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EXHIBIT 1
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into on November 17, 2000,
among Applied Medical Devices, Inc., a Colorado corporation ("AMDI"), Applied
Medical Merger Corp., a Delaware corporation ("Merger Corp."), XXXXX Systems,
Inc., a Delaware corporation ("XXXXX") and Xxxxxxx X. XxXxxxx (the "Principal
Shareholder").
RECITALS
A. The Principal Shareholder owns an aggregate of approximately 20% of
the outstanding capital stock of XXXXX.
B. The respective Boards of Directors of AMDI, Merger Corp. and XXXXX
xxxx it advisable and in the best interest of each corporation and their
respective shareholders that XXXXX and AMDI merge with and into Merger Corp.
pursuant to this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the respective
covenants and provisions herein contained, and intending to be legally bound
hereby, the parties agree as follows:
1. THE MERGER.
1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, XXXXX and AMDI shall be merged with and into Merger
Corp. (the "Merger"). Following the Merger, the separate corporate existences of
XXXXX and AMDI shall cease and Merger Corp. shall continue as the surviving
party in the Merger (Merger Corp. is sometimes referred to as the "Surviving
Corporation").
1.2 EFFECTIVE TIME OF THE MERGER. At the Closing, AMDI, XXXXX
and Merger Corp. shall file Articles of Merger in such form as is required by
and executed in accordance with the applicable provisions of the Colorado
Business Corporation Act and the Delaware General Corporation Law. The Merger
shall become effective at such time as the Articles of Merger are duly filed
with the Delaware Secretary of State or at such time as AMDI, Merger Corp. and
XXXXX shall agree and as shall be specified in the Articles of Merger (the
"Effective Time of the Merger").
1.3 CERTIFICATE OF INCORPORATION, BYLAWS, BOARD OF DIRECTORS
AND OFFICERS OF THE SURVIVING CORPORATION.
(i) The Certificate of Incorporation of Merger Corp.
as in effect immediately prior to the Effective Time of the Merger shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law, except that the
name of the Surviving Corporation shall be changed to XXXXX Systems, Inc.
(ii) At the Effective Time of the Merger, the Bylaws
as in effect immediately prior to the Effective Time of the Merger shall be the
Bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
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(iii) Directors and officers of the Surviving
Corporation shall be the persons listed in Schedule 1.3(iii), and each person
shall hold his or her respective office or offices from and after the Effective
Time of the Merger until his or her successor shall have been elected and shall
have qualified or as otherwise provided in the Bylaws of the Surviving
Corporation.
1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF
AMDI, XXXXX AND MERGER CORP. The respective designations and numbers of
outstanding shares of each class of capital stock of AMDI and XXXXX as of the
date of this Agreement are as follows:
(i) The authorized capital stock of AMDI consists of
75,000,000 shares of common stock, of which 65,977,800 shares are issued and
outstanding (the "AMDI Stock"). An additional 7,330,850 shares of AMDI Stock are
reserved for issuance for services, and there are warrants outstanding to
purchase an additional 9,028,700 shares of AMDI Stock.
(ii) The authorized capital stock of XXXXX consists
of 5,000,000 shares of common stock, $.01 par value, of which 4,104,412 shares
are issued and outstanding (the "XXXXX Stock"), and 1,000,000 shares of
preferred stock, $.01 par value, of which no shares are issued and outstanding.
XXXXX has adopted a 2000 Stock Incentive Plan which authorizes 2,000,000 shares
of XXXXX Stock, of which options to purchase up to 1,430,000 shares of XXXXX
Stock have been granted or are reserved for grants to employees of XXXXX.
(iii) The authorized capital stock of Merger Corp.
consists of 50,000,000 shares of common stock, $.001 par value, of which 100
shares are issued and outstanding (the "Merger Corp. Stock"), and 10,000,000
shares of preferred stock, $.001 par value, of which no shares are issued and
outstanding and of which none will be issued and outstanding at the Effective
Time of the Merger.
1.5 EFFECT OF MERGER. At the Effective Time of the Merger the
effect of the Merger shall be as provided in the applicable provisions of the
Delaware General Corporation Law. Except as herein specifically set forth, the
identity, existence, purposes, powers, objects, franchises, privileges, rights
and immunities of Merger Corp. shall continue unaffected and unimpaired by the
Merger and the corporate franchises, existence and rights of AMDI and XXXXX
shall be merged with and into Merger Corp., and Merger Corp., as the Surviving
Corporation shall be fully vested therewith.
1.6 CONVERSION OF XXXXX STOCK. At the Effective Time of the
Merger and without any action on the part of the holders of the XXXXX Stock,
each share of XXXXX Stock shall be converted into 3.2 shares of Merger Corp.
Stock. No fractional shares shall be issued. If a holder of the XXXXX Stock
would otherwise be entitled to a fractional share, it shall be rounded up to one
whole share.
1.7 CONVERSION OF AMDI STOCK. At the Effective Time of the
Merger and without any action on the part of the holders of the AMDI Stock, each
share of AMDI Stock shall be converted into .0222 shares of Merger Corp. Stock.
No fractional shares shall be issued. If a holder of the AMDI Stock would
otherwise be entitled to a fractional share, it shall be rounded up to one whole
share. At the Effective Time of the Merger, Merger Corp. will issue 147,574
shares of Merger Corp. Stock for the services referred to in Section 1.4(i).
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1.8 OUTSTANDING MERGER CORP. STOCK. At the Effective Time of
the Merger the 100 shares of Merger Corp. Stock which are currently outstanding
will be deemed cancelled.
1.9 EXCHANGE PROCEDURE; DELIVERY OF CERTIFICATES OF AMDI STOCK
AND XXXXX STOCK.
(a) As of the Effective Time of the Merger, Merger
Corp. shall deposit, or shall cause to be deposited, with Olde Monmouth Stock
Transfer Co., Inc. or such other party reasonably satisfactory to XXXXX and AMDI
(the "Exchange Agent"), for the benefit of the holders of AMDI Stock and XXXXX
Stock, for exchange in accordance with this Article 1, certificates representing
the shares of Merger Corp. Stock to be issued pursuant to this Article 1 in
exchange for outstanding shares of AMDI Stock and XXXXX Stock.
(b) Promptly after the Effective Time of the Merger,
the Exchange Agent shall mail to each holder of record of AMDI Stock and XXXXX
Stock: (i) a letter of transmittal (the "Letter of Transmittal") which shall
specify that delivery shall be effected, and risk of loss and title to
certificates shall pass, only upon delivery of certificates to the Exchange
Agent and shall be in such form and have such other provisions as Merger Corp.
may reasonably specify and (ii) instructions for use in effecting the surrender
of the certificates evidencing the AMDI Stock and XXXXX Stock in exchange for
certificates representing shares of Merger Corp. Stock. Upon surrender of a
certificate for cancellation to the Exchange Agent together with such Letter of
Transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of such certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Merger Corp.
Stock surrendered as provided in this Article 1, and the certificate of AMDI
Stock or XXXXX Stock so surrendered shall be cancelled.
(c) Notwithstanding any other provisions of this
Agreement, no dividends or other distributions declared or made after the
Effective Time of the Merger with respect to the Merger Corp. Stock with a
record date after the Effective Time of the Merger shall be paid with respect to
the shares represented by any certificate for AMDI Stock or XXXXX Stock until
such certificate is surrendered for exchange as provided in this Article 1.
1.10 WARRANTS. At the Effective Time of the Merger, all
warrants then outstanding to purchase AMDI Stock shall remain outstanding
following the Effective Time of the Merger and cease to represent a right to
acquire shares of AMDI Stock and shall be converted automatically into warrants
to purchase shares of Merger Corp. Stock with the number of shares and exercise
price to be proportionately adjusted to reflect the exchange ratio set forth in
Section 1.7.
1.11 OPTIONS. XXXXX has granted or reserved for grant, options
to purchase up to 2,000,000 shares of XXXXX Stock at exercise prices ranging
from $2.50 to $2.75 per share. At the Effective Time of the Merger, all options
then outstanding to purchase XXXXX Stock shall remain outstanding following the
Effective Time of the Merger and cease to represent a right to acquire shares of
XXXXX Stock and shall convert automatically into options to purchase the same
number of shares of Merger Corp. Stock at the same exercise price per share as
the options to purchase XXXXX Stock prior to the Effective Time of the Merger
and shall otherwise be subject to the same terms and conditions as under XXXXX'x
2000 Stock Incentive Plan. It is the intention of the parties that the options
qualify following the Effective Date of the Merger as incentive stock options as
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defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") to the extent permitted under Section 422 of the Code and to the extent
the options qualified as incentive stock options prior to the Effective Time of
the Merger.
2. CLOSING.
Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") will
take place on the second business day after the satisfaction or waiver (subject
to applicable law) of the conditions set forth in Sections 8 and 9, unless
another time or date is agreed to in writing by the parties hereto (the actual
time and date of the Closing being referred to herein as the "Closing Date").
The Closing shall be held at the offices of Xxxxxx Xxxxx, LLP, 0000 Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, unless another place is agreed to in
writing by the parties hereto.
3. REPRESENTATIONS AND WARRANTIES OF XXXXX AND THE PRINCIPAL
SHAREHOLDER CONCERNING XXXXX.
Except as provided in the XXXXX Disclosure Letter (as defined
below) to be delivered pursuant to Section 10.2, XXXXX and the Principal
Shareholder jointly and severally represent and warrant to AMDI and Merger Corp.
that all of the following representations and warranties in this Section 3 are
true at the date of this Agreement and shall be true at the time of Closing. As
used in this Agreement, the "XXXXX Disclosure Letter" shall mean the disclosure
letter delivered by XXXXX and the Shareholder regarding XXXXX pursuant to this
Section 3 upon execution of this Agreement.
3.1 DUE ORGANIZATION. XXXXX is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and has the requisite power and authority to carry on its
business as it is now being conducted. XXXXX is duly qualified to do business
and is in good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, except (i) as set forth on Schedule 3.1 to the XXXXX Disclosure
Letter or (ii) where the failure to be so authorized or qualified would not have
a material adverse effect on the business, operations, properties, assets or
condition (financial or otherwise), of XXXXX taken as a whole (as used herein
with respect to XXXXX, or with respect to any other person, a "Material Adverse
Effect"). Schedule 3.1 to the XXXXX Disclosure Letter sets forth the
jurisdiction in which XXXXX is incorporated and contains a list of all
jurisdictions in which XXXXX is authorized or qualified to do business. True,
complete and correct copies of the Articles of Incorporation and Bylaws, each as
amended, of XXXXX (the "XXXXX Charter Documents") have been made available to
AMDI and Merger Corp. The stock records of XXXXX as heretofore made available to
AMDI and Merger Corp., are correct and complete in all material respects. There
are no minutes or other records or proceedings of XXXXX which have not been made
available to AMDI and Merger Corp., and all of such minutes or other records of
proceedings are correct and complete in all respects.
3.2 SUBSIDIARIES. XXXXX has no other subsidiaries than the
subsidiaries listed in Schedule 3.2 to the XXXXX Disclosure Letter.
