Knowledge of Company, the Parent Shareholders, the
Shareholder and the Acquired Companies, (1) no such Proceeding has been
Threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. The
Company has delivered to Nu-Wave Sub copies of all pleadings, correspondence,
and other documents relating to each Proceeding listed in Part 3.15 of the
Disclosure Letter. The Proceedings listed in Part 3.15 of the Disclosure Letter
will not have a material adverse effect on the business, operations, assets,
condition, or prospects of any Acquired Company.
(b) Except as set forth in Part 3.15 of the
Disclosure Letter:
(i) there is no Order to which any of
the Acquired Companies, or any of the assets owned or used by any Acquired
Company, is subject;
(ii) the Shareholder is not subject to
any Order that relates to the business of, or any of the assets owned or used
by, any Acquired Company; and
(iii) no officer, director, agent, or
employee of any Acquired Company is subject to any Order that prohibits such
officer, director, agent, or employee from engaging in or continuing any
conduct, activity, or practice relating to the business of any Acquired Company.
(c) Except as set forth in Part 3.15 of the
Disclosure Letter:
(i) each Acquired Company is, and at
all times since December 31, 1997 has been, in full compliance with all of the
terms and requirements of each Order to which it, or any of the assets owned or
used by it, is or has been subject;
(ii) no event has occurred or
circumstance exists that may constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply with any term or requirement
of any Order to which any Acquired Company, or any of the assets owned or used
by any Acquired Company, is subject; and
(iii) no Acquired Company has received,
at any time since December 31, 1997, any notice or other communication (whether
oral or written) from any Governmental Body or any other Person regarding any
actual, alleged, possible, or potential violation of, or failure to comply with,
any term or requirement of any Order to which any Acquired Company, or any of
the assets owned or used by any Acquired Company, is or has been subject.
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3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth in Part 3.16 of the Disclosure Letter, since the date of the Balance
Sheet, the Acquired Companies have conducted their businesses only in the
Ordinary Course of Business and there has not been any:
(a) change in any Acquired Company's authorized
or issued capital stock; grant of any stock option or right to purchase shares
of capital stock of any Acquired Company; issuance of any security convertible
into such capital stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by any Acquired Company of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents
of any Acquired Company;
(c) payment or increase by any Acquired Company
of any bonuses, salaries, or other compensation to any stockholder, director,
officer, or (except in the Ordinary Course of Business) employee or entry into
any employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to
or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of any Acquired Company;
(e) damage to or destruction or loss of any
asset or property of any Acquired Company, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business, financial
condition, or prospects of the Acquired Companies, taken as a whole;
(f) entry into, termination of, or receipt of
notice of termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to any
Acquired Company of at least $10,000;
(g) sale (other than sales of inventory in the
Ordinary Course of Business), lease, or other disposition of any asset or
property of any Acquired Company or mortgage, pledge, or imposition of any lien
or other encumbrance on any material asset or property of any Acquired Company,
including the sale, lease, or other disposition of any of the Intellectual
Property Assets;
(h) cancellation or waiver of any claims or
rights with a value to any Acquired Company in excess of $10,000;
(i) material change in the accounting methods
used by any Acquired Company; or
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(j) agreement, whether oral or written, by any
Acquired Company to do any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS.
(a) Part 3.17(a) of the Disclosure Letter
contains a complete and accurate list, and the Company has delivered to Nu-Wave
Sub true and complete copies, of:
(i) each Applicable Contract that
involves performance of services or delivery of goods or materials by one or
more Acquired Companies of an amount or value in excess of $10,000;
(ii) each Applicable Contract that
involves performance of services or delivery of goods or materials to one or
more Acquired Companies of an amount or value in excess of $10,000;
(iii) each Applicable Contract that was
not entered into in the Ordinary Course of Business and that involves
expenditures or receipts of one or more Acquired Companies in excess of $10,000;
(iv) each lease, rental or occupancy
agreement, license, installment and conditional sale agreement, and other
Applicable Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal property (except
personal property leases and installment and conditional sales agreements having
a value per item or aggregate payments of less than $5,000 and with terms of
less than one year);
(v) each licensing agreement or other
Applicable Contract with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the non-disclosure of
any of the Intellectual Property Assets;
(vi) each collective bargaining agreement
and other Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership, and
other Applicable Contract (however named) involving a sharing of profits,
losses, costs, or liabilities by any Acquired Company with any other Person;
(viii) each Applicable Contract containing
covenants that in any way purport to restrict the business activity of any
Acquired Company or any Affiliate of an Acquired Company or limit the freedom of
any Acquired Company or any Affiliate of an Acquired Company to engage in any
line of business or to compete with any Person;
(ix) each Applicable Contract providing
for payments to or by any Person based on sales, purchases, or profits, other
than direct payments for goods;
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(x) each power of attorney that is
currently effective and outstanding;
(xi) each Applicable Contract entered
into other than in the Ordinary Course of Business that contains or provides for
an express undertaking by any Acquired Company to be responsible for
consequential damages;
(xii) each Applicable Contract for capital
expenditures in excess of $10,000;
(xiii) each written warranty, guaranty,
and or other similar undertaking with respect to contractual performance
extended by any Acquired Company other than in the Ordinary Course of Business;
and
(xiv) each amendment, supplement, and
modification (whether oral or written) in respect of any of the foregoing.
Part 3.17(a) of the Disclosure Letter sets forth reasonably
complete details concerning such Contracts, including the parties to the
Contracts, the amount of the remaining commitment of the Acquired Companies
under the Contracts, and the Acquired Companies' office where details relating
to the Contracts are located.
(b) Except as set forth in Part 3.17(b) of the
Disclosure Letter:
(i) The Shareholder (and no Related
Person of the Shareholder) does not have or may not acquire any rights under,
and the Shareholder does not have or may not become subject to any obligation or
liability under, any Contract that relates to the business of, or any of the
assets owned or used by, any Acquired Company; and
(ii) no officer, director, agent,
employee, consultant, or contractor of any Acquired Company is bound by any
Contract that purports to limit the ability of such officer, director, agent,
employee, consultant, or contractor to (A) engage in or continue any conduct,
activity, or practice relating to the business of any Acquired Company, or (B)
assign to any Acquired Company or to any other Person any rights to any
invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the
Disclosure Letter, each Contract identified or required to be identified in Part
3.17(a) of the Disclosure Letter is in full force and effect and is valid and
enforceable in accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the
Disclosure Letter:
(i) each Acquired Company is, and at
all times since December 31, 1997 has been, in full compliance with all
applicable terms and requirements of
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each Contract under which such Acquired Company has or had any obligation or
liability or by which such Acquired Company or any of the assets owned or used
by such Acquired Company is or was bound;
(ii) each other Person that has or had
any obligation or liability under any Contract under which an Acquired Company
has or had any rights is, and at all times since December 31, 1997 has been, in
full compliance with all applicable terms and requirements of such Contract;
(iii) no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a violation or breach of, or give any
Acquired Company or other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; and
(iv) no Acquired Company has given to or
received from any other Person, at any time since December 31, 1997, any notice
or other communication (whether oral or written) regarding any actual, alleged,
possible, or potential violation or breach of, or default under, any Contract.
(e) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to any Acquired Company under current or completed Contracts with any
Person and no such Person has made written demand for such renegotiation.
(f) The Contracts relating to the sale, design,
manufacture, or provision of products or services by the Acquired Companies have
been entered into in the Ordinary Course of Business and have been entered into
without the commission of any act alone or in concert with any other Person, or
any consideration having been paid or promised, that is or would be in violation
of any Legal Requirement.
3.18 INSURANCE.
(a) The Company has delivered to Nu-Wave Sub:
(i) true and complete copies of all
policies of insurance to which any Acquired Company is a party or under which
any Acquired Company, or any director of any Acquired Company, is or has been
covered at any time within the five years preceding the date of this Agreement;
(ii) true and complete copies of all
pending applications for policies of insurance; and
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(iii) any statement by the auditor of any
Acquired Company's financial statements with regard to the adequacy of such
entity's coverage or of the reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter
describes:
(i) any self-insurance arrangement by
or affecting any Acquired Company, including any reserves established
thereunder;
(ii) any contract or arrangement, other
than a policy of insurance, for the transfer or sharing of any risk by any
Acquired Company; and
(iii) all obligations of the Acquired
Companies to third parties with respect to insurance (including such obligations
under leases and service agreements) and identifies the policy under which such
coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets
forth, by year, for the current policy year and each of the five preceding
policy years:
(i) a summary of the loss experience
under each policy;
(ii) a statement describing each claim
under an insurance policy for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy
by insurer, type of insurance, and period of coverage; and
(C) the amount and a brief
description of the claim; and
(iii) a statement describing the loss
experience for all claims that were self-insured, including the number and
aggregate cost of such claims.
(d) Except as set forth on Part 3.18(d) of the
Disclosure Letter:
(i) All policies to which any Acquired
Company is a party or that provide coverage to the Shareholder, any Acquired
Company, or any director or officer of an Acquired Company:
(A) are valid, outstanding, and
enforceable;
(B) are issued by an insurer that
is financially sound and reputable;
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(C) taken together, provide
adequate insurance coverage for the assets and the operations of the Acquired
Companies for all risks normally insured against by a Person carrying on the
same business or businesses as the Acquired Companies;
(D) are sufficient for compliance
with all Legal Requirements and Contracts to which any Acquired Company is a
party or by which any of them is bound;
(E) will continue in full force
and effect following the consummation of the Contemplated Transactions; and
(F) do not provide for any
retrospective premium adjustment or other experienced-based liability on the
part of any Acquired Company.
(ii) Neither the Shareholder nor any
Acquired Company has received (A) any refusal of coverage or any notice that a
defense will be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy is no longer in
full force or effect or will not be renewed or that the issuer of any policy is
not willing or able to perform its obligations thereunder.
(iii) The Acquired Companies have paid all
premiums due, and have otherwise performed all of their respective obligations,
under each policy to which any Acquired Company is a party or that provides
coverage to any Acquired Company or director thereof.
(iv) The Acquired Companies have given
notice to the insurer of all claims that may be insured thereby.
3.19 ENVIRONMENTAL MATTERS. Except as set forth in part
3.19 of the disclosure letter, to the knowledge of the Shareholder and the
Parent Shareholders:
(a) Each Acquired Company is, and at all times
has been, in full compliance with, and has not been and is not in violation of
or liable under, any Environmental Law. Neither the Shareholder nor any Acquired
Company has any basis to expect, nor has any of them or any other Person for
whose conduct they are or may be held to be responsible received, any actual or
Threatened order, notice, or other communication from (i) any Governmental Body
or private citizen acting in the public interest, or (ii) the current or prior
owner or operator of any Facilities, of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual or Threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which the Shareholder or any
Acquired Company has had an interest, or with respect to any property or
Facility at or to which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, or processed by the Shareholder, any
Acquired Company, or any other Person for whose conduct they are or may be held
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responsible, or from which Hazardous Materials have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of
the Shareholder and the Parent Shareholders and the Acquired Companies,
Threatened claims, Encumbrances, or other restrictions of any nature, resulting
from any Environmental, Health, and Safety Liabilities or arising under or
pursuant to any Environmental Law, with respect to or affecting any of the
Facilities or any other properties and assets (whether real, personal, or mixed)
in which the Shareholder or any Acquired Company has or had an interest.
(c) Neither the Shareholder, the Parent
Shareholders nor any Acquired Company has any basis to expect, nor has any of
them or any other Person for whose conduct they are or may be held responsible,
received, any citation, directive, inquiry, notice, Order, summons, warning, or
other communication that relates to Hazardous Activity, Hazardous Materials, or
any alleged, actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any Environmental, Health, and Safety Liabilities
with respect to any of the Facilities or any other properties or assets (whether
real, personal, or mixed) in which the Shareholder or any Acquired Company had
an interest, or with respect to any property or facility to which Hazardous
Materials generated, manufactured, refined, transferred, imported, used, or
processed by the Shareholder, any Acquired Company, or any other Person for
whose conduct they are or may be held responsible, have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(d) Neither the Shareholder nor any Acquired
Company, or any other Person for whose conduct they are or may be held
responsible, has any Environmental, Health, and Safety Liabilities with respect
to the Facilities or with respect to any other properties and assets (whether
real, personal, or mixed) in which the Shareholder or any Acquired Company (or
any predecessor), has or had an interest, or at any property geologically or
hydrologically adjoining the Facilities or any such other property or assets.
(e) There are no Hazardous Materials present on
or in the Environment at the Facilities or at any geologically or hydrologically
adjoining property, including any Hazardous Materials contained in barrels,
above or underground storage tanks, landfills, land deposits, dumps, equipment
(whether moveable or fixed) or other containers, either temporary or permanent,
and deposited or located in land, water, sumps, or any other part of the
Facilities or such adjoining property, or incorporated into any structure
therein or thereon. Neither the Shareholder, Acquired Company, any other Person
for whose conduct they are or may be held responsible, nor any other Person, has
permitted or conducted, or is aware of, any Hazardous Activity conducted with
respect to the Facilities or any other properties or assets (whether real,
personal, or mixed) in which the Shareholder or any Acquired Company has or had
an interest.
(f) There has been no Release or, to the
Knowledge of the Shareholder, the Parent Shareholders and the Acquired
Companies, Threat of Release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous
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Materials were generated, manufactured, refined, transferred, produced,
imported, used, or processed from or by the Facilities, or from or by any other
properties and assets (whether real, personal, or mixed) in which the
Shareholder or any Acquired Company has or had an interest, or any geologically
or hydrologically adjoining property, whether by the Shareholder, any Acquired
Company, or any other Person.
(g) The Company has delivered to Nu-Wave Sub
true and complete copies and results of any reports, studies, analyses, tests,
or monitoring possessed or initiated by the Shareholder or any Acquired Company
pertaining to Hazardous Materials or Hazardous Activities in, on, or under the
Facilities, or concerning compliance by the Shareholder, any Acquired Company,
or any other Person for whose conduct they are or may be held responsible, with
Environmental Laws.
3.20 EMPLOYEES.
(a) Part 3.20 of the Disclosure Letter contains
a complete and accurate list of the following information for each employee or
director of the Acquired Companies, including each employee on leave of absence
or layoff status: employer; name; job title; current compensation paid or
payable and any change in compensation since December 31, 1997; vacation
accrued; and service credited for purposes of vesting and eligibility to
participate under any Acquired Company's pension, retirement, profit-sharing,
thrift-savings, deferred compensation, stock bonus, stock option, cash bonus,
employee stock ownership (including investment credit or payroll stock
ownership), severance pay, insurance, medical, welfare, or vacation plan, other
Employee Pension Benefit Plan or Employee Welfare Benefit Plan, or any other
employee benefit plan or any Director Plan.
(b) No employee or director of any Acquired
Company is a party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality, noncompetition, or proprietary rights agreement,
between such employee or director and any other Person ("Proprietary Rights
Agreement") that in any way adversely affects or will affect (i) the performance
of his duties as an employee or director of the Acquired Companies, or (ii) the
ability of any Acquired Company to conduct its business, including any
Proprietary Rights Agreement with the Shareholder or the Acquired Companies by
any such employee or director. To the Shareholder's, the Parent Shareholders and
the Acquired Companies' Knowledge, no director, officer, or other key employee
of any Acquired Company intends to terminate his employment with such Acquired
Company.
(c) Part 3.20 of the Disclosure Letter also
contains a complete and accurate list of the following information for each
retired employee or director of the Acquired Companies, or their dependents,
receiving benefits or scheduled to receive benefits in the future: name, pension
benefit, pension option election, retiree medical insurance coverage, retiree
life insurance coverage, and other benefits.
3.21 LABOR RELATIONS; COMPLIANCE. Since December 31, 1997,
no Acquired Company has been or is a party to any collective bargaining or other
labor Contract. Since
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December 31, 1997, there has not been, there is not presently pending or
existing, and there is not Threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any Proceeding against or affecting
any Acquired Company relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment Opportunity Commission, or any comparable Governmental
Body, organizational activity, or other labor or employment dispute against or
affecting any of the Acquired Companies or their premises, or (c) any
application for certification of a collective bargaining agent. No event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by any
Acquired Company, and no such action is contemplated by any Acquired Company.
Each Acquired Company has complied in all respects with all Legal Requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing. No Acquired Company is liable for the payment of any compensation,
damages, taxes, fines, penalties, or other amounts, however designated, for
failure to comply with any of the foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY.
(a) INTELLECTUAL PROPERTY ASSETS. The term
"Intellectual Property Assets" includes:
(i) any trade names used by the Company,
all fictional business names, trading names, registered and unregistered
trademarks, service marks, and applications (collectively, "Marks");
(ii) all patents, patent applications,
and inventions and discoveries that may be patentable (collectively, "Patents");
and
(iii) all know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"); owned, used, or licensed by any Acquired Company as licensee or
licensor.
(b) AGREEMENTS. Part 3.22(b) of the Disclosure
Letter contains a complete and accurate list and summary description, including
any royalties paid or received by the Acquired Companies, of all Contracts
relating to the Intellectual Property Assets to which any Acquired Company is a
party or by which any Acquired Company is bound, except for any license implied
by the sale of a product and perpetual, paid-up licenses for commonly available
software programs with a value of less than $5,000 under which an Acquired
Company is the licensee. There are no outstanding and, to the Shareholder's, the
Parent Shareholders' and the Acquired Companies' Knowledge, no Threatened
disputes or disagreements with respect to any such agreement.
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(c) KNOW-HOW NECESSARY FOR THE BUSINESS.
(i) The Intellectual Property Assets
are all those necessary for the operation of the Acquired Companies' businesses
as they are currently conducted. One or more of the Acquired Companies is the
owner of all right, title, and interest in and to each of the Intellectual
Property Assets, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the right to use
without payment to a third party all of the Intellectual Property Assets.
(ii) Except as set forth in Part 3.22(c)
of the Disclosure Letter, all former and current employees of each Acquired
Company have executed written Contracts with one or more of the Acquired
Companies that assign to one or more of the Acquired Companies all rights to any
inventions, improvements, discoveries, or information relating to the business
of any Acquired Company. No employee of any Acquired Company has entered into
any Contract that restricts or limits in any way the scope or type of work in
which the employee may be engaged or requires the employee to transfer, assign,
or disclose information concerning his work to anyone other than one or more of
the Acquired Companies.
(d) PATENTS.
(i) Part 3.22(d) of the Disclosure
Letter contains a complete and accurate list and summary description of all
Patents. One or more of the Acquired Companies is the owner of all right, title,
and interest in and to each of the Patents, free and clear of all liens,
security interests, charges, encumbrances, entities, and other adverse claims.
(ii) All of the issued Patents are
currently in compliance with formal legal requirements (including payment of
filing, examination, and maintenance fees and proofs of working or use), are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date.
(iii) No Patent has been or is now
involved in any interference, reissue, reexamination, or opposition proceeding.
To the Shareholder's, the Parent Shareholders' and the Acquired Companies'
Knowledge, there is no potentially interfering patent or patent application of
any third party.
(iv) No Patent is infringed or, to the
Shareholders, the Parent Shareholders' and the Acquired Companies' Knowledge,
has been challenged or threatened in any way. None of the products manufactured
and sold, nor any process or know-how used, by any Acquired Company infringes or
is alleged to infringe any patent or other proprietary right of any other
Person.
(v) All products made, used, or sold
under the Patents have been marked with the proper patent notice.
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(e) TRADEMARKS.
(i) Part 3.22(e) of Disclosure Letter
contains a complete and accurate list and summary description of all Marks. One
or more of the Acquired Companies is the owner of all right, title, and interest
in and to each of the Marks, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims.
(ii) All Marks that have been registered
with the United States Patent and Trademark Office are currently in compliance
with all formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal applications), are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date.
(iii) No Xxxx has been or is now involved
in any opposition, invalidation, or cancellation and, to the Shareholder's, the
Parent Shareholders' and the Acquired Companies' Knowledge, no such action is
Threatened with the respect to any of the Marks.
(iv) To the Shareholder's, the Parent
Shareholders' and the Acquired Companies' Knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(v) No Xxxx is infringed or, to the
Shareholder's, the Parent Shareholders' and the Acquired Companies' Knowledge,
has been challenged or threatened in any way. None of the Marks used by any
Acquired Company infringes or is alleged to infringe any trade name, trademark,
or service xxxx of any third party.
(vi) All products and materials
containing a Xxxx xxxx the proper federal registration notice where permitted by
law.
(f) COPYRIGHTS.
(i) Part 3.22(f) of the Disclosure
Letter contains a complete and accurate list and summary description of all
Copyrights. One or more of the Acquired Companies is the owner of all right,
title, and interest in and to each of the Copyrights, free and clear of all
liens, security interests, charges, encumbrances, equities, and other adverse
claims.
(ii) All the Copyrights have been
registered and are currently in compliance with formal legal requirements, are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the date of Closing.
(iii) No Copyright is infringed or, to the
Shareholder's, the Parent Shareholders' and the Acquired Companies' Knowledge,
has been challenged or threatened in any way. None of the subject matter of any
of the infringes or is alleged to infringe any copyright of any third party or
is a derivative work based on the work of a third party.
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(iv) All works encompassed by the
Copyrights have been marked with the proper copyright notice.
(g) TRADE SECRETS.
(i) With respect to each Trade Secret,
the documentation relating to such Trade Secret is current, accurate, and
sufficient in detail and content to identify and explain it and to allow its
full and proper use without reliance on the knowledge or memory of any
individual.
(ii) The Shareholder and the Acquired
Companies have taken all reasonable precautions to protect the secrecy,
confidentiality, and value of their Trade Secrets.
(iii) One or more of the Acquired
Companies has good title and an absolute (but not necessarily exclusive) right
to use the Trade Secrets. The Trade Secrets are not part of the public knowledge
or literature, and, to the Shareholder's, the Parent Shareholders' and the
Acquired Companies' Knowledge, except as set forth in Part 3.22(g) of the
Disclosure Letter, have not been used, divulged, or appropriated either for the
benefit of any Person (other than one or more of the Acquired Companies) or to
the detriment of the Acquired Companies. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.
3.23 CERTAIN PAYMENTS. Since December 31, 1997, no
Acquired Company or director, officer, agent, or employee of any Acquired
Company, or any other Person associated with or acting for or on behalf of any
Acquired Company, has directly or indirectly (a) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of any Acquired
Company or any Affiliate of an Acquired Company, or (iv) in violation of any
Legal Requirement, (b) established or maintained any fund or asset that has not
been recorded in the books and records of the Acquired Companies.
3.24 DISCLOSURE.
(a) No representation or warranty of the
Shareholder, the Parent Shareholders and the Acquired Companies in this
Agreement and no statement in the Disclosure Letter omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will
contain any untrue statement or omit to state a material fact necessary to make
the statements therein or in this Agreement, in light of the circumstances in
which they were made, not misleading.
(c) Except as set forth in Part 3.24(c) of the
Disclosure Letter, there is no fact known to the Shareholder, the Parent
Shareholders or the Acquired Companies that has
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specific application to the Shareholder, the Parent Shareholders or the Acquired
Companies or any Acquired Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as the Shareholder,
the Parent Shareholders and the Acquired Companies can reasonably foresee,
materially threatens, the assets, business, prospects, financial condition, or
results of operations of the Acquired Companies (on a consolidated basis) that
has not been set forth in this Agreement or the Disclosure Letter.
3.25 RELATIONSHIPS WITH RELATED PERSONS. Neither the
Shareholder, the Parent Shareholders nor any Related Person of the Shareholder,
the Parent Shareholders or of any Acquired Company has, or since the first day
of the next to last completed fiscal year of the Acquired Companies has had, any
interest in any property (whether real, personal, or mixed and whether tangible
or intangible), used in or pertaining to the Acquired Companies' businesses.
Neither the Shareholder, the Parent Shareholders nor any Related Person of the
Shareholder, the Parent Shareholders or of any Acquired Company is, or since the
first day of the next to last completed fiscal year of the Acquired Companies
has owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (i) had business dealings or
a material financial interest in any transaction with any Acquired Company other
than business dealings or transactions conducted in the Ordinary Course of
Business with the Acquired Companies at substantially prevailing market prices
and on substantially prevailing market terms, or (ii) engaged in competition
with any Acquired Company with respect to any line of the products or services
of such Acquired Company (a "Competing Business") in any market presently served
by such Acquired Company. Except as set forth in Part 3.25 of the Disclosure
Letter, neither the Shareholder, the Parent Shareholders nor any Related Person
of the Shareholder, the Parent Shareholders or of any Acquired Company is a
party to any Contract with, or has any claim or right against, any Acquired
Company.
3.26 BROKERS OR FINDERS. The Shareholder, the Parent
Shareholders nor the Acquired Companies and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
3.27 DISPOSAL COSTS. The cost of disposing of the barrels
of product disclosed in item 3.19 of the Disclosure Letter will not exceed
$10,000.
4. REPRESENTATIONS AND WARRANTIES OF NU-WAVE SUB. Nu-Wave Sub
represents and warrants to the Company, the Shareholder and the Parent
Shareholders as follows:
4.1 ORGANIZATION AND GOOD STANDING. Nu-Wave Sub and
Nu-Wave are corporations duly organized, validly existing, and in good standing
under the laws of the State of Florida, with full corporate power and authority
to conduct their businesses as they are now being conducted, to own or use the
properties and assets that they purport to own or use, and to perform all their
obligations under this Agreement.
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4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid,
and binding obligation of Nu-Wave and Nu-Wave Sub, enforceable against Nu-Wave
and Nu-Wave Sub in accordance with its terms. Upon the execution and delivery by
Nu-Wave of the Employment Agreement, the Option Agreement and the Registration
Rights Agreement, the Employment Agreement, the Option Agreement and the
Registration Rights Agreement will constitute the legal, valid, and binding
obligations of Nu-Wave, enforceable against Nu-Wave in accordance with their
terms. Nu-Wave and Nu-Wave Sub have the absolute and unrestricted right, power,
and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement.
(b) Except as set forth in Schedule 4.2, neither
the execution and delivery of this Agreement by Nu-Wave Sub nor the consummation
or performance of any of the Contemplated Transactions by Nu-Wave Sub will give
any Person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
(i) any provision of Nu-Wave Sub's
Organizational Documents;
(ii) any resolution adopted by the board
of directors or the stockholders of Nu-Wave Sub;
(iii) any Legal Requirement or Order to
which Nu-Wave Sub may be subject; or
(iv) any Contract to which Nu-Wave Sub
is a party or by which Nu-Wave Sub may be bound.
Except as set forth in Schedule 4.2, Nu-Wave Sub is not and
will not be required to obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or performance
of any of the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS. There is no pending Proceeding that
has been commenced against Nu-Wave Sub and that challenges, or may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions. To Nu-Wave Sub's Knowledge, no such
Proceeding has been Threatened.
4.4 BROKERS OR FINDERS. Nu-Wave Sub and its officers and
agents have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement and will indemnify and hold the Shareholder and
the Parent Shareholder harmless from any such payment alleged to be due by or
through Nu-Wave Sub as a result of the action of Nu-Wave Sub or its officers or
agents.
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4.5 CAPITALIZATION. The authorized equity securities of
Nu-Wave consist of 9,000,000 shares of common stock, par value $0.01 per share,
of which 3,823,547 shares are issued and outstanding. Nu-Wave Sub is a
newly-formed, wholly-owned subsidiary of Nu-Wave. Information with respect to
the beneficial owners of the outstanding Common Stock of Nu-Wave is set forth in
the Form 10.
4.6 FORM 10. Since the filing of the Form 10 with the SEC,
there has been no material change in the information set forth therein, except
for the execution of this Agreement.
4.7 INTENT WITH RESPECT TO CAPITALIZATION AND ACQUISITION.
Nu-Wave agrees, after the Closing, to implement a one-for-three reverse stock
split of its common stock. Thereafter, it agrees to issue 1.5 million shares of
its common stock to acquire Beacon Distributors, Inc., a Pennsylvania
corporation ("Beacon").
4.8 LEGAL PROCEEDINGS AND ORDERS. There is no pending Legal
Proceeding that has commenced by or against Nu-Wave or the Nu-Wave Sub or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, Nu-Wave or the Nu-Wave Sub, or that challenges, or that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions. To the knowledge of Nu-Wave and the
Nu-Wave Sub, (i) no such Proceeding has been Threatened, and (ii) no event has
occurred or circumstance exists that may give rise to or serve as a basis for
the commencement of any such proceeding.
4.9 BEACON DISTRIBUTORS, INC. Nu-Wave has delivered to Xxxx
Xxxxxxxxxx the unaudited, internally prepared balance sheet of Beacon as at May
31, 1998 and the related statement of income for the five-month period ending
May 31, 1998. Since May 31, 1998, there has not been a material adverse change
in the financial condition of Beacon.
5. COVENANTS OF THE COMPANY PRIOR TO CLOSING DATE.
5.1 NEGATIVE COVENANT. Except as otherwise expressly
permitted by this Agreement, between the date of this Agreement and the Closing
Date, the Company will not, and will cause each Acquired Company not to, without
the prior consent of Nu-Wave Sub, take any affirmative action, or fail to take
any reasonable action within its control, as a result of which any of the
changes or events listed in Section 3.16 is likely to occur.
5.2 REQUIRED APPROVALS. As promptly as practicable after the
date of this Agreement, the Company will, and will cause each Acquired Company
to, make all filings required by Legal Requirements to be made by them in order
to consummate the Contemplated Transactions. Between the date of this Agreement
and the Closing Date, the Company will, and will cause each Acquired Company to,
(a) cooperate with Nu-Wave Sub with respect to all filings that Nu-Wave Sub
elects to make or is required by Legal Requirements to make in connection with
the Contemplated Transactions, and (b) cooperate with Nu-Wave Sub in obtaining
all consents identified in Schedule 4.2.
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5.3 NOTIFICATION. Between the date of this Agreement and the
Closing Date, the Shareholder, the Parent Shareholders and the Acquired
Companies will promptly notify Nu-Wave Sub in writing if the Shareholder, the
Parent Shareholders or any Acquired Company becomes aware of any fact or
condition that causes or constitutes a Breach of any of the Shareholder's, the
Parent Shareholders' or the Acquired Companies' representations and warranties
as of the date of this Agreement, or if the Shareholder, the Parent Shareholders
or any Acquired Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a Breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in the Disclosure Letter if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition, the Company will promptly deliver to Nu-Wave Sub a supplement to the
Disclosure Letter specifying such change. During the same period, the
Shareholder, the Parent Shareholders and the Acquired Companies will promptly
notify Nu-Wave Sub of the occurrence of any Breach of any covenant of the
Shareholder, the Parent Shareholders or any of the Acquired Companies in this
Section 5 or of the occurrence of any event that may make the satisfaction of
the conditions in Section 7 impossible or unlikely.
5.4 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as
expressly provided in this Agreement, the Company or any Parent Shareholder will
cause all indebtedness owed to an Acquired Company by the Shareholder, the
Parent Shareholders or any Related Person of the Shareholder or any Parent
Shareholder to be paid in full prior to Closing.
5.5 NO NEGOTIATION. Until such time, if any, as this
Agreement is terminated pursuant to Section 9, the Company, the Shareholder and
the Parent Shareholders will not, and will cause each Acquired Company and each
of their Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Nu-Wave Sub) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of any Acquired Company, or any of the capital
stock of any Acquired Company, or any merger, consolidation, business
combination, or similar transaction involving any Acquired Company.
5.6 BEST EFFORTS. Between the date of this Agreement and the
Closing Date, the Shareholder, the Parent Shareholders and the Acquired
Companies will use their Best Efforts to cause the conditions in Sections 7 and
8 to be satisfied.
6. COVENANTS OF NU-WAVE SUB PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES. As promptly as
practicable after the date of this Agreement, Nu-Wave Sub will, and will cause
each of its Related Persons to, make all filings required by Legal Requirements
to be made by them to consummate the Contemplated Transactions. Between the date
of this Agreement and the Closing Date, Nu-Wave Sub will, and will cause each
Related Person to, cooperate with the Company with respect to all filings that
the Company is required by Legal Requirements to make in connection with the
Contemplated
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Transactions, and (ii) cooperate with the Company in obtaining all consents
identified in Part 3.2 of the Disclosure Letter; provided that this Agreement
will not require Nu-Wave Sub to dispose of or make any change in any portion of
its business or to incur any other burden to obtain a Governmental
Authorization.
6.2 BEST EFFORTS. Except as set forth in the proviso to
Section 6.1, between the date of this Agreement and the Closing Date, Nu-Wave
Sub will use its Best Efforts to cause the conditions in Sections 7 and 8 to be
satisfied.
7. CONDITIONS PRECEDENT TO NU-WAVE SUB'S AND NU-WAVE'S OBLIGATION TO
CLOSE. Nu-Wave Sub's and Nu-Wave's obligation to consummate the Contemplated
Transactions and to take the other actions required to be taken by them at and
after the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Nu-Wave Sub, in
whole or in part):
7.1 ACCURACY OF REPRESENTATIONS.
(a) All of the Shareholder's, the Parent
Shareholders' and the Acquired Companies' representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the Disclosure Letter.
(b) Each of the Shareholder's, the Parent
Shareholders' and the Acquired Companies' representations and warranties in
Sections 3.3, 3.4, 3.12, and 3.24 must have been accurate in all respects as of
the date of this Agreement, and must be accurate in all respects as of the
Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Letter.
7.2 THE COMPANY'S PERFORMANCE. All of the covenants and
obligations that the Company is required to perform or to comply with pursuant
to this Agreement at or prior to the Closing (considered collectively), and each
of these covenants and obligations (considered individually), must have been
duly performed and complied with in all material respects.
7.3 CONSENTS. Each of the Consents identified in
Part 3.2 of the Disclosure Letter, and each Consent identified in Schedule 4.2,
must have been obtained and must be in full force and effect.