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3.3 CAPITAL STRUCTURE. The authorized and outstanding capital
stock of XXXXX is as set forth in Section 1.4(ii). All of the outstanding shares
of common stock have been duly authorized and are validly issued, fully paid and
non-assessable. Except as listed in Schedule 3.3, XXXXX has no common stock or
other shares of capital stock reserved for or otherwise subject to issuance. The
names of all of the holders of the XXXXX Stock and the number of shares owned by
each holder are set forth in Schedule 3.3. Except as listed in Schedule 3.3 or
as set forth above, there are no pre-emptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements or commitments to issue or
sell any shares of capital stock or other securities of XXXXX or any securities
or obligations convertible or exchangeable into or exercisable for, or giving
any person a right to subscribe for or acquire, any securities of XXXXX, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. XXXXX does not have outstanding any bonds, debentures, notes or
other debt obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote). There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to XXXXX. There are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of the capital stock of XXXXX.
3.4 PREDECESSOR STATUS; ETC. Set forth in Schedule 3.4 to the
XXXXX Disclosure Letter is an accurate list of all names of all predecessor
companies of XXXXX, including the names of any entities acquired by XXXXX (by
stock purchase, merger or otherwise) or owned by XXXXX or from whom XXXXX
previously acquired material assets, in any case, from the earliest date upon
which any person acquired his or her stock in XXXXX. Except as disclosed on
Schedule 3.4 to the XXXXX Disclosure Letter, XXXXX has not been, within such
period of time, a subsidiary or division of another corporation or a part of an
acquisition which was later rescinded.
3.5 SPIN-OFF BY XXXXX. Except as set forth on Schedule 3.5 to
the XXXXX Disclosure Letter, there has not been any sale, spin-off or split-up
of material assets of either XXXXX or any other person or entity that directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, XXXXX ("Affiliates") since its inception.
3.6 FINANCIAL STATEMENTS. Schedule 3.6 to the XXXXX Disclosure
Letter includes copies of the following financial statements (the "XXXXX
Financial Statements") of XXXXX: XXXXX'x audited Balance Sheet as of December
31, 1999 and audited Statements of Income and Comprehensive Income,
Stockholders' Equity and Cash Flows for the fiscal year ended December 31, 1999
and, unaudited Balance Sheet as of September 30, 2000 and unaudited Statements
of Income and Comprehensive Income, Stockholders' Equity and Cash Flows for each
of the nine month periods ended September 30, 2000 and 1999 (September 30, 2000
being hereinafter referred to as the "Balance Sheet Date"). The XXXXX Financial
Statements have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated (except as noted thereon or on Schedule 3.6 to the XXXXX Disclosure
Letter). Except as set forth on Schedule 3.6 to the XXXXX Disclosure Letter,
such Balance Sheets present fairly in all material respects the financial
position of XXXXX as of the dates indicated thereon, and such Statements of
Income and Comprehensive Income, Stockholders' Equity and Cash Flows present
fairly in all material respects the results of operations for the periods
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indicated thereon, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
3.7 LIABILITIES AND OBLIGATIONS. Schedule 3.7 to the XXXXX
Disclosure Letter includes accurate lists as of September 30, 2000 (the "Balance
Sheet Date") of (i) all material liabilities of XXXXX which are not reflected on
the Balance Sheet of XXXXX at the Balance Sheet Date or otherwise reflected in
the XXXXX Financial Statements at the Balance Sheet Date which by their nature
would be required in accordance with GAAP to be reflected in the Balance Sheet,
and (ii) all loan agreements, indemnity or guaranty agreements, bonds,
mortgages, liens, pledges or other security agreements. Except as set forth on
Schedule 3.7 to the XXXXX Disclosure Letter, since the Balance Sheet Date XXXXX
has not incurred any material liabilities of any kind, character and
description, whether accrued, absolute, secured or unsecured, contingent or
otherwise, other than liabilities incurred in the ordinary course of business.
Schedule 3.7 to the XXXXX Disclosure Letter also includes, in the case of those
contingent liabilities related to pending or threatened litigation, or other
liabilities which are not fixed or otherwise accrued or reserved, a good faith
and reasonable estimate of the maximum amount which XXXXX reasonably expects
will be payable. For each such contingent liability or liability for which the
amount is not fixed or is contested, XXXXX has provided to AMDI the following
information:
(a) A summary description of the liability together
with the following:
(i) copies of all relevant documentation
relating thereto;
(ii) amounts claimed and any other action
or relief sought; and
(iii) name of claimant and all other parties
to the claim, suit or proceeding;
(b) The name of each court or agency before which
such claim, suit or proceeding is pending; and
(c) The date such claim, suit or proceeding was
instituted; and
(d) A good faith and reasonable estimate of the
maximum amount, if any, which is likely to become payable with respect to each
such liability. If no estimate is provided, the estimate shall for purposes of
this Agreement be deemed to be zero.
3.8 PERMITS AND INTANGIBLES.
(i) XXXXX holds all licenses, franchises, permits and
other governmental authorizations the absence of any of which could have a
Material Adverse Effect on XXXXX'x business and Schedule 3.8 to the XXXXX
Disclosure Letter includes an accurate list and summary description of all such
licenses, franchises, permits and other governmental authorizations, including
permits (it being understood and agreed that a list of all environmental permits
and other environmental approvals is set forth on Schedule 3.9 to the XXXXX
Disclosure Letter), titles
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(including motor vehicle titles and current registrations), fuel permits,
licenses, franchises and certificates, as well as (a) registered or unregistered
trademarks, trade names, patents, patent applications and inventions and
discoveries that may be patentable, (b) copyrights owned or held by XXXXX or any
of its employees (including interests in software or other technology systems,
programs and intellectual property). The licenses, franchises, permits and other
governmental authorizations listed on Schedules 3.8 and 3.9 to the XXXXX
Disclosure Letter are valid, and XXXXX has not received any notice that any
governmental authority intends to cancel, terminate or not renew any such
license, franchise, permit or other governmental authorization. XXXXX has
conducted and is conducting its business in compliance with the requirements,
standards, criteria and conditions set forth in the licenses, franchises,
permits and other governmental authorizations listed on Schedules 3.8 and 3.9 of
the XXXXX Disclosure letter and is not in violation of any of the foregoing
except where such non-compliance or violation would not have a Material Adverse
Effect on XXXXX. Except as specifically provided in Schedule 3.8 to the XXXXX
Disclosure Letter, the transactions contemplated by this Agreement will not
result in a default under or a breach or violation of, or adversely affect the
rights and benefits afforded to XXXXX by, any such licenses, franchises, permits
or government authorizations.
(ii) The patents, the marks and copyrights, as well
as the know how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans and drawings
owned, used or licensed by XXXXX (collectively, the "Trade Secrets") are all
those necessary to enable XXXXX to conduct and to continue to conduct its
business as it is currently conducted. Schedule 3.8 of the XXXXX Disclosure
Letter also contains a description of all material Trade Secrets owned or used
by XXXXX. Except as set forth on Schedule 3.8 to the XXXXX Disclosure Letter (a)
all of the patents, marks, copyrights and Trade Secrets (collectively, the
"Intellectual Property") are owned, or used under valid licenses by XXXXX, and
are free and clear of all liens and other adverse claims; (b) XXXXX has not
infringed on or misappropriated, is not now infringing on or misappropriating,
and has not received any notice that it is infringing on, misappropriating, or
otherwise conflicting with the intellectual property rights of any third
parties; (c) there is no claim pending or threatened against XXXXX with respect
to the alleged infringement or misappropriation by XXXXX or a conflict with, any
intellectual property rights of others; (d) the operation of any aspect of the
business in the manner in which it has heretofore been operated or is presently
operated does not give rise to any such infringement or misappropriation; and
(e) there is no infringement or misappropriation of the Intellectual Property by
a third party or claim, pending or threatened, against any third party with
respect to the alleged infringement or misappropriation of the Intellectual
Property by such third party.
3.9 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.9
to the XXXXX Disclosure Letter, and except where any failure to comply or action
would not have a Material Adverse Effect, (i) XXXXX has complied with and is in
compliance with all Federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws") including, without limitation,
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous Wastes and
Hazardous Substances including petroleum and petroleum products (as such terms
are defined in any applicable Environmental Laws); (ii) XXXXX has obtained and
adhered to all necessary permits and other
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approvals necessary to treat, transport, store, dispose of and otherwise handle
Hazardous Wastes and Hazardous Substances, an accurate list of all of which
permits and approvals is set forth on Schedule 3.9 to the XXXXX Disclosure
Letter, and have reported to the appropriate authorities, to the extent required
by all Environmental Laws, all past and present sites owned and operated by
XXXXX where Hazardous Wastes or Hazardous Substances have been treated, stored,
disposed of or otherwise handled; (iii) there have been no releases or threats
of releases (as defined in Environmental Laws) at, from, in or on any property
owned or operated by XXXXX except as permitted by Environmental Laws; (iv) there
is no on-site or off-site location to which XXXXX has transported or disposed of
Hazardous Wastes and Hazardous Substances or arranged for the transportation of
Hazardous Wastes and Hazardous Substances, which site is the subject of any
Federal, state, local or foreign enforcement action or any other investigation
which is reasonably likely to lead to any claim against XXXXX for any clean-up
cost, remedial work, damage to natural resources, property damage or personal
injury, including, but not limited to, any claim under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended; and
(v) XXXXX has no contingent liability in connection with any release of any
Hazardous Waste or Hazardous Substance into the environment.
3.10 PERSONAL PROPERTY. Schedule 3.10 to the XXXXX Disclosure
Letter includes an accurate list of (i) all personal property owned by XXXXX
with an individual value in excess of $25,000 acquired since September 30, 2000
and (ii) all leases and agreements in respect of personal property, including,
in the case of each of (i) and (ii), (1) true, complete and correct copies of
all such leases and (2) an indication as to which assets are currently owned, or
were formerly owned, by shareholders, relatives of shareholders, or Affiliates
of XXXXX. Except as set forth on Schedule 3.10 to the XXXXX Disclosure Letter,
(x) all material personal property used by XXXXX in its business is either owned
by XXXXX or leased by XXXXX pursuant to a lease included on Schedule 3.10 to the
XXXXX Disclosure Letter, (y) all of the personal property listed on Schedule
3.10 to the XXXXX Disclosure Letter is in good working order and condition,
ordinary wear and tear excepted and (z) all leases and agreements included on
Schedule 3.10 to the XXXXX Disclosure Letter are in full force and effect and
constitute valid and binding agreements of the parties (and their successors)
thereto in accordance with their respective terms.
3.11 MATERIAL CONTRACTS AND COMMITMENTS. Schedule 3.11 to the
XXXXX Disclosure Letter includes an accurate list as of or on the date hereof,
of all material written or oral leases, agreements or other contracts or legally
binding contractual rights or contractual obligations or contractual commitments
relating to or in any way affecting the operation or ownership of the business
of XXXXX (the "Material Contracts"), including but not limited, those of a type
described below:
(i) Any consulting agreement, employment agreement,
change-in-control agreement, and collective bargaining arrangements with any
labor union and any such agreements currently in negotiation or proposed;
(ii) Any contract for capital expenditures or
acquisition, or construction of fixed assets in excess of $25,000.