7.4 ADDITIONAL DOCUMENTS. Each of the following
documents and instruments must have been delivered to Nu-Wave Sub:
(a) an opinion of Schifino and Xxxxxxxxx, P.A.,
dated the Closing Date, in the form of Exhibit 7.4(a);
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(b) [intentionally omitted];
(c) Releases, each in the form of Exhibit 7.4(c)
executed by the Shareholder and the Parent Shareholders (collectively,
"Releases");
(d) [intentionally omitted];
(e) an employment agreement in the form of
Exhibit 7.4(e) executed by Xxxx Xxxxxxxxxx (the "Employment Agreement");
(f) noncompetition agreements, each in the form
of Exhibit 7.4(f), executed by each of the Parent Shareholders other than Xxxx
Xxxxxxxxxx (the "Noncompetition Agreements");
(g) [intentionally omitted];
(h) a lock-up agreement in the form of
Exhibit 7.4(h), executed by the Shareholder (the "Lock-up Agreement");
(i) a registration rights agreement in the
form of Exhibit 7.4(i), executed by Nu-Wave and the Shareholder (the
"Registration Rights Agreement");
(j) an option agreement in the form of
Exhibit 7.4(j), executed by Xxxx Xxxxxxxxxx (the "Option Agreement");
(k) such other documents as Nu-Wave Sub may
reasonably request for the purpose of (i) enabling its counsel to provide the
opinion referred to in Section 8.4(a), (ii) evidencing the accuracy of any of
the Shareholder's, the Parent Shareholders' and the Acquired Companies'
representations and warranties, (iii) evidencing the performance by the Company
of, or the compliance by the Company with, any covenant or obligation required
to be performed or complied with by the Company, (iv) evidencing the
satisfaction of any condition referred to in this Section 7, or (v) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions; and
(l) a Plan of Merger and Articles of Merger
executed by Nu-Wave Sub and the Company.
7.5 NO PROCEEDINGS. Since the date of this Agreement, there
must not have been commenced or Threatened against Nu-Wave Sub, or against any
Person affiliated with Nu-Wave Sub, any Proceeding (a) involving any challenge
to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the Contemplated
Transactions.
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7.6 NO CLAIM REGARDING STOCK OWNERSHIP. There must not have
been made or Threatened by any Person other than the Shareholder any claim
asserting that such Person is the holder or the beneficial owner of, or has the
right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, any of the Acquired Companies.
7.7 NO PROHIBITION. Neither the consummation nor the
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time), materially contravene, or conflict
with, or result in a material violation of, or cause Nu-Wave Sub or any Person
affiliated with Nu-Wave Sub to suffer any material adverse consequence under,
(a) any applicable Legal Requirement or Order, or (b) any Legal Requirement or
Order that has been published, introduced, or otherwise proposed by or before
any Governmental Body.
7.8 SHAREHOLDER APPROVAL. The Amendment must have been
approved by the Nu-Wave shareholders.
8. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE. The
Company's obligation to consummate the Contemplated Transactions and to take the
other actions required to be taken by the Company at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Company, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS. All of Nu-Wave Sub's
representations and warranties in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this Agreement and
must be accurate in all material respects as of the Closing Date as if made on
the Closing Date.
8.2 NU-WAVE SUB'S PERFORMANCE. All of the covenants and
obligations that Nu-Wave Sub is required to perform or to comply with pursuant
to this Agreement at or prior to the Closing (considered collectively), and each
of these covenants and obligations (considered individually), must have been
performed and complied with in all material respects.
8.3 CONSENTS. Each of the Consents identified in Part 3.2 of
the Disclosure Letter and the consent of the Shareholder must have been obtained
and must be in full force and effect.
8.4 ADDITIONAL DOCUMENTS. Nu-Wave Sub must have caused the
following documents to be delivered to the Company and Santostasi:
(a) an opinion of Johnson, Blakely, Pope, Bokor,
Xxxxxx & Xxxxx, P.A., dated the Closing Date, in the form of Exhibit 8.4(a);
(b) a Certificate representing the Preferred Stock;
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(c) the Employment Agreement executed by the
Surviving Corporation;
(d) the Registration Rights Agreement executed by
Nu-Wave;
(e) the Option Agreement executed by Nu-Wave;
(f) such other documents as the Company may
reasonably request for the purpose of (i) enabling its counsel to provide the
opinion referred to in Section 7.4(a), (ii) evidencing the accuracy of any
representation or warranty of Nu-Wave Sub, (iii) evidencing the performance by
Nu-Wave Sub of, or the compliance by Nu-Wave Sub with, any covenant or
obligation required to be performed or complied with by Nu-Wave Sub, (ii)
evidencing the satisfaction of any condition referred to in this Section 8, or
(v) otherwise facilitating the consummation of any of the Contemplated
Transactions;
(g) an assignment of the Company's cause of action
against Horizon Pharmaceuticals, Changes International, Twin Labs and related
parties arising out of the actions of Xxxxxxx Xxxxx, a former employee of the
Company relating to the theft of trade secrets and customer lists, and to
diverting business opportunities of the Company; and
(h) a Plan of Merger and Articles of Merger executed
by the Nu-Wave Sub and the Company.
8.5 NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the consummation
of the Contemplated Transactions, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice
given prior to or at the Closing, be terminated:
(a) by either Nu-Wave Sub or the Company if a
material Breach of any provision of this Agreement has been committed by the
other party and such Breach has not been waived;
(b) (i) by Nu-Wave Sub if any of the conditions in
Section 7 has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of
Nu-Wave Sub to comply with its obligations under this Agreement) and Nu-Wave Sub
has not waived such condition on or before the Closing Date; or (ii) by the
Company, if any of the conditions in Section 8 has not been satisfied of the
Closing Date or if satisfaction of such a condition is or becomes impossible
(other than through the
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failure of the Company to comply with its obligations under this Agreement) and
the Company has not waived such condition on or before the Closing Date;
(c) by mutual consent of Nu-Wave Sub and the
Company; or
(d) by either Nu-Wave Sub or the Company if the
Closing has not occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under this
Agreement) on or before July 1, 1998, or such later date as the parties may
agree upon or that may be necessitated by a review by the SEC of the Nu-Wave
Information Statement filed in conjunction with the shareholder approval of the
Amendment.
9.2 EFFECT OF TERMINATION. Each party's right of termination
under Section 9.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
9.1, all further obligations of the parties under this Agreement will terminate,
except that the obligations in Sections 11.1 and 11.3 will survive; provided,
however, that if this Agreement is terminated by a party because of the Breach
of the Agreement by the other party or because one or more of the conditions to
the terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE. All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Letter, the supplements to the Disclosure Letter, the
certificate delivered pursuant to Section 2.4(a)(v), and any other certificate
or document delivered pursuant to this Agreement will survive the Closing. The
right to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE
SHAREHOLDER AND THE PARENT SHAREHOLDERS. The Shareholder and the Parent
Shareholders, jointly and severally, will indemnify and hold harmless Nu-Wave
Sub, the Acquired Companies, and their respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "Indemnified Persons")
for, and will pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of
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investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty
made by the Shareholder and the Parent Shareholders in this Agreement (without
giving effect to any supplement to the Disclosure Letter), the Disclosure
Letter, the supplements to the Disclosure Letter, or any other certificate or
document delivered by the Company, the Shareholder or the Parent Shareholders
pursuant to this Agreement;
(b) any Breach of any representation or warranty
made by the Shareholder or the Parent Shareholders in this Agreement as if such
representation or warranty were made on and as of the Closing Date without
giving effect to any supplement to the Disclosure Letter, other than any such
Breach that is disclosed in a supplement to the Disclosure Letter and is
expressly identified in the certificate delivered pursuant to Section 2.4(a)(v)
as having caused the condition specified in Section 7.1 not to be satisfied;
(c) any Breach by the Company, the Shareholder
of the Parent Shareholders of any covenant or obligation of the Company in this
Agreement;
(d) any product shipped or manufactured by, or
any services provided by, any Acquired Company prior to the Closing Date;
(e) any matter disclosed in the Disclosure
Letter; or
(f) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with the Shareholder,
the Parent Shareholders or any Acquired Company (or any Person acting on their
behalf) in connection with any of the Contemplated Transactions.
The remedies provided in this Section 10.2 will not be
exclusive of or limit any other remedies that may be available to Nu-Wave Sub or
the other Indemnified Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE
SHAREHOLDER AND THE PARENT SHAREHOLDERS -- ENVIRONMENTAL MATTERS. In addition to
the provisions of Section 10.2, the Shareholder and the Parent Shareholders,
jointly and severally, will indemnify and hold harmless Nu-Wave Sub, the
Acquired Companies, and the other Indemnified Persons for, and will pay to
Nu-Wave Sub, the Acquired Companies, and the other Indemnified Persons the
amount of, any Damages (including costs of cleanup, containment, or other
remediation) arising, directly or indirectly, from or in connection with:
(a) any Environmental, Health, and Safety
Liabilities arising out of or relating to: (i) (A) the ownership, operation, or
condition at any time on or prior to the Closing Date of the Facilities or any
other properties and assets (whether real, personal, or mixed and
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whether tangible or intangible) in which the Shareholder, any Parent Shareholder
or any Acquired Company has or had an interest, or (B) any Hazardous Materials
or other contaminants that were present on the Facilities or such other
properties and assets at any time on or prior to the Closing Date; or (ii) (A)
any Hazardous Materials or other contaminants, wherever located, that were, or
were allegedly, generated, transported, stored, treated, Released, or otherwise
handled by the Shareholder, any Parent Shareholder or any Acquired Company or by
any other Person for whose conduct they are or may be held responsible at any
time on or prior to the Closing Date, or (B) any Hazardous Activities that were,
or were allegedly, conducted by the Shareholder, any Parent Shareholder or any
Acquired Company or by any other Person for whose conduct they are or may be
held responsible; or
(b) any bodily injury (including illness,
disability, and death, and regardless of when any such bodily injury occurred,
was incurred, or manifested itself), personal injury, property damage (including
trespass, nuisance, wrongful eviction, and deprivation of the use of real
property), or other damage of or to any Person, including any employee or former
employee of the Shareholder, any Parent Shareholder or any Acquired Company or
any other Person for whose conduct they are or may be held responsible, in any
way arising from or allegedly arising from any Hazardous Activity conducted or
allegedly conducted with respect to the Facilities or the operation of the
Acquired Companies prior to the Closing Date, or from Hazardous Material that
was (i) present or suspected to be present on or before the Closing Date on or
at the Facilities (or present or suspected to be present on any other property,
if such Hazardous Material emanated or allegedly emanated from any of the
Facilities and was present or suspected to be present on any of the Facilities
on or prior to the Closing Date) or (ii) Released or allegedly Released by the
Shareholder, any Parent Shareholder or any Acquired Company or any other Person
for whose conduct they are or may be held responsible, at any time on or prior
to the Closing Date.
Nu-Wave Sub will be entitled to control any Cleanup, any
related Proceeding, and, except as provided in the following sentence, any other
Proceeding with respect to which indemnity may be sought under this Section
10.3. The procedure described in Section 10.9 will apply to any claim solely for
monetary damages relating to a matter covered by this Section 10.3.
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY NU-WAVE SUB.
Nu-Wave Sub will indemnify and hold harmless the Shareholder and the Parent
Shareholders, and will pay to the Shareholder and the Parent Shareholders the
amount of any Damages arising, directly or indirectly, from or in connection
with (a) any Breach of any representation or warranty made by Nu-Wave Sub in
this Agreement or in any certificate delivered by Nu-Wave Sub pursuant to this
Agreement, (b) any Breach by Nu-Wave Sub of any covenant or obligation of
Nu-Wave Sub in this Agreement, or (c) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Nu-Wave Sub (or any
Person acting on its behalf) in connection with any of the Contemplated
Transactions.
10.5 TIME LIMITATIONS. If the Closing occurs, the Shareholder
and the Parent Shareholders will have no liability (for indemnification or
otherwise) with respect to any
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representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, other than those in Sections 3.3, 3.11,
3.13, and 3.19, unless on or before December 31, 2001 Nu-Wave Sub notifies the
Shareholder and the Parent Shareholders of a claim specifying the factual basis
of that claim in reasonable detail to the extent then known by Nu-Wave Sub; a
claim with respect to Section 3.3, 3.11, 3.13, or 3.19, or a claim for
indemnification or reimbursement not based upon any representation or warranty
or any covenant or obligation to be performed and complied with prior to the
Closing Date, may be made at any time. If the Closing occurs, Nu-Wave Sub will
have no liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before December 31, 2001
the Shareholder or any of the Parent Shareholders notify Nu-Wave Sub of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by them.
10.6 LIMITATIONS ON AMOUNT -- SHAREHOLDER AND PARENT
SHAREHOLDERS. The Shareholder and the Parent Shareholders will have no liability
(for indemnification or otherwise) with respect to the matters described in
clause (a), clause (b), to the extent relating to any failure to perform or
comply prior to the Closing Date, clause (c), and clause (d) of Section 10.2
until the total of all Damages with respect to such matters exceeds $20,000, and
then only for the amount by which such Damages exceed $20,000. However, this
Section 10.6 will not apply to any Breach of any of the Shareholder's and the
Parent Shareholders' representations and warranties of which the Shareholder or
a Parent Shareholder had Knowledge at any time prior to the date on which such
representation and warranty is made or any intentional Breach by the Shareholder
or any Parent Shareholder of any covenant or obligation, and the Shareholder and
the Parent Shareholders will be jointly and severally liable for all Damages
with respect to such Breaches.
10.7 LIMITATIONS ON AMOUNT -- NU-WAVE SUB. Nu-Wave Sub will
have no liability (for indemnification or otherwise) with respect to the matters
described in clause (a) or (b) of Section 10.4 until the total of all Damages
with respect to such matters exceeds $20,000, and then only for the amount by
which such Damages exceed $20,000. However, this Section 10.7 will not apply to
any Breach of any of Nu-Wave Sub's representations and warranties of which
Nu-Wave Sub had Knowledge at any time prior to the date on which such
representation and warranty is made or any intentional Breach by Nu-Wave Sub of
any covenant or obligation, and Nu-Wave Sub will be liable for all Damages with
respect to such Breaches.
10.8 RIGHT OF SET-OFF AND CANCELLATION. Upon notice to the
Shareholder and the Parent Shareholders specifying in reasonable detail the
basis for such cancellation, Nu-Wave Sub and Nu-Wave may set off any amount to
which Nu-Wave Sub may be entitled under this Section 10 against the shares of
Preferred Stock (and the shares of Common Stock of Nu-Wave into which the
Preferred Stock has been converted) by canceling that number of shares or
fractional shares of Preferred Stock or such Common Stock equal in value to the
amount of the claim. Neither the exercise of nor the failure to exercise such
right of set-off and cancellation will constitute an election of remedies or
limit Nu-Wave Sub in any manner in the enforcement of any other remedies that
may be available to it. In addition, Nu-Wave Sub and Nu-Wave shall have the same
setoff and cancellation rights as provided for above in the following instances:
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(a) a setoff in the amount of any Damages
incurred by the Surviving Corporation that arise out of or relate to the matters
described in items 2 and 3 of Exhibit 3.15 to the Disclosure Letter; and,
(b) a setoff in the event that the total assets
of the Company, as shown on the 1997 fiscal year end audited financial
statements of the Company, when issued, are less than $2,823,747, in which case
the amount of the setoff shall be equal in amount to $2,823,747 minus the dollar
amount of the Company's total assets as shown on such audited financial
statements.
The certificate(s), when issued, evidencing the Preferred
Stock and any Nu-Wave common stock into which the Preferred Stock is convertible
shall bear a restrictive legend referring to such rights of setoff and
cancellation, but the Company agrees to remove such legend upon the expiration
of one year after the date hereof.
10.9 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified
party under Section 10.2, 10.4, or (to the extent provided in the last sentence
of Section 10.3) Section 10.3 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in
Section 10.9(a) is brought against an indemnified party and it gives notice to
the indemnifying party of the commencement of such Proceeding, the indemnifying
party will, unless the claim involves Taxes, be entitled to participate in such
Proceeding and, to the extent that it wishes (unless (i) the indemnifying party
is also a party to such Proceeding and the indemnified party determines in good
faith that joint representation would be inappropriate, or (ii) the indemnifying
party fails to provide reasonable assurance to the indemnified party of its
financial capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding), to assume the defense of such Proceeding with
counsel satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Section 10 for any fees of other counsel or any other expenses with respect to
the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of such claims may
be effected by the indemnifying party without the indemnified
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party's consent unless (A) there is no finding or admission of any violation of
Legal Requirements or any violation of the rights of any Person and no effect on
any other claims that may be made against the indemnified party, and (B) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnified party will have no liability with
respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within ten days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise, or
settle such Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
(d) The Shareholder and each of the Parent
Shareholders hereby consent to the non-exclusive jurisdiction of any court in
which a Proceeding is brought against any Indemnified Person for purposes of any
claim that an Indemnified Person may have under this Agreement with respect to
such Proceeding or the matters alleged therein, and agree that process may be
served on the Shareholder or any Parent Shareholder with respect to such a claim
anywhere in the world.
10.10 PROCEDURE FOR INDEMNIFICATION -- OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
11. GENERAL PROVISIONS
11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. The Surviving Corporation
will pay all reasonable counsel fees and expenses of Schifino & Xxxxxxxxx, P.A.,
related to the Contemplated Transactions. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another
party.
11.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as Nu-Wave Sub determines.
Unless consented to by Nu-Wave Sub in
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advance or required by Legal Requirements, prior to the Closing the Shareholder
and the Parent Shareholders shall, and shall cause the Acquired Companies to,
keep this Agreement strictly confidential and may not make any disclosure of
this Agreement to any Person. The Company and Nu-Wave Sub will consult with each
other concerning the means by which the Acquired Companies' employees,
customers, and suppliers and others having dealings with the Acquired Companies
will be informed of the Contemplated Transactions, and Nu-Wave Sub will have the
right to be present for any such communication.
11.3 CONFIDENTIALITY. Between the date of this Agreement and
the Closing Date, Nu-Wave Sub, the Acquired Companies, the Shareholder and the
Parent Shareholders will maintain in confidence, and will cause the directors,
officers, employees, agents, and advisors of Nu-Wave Sub and the Acquired
Companies to maintain in confidence, any written information furnished by
another party or an Acquired Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated,
each party will return or destroy as much of such written information as the
other party may reasonably request.
11.4 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
Company: Energy Factors, Inc.
Attention: Xxxx Xxxxxxxxxx
Address: 0000 Xxxxxx Xxxxx Xxxx.
Xxxxxxxx, XX 00000
Facsimile No.: 813/544-4386
with a copy to: Schifino & Xxxxxxxxx, P.A.
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Address: 000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
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Nu-Wave Sub: Nu-Wave Acquisition, Inc.
Attention: Xx. Xxxxx X. Xxxxxxxx
Address: 0000 Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
with a copy to: Johnson, Blakely, Pope,
Bokor, Xxxxxx & Xxxxx, P.A.
Attention: Xxxxxx X. Xxxxxxxx, Esq.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Shareholder: U.S. Diversified Technologies, Inc.
Attention: Xxxx Xxxxxxxxxx
Address: 0000 Xxxxxx Xxxxx Xxxx.
Xxxxxxxx, XX 00000
Facsimile No.: 813/544-4386
Parent Shareholders: Xxxx Xxxxxxxxxx
0000 Xxxxxx Xxxxx Xxxx.
Xxxxxxxx, XX 00000
Xxxxxx Deutsch
000 Xx Xxxxxxxx
Xxxxxx Xxxxx Xxxxx, XX 00000
Xxxxx Xxxxxxx
00000 Xxx Xxxx Xxxx
Xxxxxxxx, XX 00000
11.5 JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties in the courts
of the State of Florida, County of Pinellas, or, if it has or can acquire
jurisdiction, in the United States District Court for the Middle District of
Florida, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
11.6 FURTHER ASSURANCES. The parties agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as the other party may reasonably request for the
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purpose of carrying out the intent of this Agreement and the documents referred
to in this Agreement.
11.7 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter (including the Term Sheet) and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.
11.9 DISCLOSURE LETTER. In the event of any inconsistency
between the statements in the body of this Agreement and those in the Disclosure
Letter (other than an exception expressly set forth as such in the Disclosure
Letter with respect to a specifically identified representation or warranty),
the statements in the body of this Agreement will control.
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, except that Nu-Wave Sub may assign any of
its rights under this Agreement to any Subsidiary of Nu-Wave Sub. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
11.11 SEVERABILITY. If any provision of this Agreement is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
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11.12 SECTION HEADINGS, CONSTRUCTION. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words used
in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
11.13 TIME OF ESSENCE. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
11.14 GOVERNING LAW. This Agreement will be governed by the
laws of the State of Florida without regard to conflicts of laws principles.
11.15 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
12. ACTIONS OF NU-WAVE AFTER THE CLOSING.
12.1 BACKGROUND STATEMENTS.
(a) Article III of the Nu-Wave Articles of
Incorporation is not sufficient under the FBCA to grant to the directors of
Nu-Wave the authority to determine the terms of the Preferred Stock. An
amendment of the Nu-Wave Articles of Incorporation (the "Amendment") to so
provide requires the consent of the holders of a majority of the issued and
outstanding shares of Nu-Wave common stock. Nu-Wave intends to solicit and
obtain the consent of its shareholders to the Amendment. Under SEC Rule
14c-2(b), Nu-Wave must prepare and file with the Securities and Exchange
Commission and deliver to its shareholders an Information Statement at least 20
days prior to the earliest date on which the shareholder action set forth in the
consent may be taken. The Preferred Stock cannot be issued until the aforesaid
actions have been taken.
(b) The Company is in need of funds immediately
to pay its creditors, but Nu-Wave is unwilling to provide such funds until it
has acquired the Company.
12.2 SOLICITATION OF SHAREHOLDER CONSENT. Forthwith after
the date of this Agreement, Nu-Wave shall proceed with the preparation of the
required documents for a solicitation of the consent of its shareholders to the
Amendment in accordance with SEC Rule 14c-2(b).
12.3 GRANT OF PROXY. Simultaneously with the Closing,
Nu-Wave is delivering to Xxxx Xxxxxxxxxx an irrevocable Proxy in the form of
Exhibit 12.3 executed by the holder of more than 50% of its issued and
outstanding common stock.
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12.4 APPOINTMENT TO BOARD. Xxxx Xxxxxxxxxx shall be
appointed to the Board of Directors of Nu-Wave.
13. COMPANY INTENTIONS WITH RESPECT TO PARENT SHAREHOLDERS.
13.1 NOTES PAYABLE. Nu-Wave shall cause the Surviving
Corporation to honor its notes payable to the Parent Shareholders subject to
delivering to the Surviving Corporation of canceled checks or wire transfer
evidence evidencing that such loans were made and shall pay such rates in full
upon the successful completion of its contemplated private placement of its
equity securities.
13.2 PERSONAL GUARANTEES. It is the intent of Nu-Wave to
cause the Surviving Corporation to use its best efforts within its means to
obtain releases of the Parent Shareholders from personal guaranties of Company
leases and notes. Nu-Wave shall indemnify and hold harmless the Parent
Shareholders from and against any and all expenses (including reasonable
attorney's fees) and judgments arising out of or relating to the failure of the
Surviving Corporation to pay amounts due the following creditors of the Company:
All lessors disclosed in the Disclosure Letter
14. ISSUANCE OF ADDITIONAL SHARES OF PREFERRED STOCK. If the
Average Closing Price is less than $5 per share (the "Target Price"), Nu-Wave
shall, within 10 days thereafter, issue and deliver to the Shareholder that
number of fully paid and non-assessable shares of its common stock determined in
accordance with the following formula:
$2,000,000 - (Average Closing Price per share x 400,000)
Average Closing Price per share = number of additional shares
For example, if the Average Closing Price is $4 per share,
Nu-Wave shall issue to the Shareholder shares of Nu-Wave common stock,
determined as follows:
$2,000,000 - ($4 x 400,000)
--------------------------- = 100,000 shares
$4
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
NU-WAVE SUB:
NU-WAVE ACQUISITION, INC.
By: /s/ Kotha X. Xxxxxxxx
-------------------------------
Kotha X. Xxxxxxxx, as President
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NU-WAVE HEALTH PRODUCTS, INC.
By: /s/ Kotha X. Xxxxxxxx
-------------------------------
Kotha X. Xxxxxxxx, as President
COMPANY:
ENERGY FACTORS, INC.
By: /s/ Xxxx Xxxxxxxxxx
-------------------------------
Xxxx Xxxxxxxxxx, as President
SHAREHOLDER:
U.S. DIVERSIFIED TECHNOLOGIES,
INC., a Florida corporation
By: /s/ Xxxx Xxxxxxxxxx
-------------------------------
Xxxx Xxxxxxxxxx, as President
PARENT SHAREHOLDERS:
/s/ Xxxx Xxxxxxxxxx
-----------------------------------
Xxxx Xxxxxxxxxx
/s/ Xxxxxx Deutsch
-----------------------------------
Xxxxxx Deutsch
/s/ Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
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EXHIBIT 1
FORM OF
ARTICLES OF AMENDMENT
TO
ARTICLES INCORPORATION
OF
NU-WAVE HEALTH PRODUCTS, INC.
Article III of the articles of incorporation of Nu-Wave Health Products,
Inc. was amended by resolution of the corporation's board of directors on
_______, 1998. The corporation is filing these articles of amendment to articles
of incorporation pursuant to F.S. 607.0602.
FIRST: The name of the corporation is Nu-Wave Health Products, Inc.
SECOND: Article III of the articles of incorporation of Nu-Wave Health
Products, Inc. was amended as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
1.1 "Average Closing Price" shall mean the average closing
price of the Common Stock on the Applicable Trading Market.
1.2 "Board of Directors" shall mean the Board of Directors of
the Company or, with respect to any action to be taken by the Board of
Directors, any committee of the Board of Directors duly authorized to take such
action.
1.3 "Common Stock" shall mean the common stock, par value $.01
per share, of the Company, or any other class of stock resulting from
successive changes or reclassifications of such common stock consisting solely
of changes in par value, or from par value to no par value, or as a result of a
subdivision, combination, or merger, consolidation or similar transaction in
which the Company is a constituent corporation.
1.4 "Company" shall mean Nu-Wave Health Products, Inc., a
Florida corporation.
1.5 "Conversion Date" shall mean the date upon which the
Company receives the Notice of Conversion provided for in Section 5.2.
1.6 "Conversion Rate" shall have the meaning provided for in
Section 5.1.
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1.7 "Junior Stock" shall mean the Common Stock and the shares
of any other class or series of stock of the Company created on or after the
issuance of the Series A Preferred Stock that, by the terms of the Articles of
Incorporation or of the instrument by which the Board of Directors, acting
pursuant to authority granted in the Articles of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall be junior to the
Series A Preferred Stock in respect of the right to receive dividends or to
participate in any other distribution of assets.
1.8 "Liquidation Preference" shall mean, with respect to
each share of Series A Preferred Stock, $5.00.
1.9 "Market Value Market" shall mean the Average Closing
Price for a five consecutive trading day period.
1.10 "Applicable Trading" shall mean the OTC Bulletin Board
or, if the Common Stock is listed for trading thereon, The Nasdaq Stock Market,
operated by the National Association of Securities Dealers, Inc., or if neither
of the foregoing is the principal market on which the Common Stock is then
Traded or quoted any principal successor stock exchange or market where the
Common Stock is listed or included
1.11 "Pari Passu Stock" shall mean the shares of any class or
series of stock of the Company created on or after the issuance of the Series A
Preferred Stock that, by the terms of the Articles of Incorporation or of the
instrument by which the Board of Directors, acting pursuant to authority granted
in the Articles of Incorporation, shall fix the relative rights, preferences and
limitations thereof, shall, in the event that the amounts payable thereon in
liquidation are not paid in full, be entitled to share ratably with the Series A
Preferred Stock in any other distribution of assets in accordance with the sums
or other consideration which would be payable in such distribution if all sums
payable were discharged in full.
1.12 "Person" shall mean any individual, corporation, general
partnership, limited partnership, limited liability Partnership, joint venture,
association, joint-stock company, trust, limited liability Company,
unincorporated organization or government or any agency or political subdivision
thereof.
1.13 "Series A Preferred Stock" shall mean the Series A
Convertible Preferred Stock designated and created hereby.
2. CREATION AND DESIGNATION OF SERIES A CONVERTIBLE PREFERRED STOCK.
2.1 Pursuant to the authority conferred upon the Board of
Directors by Article III of the Articles of Incorporation of the Company, as
amended, there is hereby created and the Company is hereby authorized to issue
400,000 shares of a first series of preferred stock, designated "Series A
Convertible Preferred Stock," which shall have the
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terms, conditions, designation, preferences and privileges, relative,
participating, optional and other special rights, qualifications, limitations
and restrictions as provided for herein.
2.2 The shares of Series A Preferred Stock shall have no
voting rights except as required by law.
2.3 Each share of Series A Preferred Stock shall have the same
rights and preferences as and be identical in all respects with each other share
of Series A Preferred Stock.
2.4 The Company may create, authorize or issue any shares of
Junior Stock or Pari Passu Stock or increase or decrease the amount of
authorized capital stock of any class without the consent of the holders of
Series A Preferred Stock and in taking such actions the Company shall not be
deemed to have affected adversely the rights, preferences, privileges or voting
rights of holders of shares of Series A Preferred Stock.
3. VOTING.
The holders of record of the shares of Series A Preferred
Stock and the holders of record of the Common Stock, voting as a single class,
shall be entitled to one vote for each share on all matters submitted to the
shareholders, subject to the right of the Board of Directors to fix a record
date for the determination of shareholders entitled to notice of and to vote at
any meeting.
4. LIQUIDATION RIGHTS.
4.1 In the event of any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary, the holders of the shares of
Series A Preferred Stock shall be entitled to receive out of the assets of the
Company available for distribution to stockholders the Liquidation Preference in
preference to the holders of, and before any distribution is made on, any Junior
Stock, including, without limitation, on any Common Stock.
4.2 Neither the sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all the property and assets of the Company nor the merger or
consolidation of the Company into or with any other corporation, or the merger
or consolidation of any other corporation into or with the Company, shall be
deemed to be a liquidation, dissolution or winding up, voluntary or involuntary,
for the purposes of this Section 4.
4.3 After the payment to the holders of the shares of Series A
Preferred Stock of full preferential amounts provided for in this Section 4, the
holders of Series A Preferred Stock as such shall have no right or claim to any
of the remaining assets of the Company.
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56
4.4 In the event the assets of the Company available for
distribution to the holders of shares of Series A Preferred Stock upon any
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which holders
are entitled pursuant to Section 4.1, no such distribution shall be made on
account of any shares of any Pari Passu Stock upon such liquidation, dissolution
or winding up unless proportionate distributable amounts shall be paid on
account of the shares of Series A Preferred Stock, ratably, in proportion to the
full distributable amounts for which holders of all Series A Preferred Stock and
Pari Passu Stock are entitled upon such liquidation, dissolution or winding up.
5. CONVERSION.
5.1 The holder of Series A Preferred Stock shall have the
right, at its option, at any time and from time to time to convert, subject to
the terms and provisions of this Section 5, any or all of the holder's shares of
Series A Preferred Stock. In such case, each share of Series A Preferred Stock
shall be converted into one (1) (the "Conversion Rate") fully paid and
nonassessable shares of Common Stock. In the event that the Average Closing
Price of the Common Stock for any five consecutive trading day period after the
date hereof is $5.00 per share or more (subject to adjustment upon the
occurrence of the same events and in the same manner as is provided for in this
Section 5.1), each holder of Series A Preferred Stock shall be deemed to have
automatically given notice of the conversion of all of such holder's shares of
Series A Preferred Stock.
5.2 The conversion right of a holder of Series A Preferred
Stock shall be exercised by the holder by the surrender of the certificates
representing shares to be converted to the Company at any time during usual
business hours at its principal place of business, accompanied by written notice
(the "Notice of Conversion") that the holder elects to convert all or a portion
of the shares of Series A Preferred Stock represented by such certificate. The
Notice of Conversion shall read substantially as follows:
The undersigned holder (the "Holder") is surrendering to
Nu-Wave Health Products, Inc., a Florida corporation (the
"Company"), one or more certificates representing shares of
Series A Convertible Series A Preferred Stock of the Company
(the "Series A Preferred Stock") in connection with the
Conversion of all or a portion of the Series A Preferred Stock
into shares of Common Stock, $.01 par value per share, of the
Company (the "Common Stock") as set forth below.
1. The Holder understands that the Series A Preferred
Stock was issued by the Company pursuant to the exemption from
registration under the United States Securities Act of 1933,
as amended (the "Securities Act").
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2. The Holder represents and warrants that all offers
and sales of the Common Stock issued to the Holder upon such
conversion of the Series A Preferred Stock shall be made
either pursuant to an effective registration statement under
the Securities Act, in compliance with Rule 144, or pursuant
to some other exemption from registration.
3. The Holder is subject to a lockup agreement dated
June ___, 1998.
Number of shares of Series A Preferred Stock being converted:
___________.
Applicable Conversion Price: _______.
Number of shares of Common Stock issuable: __________.
Name of Holder:
---------------------
(Signature of Holder)
5.3 Immediately prior to the close of business on the date of receipt
by the Company of Notice of Conversion, the converting holder of Series A
Preferred Stock shall be deemed to be the holder of record of Common Stock
issuable upon conversion of such holder's Series A Preferred Stock
notwithstanding that certificates representing such Common Stock shall not then
be actually delivered to such person. On the Conversion Date, all rights with
respect to the shares of Series A Preferred Stock so converted, including the
rights, if any, to receive notices, will terminate, except only the rights of
holders thereof to (i) receive certificates for the number of shares of Common
Stock into which such shares of Series A Preferred Stock have been converted;
and (ii) exercise the rights to which they are entitled as holders of Common
Stock.
5.4 The Conversion Rate shall be subject to adjustment in case the
Company shall at any time or from time to time (A) make a redemption payment or
pay a dividend (or other distribution) payable in shares of Common Stock on any
class of capital stock (which, for purposes of this Section 5.4 shall include,
without limitation, any dividends or distributions in the form of options,
warrants or other rights to acquire capital stock) of the Company; (B) subdivide
the outstanding shares of Common Stock into a larger number of shares; (C)
combine the outstanding shares of Common Stock into a smaller number of shares;
(D) issue any shares of its capital stock in a reclassification of the Common
Stock; or (E) pay a dividend or make a distribution to all holders of shares of
Common Stock pursuant to a stockholder rights plan, "poison pill" or similar
arrangement then, and in each such case, the Conversion Rate in effect
immediately prior to such event shall be adjusted (and any other appropriate
actions shall be taken by the
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58
Company) so that the holder of any share of Series A Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock that such holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such share
of Series A Preferred Stock been converted immediately prior to the occurrence
of such event. An adjustment made pursuant to this Section 5.4 shall become
effective retroactively (x) in the case of any such dividend or distribution, to
the day immediately following the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution or (y) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such corporate
action becomes effective.