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(iii) Any contract for the purchase, maintenance or
acquisition, or the sale or furnishing, of materials, supplies, merchandise,
products, machinery, equipment, parts or other property or services (except if
such contract is made in the ordinary course of business and requires aggregate
future payments of less than $25,000);
(iv) Any contract other than trade payables in the
ordinary course of business relating to the borrowing of money, or the guaranty
of another person's borrowing of money, including, without limitation, any
notes, mortgages, indentures and other obligations, guarantees of performance,
agreements and instruments for or relating to any lending or borrowing,
including assumed indebtedness;
(v) Any contract granting any person a lien on all or
any part of the assets of XXXXX;
(vi) Any contract for the cleanup, abatement or other
actions in connection with hazardous materials as defined under any
Environmental Laws, the remediation of any existing environmental liabilities or
relating to the performance of any environmental audit or study;
(vii) Any contract granting to any person an option
or a first refusal, first-offer or similar preferential right to purchase or
acquire any material assets of XXXXX;
(viii) Any contract with any agent, distributor or
representative which is not terminable by XXXXX upon thirty calendar days' or
less notice without penalty;
(ix) Any contract under which XXXXX is (1) a lessee
or sublessee of any machinery, equipment, vehicle or other tangible personal
property, or (2) a lessor of any tangible personal property owned by XXXXX, in
either case having an original value in excess of $25,000;
(x) Any contract under which XXXXX has granted or
received a license or sublicense or under which it is obligated to pay or has
the right to receive a royalty, license fee or similar payment;
(xi) Any contract concerning any Affiliates;
(xii) Any contract providing for the indemnification
or holding harmless of any officer, director, employee or other person, other
than as provided in the by-laws of XXXXX;
(xiii) Any contract for purchase or sale by XXXXX or
the granting of any options with respect to, or providing for any labor,
services or materials (including brokerage or management services) involving any
real property on which XXXXX conducts any aspect of its business involving
aggregate future payments of more than $25,000;
(xiv) Any contract limiting, restricting or
prohibiting XXXXX from conducting business anywhere in the United States or
elsewhere in the world;
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(xv) Any joint venture or partnership agreement;
(xvi) Any lease, sublease or associated agreements
relating to the property leased by XXXXX;
(xvii) Any material contract requiring prior notice,
consent or other approval upon a change of control in the equity ownership of
XXXXX, which contracts shall be separately identified on Schedule 3.11 to the
XXXXX Disclosure Letter;
(xviii) Any contract with a customer of XXXXX
involving work to be performed or product to be delivered, in each case
subsequent to September 30, 2000, in excess of $25,000;
(xix) Any other contract, whether or not made in the
ordinary course of business, which involves future payments by XXXXX in excess
of $25,000.
XXXXX has provided AMDI and Merger Corp. a true and complete copy of each
written Material Contract and a true and complete summary of each oral Material
Contract, in each case including all amendments or other modifications thereto.
Except as set forth on Schedule 3.11 to the XXXXX Disclosure Letter, each
Material Contract is a valid and binding obligation of, and enforceable in
accordance with its terms against, XXXXX, and the other parties thereto, and is
in full force and effect, subject only to bankruptcy, reorganization,
receivership and other laws affecting creditors' rights generally. Except as set
forth on Schedule 3.11 of the XXXXX Disclosure Letter, XXXXX has performed all
obligations required to be performed by it as of the date hereof and will have
performed all obligations required to be performed by it as of the Closing Date
under each Material Contract and neither XXXXX, nor any other party to any
Material Contract is in breach or default thereunder, and there exists no
condition which would, with or without the lapse of time or the giving of
notice, or both, constitute a breach or default thereunder. XXXXX has not been
notified that any party to any Material Contract intends to cancel, terminate,
not renew, or exercise an option under any Material Contract, whether in
connection with the transactions contemplated hereby or otherwise.
3.12 REAL PROPERTY. Schedule 3.12 to the XXXXX Disclosure
Letter is a correct and complete list, and a brief description of all real
property leased by XXXXX (the "Leased Real Property"), and all facilities
thereon. Except as lessee of Leased Real Property, XXXXX is not a lessee under
or otherwise a party to any lease, sublease, license, concession or other
agreement, whether written or oral, pursuant to which another person or entity
has granted to XXXXX the right to use or occupy all or any portion of any real
property. XXXXX does not have an ownership interest in any real property.
XXXXX has a valid leasehold interest in the Leased
Property free and clear of all liens, assessments or restrictions (including,
without limitation, inchoate liens arising out of the provision of labor,
services or materials to any such Real Property) other than (a) mortgages shown
on the XXXXX Financial Statements 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) liens for current
taxes not yet due, and (c) minor imperfections of title, such as utility and
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access easements that do not impair the intended use of the Real Property, 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 XXXXX, and
zoning laws and other land use restrictions or restrictive covenants that do not
materially impair the present use of the property subject thereto. The Real
Property constitutes all the real properties reflected on the XXXXX Financial
Statements or used or occupied by XXXXX in connection with its business or
otherwise.
With respect to the Leased Real Property, except as reflected
on Schedule 3.12 to the XXXXX Disclosure Letter:
(i) XXXXX is in exclusive possession thereof and no
easements, licenses or rights are necessary to conduct business thereon in
addition to those which exist as of the date hereof;
(ii) No portion thereof is subject to any pending
condemnation proceeding or proceeding by any public or quasi-public authority
materially adverse to the Leased Real Property and there is no threatened
condemnation or proceeding with respect thereto;
(iii) (a) the buildings, plants, improvements,
structures and fixtures at the Leased Real Property, including, without
limitation, heating, ventilation and air conditioning systems, roofs,
foundations and floors, are in good operating condition and repair; (b) the
Leased Real Property is not in violation of any health, safety, building, or
environmental ordinances, laws, codes or regulations; nor has any notice of any
claimed violation of any such ordinances, laws, codes or regulations been served
on XXXXX;
(iv) The Leased Real Property is supplied with
utilities and other third-party services, such as water, sewer, electricity,
gas, roads, rail service and garbage collection, necessary for the current
operation of the business and such Leased Real Property is maintained in all
material respects in accordance with all laws applicable to XXXXX or the Leased
Real Property;
(v) XXXXX is not a party to any written or oral
agreement or undertaking with owners or users of properties adjacent to the
Leased Real Property relating to the use, operation or maintenance of such
facility or any adjacent real property;
(vi) XXXXX is not a party to any lease, sublease,
license, concession or other agreement, whether written or oral, pursuant to
which XXXXX has granted to any party or parties the right to use or occupy all
or any portion of the Leased Real Property;
(vii) To the extent that XXXXX has responsibility
under the lease(s) for the Leased Real Property for compliance with the
provisions of the ADA, all alterations, rehabilitations, structures, or
improvements in the Leased Property comply with the ADA;
(viii) (a) There are no material defects in any
improvements on or to the Leased Real Property; (b) the Leased Real Property is
free from regulated quantities of asbestos; and (c) the Leased Real Property is
free from flooding and leaks.
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3.13 INSURANCE. Schedule 3.13 to the XXXXX Disclosure Letter
includes (i) an accurate list of all insurance policies carried by XXXXX since
its inception, and (ii) an accurate list of all insurance loss claims or workers
compensation claims received since its inception and complete copies of the
foregoing items have been delivered to AMDI and Merger Corp. Such insurance
policies evidence all of the insurance that XXXXX has been required to carry
pursuant to all of its contracts and other agreements and pursuant to all
applicable laws. All insurance policies for the current policy periods are in
full force and effect and shall remain in full force and effect through the
Closing Date. Since its inception, no insurance carried by XXXXX has been
canceled by the insurer and XXXXX has not been denied coverage.
3.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR
MATTERS. Schedule 3.14 to the XXXXX Disclosure Letter includes an accurate list
of (i) all officers, directors and key employees of XXXXX, (ii) all employment
agreements with such officers, directors and key employees and the rate of
compensation (and the portions thereof attributable to salary, bonus and other
compensation, respectively) of each of such persons as of the Balance Sheet Date
and the date hereof. XXXXX has provided to AMDI and Merger Corp. true, complete
and correct copies of any employment agreements for persons listed on Schedule
3.14 to the XXXXX Disclosure Letter. Since the Balance Sheet Date, there have
been no increases in the compensation payable or any special bonuses to any
officer, director, key employee or other employee, except ordinary salary
increases implemented on a basis consistent with past practices. Except as set
forth on Schedule 3.14 to the XXXXX Disclosure Letter, (i) XXXXX is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any arrangement with any labor union, (ii) no employees of XXXXX are represented
by any labor union or covered by any collective bargaining agreement, (iii) no
campaign to establish such representation is in progress and (iv) there is no
pending or threatened labor dispute involving XXXXX and any group of its
employees nor has XXXXX experienced any labor interruptions over the past three
years. XXXXX believes its relationship with its employees to be good.
3.15 EMPLOYEE BENEFIT PLANS. Schedule 3.15 to the XXXXX
Disclosure Letter sets forth all employee benefit plans of XXXXX, including all
employment agreements and other agreements or arrangements containing "golden
parachute" or other similar provisions, and deferred compensation agreements.
XXXXX has delivered to AMDI and Merger Corp. true, complete and correct copies
of such plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on Schedule 3.15 to the XXXXX Disclosure
Letter, XXXXX does not sponsor, maintain or contribute to any plan program, fund
or arrangement that constitutes an "employee pension benefit plan," nor has
XXXXX any obligation to contribute to or accrue or pay any benefits under any
deferred compensation or retirement funding arrangement on behalf of any
employee or employees (such as, for example, and without limitation, any
individual retirement account or annuity, any "excess benefit plan" (within the
meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or any non-qualified deferred compensation arrangement).
For the purposes of this Agreement, the term "employee pension benefit plan"
shall have the same meaning as is given that term in Section 3(2) of ERISA.
XXXXX has not sponsored, maintained or contributed to any employee pension
benefit plan other than the plans set forth on Schedule 3.15 to the XXXXX
Disclosure Letter, nor is XXXXX required to contribute to any retirement plan
pursuant to the provisions of any collective bargaining agreement establishing
the
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terms and conditions or employment of any employees of XXXXX. All accrued
contribution obligations of XXXXX with respect to any plan listed on Schedule
3.15 to the XXXXX Disclosure Letter have either been fulfilled in their entirety
or are fully reflected on the balance sheet of the XXXXX as of the Balance Sheet
Date.