5.5 Upon any increase or decrease in the Conversion Rate,
then, and in each such case, the Company promptly shall deliver to each holder
of Series A Preferred Stock a certificate signed by an authorized officer of the
Company, setting forth in reasonable detail the event requiring the adjustment
and the method by which such adjustment was calculated and specifying the
increased or decreased Conversion Rate then in effect following such adjustment.
5.6 No fractional shares or scrip representing fractional
shares of Common Stock shall be issued upon the conversion of any shares of
Series A Preferred Stock. If more than one share of Series A Preferred Stock
shall be surrendered for conversion at one time by the same holder the number of
full shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate Liquidation Preference of the shares of Series A
Preferred Stock so surrendered. If the conversion of any share or shares of
Series A Preferred Stock results in a fraction, an amount equal to such fraction
multiplied by the last reported closing bid price of the Common Stock on the
Nasdaq Stock Market at the close of business on the trading day next preceding
the day of conversion shall be paid to such holder in cash by the Company.
5.7 In case of any capital reorganization or reclassification
or other change of outstanding shares of Common Stock (other than a change in
par value, or from par value to no par value, or from no par value to par
value), or in case of any consolidation or merger of the Company with or into
another Person (other than a consolidation or merger in which the Company is the
resulting or surviving Person and which does not result in any reclassification
or change of outstanding Common Stock), or in case of any sale or other
disposition to another Person of all or substantially all of the assets of the
Company (any of the foregoing, a "Transaction"), each share of Series A
Preferred Stock then outstanding shall, without the consent of any holder of
Series A Preferred Stock, become convertible only into the kind and amount of
shares of stock or other securities (of the Company or another issuer) or
property or cash receivable upon such Transaction by a holder of the number of
shares of Common Stock into which such share of Series A Preferred Stock could
have been converted immediately prior to such Transaction after giving effect to
any adjustment event. The provisions of this Section
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4.4 and any equivalent thereof in any such certificate similarly shall apply to
successive Transactions. The provisions of this Section 5.7 shall be the sole
right of holders of Series A Preferred Stock in connection with any Transaction
and such holders shall have no separate vote thereon.
5.8 In the case of any distribution by the Company to its
stockholders of substantially all of its assets, each holder of Series A
Preferred Stock will participate pro rata in such distribution based on the
number of shares of Common Stock into which such holders' shares of Series A
Preferred Stock would have been convertible immediately prior to such
distribution.
5.9 The Company shall at all times reserve and keep available
for issuance upon the conversion of the Series A Preferred Stock, such number of
its authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the conversion of all outstanding shares of Series A
Preferred Stock, and shall take all action required to increase the authorized
number of shares of Common Stock if at any time there shall be insufficient
authorized but unissued shares of Common Stock to permit such reservation or to
permit the conversion of all outstanding shares of Series A Preferred Stock.
5.10 The issuance or delivery of certificates for Common Stock
upon the conversion of shares of Series A Preferred Stock shall be made without
charge to the converting holder of shares of Series A Preferred Stock for such
certificates or for any tax in respect of the issuance or delivery of such
certificates or the securities represented thereby, and such certificates shall
be issued or delivered in the respective names of, or in such names as may be
directed by, the holders of the shares of Series A Preferred Stock converted;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate in a name other than that of the holder of the shares of
Series A Preferred Stock converted, and the Company shall not be required to
issue or deliver such certificate unless or until the Person or Persons
requesting the issuance or delivery thereof shall have paid to the Company the
amount of such tax or shall have established to the reasonable satisfaction of
the Company that such tax has been paid.
6. OTHER PROVISIONS.
6.1 With respect to any notice to a holder of shares of Series
A Preferred Stock required to be provided hereunder, neither failure to mail
such notice, nor any defect therein or in the mailing thereof, to any particular
holder shall affect the sufficiency of the notice or the validity of the
proceedings referred to in such notice with respect to the other holders or
affect the legality or validity of any distribution, rights, warrant,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any such action. Any notice which
was mailed in the manner herein provided shall be conclusively presumed to have
been duly given whether or not the holder receives the notice.
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6.2 Shares of Series A Preferred Stock issued and reacquired
will be retired and canceled promptly after reacquisition thereof and, upon
compliance with the applicable requirements of Florida law, have the status of
authorized but unissued shares of Series A Preferred Stock of the Company
undesignated as to series and may with any and all other authorized but unissued
shares of Series A Preferred Stock of the Company be designated or redesignated
and issued or reissued, as the case may be, as part of any series of Series A
Preferred Stock of the Corporation, except that any issuance or reissuance of
shares of Series A Preferred Stock must be in compliance with these Articles of
Amendment.
6.3 All notices periods referred to herein shall commence on
the date of the mailing of the applicable notice.
THIRD: The foregoing amendment to articles of incorporation was duly
adopted by the board of directors on June 12, 1998.
Signed this 12th day of June, 1998.
NU-WAVE HEALTH PRODUCTS, INC.
By:
-------------------------------
Kotha X. Xxxxxxxx, as President
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SCHEDULE 4.2
Approval of shareholders of Nu-Wave Sub.
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EXHIBIT 2.3(c)
FORM OF
ARTICLES OF MERGER
OF
NU-WAVE ACQUISITION, INC.
INTO
ENERGY FACTORS, INC.
Articles of Merger between Nu-Wave Acquisition, Inc., a Florida
corporation ("Nu-Wave Sub") and Energy Factors, Inc., a Florida corporation
("Energy Factors").
Pursuant to Section 607.1105 of the Florida Business Corporation Act,
Nu-Wave Sub and Energy Factors adopt the following Articles of Merger.
1. PLAN OF MERGER. The Plan of Merger dated June 12, 1998,
between Nu-Wave Sub and Energy Factors, a copy of which is attached hereto as
Exhibit 1 (the "Plan of Merger"), and pursuant to which Nu-Wave Sub will be
merged into Energy Factors (the "Merger") was approved and adopted by the sole
shareholder of Nu-Wave Sub on June 12, 1998 and was adopted by the sole
shareholder of Energy Factors on June 12, 1998.
2. EFFECTIVE DATE. The effective date of the merger shall be
the date that these Articles of Merger are filed with the Florida Department of
State.
3. SURVIVING CORPORATION; NAME. Pursuant to the Plan of
Merger, Energy Factors is the surviving corporation and has amended and
restated its articles of incorporation to, among other things, change its name
to Dynamic Health Products, Inc.
Executed on June 12, 1998.
Nu-Wave Acquisition, Inc. Energy Factors, Inc.
By: By:
--------------------------------- -----------------------------
Kotha X. Xxxxxxxx, as President Xxxx Xxxxxxxxxx, as President
63
Exhibit 7.4(a)
Form of Opinion Letter
[SCHIFINO & XXXXXXXXX, P.A. LETTERHEAD]
June 12, 1998
Nu-Wave Acquisition, Inc.
Nu-Wave Health Products, Inc.
0000 Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxxxx
Gentlemen:
We have acted as counsel to Energy Factors, Inc. (the "Company"), a Florida
corporation, and U.S. Diversified Technologies, Inc. (the "Shareholder"), a
Florida corporation (collectively, "Sellers"), in connection with the Agreement
and Plan of Reorganization dated June 12, 1998 (the "Agreement"). This is the
opinion contemplated by Section 7.4(a) of the Agreement. All capitalized terms
used in this opinion without definition have the respective meanings given to
them in the Agreement or the Accord referred to below.
This Opinion Letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business
Law (1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this Opinion Letter should be
read in conjunction therewith. The law covered by the opinions expressed herein
is limited to the Federal Law of the United States and the Law of the State of
Florida.
On June 12, 1998, pursuant to Chapter 607.0704 of the Florida Business
Corporation Act, Messrs. Xxxx Xxxxxxxxxx, Xxxxx Xxxxxxx and Xxxxxx Deutsch,
owners of approximately 90% of the outstanding shares of capital stock of the
Shareholder, approved the adoption of the Agreement. Florida law requires that
within ten (10) days after the approval of the Agreement, notice must be given
to those shareholders of the corporation who have not consented in writing to
the Agreement. We have been advised that proper notice will be given within the
ten day period.
Based on the foregoing, and assuming compliance with Chapter 607.0704 of
the Florida Business Corporation Act, is our opinion that:
1. The Agreement is enforceable against the Sellers. The Lockup Agreement
is enforceable against the Shareholder. The Releases, the
Noncompetition Agreements and the Employment Agreement are enforceable
against each Parent Shareholder executing them.
2. The authorized capital stock of the Company consists of 60 shares of
stock, no par value, of which 60 shares are outstanding. The
Shareholder owns all of the outstanding Stock of record and
beneficially, free and clear of all adverse claims.
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3. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida, with full
corporate power and authority to own its properties and to engage in
its business as presently conducted or contemplated. The outstanding
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable and were not
issued in violation of the preemptive rights of any Person.
4. Neither the execution and delivery of the Agreement nor the
consummation of any or all of the Contemplated Transactions (a)
breaches or constitutes a default (or an event that, with notice or
lapse of time or both, would constitute a default) under any agreement
or commitment known to us to which the Company is a party or by which
any of their respective property or assets is bound to which either
Seller is party or (b) violates any statute, law, regulation or rule,
or, to our knowledge, any judgment, decree or order of any court or
other Governmental Body applicable to either Seller.
5. Neither the execution and delivery of the Agreement nor the
consummation of any or all of the Contemplated Transactions (a)
violates any provision of the certificates of incorporation or bylaws
(or other governing instrument) of Sellers, (b) breaches or
constitutes a default (or an event that, with notice or lapse of time
or both, would constitute a default) under, or results in termination
of, or accelerates the performance required by, or excuses performance
by any Person of any of its obligations under, or causes the
acceleration of the maturity of any debt or obligation pursuant to, or
results in the creation or imposition of any Encumbrance upon any
property or assets of either Seller under, any agreement or commitment
known to us to which either Seller is a party or by which any of their
respective property or assets is bound or to which any of the
properties or assets of either Seller are subject, and which breach or
default would have a material adverse effect on the operations of the
Sellers. It should be noted however that compliance with Chapter
607.0704 affords the shareholders of the Shareholder dissenters rights
of appraisal.
This opinion is delivered solely in connection with the consummation of
the transactions described herein, and may not be relied upon by you for any
other purpose nor by any other person for any purpose.
Very truly yours,
SCHIFINO & XXXXXXXXX, P.A.
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
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EXHIBIT 7.4(c)
FORM OF
RELEASE
This Release is being executed and delivered in accordance with Section
7.4(c) of the Agreement of Reorganization dated June 12, 1998 (the "Agreement")
between Nu-Wave Acquisition, Inc., a Florida corporation ("Nu-Wave Sub"), Energy
Factors, Inc., a Florida corporation (the "Company") and others. Capitalized
terms used in this Release without definition have the respective meanings given
to them in the Agreement.
The undersigned Parent Shareholders acknowledge that execution and
delivery of this Release is a condition to Nu-Wave Sub's and Nu-Wave's
obligation to consummate the transactions contemplated in the Agreement and that
they are relying on this Release in consummating such transactions.
The undersigned, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged and intending to be legally bound,
in order to induce Nu-Wave Sub and Nu-Wave to consummate the transactions
provided for in the Agreement, hereby agree as follows:
Each Parent Shareholder, on behalf of himself and each of his Related
Persons, hereby releases and forever discharges Nu-Wave Sub and Nu-Wave, the
Company and each of the other Acquired Companies, and each of their respective
individual, joint or mutual, past, present and future Representatives,
affiliates, stockholders, controlling persons, Subsidiaries, successors and
assigns (individually, a "Releasee" and collectively, "Releasees") from any and
all claims, demands, Proceedings, causes of action, Orders, obligations,
contracts, agreements, debts and liabilities whatsoever, whether known or
unknown, suspected or unsuspected, both at law and in equity, which each of the
Parent Shareholders or any of their respective Related Persons now has, have
ever had or may hereafter have against the respective Releasees arising
contemporaneously with or prior to the Closing Date or on account of or arising
out of any matter, cause or event occurring contemporaneously with or prior to
the Closing Date, including, but not limited to, any rights to indemnification
or reimbursement from the Company or any other Acquired Company, whether
pursuant to their respective Organizational Documents, contract or otherwise and
whether or not relating to claims pending on, or asserted after, the Closing
Date; provided, however, that nothing contained herein shall operate to release
any obligations of Nu-Wave Sub or Nu-Wave arising under the Agreement or any
obligation of any Acquired Company which obligation has been disclosed in
Section 3.25 of the Disclosure Letter.
Each Parent Shareholder hereby irrevocably covenants to refrain from,
directly or indirectly, asserting any claim or demand, or commencing,
instituting or causing to be commenced, any proceeding of any kind against any
Releasee, based upon any matter purported to be released hereby.
66
Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, each Parent Shareholder, jointly and severally, shall
indemnify and hold harmless each Releasee from and against all loss, liability,
claim, damage (including incidental and consequential damages) or expense
(including costs of investigation and defense and reasonable attorney's fees)
whether or not involving third party claims, arising directly or indirectly from
or in connection with (i) the assertion by or on behalf of the Parent
Shareholders or any of their Related Persons of any claim or other matter
purported to be released pursuant to this Release and (ii) the assertion by any
third party of any claim or demand against any Releasee which claim or demand
arises directly or indirectly from, or in connection with, any assertion by or
on behalf of the Parent Shareholders or any of their Related Persons against
such third party of any claims or other matters purported to be released
pursuant to this Release.
If any provision of this Release is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
This Release may not be changed except in a writing signed by the
person(s) against whose interest such change shall operate. This Release shall
be governed by and construed under the laws of the State of Florida without
regard to principles of conflicts of law.
All words used in this Release will be construed to be of such gender
or number as the circumstances require.
Each of the undersigned have executed and delivered this Release as of
this 12th day of June, 1998.
-------------------------------
Xxxx Xxxxxxxxxx
-------------------------------
Xxxxxx Deutsch
-------------------------------
Xxxxx Xxxxxxx
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EXHIBIT 7.4(c)
FORM OF
RELEASE
This Release is being executed and delivered in accordance with Section
7.4(c) of the Agreement of Reorganization dated June 12, 1998 (the "Agreement")
between Nu-Wave Acquisition, Inc., a Florida corporation ("Nu-Wave Sub"), Energy
Factors, Inc., a Florida corporation (the "Company") and others. Capitalized
terms used in this Release without definition have the respective meanings given
to them in the Agreement.
The undersigned Shareholder acknowledges that execution and delivery of
this Release is a condition to Nu-Wave Sub's and Nu-Wave's obligation to
consummate the transactions contemplated in the Agreement and that they are
relying on this Release in consummating such transactions.
The undersigned, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged and intending to be legally bound,
in order to induce Nu-Wave Sub and Nu-Wave to consummate the transactions
provided for in the Agreement, hereby agree as follows:
The Shareholder, on behalf of itself and each of its Related Persons,
hereby releases and forever discharges Nu-Wave Sub and Nu-Wave, the Company and
each of the other Acquired Companies, and each of their respective individual,
joint or mutual, past, present and future Representatives, affiliates,
stockholders, controlling persons, Subsidiaries, successors and assigns
(individually, a "Releasee" and collectively, "Releasees") from any and all
claims, demands, Proceedings, causes of action, Orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity, which the Shareholder or
any of its respective Related Persons now has, have ever had or may hereafter
have against the respective Releasees arising contemporaneously with or prior to
the Closing Date or on account of or arising out of any matter, cause or event
occurring contemporaneously with or prior to the Closing Date, including, but
not limited to, any rights to indemnification or reimbursement from the Company
or any other Acquired Company, whether pursuant to their respective
Organizational Documents, contract or otherwise and whether or not relating to
claims pending on, or asserted after, the Closing Date; provided, however, that
nothing contained herein shall operate to release any obligations of Nu-Wave Sub
or Nu-Wave arising under the Agreement or any obligation of any Acquired Company
which obligation has been disclosed in Section 3.25 of the Disclosure Letter.
The Shareholder hereby irrevocably covenants to refrain from, directly
or indirectly, asserting any claim or demand, or commencing, instituting or
causing to be commenced, any proceeding of any kind against any Releasee, based
upon any matter purported to be released hereby.
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Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, the Shareholder, jointly and severally, shall
indemnify and hold harmless each Releasee from and against all loss, liability,
claim, damage (including incidental and consequential damages) or expense
(including costs of investigation and defense and reasonable attorney's fees)
whether or not involving third party claims, arising directly or indirectly from
or in connection with (i) the assertion by or on behalf of the Shareholder or
any of its Related Persons of any claim or other matter purported to be released
pursuant to this Release and (ii) the assertion by any third party of any claim
or demand against any Releasee which claim or demand arises directly or
indirectly from, or in connection with, any assertion by or on behalf of the or
any of its Related Persons against such third party of any claims or other
matters purported to be released pursuant to this Release.
If any provision of this Release is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
This Release may not be changed except in a writing signed by the
person(s) against whose interest such change shall operate. This Release shall
be governed by and construed under the laws of the State of Florida without
regard to principles of conflicts of law.
All words used in this Release will be construed to be of such gender
or number as the circumstances require.
The undersigned has executed and delivered this Release as of this 12th
day of June, 1998.
U.S. Diversified Technologies, Inc.
By:
--------------------------------
Xxxx Xxxxxxxxxx, as President
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69
EXHIBIT 7.4(e)
FORM OF
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
May, 1995, by and between Nu-Wave Health Products, Inc., a Florida corporation
(the "Employer") and Xxxx Xxxxxxxxxx, residing at 0000 Xxxxxx Xxxxx Xxxx.,
Xxxxxxxx, XX 00000 (the "Employee").
WITNESSETH:
1. EMPLOYMENT. The Employer hereby employs the Employee as the Vice
Chairman of the Board of Directors of the Employer, and the Employee hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. TERM. Subject to the provisions of termination as hereinafter
provided, the term of employment under this Agreement shall begin as of June 12,
1998, and terminate on June 13, 2001.
3. COMPENSATION; REIMBURSEMENT, ETC.
(a) The compensation payable to the Employee shall be fixed at
an annual salary of $125,000. Such compensation may be paid in weekly or in
other convenient installments, as determined by the Employer. In addition, the
Board of Directors of Employer may, in its discretion, establish a bonus plan
which may include the Employee. The terms of any such bonus plan shall be in the
discretion of the Employer.
(b) The Employer shall reimburse the Employee on a monthly
basis for all reasonable expenses incurred by the Employee in the performance of
his duties under this Agreement; provided, however, that the Employer will not
reimburse the Employee for any expense which had not been approved by the
Employer prior to such expense; and provided further, that the Employee shall
have previously furnished to the Employer an itemized account, satisfactory to
the Employer, in substantiation of such expenditures.
(c) The Employer currently provides to the Employee a leased
automobile, with ____ months remaining on such lease. The Employer shall
maintain such lease until its expiration, at which time such vehicle shall be
returned to the lessor. Thereafter, Employer shall pay to Employee an automobile
allowance of $750 per month for each month during the term hereof.
(d) The Employer shall maintain a life insurance policy on the
life of the Employee during the term of this Agreement in the face amount of
$500,000. The Employee, his designee or estate shall be the beneficiary of
$250,000 of the death benefit of such life insurance policy and, until the date
that the Employer refinances its existing note and mortgage
70
encumbering its facilities (the "Note"), $250,000 of the death benefit shall be
payable to the Employer, but pledged as additional security for the Note. After
the Note is refinanced, the death benefit previously pledged as additional
security for the Note shall be payable to the Employee's designated beneficiary.
4. DUTIES. The Employee is engaged as the Vice Chairman of the Board
of the Employer. Employee shall report to and take direction from Employer's
Chairman of the Board. Employee's primary responsibility shall be business
development and acquisitions. The Employee shall adhere to the minimum
performance standards set forth in Exhibit "A" hereto. In addition, the Employee
shall have such other duties and hold such offices as may from time to time be
reasonably assigned to him by the Board of Directors of the Employer.
5. EXTENT- OF SERVICES. During the term of his employment under this
Agreement, the Employee shall devote his entire time, attention, energies and
skill to the benefit and business of the Employer, and shall not during the term
of this Agreement be employed by any other person without board approval.
6. BENEFITS. The Employee shall be entitled to the same benefits
package made available by the Employer to its management personnel, including
health insurance for employee and his immediate family. The Employee shall be
entitled to four (4) weeks vacation time during each fiscal year of the
Employer.
7. DISABILITY, ILLNESS OR INCAPACITY.
(a) The Employee shall receive full compensation for any
period of disability, illness or incapacity during the term hereof which renders
the Employee at least temporarily unable to perform the services required under
this Agreement, provided, however, that if the Employee's disability, illness or
incapacity extends beyond a period of one hundred twenty (120) days, the
Employee shall not be entitled, after the expiration of such one hundred twenty
(120) day period, to any further compensation hereunder until he returns to full
time service hereunder, but he shall be entitled only to such disability
payments as may be provided by a disability insurance policy or policies
purchased by the Employer.
(b) Successive periods of disability, illness or incapacity
will be considered separate periods unless the later period of disability,
illness or incapacity is due to the same or related cause and commences less
than six (6) months after the ending of the previous period of disability.
(c) If and when the period of disability, illness or
incapacity of the Employee totals six (6) months, his employment with the
Employer may be terminated by the Board. If the Employee and the Employer agree,
the Employee may thereafter be employed by the Employer upon such terms as may
be mutually agreeable.
(d) Any dispute regarding the existence, extent or continuance
of the disability, illness or incapacity shall be resolved by the determination
of a majority of three competent doctors who are not employees of the Employer,
one of which shall be selected by the
2
71
Employer, one of which shall be selected by the Employee and a third selected by
the other two doctors.
8. DEATH OR RETIREMENT.
(a) All rights of the Employee hereunder (other than rights
accrued prior thereto) shall terminate upon his death, except that the Employer
shall pay to the estate of the Employee such compensation as would otherwise
have been payable to the Employee up to six months after the death occurs. The
Employer shall. have no additional financial obligation under this Agreement to
the Employee or his estate.
(b) All rights of the Employee hereunder (other than rights
accrued prior thereto) shall terminate upon his retirement, except that the
Employer shall pay to the Employee such compensation as would otherwise have
been payable to the Employee up to the end of the month in which his retirement
occurs. The Employer shall have no additional financial obligation under this
Agreement to the Employee.
9. OTHER TERMINATIONS.
(a) (i) The Employer may terminate the employment of the
Employee hereunder without notice (1) upon the Employee's breach of any
provision of this Agreement, or (2) for good cause (as defined below).
(ii) The term "good cause" as used in this Agreement
shall include, but shall not necessarily be limited to fraud, habitual
absenteeism, a pattern of conduct which tends to hold the Employer up to
ridicule in the community, conduct disloyal to the Employer, conviction of any
crime of moral turpitude and substantial dependence, as determined by the Board
of Directors of the Employer, on any addictive substance, including but not
limited to alcohol, amphetamines, barbiturates, methadone, cannabis, cocaine,
PCP, THC, LSD or other illegal or narcotic drugs. If any determination of
substantial dependence by the Board of Directors is disputed by the Employee,
the parties hereto agree to abide by the decision of a panel of three physicians
selected in the manner provided in Section 7(d) of this Agreement. The Employee
agrees to make himself available for and submit to examinations by such
physicians as may be directed by the Employer. Failure to submit to any such
examination shall constitute a breach of a material part of this Agreement.
(b) If the employment of the Employee is terminated pursuant
to this Section 9, the Employer shall pay to the Employee any compensation
earned but not paid to the Employee prior to such termination. Such payment
shall be in full and complete discharge of any and all liabilities or
obligations of the Employer to the Employee hereunder, and the Employee shall be
entitled to no further benefits under this Agreement, except as provided in
Section 9 of this Agreement.
(c) In the event termination for reasons other than those
pursuant to this Section 9 the Employer will pay the balance of compensation due
pursuant to that contact, less any bonus, up to the termination date of this
contract.
10. DISCLOSURE.
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72
(a) The Employee agrees that he will fully disclose and
disclose only to the Employer all ideas, methods, plans, developments,
improvements or patentable inventions, of any kind, which relate directly or
indirectly to the business of the Employer and which are known, made or
discovered by him during the performance of his duties under this Agreement. All
disclosures are to be made promptly after conception or discovery of the idea,
method, plan, development, improvement or invention. Nothing in this Section 10
shall be construed as requiring any communication to the Employer of the idea,
method, plan, development, improvement or invention if lawfully protected by any
other lawful prohibition against such communication.
(b) Any idea, method, plan, development, improvement or
invention which the Employee is obligated to disclose to the Employer under this
Section 10 shall be the property of the Employer, regardless of whether it is
disclosed by the Employee to the Employer. The Employee agrees that he will
provide any and all assistance to the Employer in making any patent applications
or other applications for obtaining exclusive rights in, and will do all other
things that may be reasonably necessary to vest in the Employer or its assigns,
the ideas, methods, plans, developments, improvements or inventions.
11. CONFIDENTIALITY. The Employee agrees to keep in strict secrecy and
confidence any and all information the Employee assimilates or to which he has
access during his employment by the Employer and which has not been publicly
disclosed and is not a matter of common knowledge in the fields of work of the
Employer. The Employee agrees that both during and after the term of his
employment by the Employer, lie will not, without prior written consent of the
Employer, disclose any such confidential information to any third person,
partnership, joint venture, company, corporation or other organization.
12. NONCOMPETITION AND NONSOLICITATION.
(a) During the term of this Agreement, except as contemplated
herein, and for a period of three (3) years after the termination of his
employment with the Employer, regardless of the reason for such termination, the
Employee shall not, directly or indirectly, within Florida, enter into, engage
in, be employed by, or consult with any business in competition with the
business of the Employer or Nu-Wave Health Products, Inc., a Florida corporation
("Nu-Wave") as it is then carried on (except for vitamin outlets); further, the
Employee shall not sell to, market, produce or otherwise deal with any customer
of the Employer or Nu-Wave. The restrictions of this Section 12 shall extend to
any and all activities of the Employee, whether as an independent contractor,
partner or joint venturer, or as an officer, director, stockholder, agent,
employee or salesman for any person, firm, partnership, corporation or other
entity, or otherwise. The restrictions of this Section 12 shall not be violated
by the ownership of no more than 2% of the outstanding securities of any company
whose stock is traded on a national securities exchange or is quoted in the
Automated Quotation System of the National Association of Securities Dealers
(NASDAQ). Solicitation or acceptance of orders outside of any prohibited
territory as described above for shipment to, delivery in or service in any
restricted territory shall also constitute engaging in business within the
restricted territories in violation of this Section 12.
4
73
(b) During his employment with the Employer, except as
contemplated herein, and for a period of one (1) year after the termination of
his employment with the Employer, regardless of the reason for such termination,
the Employee agrees he will refrain from and will not, directly or indirectly,
as independent contractor, employee, consultant, agent, partner, joint venturer,
or otherwise, (1) solicit any of the employees of the Employer or Nu-Wave to
terminate their employment or (2) accept employment with or seek remuneration by
any of the customers of the Employer or Nu-Wave with whom the Employer or
Nu-Wave did business during the term of the Employee's employment.
(c) The period of time during which the Employee is prohibited
from engaging in certain business practices pursuant to Sections 12(a) or (b)
shall be extended by any length of time during which the Employee is in breach
of such covenants.
(d) It is understood by and between the parties hereto that
the foregoing restrictive covenants set forth in Sections 12(a) through (c) are
essential elements of this Agreement, and that, but for the agreement of the
Employee to comply with such covenants, the Employer would not have agreed to
enter into this Agreement. Such covenants by the Employee shall be construed as
agreements independent of any other provision in this Agreement. The existence
of any claim or cause of action of the Employee against the Employer, whether
predicated on this Agreement, or otherwise, shall not constitute a defense to
the enforcement by the Employer of such covenants.
(e) It is agreed by the Employer and the Employee that if any
portion of the covenants set forth in this Section 12 are held to be invalid,
unreasonable, arbitrary or against public policy, then such portion of such
covenants shall be considered divisible both as to time and geographical area.
The Employer and Employee agree that, if any court of competent jurisdiction
determines the specified time period or the specified geographical area
applicable to this Section 12 to be invalid, unreasonable, arbitrary or against
public policy, a lesser time period or geographical area which is determined to
be reasonable, nonarbitrary and not against public policy may be enforced
against the Employee. The Employer and the Employee agree that the foregoing
covenants are appropriate and reasonable when considered in light of the nature
and extent of the business conducted by the Employer.
13. SPECIFIC PERFORMANCE. The Employee agrees that damages at law will
be an insufficient remedy to the Employer if the Employee violates the terms of
Sections 10, 11 or 12 of this Agreement and that the Employer would suffer
irreparable damage as a result of such violation. Accordingly, it is agreed that
the Employer shall be entitled, upon application to a court of competent
jurisdiction, to obtain injunctive relief to enforce the provisions of such
Sections, which injunctive relief shall be in addition to any other rights or
remedies available to the Employer. The Employee agrees to pay to the Employer
all costs and expenses incurred by the Employer relating to the enforcement of
the terms of Sections 10, 11 or 12 of this Agreement, including reasonable fees
and disbursements of counsel (both at trial and in appellate proceedings).
14. COMPLIANCE WITH OTHER AGREEMENTS. The Employee represents and
war-rants that the execution of this Agreement by him and his performance of his
obligations hereunder will not conflict with, result in the breach of any
provisions of or the termination of or constitute
5
74
a default under any Agreement to which the Employee is a party or by which the
Employee is or may be bound.
15. WAIVER OR BREACH. The waiver by the Employer of a breach of any of
the provisions of this Agreement by the Employee shall not be construed as a
waiver of any subsequent breach by the Employee.
16. BINDING EFFECT ASSIGNMENT. The rights and obligations of the
Employer under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Employer. This Agreement is a personal
employment contract and the rights, obligations and interests of the Employee
hereunder may not be sold, assigned, transferred, pledged or hypothecated.
17. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge is sought.
18. HEADINGS. The headings contained in this Agreement are for
reference purposes and shall not affect the meaning or interpretation of this
Agreement.
19. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Florida.
20. NOTICES. Any notice required or permitted to be given under this
Agreement shall Sufficient if in writing and if sent by certified or registered
mail, first class, return receipt requested, to the parties at the following
addresses:
To the Employer: Nu-Wave Health Products, Inc.
c/o Nu-Wave Health Products, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Kotha X. Xxxxxxxx,
President
To the Employee at his address herein first above written.
The parties hereto have executed this Agreement the day and year first
above written.
EMPLOYER:
NU-WAVE HEALTH PRODUCTS, INC.
By:
----------------------------
Kotha X. Xxxxxxxx, President
6
75
EMPLOYEE:
----------------------------
Xxxx Xxxxxxxxxx
7
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EXHIBIT 7.4(f)
FORM OF
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of June 12,
1998, by and between Energy Factors, Inc., a Florida corporation (the
"Company"), and Xxxxx Xxxxxxx, residing at 00000 Xxx Xxxx Xxxx, Xxxxxxxx, XX
00000 ("Parent Shareholder").
RECITALS
Concurrently with the execution and delivery of this Agreement, Nu-Wave
Acquisition, Inc., a Florida corporation, is merging into Energy Factors, with
the result that Energy Factors will become a wholly-owned subsidiary of Nu-Wave
Health Products, Inc., a Florida corporation ("Nu-Wave") pursuant to the terms
and conditions of a reorganization agreement made as of June 12, 1998, (the
"Reorganization Agreement"). Section 7.4(f) of the Reorganization Agreement
requires that noncompetition agreements be executed and delivered by the Parent
Shareholder as a condition to the consummation of the transactions provided for
in the Reorganization Agreement.
AGREEMENT
For valuable consideration, the parties, intending to be legally bound,
agree as follows:
1. DEFINITIONS. Capitalized terms not expressly defined in this Agreement
shall have the meanings ascribed to them in the Reorganization Agreement.
2. ACKNOWLEDGMENTS BY PARENT SHAREHOLDER. Parent Shareholder acknowledges
that (a) Parent Shareholder has occupied a position of trust and confidence with
the Acquired Companies prior to the date hereof and has become familiar with one
or more of the following, any and all of which constitute confidential
information of the Acquired Companies, (collectively the "Confidential
Information"): (i) any and all trade secrets concerning the business and affairs
of the Acquired Companies, product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current and planned research and
development, current and planned manufacturing and distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer software and programs (including
object code and source code), computer software and database technologies,
systems, structures and architectures (and related processes, formulae,
compositions, improvements, devices, know-how, inventions, discoveries,
concepts, ideas, designs, methods and information, of the Acquired Companies and
any other information, however documented, of the Acquired Companies that is a
trade secret within the meaning of Section 688, et sec., Florida Statutes; (ii)
any and all information concerning the business and affairs of the Acquired
Companies (which includes historical financial statements, financial projections
and budgets, historical and projected sales, capital spending budgets and plans,
the names and backgrounds of
77
key personnel, personnel training and techniques and materials), however
documented; and (iii) any and all notes, analysis, compilations, studies,
summaries, and other material prepared by or for the Acquired Companies
containing or based, in whole or in part, on any information included in the
foregoing, (b) the business of the Acquired Companies is national in scope, (c)
its products and services are marketed throughout the United States; (d) the
Acquired Companies compete with other businesses that are or could be located in
any part of the United States; (e) the Company has required that Parent
Shareholder make the covenants set forth in Sections 3 and 4 of this Agreement
as a condition to Nu-Wave Sub and Nu-Wave consummating the transactions provided
for in the Reorganization Agreement and A; (f) the provisions of Sections 3 and
4 of this Agreement are reasonable and necessary to protect and preserve the
Acquired Companies' business, and (g) the Acquired Companies would be
irreparably damaged if Parent Shareholder were to breach the covenants set forth
in Sections 3 and 4 of this Agreement.