3.16 COMPLIANCE WITH ERISA. All plans listed on Schedule 3.15
to the XXXXX Disclosure Letter that are intended to qualify (the "Qualified
Plans") under Section 401(a) of the Code are, and have been so qualified and
have been determined by the Internal Revenue Service to be so qualified, and
copies of such determination letters are included as part of Schedule 3.15 to
the XXXXX Disclosure Letter. Except as disclosed on Schedule 3.16 to the XXXXX
Disclosure Letter, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax returns) have
been timely filed or distributed, and copies thereof are included as part of
Schedule 3.15 to the XXXXX Disclosure Letter. None of the XXXXX stockholders has
engaged in any transaction prohibited under the provisions of Section 4975 of
the Code or Section 406 of ERISA. No plan listed in Schedule 3.15 to the XXXXX
Disclosure Letter has incurred an accumulated funding deficiency, as defined in
Section 412(a) of the Code and Section 302(1) of ERISA; and XXXXX has not
incurred any liability for excise tax or penalty due to the Internal Revenue
Service nor any liability to the Pension Benefit Guaranty Corporation.
(i) There have been no terminations, partial
terminations or discontinuance of contributions to any such Qualified Plan
intended to qualify under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service;
(ii) No plan listed in Schedule 3.15 to the XXXXX
Disclosure Letter, subject to the provisions of Title IV of ERISA, has been
terminated;
(iii) There have been no "reportable events" (as that
phrase is defined in Section 4043 of ERISA) with respect to any such plan listed
in Schedule 3.15 to the XXXXX Disclosure Letter;
(iv) XXXXX has not incurred liability under Section
4062 of ERISA; and
(v) No circumstances exist pursuant to which XXXXX
could have any direct or indirect liability whatsoever (including, but not
limited to, any liability to any multiemployer plan or the PBGC under Title IV
of ERISA or to the Internal Revenue Service for any excise tax or penalty, or
being subject to any statutory lien to secure payment of any such liability)
with respect to any plan now or heretofore maintained or contributed to by any
entity other than XXXXX that is, or at any time was, a member of a "controlled
group" (as defined in Section 412(n)(6)(B) of the Code) that includes XXXXX.
3.17 CONFORMITY WITH LAW; LITIGATION.
(i) Except to the extent set forth on Schedule 3.17
to the XXXXX Disclosure Letter, XXXXX is not in violation of any law or
regulation or any order of any court or
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Xxxxxxx, xxxxx, xxxxxxxxx or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over it which would have a
Material Adverse Effect.
(ii) Except as set forth on Schedule 3.17 to the
XXXXX Disclosure Letter (which shall disclose the parties to, nature of and
relief sought for each matter to be disclosed), other than collection actions by
XXXXX, in the ordinary course of business on its own behalf, none of which is
greater than $25,000 and which in the aggregate do not exceed $50,000:
(a) There is no suit, action, proceeding,
investigation, claim or order pending or threatened against XXXXX, or with
respect to any Employee Plan, or any fiduciary of any such plan (or pending or
threatened against any of the officers, directors or employees of XXXXX with
respect to the business or currently proposed business activities of XXXXX, or
to which XXXXX is otherwise a party, or which may have or is likely to have a
Material Adverse Effect, before any court, or before any governmental authority,
department, commission, bureau, agency or other governmental department or
arbitrator (collectively, "Claims"), nor is there any basis for any such Claims.
(b) XXXXX is not subject to any unsatisfied
or continuing judgment, order or decree of any court or governmental authority,
and XXXXX is not otherwise exposed, from a legal standpoint, to any liability or
disadvantage which could have a Material Adverse Effect. Schedule 3.17 to the
XXXXX Disclosure Letter sets forth all closed litigation matters to which XXXXX
was a party during the preceding five years, the dates such litigation was
commenced and concluded, and the nature of the resolution thereof (including
amounts paid in settlement or judgment).
3.18 TAXES. XXXXX has timely filed all requisite federal,
state and other tax returns or extension requests for all fiscal periods ended
on or before the Balance Sheet Date; and except as set forth on Schedule 3.18 to
the XXXXX Disclosure Letter, there are no examinations in progress or claims
against any of them for federal, state and other Taxes (including penalties and
interest) for any period or periods prior to and including the Balance Sheet
Date and no notice of any claim for taxes, whether pending or threatened, has
been received. All Taxes, including interest and penalties (whether or not shown
on any tax return) owed by XXXXX, any member of an affiliated or consolidated
group which includes or included XXXXX, or with respect to any payment made or
deemed made by XXXXX herein have been paid. The amounts shown as accruals for
Taxes on the XXXXX Financial Statements are sufficient for the payment of all
Taxes of the kinds indicated (including penalties and interest) for all fiscal
periods ended on or before that date. Copies of (i) any tax examinations, (ii)
extensions of statutory limitations and (iii) the federal and local income tax
returns and franchise tax returns of XXXXX for the last three fiscal years, are
attached as Schedule 3.18 to the XXXXX Disclosure Letter.
3.19 NO VIOLATIONS. XXXXX is not in violation of any of its
Charter Documents. XXXXX is not in default under any lease, instrument,
agreement, license, or permit set forth on the Schedules to the XXXXX Disclosure
Letter, or any other material agreement to which it is a party or by which its
properties are bound (the "Material Documents"); and, except as set forth in
Schedule 3.19 to the XXXXX Disclosure Letter, (a) the rights and benefits of
XXXXX under the Material Documents will not be adversely affected by the
transactions contemplated hereby and (b) the
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execution of this Agreement and the performance of the obligations hereunder and
the consummation of the transactions contemplated hereby will not result in any
violation of, or breach of, or constitute a default under, any of the terms or
provisions of the Material Documents or the Charter Documents. Except as set
forth on Schedule 3.19 to the XXXXX Disclosure Letter, none of the Material
Documents requires notice to, or the consent or approval of, any governmental
agency or other third party with respect to any of the transactions contemplated
hereby in order to remain in full force and effect and consummation of the
transactions contemplated hereby will not give rise to any right to termination,
cancellation or acceleration or loss of any right or benefit. Except as set
forth on Schedule 3.19 to the XXXXX Disclosure Letter, none of the Material
Documents prohibits the use or publication by XXXXX of the name of any other
party to such Material Document, and none of the Material Documents prohibits or
restricts XXXXX from freely providing services to any other customer or
potential customer of XXXXX.
3.20 GOVERNMENT CONTRACTS. Except as set forth on Schedule
3.20 to the XXXXX Disclosure Letter, XXXXX is not now a party to any
governmental contract subject to price redetermination or renegotiation.
3.21 ABSENCE OF CHANGES. Since September 30, 2000, except as
set forth on Schedule 3.21 to the XXXXX Disclosure Letter, there has not been:
(i) Any material adverse change in the financial
condition, assets, liabilities (contingent or otherwise), income or business of
XXXXX;
(ii) Any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the properties or business
of XXXXX;
(iii) Any change in the authorized capital of XXXXX
or its outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) Any declaration or payment of any dividend or
distribution in respect of the capital stock or any direct or indirect
redemption, purchase or other Merger Corp. of any of the capital stock of XXXXX;
(v) Any increase in the compensation, bonus, sales
commissions or fee arrangement payable or to become payable by XXXXX to any of
their respective officers, directors, stockholders, employees, consultants or
agents, except for ordinary and customary bonuses and salary increases for
employees in accordance with past practice;
(vi) Any work interruptions, labor grievances or
claims filed, or any event or condition of any character, materially adversely
affecting the business of XXXXX;
(vii) Any sale or transfer, or any agreement to sell
or transfer, any material assets, property or rights of XXXXX to any person,
including, without limitation, any of the stockholders and their affiliates;
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(viii) Any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to XXXXX, including without limitation
any indebtedness or obligation of any stockholder or any affiliate thereof;
(ix) Any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
property or rights of XXXXX or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) Any purchase or acquisition of, or agreement,
plan or arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of business of XXXXX;
(xi) Any waiver of any material rights or claims of
XXXXX;
(xii) Any amendment or termination of any Material
Documents or other right to which XXXXX is a party;
(xiii) Any transaction by XXXXX outside the ordinary
course of its business;
(xiv) Any cancellation or termination of a Material
Contract with a customer or client prior to the scheduled termination date; or
(xv) Any other distribution of property or assets by
XXXXX other than in the ordinary course of business.
3.22 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. Schedule 3.22 to
the XXXXX Disclosure Letter includes an accurate list as of the date of the
Agreement of: (i) the name of each financial institution in which XXXXX has
accounts or safe deposit boxes; (ii) the names in which the accounts or boxes
are held; (iii) the type of account and account number; and (iv) the name of
each person authorized to draw thereon or have access thereto. Schedule 3.22 to
the XXXXX Disclosure Letter also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from XXXXX and a description of the terms of such power.
3.23 RELATIONS WITH GOVERNMENTS. Except for political
contributions made in a lawful manner which, in the aggregate, do not exceed
$10,000 per year, XXXXX has not made, offered or agreed to offer anything of
value to any governmental official, political party or candidate for government
office nor has it otherwise taken any action which would cause XXXXX to be in
violation of the Foreign Corrupt Practices Act of 1977, as amended or any law of
similar effect.
3.24 DISCLOSURE. This Agreement, including the Exhibits and
XXXXX Disclosure Letter and the Schedules thereto, together with the other
information furnished to AMDI by XXXXX and the Shareholder in connection
herewith, do not contain an untrue statement of a material fact or omit to state
a material fact necessary to make the statements herein and therein, in light of
the circumstances under which they were made, not misleading.
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3.25 PROHIBITED ACTIVITIES. Except as set forth on Schedule
3.25 to the XXXXX Disclosure Letter, XXXXX has not, between September 30, 2000
and the date hereof, taken any of the actions (Prohibited Activities) set forth
in Section 6.3.
3.26 NO CONFLICTS. Except as set forth on Schedule 3.26 to the
XXXXX Disclosure Letter, the execution, delivery and performance of this
Agreement by XXXXX and the consummation by XXXXX of the transactions
contemplated hereby will not conflict with or result in a breach or violation of
any term or provision of, or (with or without notice or passage of time, or
both) constitute a default under, any indenture, mortgage, deed of trust, trust
(constructive and other), loan agreement or other agreement or instrument to
which XXXXX is a party or violate the provisions of any statute, or any order,
rule or regulation of any governmental body or agency or instrumentality
thereof, or any order, writ, injunction or decree of any court or any
arbitrator, having jurisdiction over XXXXX or the property of XXXXX.
3.27 CERTAIN BUSINESS RELATIONSHIPS WITH XXXXX. Except as
listed in Schedule 3.27, neither the Principal Shareholder nor any relative of
the Principal Shareholder or Affiliate of XXXXX has been involved in any
business arrangement or relationship with XXXXX since its inception, and neither
the Principal Shareholder, nor any relative of the Principal Shareholder or
Affiliate of XXXXX owns any asset, tangible or intangible, which is used in
XXXXX'x operations.
3.28 AUTHORIZATION. The representatives of XXXXX executing
this Agreement have the authority to enter into and bind XXXXX to the terms of
this Agreement and XXXXX has the full legal right, power and authority to enter
into this Agreement and the Merger.
4. REPRESENTATIONS AND WARRANTIES OF AMDI AND MERGER CORP.
Except as provided in the AMDI Disclosure Letter (as defined
below) to be delivered pursuant to Section 10.2, each of AMDI and Merger Corp.
jointly and severally represents and warrants to XXXXX and the Principal
Shareholder that all of the following representations and warranties in this
Section 4 are true at the date of this Agreement and shall be true at the time
of Closing. As used in this Agreement, the "AMDI Disclosure Letter" shall mean
the disclosure letter delivered by AMDI and Merger Corp. to XXXXX and the
Principal Shareholder regarding AMDI and Merger Corp. pursuant to this Section 4
upon execution of this Agreement.
4.1 DUE ORGANIZATION. Merger Corp. is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, and has the requisite power and authority to carry on its
business as it is now being conducted. Merger Corp. is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, except (i) as set forth on Schedule 4.1 to AMDI Disclosure Letter or
(ii) where the failure to be so authorized or qualified would not have a
material adverse effect on the business, operations, properties, assets or
condition (financial or otherwise), of AMDI (as used herein with respect to
AMDI, or with respect to any other person, a "Material Adverse Effect").
Schedule 4.1 to the AMDI Disclosure Letter sets forth the jurisdictions in which
AMDI and Merger Corp. are
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incorporated and contains a list of all jurisdictions in which AMDI and Merger
Corp. are authorized or qualified to do business. True, complete and correct
copies of the Articles of Incorporation and Bylaws, each as amended, of AMDI
(the "AMDI Charter Documents") and true, complete and correct copies of
Certificate of Incorporation and Bylaws of Merger Corp. (the "Merger Corp.
Charter Documents") have been made available to XXXXX and the Principal
Shareholder. The stock records of AMDI and Merger Corp. as heretofore made
available to XXXXX the Principal Shareholder, are correct and complete in all
material respects. There are no minutes or other records or proceedings of AMDI
and Merger Corp. which have not been made available to XXXXX and the Principal
Shareholder, and all of such minutes or other records of proceedings are correct
and complete in all respects.
4.2 SUBSIDIARIES. The names and jurisdiction of incorporation
of the subsidiaries of AMDI are set forth in Schedule 4.2. Merger Corp. has no
subsidiaries.
4.3 CAPITAL STRUCTURE. The authorized and outstanding capital
stock of AMDI is as set forth in Section 1.4(i). The authorized and outstanding
capital stock of Merger Corp. is as set forth in Section 1.4(iii). All of the
issued and outstanding shares of the capital stock of AMDI and Merger Corp. have
been duly authorized and are validly issued, fully paid and non-assessable.
Except as listed in Schedule 4.3, each of AMDI and Merger Corp. has no common
stock or other shares of capital stock reserved for or otherwise subject to
issuance. Except as listed in Schedule 4.3 or as set forth above, there are no
pre-emptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other securities of AMDI or Merger Corp. or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any person a
right to subscribe for or acquire, any securities of AMDI or Merger Corp., and
no securities or obligations evidencing such rights are authorized, issued or
outstanding. Each of AMDI and Merger Corp. does not have outstanding any bonds,
debentures, notes or other debt obligations the holders of which have the right
to vote (or convertible into or exercisable for securities having the right to
vote). There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to AMDI or Merger Corp.
There are no voting trusts, proxies or other agreements or understandings with
respect to the voting of the capital stock of AMDI or Merger Corp.
4.4 PREDECESSOR STATUS; ETC. Set forth in Schedule 4.4 to AMDI
Disclosure Letter is an accurate list of all names of all predecessor companies
of AMDI since May 1, 1994, including the names of any entities acquired by AMDI
(by stock purchase, merger or otherwise) or owned by AMDI or from whom AMDI
previously acquired material assets, in any case, from the earliest date upon
which any person acquired his or her stock in AMDI. Except as disclosed on
Schedule 4.4 to AMDI Disclosure Letter, AMDI has not been, within such period of
time, a subsidiary or division of another corporation or a part of an
acquisition which was later rescinded.
4.5 SPIN-OFF BY AMDI. Except as set forth on Schedule 4.5 to
AMDI Disclosure Letter, there has not been any sale, spin-off or split-up of
material assets of either AMDI or any other person or entity that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, AMDI ("Affiliates") since its inception.
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4.6 FINANCIAL STATEMENTS. Schedule 4.6 to AMDI Disclosure
Letter includes copies of the following financial statements (the "AMDI
Financial Statements") of AMDI: AMDI's audited Balance Sheets as of April 30,
2000 and 1999 and audited Statements of Income and Comprehensive Income,
Stockholders' Equity and Cash Flows for each of the fiscal years ended April 30,
2000 and 1999 and, unaudited Balance Sheet as of September 30, 2000 and
unaudited Statements of Income and Comprehensive Income, Stockholders' Equity
and Cash Flows for each of the four month periods ended September 30, 2000 and
1999 (September 30, 2000 being hereinafter referred to as the "Balance Sheet
Date"). The AMDI Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods indicated (except as noted thereon or on Schedule 4.6 to
AMDI Disclosure Letter). Except as set forth on Schedule 4.6 to AMDI Disclosure
Letter, such Balance Sheets present fairly in all material respects the
financial position of AMDI as of the dates indicated thereon, and such
Statements of Income and Comprehensive Income, Stockholders' Equity and Cash
Flows present fairly in all material respects the results of operations for the
periods indicated thereon, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
4.7 LIABILITIES AND OBLIGATIONS. Schedule 4.7 to AMDI
Disclosure Letter includes accurate lists as of September 30, 2000 (the "Balance
Sheet Date") of (i) all material liabilities of AMDI which are not reflected on
the Balance Sheet of AMDI at the Balance Sheet Date or otherwise reflected in
AMDI Financial Statements at the Balance Sheet Date which by their nature would
be required in accordance with GAAP to be reflected in the Balance Sheet, and
(ii) all loan agreements, indemnity or guaranty agreements, bonds, mortgages,
liens, pledges or other security agreements. Except as set forth on Schedule 4.7
to AMDI Disclosure Letter, since the Balance Sheet Date AMDI has not incurred
any material liabilities of any kind, character and description, whether
accrued, absolute, secured or unsecured, contingent or otherwise, other than
liabilities incurred in the ordinary course of business. Schedule 4.7 to AMDI
Disclosure Letter also includes, in the case of those contingent liabilities
related to pending or threatened litigation, or other liabilities which are not
fixed or otherwise accrued or reserved, a good faith and reasonable estimate of
the maximum amount which AMDI reasonably expects will be payable. For each such
contingent liability or liability for which the amount is not fixed or is
contested, AMDI has provided to XXXXX and the Shareholder the following
information:
(a) A summary description of the liability together
with the following:
(i) copies of all relevant documentation
relating thereto;
(ii) amounts claimed and any other action
or relief sought; and
(iii) name of claimant and all other
parties to the claim, suit or
proceeding;
(b) The name of each court or agency before which
such claim, suit or proceeding is pending; and
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(c) The date such claim, suit or proceeding was
instituted; and
(d) A good faith and reasonable estimate of the
maximum amount, if any, which is likely to become payable with respect to each
such liability. If no estimate is provided, the estimate shall for purposes of
this Agreement be deemed to be zero.
4.8 ABSENCE OF CHANGES. Since September 30, 2000, except as
set forth on Schedule 4.21 to AMDI Disclosure Letter, there has not been:
(i) Any material adverse change in the financial
condition, assets, liabilities (contingent or otherwise), income or business of
AMDI;
(ii) Any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the properties or business
of AMDI;
(iii) Any change in the authorized capital of AMDI or
its outstanding securities or any change in its ownership interests or any grant
of any options, warrants, calls, conversion rights or commitments;
(iv) Any declaration or payment of any dividend or
distribution in respect of the capital stock or any direct or indirect
redemption, purchase or other Merger Corp. of any of the capital stock of AMDI;
(v) Any increase in the compensation, bonus, sales
commissions or fee arrangement payable or to become payable by AMDI to any of
their respective officers, directors, stockholders, employees, consultants or
agents, except for ordinary and customary bonuses and salary increases for
employees in accordance with past practice;
(vi) Any work interruptions, labor grievances or
claims filed, or any event or condition of any character, materially adversely
affecting the business of AMDI;
(vii) Any sale or transfer, or any agreement to sell
or transfer, any material assets, property or rights of AMDI to any person,
including, without limitation, any of the stockholders and their affiliates;
(viii) Any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to AMDI, including without limitation any
indebtedness or obligation of any stockholder or any affiliate thereof;
(ix) Any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the assets,
property or rights of AMDI or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
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(x) Any purchase or acquisition of, or agreement,
plan or arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of business of AMDI;
(xi) Any waiver of any material rights or claims of
AMDI;
(xii) Any amendment or termination of any Material
Documents or other right to which AMDI is a party;
(xiii) Any transaction by AMDI outside the ordinary
course of its business;
(xiv) Any cancellation or termination of a Material
Contract with a customer or client prior to the scheduled termination date; or
(xv) Any other distribution of property or assets by
AMDI other than in the ordinary course of business.
4.9 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. Schedule 4.9 to AMDI
Disclosure Letter includes an accurate list as of the date of the Agreement of:
(i) the name of each financial institution in which AMDI has accounts or safe
deposit boxes; (ii) the names in which the accounts or boxes are held; (iii) the
type of account and account number; and (iv) the name of each person authorized
to draw thereon or have access thereto. Schedule 4.9 to AMDI Disclosure Letter
also sets forth the name of each person, corporation, firm or other entity
holding a general or special power of attorney from AMDI and a description of
the terms of such power.
4.10 RELATIONS WITH GOVERNMENTS. Except for political
contributions made in a lawful manner which, in the aggregate, do not exceed
$10,000 per year since 1996, AMDI has not made, offered or agreed to offer
anything of value to any governmental official, political party or candidate for
government office nor has it otherwise taken any action which would cause AMDI
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended or
any law of similar effect.
4.11 DISCLOSURE. This Agreement, including the Exhibits and
AMDI Disclosure Letter and the Schedules thereto, together with the other
information furnished to XXXXX and the Principal Shareholder by AMDI and Merger
Corp. in connection herewith, do not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements herein
and therein, in light of the circumstances under which they were made, not
misleading.
4.12 PROHIBITED ACTIVITIES. Except as set forth on Schedule
4.12 to AMDI Disclosure Letter, each of AMDI and Merger Corp. has not, between
September 30, 2000 and the date hereof, taken any of the actions (Prohibited
Activities) set forth in Section 6.3.
4.13 NO CONFLICTS. Except as set forth on Schedule 4.13 to the
AMDI Disclosure Letter, the execution, delivery and performance of this
Agreement by each of AMDI and Merger Corp. and the consummation by each of AMDI
and Merger Corp. of the transactions contemplated hereby will not conflict with
or result in a breach or violation of any term or provision
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of, or (with or without notice or passage of time, or both) constitute a default
under, any indenture, mortgage, deed of trust, trust (constructive and other),
loan agreement or other agreement or instrument to which AMDI or Merger Corp. is
a party or violate the provisions of any statute, or any order, rule or
regulation of any governmental body or agency or instrumentality thereof, or any
order, writ, injunction or decree of any court or any arbitrator, having
jurisdiction over AMDI or Merger Corp. or the property of AMDI or Merger Corp.