3. CONFIDENTIAL INFORMATION. Parent Shareholder acknowledges and agrees
that all Confidential Information known or obtained by Parent Shareholder,
whether before or after the date hereof, is the property of the Acquired
Companies. Therefore, Parent Shareholder agrees that Parent Shareholder will
not, at any time, disclose to any unauthorized Persons or use for his own
account or for the benefit of any third party any Confidential Information,
whether Parent Shareholder has such information in Parent Shareholder's memory
or embodied in writing or other physical form, without the Company's written
consent, unless and to the extent that the Confidential Information is or
becomes generally known to and available for use by the public other than as a
result of Parent Shareholder's fault or the fault of any other Person bound by a
duty of confidentiality to the Company or the Acquired Companies. Parent
Shareholder agrees to deliver to the Company at the time of execution of this
Agreement, and at any other time the Company may request, all documents,
memoranda, notes, plans, records, reports, and other documentation, models,
components, devices, or computer software, whether embodied in a disk or in
other form (and all copies of all of the foregoing), relating to the businesses,
operations, or affairs of the Acquired Companies and any other Confidential
Information that Parent Shareholder may then possess or have under Parent
Shareholder's control.
4. NONCOMPETITION. As an inducement for Nu-Wave Sub and Nu-Wave to enter
into the Reorganization Agreement and as additional consideration under the
Reorganization Agreement, Parent Shareholder agrees that:
(a) For a period of three years after the Closing, Parent Shareholder
shall not, directly or indirectly, within Florida, enter into, engage in, be
employed by, or consult with any business in competition with the business of
the Company or Nu-Wave as it is then carried on (except for vitamin outlets);
further, the Parent Shareholder shall not sell to, market, produce or otherwise
deal with any customer of the Company or Nu-Wave. The restrictions of this
paragraph 4 shall extend to any and all activities of the Parent Shareholder,
whether as an independent contractor, partner or joint venturer, or as an
officer, director, stockholder, agent, employee or salesman for any person,
firm, partnership, corporation or other entity, or otherwise. The restrictions
of this paragraph 4 shall not be violated by the ownership of no more than 2% of
the outstanding securities of any company whose stock is traded on a national
securities exchange or is quoted in the Automated Quotation System of the
National Association of Securities Dealers (NASDAQ). Solicitation or acceptance
of orders outside of any prohibited territory as described above for shipment
to, delivery in or service in any restricted territory shall
2
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also constitute engaging in business within the restricted territories in
violation of this paragraph 4.
(b) For a period of one (1) year after the Closing, the Parent
Shareholder agrees he will refrain from and will not, directly or indirectly, as
independent contractor, employee, consultant, agent, partner, joint venturer, or
otherwise, (1) solicit any of the employees of the Company or Nu-Wave to
terminate their employment or (2) accept employment with or seek remuneration by
any of the customers of the Company or Nu-Wave with whom the Company or Nu-Wave
did business during the three year period prior to the Closing.
(c) The period of time during which the Parent Shareholder is
prohibited from engaging in certain business practices pursuant to paragraph 4
shall be extended by any length of time during which the Parent Shareholder is
in breach of such covenants.
(d) It is agreed by the Parent Shareholder and the Company that if any
portion of the covenants set forth in this paragraph 4 are held to be invalid,
unreasonable, arbitrary or against public policy, then such portion of such
covenants shall be considered divisible both as to time and geographical area.
The parties agree that, if any court of competent jurisdiction determines the
specified time period or the specified geographical area applicable to this
paragraph 4 to be invalid, unreasonable, arbitrary or against public policy, a
lesser time period or geographical area which is determined to be reasonable,
nonarbitrary and not against public policy may be enforced against the Parent
Shareholder. The parties agree that the foregoing covenants are appropriate and
reasonable when considered in light of the nature and extent of the business
conducted by the Company and Nu-Wave.
5. SPECIFIC PERFORMANCE. The Parent Shareholder agrees that damages at law
will be an insufficient remedy to the Company if the Parent Shareholder violates
the terms of paragraphs 3 and 4 of this Agreement and that the Company and
Nu-Wave would suffer irreparable damage as a result of such violation.
Accordingly, it is agreed that the Company shall be entitled, upon application
to a court of competent jurisdiction, to obtain injunctive relief to enforce the
provisions of such paragraphs, which injunctive relief shall be in addition to
any other rights or remedies available to the Company. The Parent Shareholder
agrees to pay to the Company all costs and expenses incurred by the Company
relating to the enforcement of the terms of paragraphs 3 and 4 of this
Agreement, including reasonable fees and disbursements of counsel (both at trial
and in appellate proceedings).
6. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon the parties
and will inure to the benefit of the parties and their affiliates, successors
and assigns.
7. WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement will operate
as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that
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79
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement.
8. GOVERNING LAW. This Agreement will be governed by the laws of the State
of Florida without regard to conflicts of laws principles.
9. JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the State of Florida,
County of Pinellas, or, if it has or can acquire jurisdiction, in the United
States District Court for the Middle District of Florida, and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
10. SEVERABILITY. Whenever possible each provision and term of this
Agreement will be interpreted in a manner to be effective and valid but if any
provision or term of this Agreement is held to be prohibited by or invalid, then
such provision or term will be ineffective only to the extent of such
prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining provisions
or terms of this Agreement.
11. ENTIRE AGREEMENT. This Agreement and the Reorganization Agreement
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior written and oral agreements and
understandings between the parties with respect to the subject matter of this
Agreement. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
Company:
ENERGY FACTORS, INC. Parent Shareholders:
By:
--------------------------------- ------------------------------
Kotha X. Xxxxxxxx, as President Xxxxx Xxxxxxx
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EXHIBIT 7.4(f)
FORM OF
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made as of June 12,
1998, by and between Energy Factors, Inc., a Florida corporation (the
"Company"), and Xxxxxx Deutsch, residing at 000 XxXxxxxxxx, Xxxxxx Xxxxx Xxxxx,
XX 00000 ("Parent Shareholder").
RECITALS
Concurrently with the execution and delivery of this Agreement, Nu-Wave
Acquisition, Inc., a Florida corporation, is merging into Energy Factors, with
the result that Energy Factors will become a wholly-owned subsidiary of Nu-Wave
Health Products, Inc., a Florida corporation ("Nu-Wave") pursuant to the terms
and conditions of a reorganization agreement made as of June 12, 1998, (the
"Reorganization Agreement"). Section 7.4(f) of the Reorganization Agreement
requires that noncompetition agreements be executed and delivered by the Parent
Shareholder as a condition to the consummation of the transactions provided for
in the Reorganization Agreement.
AGREEMENT
For valuable consideration, the parties, intending to be legally bound,
agree as follows:
1. DEFINITIONS. Capitalized terms not expressly defined in this Agreement
shall have the meanings ascribed to them in the Reorganization Agreement.
2. ACKNOWLEDGMENTS BY PARENT SHAREHOLDER. Parent Shareholder acknowledges
that (a) Parent Shareholder has occupied a position of trust and confidence with
the Acquired Companies prior to the date hereof and has become familiar with one
or more of the following, any and all of which constitute confidential
information of the Acquired Companies, (collectively the "Confidential
Information"): (i) any and all trade secrets concerning the business and affairs
of the Acquired Companies, product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current and planned research and
development, current and planned manufacturing and distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer software and programs (including
object code and source code), computer software and database technologies,
systems, structures and architectures (and related processes, formulae,
compositions, improvements, devices, know-how, inventions, discoveries,
concepts, ideas, designs, methods and information, of the Acquired Companies and
any other information, however documented, of the Acquired Companies that is a
trade secret within the meaning of Section 688, et sec., Florida Statutes; (ii)
any and all information concerning the business and affairs of the Acquired
Companies (which includes historical financial statements, financial projections
and budgets, historical and projected sales, capital spending budgets and plans,
the names and backgrounds of
81
key personnel, personnel training and techniques and materials), however
documented; and (iii) any and all notes, analysis, compilations, studies,
summaries, and other material prepared by or for the Acquired Companies
containing or based, in whole or in part, on any information included in the
foregoing, (b) the business of the Acquired Companies is national in scope, (c)
its products and services are marketed throughout the United States; (d) the
Acquired Companies compete with other businesses that are or could be located in
any part of the United States; (e) the Company has required that Parent
Shareholder make the covenants set forth in Sections 3 and 4 of this Agreement
as a condition to Nu-Wave Sub and Nu-Wave consummating the transactions provided
for in the Reorganization Agreement and A; (f) the provisions of Sections 3 and
4 of this Agreement are reasonable and necessary to protect and preserve the
Acquired Companies' business, and (g) the Acquired Companies would be
irreparably damaged if Parent Shareholder were to breach the covenants set forth
in Sections 3 and 4 of this Agreement.
3. CONFIDENTIAL INFORMATION. Parent Shareholder acknowledges and agrees
that all Confidential Information known or obtained by Parent Shareholder,
whether before or after the date hereof, is the property of the Acquired
Companies. Therefore, Parent Shareholder agrees that Parent Shareholder will
not, at any time, disclose to any unauthorized Persons or use for his own
account or for the benefit of any third party any Confidential Information,
whether Parent Shareholder has such information in Parent Shareholder's memory
or embodied in writing or other physical form, without the Company's written
consent, unless and to the extent that the Confidential Information is or
becomes generally known to and available for use by the public other than as a
result of Parent Shareholder's fault or the fault of any other Person bound by a
duty of confidentiality to the Company or the Acquired Companies. Parent
Shareholder agrees to deliver to the Company at the time of execution of this
Agreement, and at any other time the Company may request, all documents,
memoranda, notes, plans, records, reports, and other documentation, models,
components, devices, or computer software, whether embodied in a disk or in
other form (and all copies of all of the foregoing), relating to the businesses,
operations, or affairs of the Acquired Companies and any other Confidential
Information that Parent Shareholder may then possess or have under Parent
Shareholder's control.
4. NONCOMPETITION. As an inducement for Nu-Wave Sub and Nu-Wave to enter
into the Reorganization Agreement and as additional consideration under the
Reorganization Agreement, Parent Shareholder agrees that:
(a) For a period of three years after the Closing, Parent Shareholder
shall not, directly or indirectly, within Florida, enter into, engage in, be
employed by, or consult with any business in competition with the business of
the Company or Nu-Wave as it is then carried on (except for vitamin outlets);
further, the Parent Shareholder shall not sell to, market, produce or otherwise
deal with any customer of the Company or Nu-Wave. The restrictions of this
paragraph 4 shall extend to any and all activities of the Parent Shareholder,
whether as an independent contractor, partner or joint venturer, or as an
officer, director, stockholder, agent, employee or salesman for any person,
firm, partnership, corporation or other entity, or otherwise. The restrictions
of this paragraph 4 shall not be violated by the ownership of no more than 2% of
the outstanding securities of any company whose stock is traded on a national
securities exchange or is quoted in the Automated Quotation System of the
National Association of Securities Dealers (NASDAQ). Solicitation or acceptance
of orders outside of any prohibited territory as described above for shipment
to, delivery in or service in any restricted territory shall
2
82
also constitute engaging in business within the restricted territories in
violation of this paragraph 4.
(b) For a period of one (1) year after the Closing, the Parent
Shareholder agrees he will refrain from and will not, directly or indirectly, as
independent contractor, employee, consultant, agent, partner, joint venturer, or
otherwise, (1) solicit any of the employees of the Company or Nu-Wave to
terminate their employment or (2) accept employment with or seek remuneration by
any of the customers of the Company or Nu-Wave with whom the Company or Nu-Wave
did business during the three year period prior to the Closing.
(c) The period of time during which the Parent Shareholder is
prohibited from engaging in certain business practices pursuant to paragraph 4
shall be extended by any length of time during which the Parent Shareholder is
in breach of such covenants.
(d) It is agreed by the Parent Shareholder and the Company that if any
portion of the covenants set forth in this paragraph 4 are held to be invalid,
unreasonable, arbitrary or against public policy, then such portion of such
covenants shall be considered divisible both as to time and geographical area.
The parties agree that, if any court of competent jurisdiction determines the
specified time period or the specified geographical area applicable to this
paragraph 4 to be invalid, unreasonable, arbitrary or against public policy, a
lesser time period or geographical area which is determined to be reasonable,
nonarbitrary and not against public policy may be enforced against the Parent
Shareholder. The parties agree that the foregoing covenants are appropriate and
reasonable when considered in light of the nature and extent of the business
conducted by the Company and Nu-Wave.
5. SPECIFIC PERFORMANCE. The Parent Shareholder agrees that damages at law
will be an insufficient remedy to the Company if the Parent Shareholder violates
the terms of paragraphs 3 and 4 of this Agreement and that the Company and
Nu-Wave would suffer irreparable damage as a result of such violation.
Accordingly, it is agreed that the Company shall be entitled, upon application
to a court of competent jurisdiction, to obtain injunctive relief to enforce the
provisions of such paragraphs, which injunctive relief shall be in addition to
any other rights or remedies available to the Company. The Parent Shareholder
agrees to pay to the Company all costs and expenses incurred by the Company
relating to the enforcement of the terms of paragraphs 3 and 4 of this
Agreement, including reasonable fees and disbursements of counsel (both at trial
and in appellate proceedings).
6. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon the parties
and will inure to the benefit of the parties and their affiliates, successors
and assigns.
7. WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement will operate
as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that
3
83
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement.
8. GOVERNING LAW. This Agreement will be governed by the laws of the State
of Florida without regard to conflicts of laws principles.
9. JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the State of Florida,
County of Pinellas, or, if it has or can acquire jurisdiction, in the United
States District Court for the Middle District of Florida, and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
10. SEVERABILITY. Whenever possible each provision and term of this
Agreement will be interpreted in a manner to be effective and valid but if any
provision or term of this Agreement is held to be prohibited by or invalid, then
such provision or term will be ineffective only to the extent of such
prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining provisions
or terms of this Agreement.
11. ENTIRE AGREEMENT. This Agreement and the Reorganization Agreement
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior written and oral agreements and
understandings between the parties with respect to the subject matter of this
Agreement. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
Company:
ENERGY FACTORS, INC. Parent Shareholders:
By:
---------------------------------- ----------------------------------
Kotha X. Xxxxxxxx, as President Xxxxxx Deutsch
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EXHIBIT 7.4h
FORM OF LOCKUP AGREEMENT
To: Nu-Wave Health Products, Inc.
0000 Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx, XX 00000
Re: Nu-Wave Health Products, Inc. (the "Company")
Ladies and Gentlemen:
The undersigned is the owner of record and beneficially of 40,000
shares of Series A convertible preferred stock of the Company ("Preferred
Stock"). The undersigned recognizes that the Company's financing plans will be
of benefit to the undersigned and that in order to further such financing plans,
it would be beneficial to the Company for the undersigned to agree not to
dispose of the Preferred Stock and any common stock into which the Preferred
Stock is convertible except as set forth herein.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not, without the prior written consent of the Company
(which consent may be withheld in its sole discretion), directly or indirectly
sell, offer, contract or grant any options to sell (including without limitation
any short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
as amended, (the "Exchange Act"), or otherwise dispose of any shares of
Preferred Stock and any shares of common stock into which the Preferred Stock is
convertible, or publicly announce the undersigns intention to do any of the
foregoing, for a period commencing on the date of the consummation of the merger
between Nu-Wave Acquisition, Inc., a Florida corporation and Energy Factors,
Inc., a Florida corporation and continuing to a date twelve months thereafter.
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of the shares of Preferred Stock or common stock into which the
Preferred Stock is convertible in compliance with the foregoing restrictions.
The undersigned further agrees to an inscription on the certificate representing
the Preferred Stock and the common stock into which the Preferred Stock is
convertible stating that such securities are restricted securities under
applicable federal securities laws and may not be transferred in the absence of
an effective registration statement or an opinion of counsel satisfactory to the
Company that registration is not required.
This Agreement is irrevocable and is binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
Dated: U.S. Diversified Technologies, Inc.
----------------
By:
-------------------------------
as
----------------------------
85
EXHIBIT 7.4(i)
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of ______________, 1998, by and between Nu-Wave Health Products, Inc., a
Florida corporation (the "Company") and U.S. Diversified Technologies, Inc., a
Florida corporation (the "Initial Purchaser").
This Agreement is made pursuant to the Agreement and Plan of Merger dated
June ___, 1998 (the "Merger Agreement"), by and among the Company, the Initial
Purchaser and others.
The parties agree as follows:
Section 1. DEFINITIONS. As used in this Registration Rights Agreement, the
following capitalized terms shall have the following meanings:
ACT: The Securities Act of 1933, as amended.
COMMISSION: The Securities and Exchange Commission.
REGISTRABLE SECURITIES: The Common Stock into which the
Preferred Stock is convertible.