4.14 CERTAIN BUSINESS RELATIONSHIPS WITH AMDI. Except as
listed in Schedule 4.14, no current officer or director of AMDI or Merger Corp.
has been involved in any business arrangement or relationship with AMDI or
Merger Corp. since May 1, 1997, and none of the officers or directors, nor any
relative of any officer or director or affiliate of an officer or director of
AMDI or Merger Corp., owns any asset, tangible or intangible, which is used in
AMDI's or Merger Corp.'s operations.
4.15 AUTHORIZATION. The representatives of each of AMDI and
Merger Corp. executing this Agreement has the authority to enter into and bind
AMDI and Merger Corp. to the terms of this Agreement and each of AMDI and Merger
Corp. has the full legal right, power and authority to enter into this Agreement
and the Merger, subject to the approval of the shareholders of AMDI as provided
in Sections 8.4 and 9.4.
5. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDER
CONCERNING THE TRANSACTION.
The Principal Shareholder represents and warrants to AMDI, as
to himself, that all of the following representations and warranties in this
Section 5 are true at the date of this Agreement and shall be true at the time
of Closing.
5.1 AUTHORIZATION. All action on the part of the Principal
Shareholder necessary for the authorization, execution and delivery of this
Agreement and the performance of all obligations of the Principal Shareholder
hereunder has been taken, and this Agreement constitutes a valid and legally
binding obligation of the Principal Shareholder, enforceable in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
5.2 OWNERSHIP OF SHARES. The Principal Shareholder owns, of
record and beneficially, 811,765 shares of XXXXX stock and options to purchase
500,000 shares of XXXXX Stock, free and clear of all liens, claims, options and
encumbrances whatsoever. There are no outstanding options, warrants or rights to
purchase or acquire any of the shares of XXXXX Stock or options to purchase
XXXXX Stock owned by the Principal Shareholder.
5.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement by the Principal Shareholder and the consummation by the
Principal Shareholder of the transactions contemplated hereby will not conflict
with or result in a breach or violation of any term or provision of, or (with or
without notice or passage of time, or both) constitute a default under, any
indenture,
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mortgage, deed of trust, trust (constructive and other), loan agreement or other
agreement or instrument to which the Principal Shareholder is a party or violate
the provisions of any statute, or any order, rule or regulation of any
governmental body or agency or instrumentality thereof, or any order, writ,
injunction or decree of any court or any arbitrator, having jurisdiction over
the Principal Shareholder or the property of the Principal Shareholder.
5.4 MERGER CORP. STOCK . The Merger Corp. Stock will be
acquired by the Principal Shareholder for his own account, not as a nominee or
agent, and the Principal Shareholder has no present intention of selling,
granting any participation in, or otherwise distributing Merger Corp. Stock.
5.5 DISCLOSURE OF INFORMATION. The Principal Shareholder has
received and had the opportunity to review the reports filed by AMDI with the
Securities and Exchange Commission and has had the opportunity to ask questions
of, and receive answers from, representatives of AMDI to obtain additional
information regarding AMDI and Merger Corp.
6. COVENANTS OF XXXXX AND THE SHAREHOLDERS PRIOR TO CLOSING.
6.1 ACCESS AND COOPERATION; DUE DILIGENCE. Between the date of
this Agreement and the Closing Date, XXXXX and the Principal Shareholder will
afford to the officers and authorized representatives of AMDI and Merger Corp.
access to all of the sites, properties, books and records of XXXXX and will
furnish AMDI and Merger Corp. such additional financial and operating data and
other information as to the business and properties of NISCO, AMDI and Merger
Corp. may from time to time reasonably request. The Principal Shareholder and
XXXXX will cooperate with each of AMDI and Merger Corp., its representatives,
auditors and counsel in the preparation of any documents or other material which
may be required in connection with any documents or materials required by this
Agreement or necessary to complete the transactions contemplated hereunder
6.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of
this Agreement and the Closing, XXXXX will, except as set forth on Schedule 6.2
to the XXXXX Disclosure Letter:
(i) Carry on its business in substantially the same
manner as it has heretofore and not introduce any material new method of
management, operation or accounting;
(ii) Maintain its properties and facilities in as
good working order and condition as at present, ordinary wear and tear excepted;
(iii) Perform in all material respects all of its
obligations under agreements relating to or affecting its respective assets,
properties or rights;
(iv) Use all reasonable efforts to keep in full force
and effect present insurance policies or other comparable insurance coverage;
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(v) Use its reasonable efforts to maintain and
preserve its business organization intact, retain its present key employees and
maintain its relationships with suppliers, customers and others having business
relations with it;
(vi) Maintain compliance with all material permits,
laws, rules and regulations, consent orders, and all other orders of applicable
courts, regulatory agencies and similar governmental authorities;
(vii) Maintain present debt and lease instruments and
not enter into new or amended debt or lease instruments, without the knowledge
and consent of AMDI (which consent shall not be unreasonably withheld), provided
that debt and/or lease instruments may be replaced without the consent of AMDI
if such replacement instruments are on terms at least as favorable to XXXXX as
the instruments being replaced; and
(viii) Maintain or reduce present salaries and
commission levels for all officers, directors, employees and agents except for
ordinary and customary bonus and salary increases for employees in accordance
with past practices.
6.3 PROHIBITED ACTIVITIES. Except as provided in Schedule 6.3,
between the date hereof and the Closing Date, XXXXX will not, without the prior
written consent of AMDI (which consent shall not be unreasonably withheld),
engage in any of the following (the "Prohibited Activities"):
(i) Make any change in its Charter Documents;
(ii) Issue any securities, options, warrants, calls,
conversion rights or commitments relating to its securities of any kind other
than in connection with the grant or exercise of options or warrants listed in
Schedule 3.3 to the XXXXX Disclosure Letter;
(iii) Declare or pay any dividend, or make any
distribution in respect of its stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares of its
stock;
(iv) Except as listed in Schedule 6.3, enter into any
contract or commitment or incur or agree to incur any liability or make any
capital expenditures, except if it is in the normal course of business
(consistent with past practice) and involves an amount not in excess of
$100,000;
(v) Create, assume or permit to exist any mortgage,
pledge or other lien or encumbrance upon any assets or properties whether now
owned or hereafter acquired, except (1) with respect to purchase money liens
incurred in connection with the acquisition of equipment with an aggregate cost
not in excess of $50,000 necessary or desirable for the conduct of the
businesses of XXXXX, (2) (A) liens for taxes either not yet due or being
contested in good faith and by appropriate proceedings (and for which contested
taxes adequate reserves have been established and are being maintained) or (B)
materialmen's, mechanics' or other like liens arising in the ordinary
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course of business (the liens set forth in clause (2) being referred to herein
as "Statutory Liens"), or (3) liens set forth on Schedule 3.7 and/or 3.11 to the
XXXXX Disclosure Letter;
(vi) Sell, assign, lease or otherwise transfer or
dispose of any property or equipment except in the normal course of business;
(vii) Acquire any business;
(viii) Merge or consolidate or agree to merge or
consolidate with or into any other corporation;
(ix) Waive any material rights or claims of XXXXX,
provided that XXXXX may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice;
(x) Commit a breach or amend or terminate any
Material Documents or right of XXXXX; or
(xi) Enter into any other transaction outside the
ordinary course of its business or prohibited hereunder.
6.4 NO SHOP. Neither XXXXX, nor any agent, officer, director,
trustee or any representative of any of the foregoing will, during the period
commencing on the date of this Agreement and ending with the earlier to occur of
the Closing Date or the termination of this Agreement in accordance with its
terms, directly or indirectly: (i) solicit or initiate the submission of
proposals or offers from any person for; (ii) participate in any discussions
pertaining to; or (iii) furnish any information to any person other than AMDI or
its authorized agents relating to, any acquisition or purchase of all or a
material amount of the assets of, or any equity interest in, XXXXX or a merger,
consolidation or business combination of XXXXX.
6.5 NOTIFICATION OF CERTAIN MATTERS. XXXXX and the Principal
Shareholder shall give prompt notice to AMDI and Merger Corp. of (i) the
occurrence or non-occurrence of any event the occurrence or non-occurrence of
which would be likely to cause any representation or warranty of XXXXX contained
herein or in the XXXXX Disclosure Letter to be untrue or inaccurate in any
material respect at or prior to the Closing and (ii) any material failure of
XXXXX to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by such person hereunder. The delivery of any notice
pursuant to this Section 6.5 shall not be deemed to (i) modify the
representations or warranties of the party delivering such notice, (ii) modify
the conditions set forth in Sections 7 and 8, or (iii) limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
6.6 FINAL FINANCIAL STATEMENTS. The Principal Shareholder
shall provide to AMDI and Merger Corp. for each calendar month prior to the
Closing Date, the unaudited balance sheets of XXXXX as of the end of all months
following the Balance Sheet Date, and the unaudited statement of income and
comprehensive income and cash flows for all months ended after the Balance Sheet
Date, disclosing no material adverse change in the financial condition or the
results of
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its operations from the financial statements as of the Balance Sheet Date. Such
financial statements shall have been prepared in accordance with GAAP applied on
a consistent basis throughout the periods indicated (except as noted therein).
Except as noted in such financial statements, all of such financial statements
will present fairly the results of operations for the periods indicated therein.
7. COVENANTS OF AMDI AND MERGER CORP. PRIOR TO CLOSING.
7.1 ACCESS AND COOPERATION; DUE DILIGENCE. Between the date of
this Agreement and the Closing Date, each of AMDI and Merger Corp. will afford
to the authorized representatives of XXXXX and the Principal Shareholder access
to all of the sites, properties, books and records of AMDI and Merger Corp. and
will furnish XXXXX and the Principal Shareholder such additional financial and
operating data and other information as to the business and properties of AMDI
and Merger Corp. as XXXXX and the Principal Shareholder may from time to time
reasonably request. AMDI and Merger Corp. will cooperate with XXXXX and the
Principal Shareholder, their representatives, auditors and counsel in the
preparation of any documents or other material which may be required in
connection with any documents or materials required by this Agreement or
necessary to complete the transactions contemplated hereunder
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of
this Agreement and the Closing, AMDI will, except as set forth on Schedule 7.2
to the AMDI Disclosure Letter:
(i) Carry on its business in substantially the same
manner as it has heretofore and not introduce any material new method of
management, operation or accounting;
(ii) Perform in all material respects all of its
obligations under agreements relating to or affecting its respective assets,
properties or rights;
(iii) Maintain compliance with all material permits,
laws, rules and regulations, consent orders, and all other orders of applicable
courts, regulatory agencies and similar governmental authorities;
(iv) Maintain present debt and lease instruments and
not enter into new or amended debt or lease instruments, without the knowledge
and consent of XXXXX (which consent shall not be unreasonably withheld),
provided that debt and/or lease instruments may be replaced without the consent
of XXXXX if such replacement instruments are on terms at least as favorable to
AMDI as the instruments being replaced; and
(viii) Maintain or reduce present salaries and
commission levels for all officers, directors, employees and agents except for
ordinary and customary bonus and salary increases for employees in accordance
with past practices.