Section 2. INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the
Company within one year after the date hereof proposes to register common stock
for sale for cash under the Securities Act, in a manner which would permit
registration of Registrable Securities for sale to the public under the
Securities Act and the Registrable Securities will not be salable under
Commission Rule 144 at the anticipated date of effectiveness of such
registration, it will give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section 2. Upon the written request of any such holder made within 20 days after
receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the holders thereof, to the extent
requisite to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be registered, by
inclusion of such Registrable Securities in the registration statement which
covers the securities which the Company proposes to register, provided that if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement
86
filed in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each holder
of Registrable Securities and, thereupon, (a) in the case of a determination not
to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration, and (b) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities for the same period as the delay in registering such
other securities. The Company will pay all Registration Expenses in connection
with the registration of Registrable Securities requested pursuant to this
Section 2.
(b) PRIORITY IN INCIDENTAL REGISTRATION. If a
registration pursuant to this Section 2 involves an underwritten offering and
the managing underwriter advises the Company in writing that, in its opinion,
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering, the Company will include in such
registration to the extent of the number which the Company is so advised can be
sold in such offering as follows: (i) first, the securities proposed by the
Company to be sold for its own account, and (ii) second, any Registrable
Securities requested to be included in such registration, pro rata among the
holders thereof requesting such registration on the basis of the number of
shares of such securities requested to be included by such holders.
Section 3. REGISTRATION PROCEDURES. If and whenever the Company is
required to file a registration statement under the Securities Act pertaining
to any Registrable Securities as provided in Section 2, the Company will as
expeditiously as possible:
(a) prepare and file with the Commission the requisite
registration statement (including such audited financial statements as may be
required by the Securities Act or the rules and regulations promulgated
thereunder) to effect such registration and use its best efforts to cause such
registration statement to become effective;
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of such
registration statement and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement until the earlier of such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement 90 days after such
registration statement becomes effective;
(c) furnish to each seller of Registrable Securities
covered by such registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act;
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87
(d) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such jurisdictions as
each seller thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement remains in
effect, and take any other action which may be reasonably necessary or advisable
to enable such seller to consummate the disposition in such jurisdictions of the
securities owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not but for the requirements of this
subdivision (d) be obligated to be so qualified or to consent to general service
of process in any such jurisdiction;
(e) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(f) notify each holder of Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made, and at the request of any such holder promptly
prepare and furnish to such holder a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made; and
(g) use its best efforts to list all Registrable
Securities covered by such registration statement on any securities exchange on
which any of the securities of the same class as the Registrable Securities are
then listed.
The Company may require each holder of Registrable Securities as to which
any registration is being effected to furnish the Company such information
regarding such holder and the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by the acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (f) of this Section
3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (f) of this
Section 3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than
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permanent file copies, then in such holder's possession of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice.
Section 4. UNDERWRITTEN OFFERINGS.
(a) If the Company at any time proposes to register any of its
securities under the Securities Act as contemplated by Section 2 and such
securities are to be distributed by or through one or more underwriters, the
Company will, subject to the provisions of Section 2(b), use its best efforts,
if requested by any holder of Registrable Securities, to arrange for such
underwriters to include the Registrable Securities to be offered and sold by
such holder among the securities to be distributed by such underwriters. The
holders of Registrable Securities to be distributed by such underwriters shall
be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. No holder of Registrable Securities shall be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder and such holder's intended method of distribution and any
other representation required by law.
(b) Each holder of Registrable Securities agrees by acquisition
of such Registrable Securities, if so required by the managing underwriter, not
to effect any public sale or distribution of such securities during the seven
days prior to and the 90 days after the closing of any underwritten registration
pursuant to Section 2 has become effective, or, if the managing underwriter
advises the Company in writing that, in its opinion, no such public sale or
distribution should be effected for a specified period longer than 90 days after
such underwritten registration in order to complete the sale and distribution of
securities included in such registration and the Company gives notice to such
holder of Registrable Securities of such advice, during a reasonably longer
period after such underwritten registration, except as part of such underwritten
registration, whether or not such holder participates in such registration.
Section 5. PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of the registration statement under the Securities Act,
the Company will give the holders of Registrable Securities registered under
such registration statement, their underwriters, if any, and their respective
counsel and accountants, the reasonable opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
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Section 6. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless the seller of
Registrable Securities covered by any registration statement filed pursuant to
Section 2, its directors and officers, each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person, if
any, who controls any such seller or any such underwriter within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller or any such director or officer or underwriter or
controlling Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse such seller and each such
director, officer, underwriter and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding, provided that
wit respect to any seller the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by such seller specifically stating that it is for use in the
preparation thereof, and, provided, further, that the Company shall not be
liable to any Person who participates as an underwriter, in the offering or sale
of Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus to the Person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Registrable Securities to such Person if
such statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any such director, officer, underwriter
or controlling person and shall survive the transfer of such securities by such
seller.
(b) INDEMNIFICATION BY THE SELLERS. The Company may require,
as a condition to including any Registrable Securities in any registration
statement filed pursuant to Section 3, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such securities,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this Section 6) the Company, each director of the
Company, each officer of the Company and each other person, if any, who controls
the company within the meaning of the Securities Act, with respect to any
statement or alleged
5
90
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such seller specifically stating that it is for use
in the preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section 6,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 6, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall consent to entry of any judgment or enter into any settlement
without the consent of the indemnified party which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) OTHER INDEMNIFICATION. Indemnification similar to
that specified in the preceding subdivisions of this Section 6 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any Federal or state law or regulation of any governmental
authority, other than the Securities Act.
(e) INDEMNIFICATION PAYMENTS. The indemnification required
by this Section 6 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
Section 7. MISCELLANEOUS.
(a) NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written
6
91
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as a party may designate by notice
to the other parties):
Company: Dynamic Health Products, Inc.
Attention: Xx. Xxxxx X. Xxxxxxxx
Address: 0000 Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
with a copy to: Johnson, Blakely, Pope,
Bokor, Xxxxxx & Xxxxx, P.A.
Attention: Xxxxxx X. Xxxxxxxx, Esq.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Initial Purchaser: U.S. Diversified Technologies, Inc.
Attention: Xxxx Xxxxxxxxxx
Address: 0000 Xxxxxx Xxxxx Xxxx.
Xxxxxxxx, XX 00000
Facsimile No.: ________________
(b) JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties in the courts
of the State of Florida, County of Pinellas, or, if it has or can acquire
jurisdiction, in the United States District Court for the Middle District of
Florida, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
(c) ENTIRE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter and constitutes (along with the documents referred to in this Agreement)
a complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.
(d) ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties.
7
92
Nothing expressed or referred to in this Agreement will be construed to give
any person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
(e) SEVERABILITY. If any provision of this Agreement is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
(f) SECTION HEADINGS, CONSTRUCTION. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words used
in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
(g) GOVERNING LAW. This Agreement will be governed by the
laws of the State of Florida without regard to conflicts of laws principles.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as
of the date first above written.
Nu-Wave Health Products, Inc.,
a Florida corporation
By:
-------------------------------
Its:
-------------------------------
U.S. Diversified Technologies, Inc.,
a Florida corporation
By:
-------------------------------
Its:
-------------------------------
8
93
EXHIBIT 7.4(j)
FORM OF
NU-WAVE HEALTH PRODUCTS, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT made as of this _____ day of June, 1998, between Nu-Wave
Health Products, Inc., a corporation existing under the laws of the State of
Florida (hereinafter referred to as the "Company"), and Xxxx Xxxxxxxxxx
(hereinafter referred to as "Optionee").
In consideration of the services to be rendered by Optionee to the Company
as provided in the Employment Agreement between Optionee and Dynamic Health
Products, Inc., a Florida corporation and a wholly-owned subsidiary of the
Company, of even date herewith (the "Employment Agreement"), the parties hereto
agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee the right and
option hereinafter called "Option" to purchase all or any part of an aggregate
of 600,000 shares of its Common Stock (the "Shares") on the terms and conditions
herein set forth.
2. PURCHASE PRICE. The purchase price of the Shares covered by the Option
granted hereunder shall be the greater of Three Dollars ($3.00) per Share or the
purchase price of the Company Common Stock offered in the Company's initial
public offering of its Common Stock.
3. EXPIRATION. Anything to the contrary contained therein notwithstanding,
the Option contained herein shall expire and shall in no event be exercisable
after five years after the date hereof.
4. VESTING; EXERCISE RIGHTS; TERMINATION.
(a) The Option shall vest and shall be exercisable in three
equal annual installments of 200,000 shares each, with the first installment
vesting at 12:00 midnight one year after the date hereof, the second installment
vesting at 12:00 midnight two years after the date hereof, and the third and
final installment vesting at 12:00 midnight three years after the date hereof;
provided, however, all Shares subject to this Option shall vest in the event
that the closing bid price of the Common Stock of the Company on the primary
market on which it is traded is Eight Dollars or more for a period of twenty
consecutive trading days.
(b) Anything to the contrary contained in this paragraph 4
notwithstanding, in the event that the Employment Agreement is terminated for
any reason other than the death of Optionee, all Options not vested at the time
of such termination shall automatically terminate.
5. RECAPITALIZATIONS, ETC. In the event after the date hereof of any
change in the outstanding Common Stock of the Corporation by reason of any stock
dividend, recapitalization, reorganization, merger, consolidation, split-up,
combination, or exchange of shares, rights offering to purchase the Common Stock
at a price substantially below fair market value, or of any similar change
affecting the Common Stock, the number and kind of shares which thereafter may
be purchased hereunder and the purchase price per share thereof shall be
appropriately adjusted consistent with such change in such manner as the
Company's Board of Directors may deem equitable to prevent substantial
94
dilution or enlargement of the rights granted hereunder. The decision of the
Board of Directors in this respect shall be final and binding as Optionee.
6. DEATH. In the event of the death of the Optionee any option or
unexercised portion thereof granted to him, if otherwise vested and exercisable
by the Optionee at the date of death, may be exercised by his personal
representative, heirs, or legatees at any time prior to the expiration of twelve
(12) months after the date of the death of the Optionee, but in any event not
later than five years after the date hereof. All Options invested at the time
of death shall terminate.
7. METHOD OF EXERCISE; PAYMENT. Vested options may be exercised in whole
at any time, or in part from time to time with respect to whole shares only,
within the period permitted for the exercise thereof, and shall be exercised by
delivery of written notice of intent to exercise the Option with respect to a
specified number of shares delivered to the Company at its principal office
accompanied by payment in full to the Company at said office of the amount of
the purchase price for the number of shares of Stock with respect to which the
Option is then being exercised, which payment may be by any of the following
means or any combination thereof: cash, or certified or cashier's check payable
to the Company or by cashless exercise.
8. RESTRICTIONS ON TRANSFERABILITY OF OPTION. This Option shall not be
transferable other than by a will of the Optionee or by the laws of descent and
distribution. During his lifetime, the Option shall be exercisable only by the
Optionee or by the Optionee's attorney-in-fact or conservator.
9. RIGHTS IN STOCK BEFORE ISSUANCE AND DELIVERY. No person shall be
entitled to the privileges of stock ownership in respect of any Shares issuable
upon exercise of this Option, unless and until such Shares have been issued to
such person as fully paid Shares.
10. REQUIREMENTS OF LAW. By accepting this Option, the Optionee represents
and agrees for himself or herself and his or her transferees by will or the laws
of descent and distribution that, unless a registration statement under the
Securities Act of 1933 is in effect as to Shares purchased upon exercise of this
Option, (a) any and all Shares so purchased shall be acquired for his or her
personal account and not with a view to or for a sale in connection with any
distribution, and (b) each notice of the exercise of any portion of this Option
shall be accompanied by a representation and warranty in writing, signed by the
person entitled to exercise the same, that the Shares are being so acquired in
good faith for his or her personal account and not with a view to or for a sale
in connection with any distribution. No certificate or certificates for shares
of stock purchased upon exercise of this Option shall be issued and delivered
unless and until, in the opinion of legal counsel for the Company, such Shares
may be issued and delivered without causing the Company to be in violation of or
incur any liability under any federal, state or other securities law or other
requirement of law or any regulatory body having jurisdiction over the Company.
Unless registered under applicable securities laws, certificates evidencing
shares of stock purchased upon exercise of this Option shall bear a customary
restrictive legend. Optionee understands that the Common Stock of the Company
issued upon exercise of the Option will not be registered under applicable
federal and state securities laws and will therefore constitute "restricted
securities" under applicable securities laws. Such common stock may not be
resold in the absence of registration under applicable securities laws or
exemption therefrom. The Company may require an opinion of counsel acceptable to
it that registration is not required upon any transfer of the Shares. The
undersigned understands that as a condition of exemption from registration under
federal securities laws, Optionee may be required to hold the Common Stock for a
period of one
2
95
year after such Common Stock is issued and that Optionee may be required to
comply with other applicable provisions of Securities and Exchange Commission
Rule 144.
11. ENTIRE AGREEMENT. This Agreement and the Employment Agreement
constitute the entire agreement between the parties hereto concerning the
subject matter hereof, and supersede all prior agreements, memoranda,
correspondence, conversations and negotiations.
12. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Florida as to all matters, including but not limited to matters of
validity, construction, effect, performance, and remedies. This Agreement shall
be binding upon the successors, assigns, and transferees of the undersigned.
13. NOTICES. All notices given hereunder must be in writing and shall be
deemed to have been properly given if: (i) personally delivered; (ii) deposited
for delivery by federal express or other nationally recognized overnight courier
services; or (iii) sent by registered or certified mail, return receipt
requested, first class postage prepaid; in each case addressed to the party
entitled to receive the same at the address specified below:
If to the Company: Nu-Wave Health Products, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Kotha X. Xxxxxxxx, President
If to Optionee: Xxxx Xxxxxxxxxx
0000 Xxxxxx Xxxxx Xxxx.
Xxxxxxxx, XX 00000
Either party may alter the address to which notice is to be sent by giving
notice of such change of address in conformity with the provisions set forth
above providing for the giving of notice.
IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement to
be duly executed by its officer thereunto duly authorized, and Optionee has
hereunto set his hand upon this Agreement to be effective as of the date and
year first written above.
OPTIONEE: COMPANY:
Nu-Wave Health Products, Inc.
By:
----------------------------------- ----------------------------
(Signature) Kotha X. Xxxxxxxx, President
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
-----------------------------------
(Social Security Number)
3
96
[JOHNSON, BLAKELY, POPE, BOKOR, XXXXXX & XXXXX, P.A. LETTERHEAD]
FILE NO. 39625.99157
EXHIBIT 8.4(a)
Form of Opinion Letter
June 23, 1998
U.S. Diversified Technologies, Inc.
0000 Xxxxxx Xxxxx Xxxx.
Xxxxxxxx, XX 00000
Gentlemen:
We have acted as counsel to Nu-Wave Acquisition, Inc. and Nu-Wave Health
Products, Inc., both Florida corporations, in connection with the Agreement and
Plan of Reorganization dated June 12, 1998 (the "Agreement"). This is the
opinion contemplated by Section 8.4(a) of the Agreement. All capitalized terms
used in this opinion without definition have the respective meanings given to
them in the Agreement or the Accord referred to below.
This Opinion Letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business
Law (1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this Opinion Letter should be
read in conjunction therewith. The law covered by the opinions expressed herein
is limited to the Federal Law of the United States and the Law of the State(s)
of Florida.
Based on the foregoing, our opinion is as follows:
97
U.S. Diversified Technologies, Inc.
June 23, 1998
Page 2
1. The Agreement is enforceable against Nu-Wave Sub and Nu-Wave. The
Registration Rights Agreement and the Option Agreement are enforceable against
Nu-Wave.
2. Neither the execution and delivery of the Agreement, the Registration
Rights Agreement and the Option Agreement nor the performance of Nu-Wave's and
Nu-Wave Sub's obligations thereunder (a) violates any provision of the
certificate of incorporation or bylaws (or other governing instrument) of
Nu-Wave and Nu-Wave Sub, (b) breaches or constitutes a default (or an event
that, with notice or lapse of time or both, would constitute a default) under
any agreement or commitment known to us to which either Nu-Wave or Nu-Wave Sub
is a party or by which any of their respective property or assets is bound to
which either Nu-Wave or Nu-Wave Sub is party or (c) violates any statute, law,
regulation or rule, or any judgment, decree or order of any court or
Governmental Body applicable to either Nu-Wave or Nu-Wave Sub.
Very truly yours,
JOHNSON, BLAKELY, POPE,
BOKOR, XXXXXX & XXXXX, P.A.
98
EXHIBIT 12.3
FORM OF
IRREVOCABLE PROXY
The undersigned hereby appoints Xxxx Xxxxxxxxxx ("Santostasi") as the
proxy of the undersigned, to vote as designated below all of the shares of
common stock of Nu-Wave Health Products, Inc., a Florida corporation ("Nu-Wave")
held of record by the undersigned on the date hereof, at any meeting of the
shareholders of Nu-Wave held for the purpose of approving the amendment to
Article III of the Nu-Wave Articles of Incorporation in the form attached hereto
as Exhibit "A" (the "Amendment") and for the purpose of executing any written
consent of the shareholders of Nu-Wave pursuant to Section 607.0704 of the
Florida Business Corporation Act for the same purpose ("Consent").
Santostasi agrees to vote in favor of the Amendment or to execute a
Consent if no meeting is held.
This Proxy is coupled with an interest and is irrevocable through the
date that the Amendment is approved by the shareholders of Nu-Wave.
Dated:
---------------- ------------------------------
Xxxxx Xxxxxx
------------------------------
Xxxx Xxxxxxxxxx