7.3 PROHIBITED ACTIVITIES. Between the date hereof and the
Closing Date, AMDI will not, without the prior written consent of XXXXX, engage
in any of the following (the "Prohibited Activities"):
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(i) Make any change in its Charter Documents;
(ii) Issue any securities, options, warrants, calls,
conversion rights or commitments relating to its securities of any kind other
than in connection with the exercise of options or warrants listed in Schedule
4.3 to the AMDI Disclosure Letter;
(iii) Declare or pay any dividend, or make any
distribution in respect of its stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares of its
stock;
(iv) Except as listed in Schedule 7.3, enter into any
contract or commitment or incur or agree to incur any liability or make any
capital expenditures, except if it is in the normal course of business
(consistent with past practice) and involves an amount not in excess of $50,000;
(v) Create, assume or permit to exist any mortgage,
pledge or other lien or encumbrance upon any assets or properties whether now
owned or hereafter acquired, except (1) with respect to purchase money liens
incurred in connection with the acquisition of equipment with an aggregate cost
not in excess of $50,000 necessary or desirable for the conduct of the
businesses of AMDI, (2) (A) liens for taxes either not yet due or being
contested in good faith and by appropriate proceedings (and for which contested
taxes adequate reserves have been established and are being maintained) or (B)
materialmen's, mechanics' or other like liens arising in the ordinary course of
business (the liens set forth in clause (2) being referred to herein as
"Statutory Liens"), or (3) liens set forth on Schedule 4.7 to the AMDI
Disclosure Letter;
(vi) Sell, assign, lease or otherwise transfer or
dispose of any property or equipment except in the normal course of business;
(vii) Negotiate for the acquisition of any business
or the start-up of any new business;
(viii) Merge or consolidate or agree to merge or
consolidate with or into any other corporation;
(ix) Waive any material rights or claims of AMDI,
provided that AMDI may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice;
(x) Commit a breach or amend or terminate any
Material Documents or right of AMDI; or
(xi) Enter into any other transaction outside the
ordinary course of its business or prohibited hereunder.
7.4 NO SHOP. Neither AMDI, nor any agent, officer, director,
trustee or any representative will, during the period commencing on the date of
this Agreement and ending with
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the earlier to occur of the Closing Date or the termination of this Agreement in
accordance with its terms, directly or indirectly: (i) solicit or initiate the
submission of proposals or offers from any person for; (ii) participate in any
discussions pertaining to; or (iii) furnish any information to any person other
than XXXXX or its authorized agents relating to, any acquisition or purchase of
all or a material amount of the assets of, or a majority equity interest in,
AMDI or a merger, consolidation or business combination of AMDI.
7.5 NOTIFICATION OF CERTAIN MATTERS. AMDI shall give prompt
notice to XXXXX and the Principal Shareholder of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of AMDI contained herein or in
the AMDI Disclosure Letter to be untrue or inaccurate in any material respect at
or prior to the Closing and (ii) any material failure of AMDI to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
such person hereunder. The delivery of any notice pursuant to this Section 7.5
shall not be deemed to (i) modify the representations or warranties of the party
delivering such notice, (ii) modify the conditions set forth in Sections 8 and
9, or (iii) limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
7.6 FINAL FINANCIAL STATEMENTS. AMDI shall provide to XXXXX
and the Principal Shareholder for each calendar month prior to the Closing Date,
the unaudited consolidated balance sheets of AMDI as of the end of all months
following the Balance Sheet Date, and the unaudited consolidated statements of
income and cash flows for all months ended after the Balance Sheet Date,
disclosing no material adverse change in the financial condition or the results
of its operations from the financial statements as of the Balance Sheet Date.
Such financial statements shall have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated (except as noted
therein). Except as noted in such financial statements, all of such financial
statements will present fairly the results of operations for the periods
indicated therein.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF AMDI AND MERGER CORP.
The obligations of AMDI and Merger Corp. with respect to
actions to be taken on the Closing Date are subject to the satisfaction or
waiver on or prior to the Closing Date of all of the following conditions.
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS. All representations and warranties of XXXXX and the Principal
Shareholder contained in this Agreement shall be true and correct in all
material respects as of the Closing Date as though such representations and
warranties had been made as of that time; all the terms, covenants and
conditions of this Agreement to be complied with and performed by XXXXX and the
Principal Shareholder on or before the Closing Date shall have been duly
complied with and performed in all material respects; and certificates to the
foregoing effect dated the Closing Date, and signed by XXXXX and the Principal
Shareholder shall have been delivered to AMDI and Merger Corp.
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8.2 SATISFACTION. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and all
other related legal matters shall be reasonably satisfactory to AMDI and its
counsel.
8.3 NO LITIGATION. No action or proceeding before a court or
any other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the transactions contemplated hereunder and no
governmental agency or body shall have taken any other action or made any
request of XXXXX or the Principal Shareholder as a result of which AMDI or
Merger Corp. deems it inadvisable to proceed with the transactions hereunder.
8.4 CONSENTS AND APPROVALS. The Registration Statement
referred to in Section 10.1 shall have been declared effective by the Securities
and Exchange Commission. This Agreement shall have been duly adopted by the
shareholders of Merger Corp., AMDI and XXXXX. All necessary consents and
approvals as listed in Schedule 3.26 shall have been obtained. All necessary
consent of and filings with any governmental authority or agency relating to the
consummation of the transaction contemplated herein shall have been obtained and
made and no action or proceeding shall have been instituted or threatened to
restrain or prohibit the transactions hereunder and no governmental agency or
body shall have taken any other action or made any request of XXXXX or the
Principal Shareholder as a result of which AMDI or Merger Corp. deems it
inadvisable to proceed with the transactions hereunder.
8.5 GOOD STANDING CERTIFICATES. The Principal Shareholder
shall have delivered to AMDI a certificate, dated as of a date no later than ten
days prior to the Closing Date, duly issued by the Secretary of State of XXXXX'x
state of incorporation that XXXXX is in good standing and that all state
franchise and/or income tax returns and taxes for each for all periods prior to
the Closing have been filed and paid.
8.6 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall
have occurred with respect to XXXXX which would constitute a Material Adverse
Effect.
8.7 OFFICER'S CERTIFICATE. AMDI and Merger Corp. shall have
received a certificate or certificates, dated the Closing Date and signed by the
President of XXXXX, certifying the truth and correctness of attached copies of
its Articles of Incorporation (including amendments thereto) and Bylaws
(including amendments thereto).
8.8 INCUMBENCY CERTIFICATE AND OTHER DOCUMENTS. AMDI and
Merger Corp. shall have received an incumbency certificate or certificates,
dated the Closing Date and signed by the Secretary of XXXXX certifying the
names, titles and signatures of the officers authorized to execute the documents
referred to in this Section 8 and such additional supporting documentation and
other information with respect to the transactions contemplated hereunder as
AMDI, Merger Corp. or its counsel may reasonably request.
8.9 EMPLOYMENT AGREEMENTS. At the Closing, the Principal
Shareholder will enter into a Non-Competition and Employment Agreement
satisfactory to AMDI and Merger Corp.
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8.10 RELEASE OF OBLIGATIONS AND STOCK OPTIONS. AMDI and Merger
Corp. shall have obtained a release of each of the officers and directors of
XXXXX related to all matters involving XXXXX.
8.11 LOCK-UP AGREEMENTS. AMDI and Merger Corp. shall have
obtained lock-up agreements from the Principal Shareholder and all other persons
who are officers, directors and holders of 10% or more of the XXXXX Stock
agreeing not to sell any of their Merger Corp. Stock obtained in the Merger for
a period reasonably satisfactory to AMDI.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXX AND THE PRINCIPAL
SHAREHOLDER.
The obligations of XXXXX and the Principal Shareholder with
respect to actions to be taken on the Closing Date are subject to the
satisfaction or waiver on or prior to the Closing Date of all of the following
conditions.
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
OBLIGATIONS. All the representations and warranties of AMDI and Merger Corp.
contained in this Agreement shall be true and correct in all material respects
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of that time; all the terms, covenants and
conditions of this Agreement to be complied with and performed by AMDI and
Merger Corp. on or before the Closing Date shall have been duly complied with
and performed in all material respects; and certificates to the foregoing effect
dated the Closing Date, and signed by AMDI and Merger Corp. shall have been
delivered to XXXXX.
9.2 SATISFACTION. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and all
other related legal matters shall be reasonably satisfactory to XXXXX and its
counsel.
9.3 NO LITIGATION. No action or proceeding before a court or
any other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the transactions hereunder and no governmental agency or
body shall have taken any other action or made any request of AMDI or Merger
Corp. as a result of which XXXXX and the Principal Shareholder deem it
inadvisable to proceed with the transactions hereunder.
9.4 CONSENTS AND APPROVALS. The Registration Statement
referred to in Section 10.1 shall have been declared effective by the Securities
and Exchange Commission. This Agreement shall have been duly adopted by the
stockholders of Merger Corp., AMDI and XXXXX. All necessary consents and
approvals as listed in Schedule 4.13 shall have been obtained. All necessary
consent of and filings with any governmental authority or agency relating to the
consummation of the transaction contemplated herein shall have been obtained and
made and no action or proceeding shall have been instituted or threatened to
restrain or prohibit the transactions hereunder and no governmental agency or
body shall have taken any other action or made any request of AMDI or Merger
Corp. as a result of which the Principal Shareholder deem it inadvisable to
proceed with the transactions hereunder.
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9.5 GOOD STANDING CERTIFICATES. Merger Corp. shall have
delivered to XXXXX and the Principal Shareholder certificates, dated as of the
date no later than 10 days prior to the Closing Date, duly issued by the
Secretary of State of Delaware that Merger Corp. is in good standing.
9.6 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall
have occurred with respect to AMDI or Merger Corp. which would constitute a
Material Adverse Effect.
9.7 OFFICER'S CERTIFICATES. XXXXX and the Principal
Shareholder shall have received a certificate or certificates, dated the Closing
Date and signed by the President of each of AMDI and Merger Corp., certifying
the truth and correctness of attached copies of AMDI's Articles of Incorporation
(including amendments thereto), and Bylaws (including amendments thereto) and
Merger Corp.'s Certificate of Incorporation and Bylaws.
9.8 INCUMBENCY CERTIFICATE AND OTHER DOCUMENTS. XXXXX and the
Principal Shareholder shall have received an incumbency certificate or
certificates, dated the Closing Date, and signed by the Secretary of each of
AMDI and Merger Corp., certifying the names, titles and signatures of the
officers authorized to execute the documents referred to in this Section 9 and
such additional supporting documentation and other information with respect to
the transactions contemplated hereunder as XXXXX and the Principal Shareholder
or their counsel may reasonably request.
9.9 EMPLOYMENT AGREEMENTS. At the Closing, the Principal
Shareholder will enter into a Non-Competition and Employment Agreement
satisfactory to the Principal Shareholder.
9.10 RELEASE OF OBLIGATIONS. XXXXX and the Principal
Shareholder shall have obtained a release of each of the officers and directors
of AMDI and Merger Corp. related to all matters involving AMDI and Merger Corp.
except for obligations pursuant to this Agreement.
9.11 NET ASSETS OF AMDI. As of the Closing Date, AMDI shall
have net assets of a minimum of $100,000.
10. ADDITIONAL AGREEMENTS.
10.1 REASONABLE BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement as soon as
practicable after the date hereof. AMDI and Merger Corp., shall promptly prepare
and file with the Securities and Exchange Commission a proxy statement included
in a registration statement on Form S-4 or a similar form (the "Registration
Statement") and AMDI will take, in accordance with applicable law and its
Articles of Incorporation and Bylaws, all action necessary to convene a meeting
of its shareholders to consider and vote upon the adoption of this Agreement.
XXXXX and the Principal Shareholder shall cooperate with AMDI and Merger Corp.
in the preparation of the Registration Statement, including providing such
information about XXXXX and the Principal Shareholder and
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their plans with respect to Merger Corp. after the Merger as may be reasonably
requested by AMDI and Merger Corp.
10.2 PUBLIC ANNOUNCEMENTS. The initial press release of AMDI
with respect to this Agreement shall be reviewed by XXXXX and the Principal
Shareholder. Thereafter, AMDI and Merger Corp. shall consult with XXXXX and the
Principal Shareholder prior to issuing any press releases or otherwise making
public announcements with respect to this Agreement and the transactions
contemplated by this Agreement, except as may be required by law.
10.3 FURTHER ASSURANCES. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, common, proper or advisable under applicable legal
requirements, to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing any further action is necessary
or desirable to carry out the purposes of this Agreement, AMDI, Merger Corp.
XXXXX and the Principal Shareholder, as the case may be, shall take or cause to
be taken all such necessary or convenient action and execute, and deliver and
file, or cause to be executed, delivered and filed, all necessary or convenient
documentation.
11. TERMINATION OF AGREEMENT.
11.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date solely:
(i) By mutual consent of all of the parties hereto;
(ii) By the Principal Shareholder and XXXXX, on the
one hand, or by AMDI or Merger Corp. on the other hand, if the transactions
contemplated by this Agreement to take place at the Closing shall not have been
consummated by February 28, 2001, unless the failure of such transactions to be
consummated is due to the failure of the party seeking to terminate this
Agreement to perform any of its obligations under this Agreement to the extent
required to be performed by it prior to or on the Closing Date; provided, also,
that if the Registration Statement has been filed, but not yet been declared
effective by the Securities and Exchange Commission and there is a good faith,
reasonable effort to obtain effectiveness, then the February 28, 2001 deadline
shall be extended to March 30, 2001; or
(iii) By the Principal Shareholder and XXXXX, on the
one hand, or by AMDI or Merger Corp., on the other hand, if a material breach of
the representations or a material breach or default shall be made by the other
party in the observance or in the due and timely performance of any of the
covenants or agreements contained herein, and the curing of such default shall
not have been made on or before the Closing Date, by the Principal Shareholder
or XXXXX, if the conditions set forth in Section 9 hereof have not been
satisfied or waived as of the Closing Date, or by AMDI or Merger Corp., if the
conditions set forth in Section 8 hereof have not been satisfied or waived as of
the Closing Date.
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11.2 LIABILITIES IN EVENT OF TERMINATION. Termination of this
Agreement will in no way limit any obligation or liability of any party based on
or arising from a breach or default by such party with respect to any of its
representations, warranties, covenants or agreements contained in this Agreement
or in the Schedules delivered by such party, including, but not limited to,
legal and audit costs and out of pocket expenses.
12. INDEMNIFICATION.
12.1 INDEMNIFICATION BY THE PRINCIPAL SHAREHOLDER. XXXXX and
the Principal Shareholder, jointly and severally, agree to indemnify and hold
harmless each of AMDI and Merger Corp. and their respective officers, directors,
agents and representatives against any and all losses, claims, damages,
liabilities, costs and expenses (including but not limited to, attorneys' fees
and other expenses of investigation and defense of any claims or actions),
directly or indirectly resulting from, relating to or arising out of: (i) any
breach of any covenant, agreement, warranty or representation of XXXXX or the
Principal Shareholder contained in this Agreement, (ii) any misstatement of a
material fact contained in this Agreement or in any of the documents executed in
connection with the transactions contemplated by this Agreement, including the
Registration Statement, but only if the misstatement relates to information
concerning the Principal Shareholder or XXXXX'x operations, or (iii) the
omission to state any fact necessary to make the statements contained in this
Agreement or in any of the documents executed in connection with the
transactions contemplated by this Agreement not misleading, but only if the
omission relates to information concerning the Principal Shareholder or XXXXX'x
operations.
12.2 INDEMNIFICATION BY AMDI AND MERGER CORP. Each of AMDI and
Merger Corp. agrees to indemnify and hold harmless the Principal Shareholder
against any and all losses, claims, damages, liabilities, costs and expenses
(including but not limited to, attorneys' fees and other expenses of
investigation and defense of any claims or actions) directly or indirectly
resulting from, relating to or arising out of: (i) any breach of any covenant,
agreement, warranty or representation of AMDI or Merger Corp. contained in this
Agreement, (ii) any misstatement of a material fact contained in this Agreement
or in any of the documents executed in connection with the transactions
contemplated by this Agreement, including the Registration Statement, but only
if the misstatement relates to information concerning AMDI or Merger Corp. or
their operations, or (iii) the omission to state any fact necessary to make the
statements contained in this Agreement or in any of the documents executed in
connection with the transactions contemplated by this Agreement not misleading,
but only if the omission relates to information concerning AMDI or Merger Corp.
or their operations.
12.3 INDEMNIFICATION NOTICE. Should any party (the
"Indemnified Party") suffer any loss, damage or expense for which another party
(the "Indemnifying Party") is obligated to indemnify and hold such Indemnified
Party harmless pursuant to this Section 12 of this Agreement, the following
shall apply: If an Indemnified Party intends to exercise its right to
indemnification provided in this Section 12, such Indemnified Party shall notify
each Indemnifying Party in writing of such Indemnified Party's intention to do
so and the facts or circumstances giving rise to the claim (the "Indemnification
Claim"). An Indemnification Claim, at the option of the Indemnified Party, may
be asserted as soon as any situation, event or occurrence has been noticed by
the Indemnified Party regardless of whether actual harm has been suffered or
out-of-pocket expenses incurred.
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During the period of 15 days after notice by the Indemnified Party, each
Indemnifying Party shall be entitled to cure the defect or situation giving rise
to the Indemnification Claim to the satisfaction of the Indemnified Party. If
the Indemnifying Parties are unwilling or unable to cure the defect giving rise
to the Indemnification Claim during the 15-day period, the Indemnified Party
shall thereafter be entitled to indemnification as provided in this Section 12.
12.4 MATTERS INVOLVING THIRD PARTIES. If any third party shall
notify any Indemnified Party with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any Indemnifying
Party under this Section 12, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing. Provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced. Any
Indemnifying Party will have the right to defend the Indemnified Party against
the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party has given notice of
the Third Party Claim that the Indemnifying Party will indemnify the Indemnified
Party from any adverse consequences the Indemnified Party may suffer resulting
from or caused by the Third Party Claim, (ii) the Indemnifying Party provides
the Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to defend
against the Third Party Claim and fulfill its indemnification obligations
hereunder, and (iii) the Indemnifying Party conducts the defense of the Third
Party Claim actively and diligently. The Indemnifying Party shall not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party, which
consent shall not be withheld unreasonably.
13. GENERAL PROVISIONS.
13.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations and warranties of the parties hereto contained in this
Agreement or in any writing delivered pursuant hereto or at the Closing shall
survive the execution and delivery of this Agreement and the Closing and the
consummation of the transactions contemplated hereby (and any examination or
investigation by or on behalf of any party hereto) until the date one year after
the Closing Date except for claims in respect thereof pending at such time,
which shall survive until finally resolved or settled). No action may be
commenced with respect to any representation, warranty, covenant or agreement in
this Agreement, or in any writing delivered pursuant hereto, unless written
notice, setting forth in reasonable detail the claimed breach thereof, shall be
delivered pursuant to Section 13.7 to the party or parties against whom
liability for the claimed breach is charged on or before the termination of the
survival period specified in Section 13.1 for such representation, warranty,
covenant or agreement.
13.2 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the
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preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
13.3 ENTIRE AGREEMENT. This Agreement and any attachments
hereto, the XXXXX Disclosure letter and the Schedules thereto (including the
schedules, exhibits and annexes attached hereto and thereto), the AMDI
Disclosure Letter and the Schedules thereto (including the schedules, exhibits
and annexes attached hereto and thereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the parties and
supersede any prior agreement and understanding relating to the subject matter
of this Agreement. This Agreement, upon execution, constitutes a valid and
binding agreement of the parties hereto enforceable in accordance with its terms
and may be modified or amended only by a written instrument executed by all
parties.
13.4 COUNTERPARTS. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an original and
all of which together shall constitute but one and the same instrument.
13.5 BROKERS AND AGENTS. Each party represents and warrants
that it employed no broker or agent in connection with this transaction, except
as provided in Schedule 13.5.
13.6 EXPENSES. Except as otherwise specifically provided
herein, each party to this Agreement shall bear its own direct and indirect
expenses incurred in connection with the negotiation and preparation of this
Agreement and the consummation and performance of the transactions contemplated
hereby, including, without limitation, all legal fees and fees of any brokers,
finders or similar agents.
13.7 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (i) on the date of delivery
if delivered personally, or by telecopy or facsimile upon confirmation of
receipt, (ii) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (iii) on the 5th business
day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) If to AMDI or Merger Corp.:
Applied Medical Devices, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Al Lager, President
Facsimile (000) 000-0000
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with a copy to:
Xxxxxx Xxxxx, L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
(b) If to XXXXX or the Principal Shareholder:
Xxxxxxx X. XxXxxxx
XXXXX Systems, Inc.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxx, Esq.
P. X. Xxx 0000
Xxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
13.8 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Colorado.
13.9 ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
13.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default occurring before or after that waiver.
13.11 TIME. Time is of the essence with respect to this
Agreement.
13.12 REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
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13.13 REMEDIES CUMULATIVE. No right, remedy or election given
by any term of this Agreement shall be deemed exclusive, but each shall be
cumulative with all other rights, remedies and elections available at law or in
equity.
13.14 CAPTIONS; CONSTRUCTION. The headings of this Agreement
are inserted for convenience only, and shall not constitute a part of this
Agreement or be used to construe or interpret any provision hereof. This
Agreement has been fully reviewed and negotiated by the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against any party under any rule of construction or
otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
APPLIED MEDICAL DEVICES, INC. THE PRINCIPAL SHAREHOLDER
By:
---------------------------------- -----------------------------------
Xxxxxxx X. XxXxxxx
Name:
Title:
APPLIED MEDICAL MERGER CORP. XXXXX SYSTEMS, INC.
By: By:
---------------------------------- -----------------------------------
Name: Name:
Title: Title:
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