Execution Copy
STOCK PURCHASE AGREEMENT
Dated December 17, 2002
by and among
M.C.M. ENVIRONMENTAL TECHNOLOGIES, INC. ("MCM USA" or "Issuer") and
---
M.C.M. ENVIRONMENTAL TECHNOLOGIES, LTD. ("MCM Israel")
and -
CAPRIUS, INC. ("Caprius" or "Purchaser")
TABLE OF CONTENTS
PAGE
Article I Recitals; Exhibits and Schedules...............................2
1.1 Recitals..........................................................2
1.2 Exhibits and Schedules............................................2
Article II Definitions....................................................3
Article III Stock Issuance; Purchase.......................................8
3.1 Issuance of Shares; Changes in Capitalization and
Certain Stockholder Rights........................................8
3.2 Sale and Delivery of Shares.......................................9
3.3 Purchase Price....................................................9
3.4 Terms of Payment..................................................9
3.5 Closing..........................................................10
3.6 Delivery of Possession...........................................11
Article IV Application of Portions of Purchase Price.....................11
Article V Closing Covenants.............................................12
5.1 Press Release....................................................12
5.2 Resignation of Directors and Officers............................12
5.3 Deliveries by the Companies......................................12
5.4 Deliveries by Purchaser..........................................14
Article VI Conditions Precedent - General................................14
6.1 General Conditions Precedent to Parties' Obligations.............14
6.2 General Conditions Precedent for Benefit of Purchaser............15
6.3 General Conditions Precedent for the Benefit of the Companies....16
Article VII Conditions Precedent - Special................................17
7.1 Special Conditions Precedent for Benefit of Purchaser............17
Article VIII Anti-Dilution.................................................20
Article IX Representations and Warranties Regarding the Companies........21
9.1 Organization and Foreign Qualifications of Companies.............21
9.2 Capital Stock of Companies.......................................21
9.3 Qualification as Foreign Corporation.............................22
9.4 Subsidiaries.....................................................22
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TABLE OF CONTENTS
(continued)
PAGE
9.5 Absence of Certain Changes or Events.............................22
9.6 Title to Owned Assets............................................25
9.7 Title to Leased Assets...........................................25
9.8 Material Contracts, Commitments and Licenses.....................26
9.9 No Conflict or Violation.........................................28
9.10 Consents and Approvals...........................................28
9.11 Financial Statements.............................................29
9.12 Litigation.......................................................29
9.13 Labor Matters....................................................29
9.14 No Undisclosed Liabilities.......................................31
9.15 Compliance with Law..............................................31
9.16 No Brokers.......................................................32
9.17 No Other Agreements to Sell Assets or Companies..................32
9.18 Proprietary Rights...............................................32
9.19 Employee Benefit Plans...........................................35
9.20 Transactions with Certain Persons and Affiliates.................35
9.21 Tax Representation...............................................35
9.22 Insurance........................................................36
9.23 Compliance with Legislation Regulating Environmental
Quality..........................................................37
9.24 Licenses and Permits.............................................37
9.25 Bank Accounts....................................................38
9.26 Improper and Other Payments......................................38
9.27 Real Property Representations....................................38
9.28 Conduct of Business Prior to Closing.............................41
9.29 Obligations to Employees.........................................42
9.30 Compliance with Employment Requirements..........................42
9.31 Representations..................................................42
Article X Representations and Warranties of Purchaser...................42
10.1 Organization of Purchaser........................................43
10.2 Authorization....................................................43
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TABLE OF CONTENTS
(continued)
PAGE
10.3 No Conflict or Violation.........................................43
10.4 Consents and Approvals...........................................44
10.5 No Brokers.......................................................44
Article XI Survival of Representations and Warranties....................44
Article XII Post-Closing Covenants and Indemnification....................45
12.1 Books and Records................................................45
12.2 Further Assurances...............................................45
12.3 Deleted..........................................................45
12.4 Indemnification..................................................46
Article XIII Confidential Information......................................55
13.1 Confidentiality..................................................55
13.2 Remedy in the Event of Breach....................................56
Article XIV Non-Solicitation; Non-Competition.............................56
14.1 Non-Solicitation; Non-Competition................................56
14.2 Remedy in the Event of Breach....................................57
Article XV Miscellaneous.................................................58
15.1 Assignment.......................................................58
15.2 Notices..........................................................58
15.3 Choice of Law....................................................59
15.4 Consent to Jurisdiction..........................................60
15.5 Entire Agreement; Amendments and Waivers.........................60
15.6 Counterparts; Delivery...........................................60
15.7 Invalidity.......................................................61
15.8 Captions.........................................................61
15.9 Expenses.........................................................61
15.10 Confidential Information; Publicity..............................61
15.11 Trust; Escrow....................................................61
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STOCK PURCHASE AGREEMENT
made this 17th day of December, 2002
by and among
M.C.M. ENVIRONMENTAL TECHNOLOGIES, INC., a Delaware corporation with executive
offices at 0 Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 ("MCM USA" or
"Issuer") and M.C.M. ENVIRONMENTAL TECHNOLOGIES, LTD., a private limited
liability company incorporated under the laws of the State of Israel
("MCM Israel") (each of MCM USA and MCM Israel, a "Company" and collectively,
the "Companies")
- and -
CAPRIUS, INC., a Delaware corporation with executive offices at Xxx Xxxxxx
Xxxxx, Xxxx Xxx, Xxx Xxxxxx 00000 ("Caprius" or "Purchaser")
RECITALS
A. MCM Israel is a wholly-owned subsidiary of MCM USA, MCM USA having acquired
all equity rights in MCM Israel in March 2001. Also in 2001, MCM USA
incorporated a newly formed subsidiary, Sterimed Renal, Inc.
B. On June 10, 2002 Caprius made a secured loan to MCM USA in the amount of
$250,000 which was unconditionally guaranteed by MCM Israel (the "June Loan");
on or about September 30, 2002 Caprius made an additional advance of $100,000
thereunder (the "September Increase"); and during October 2002 Caprius made two
additional advances of $100,000 each (the "October Increases"); all of which
loans are convertible into shares of stock of MCM USA. Pursuant to Section 3.4
hereof, the terms of payment hereunder shall include conversion of the June
Loan, the September Increase and the October Increases.
C. The Parties have agreed that Caprius (or its assignee hereunder) shall
acquire a 57.53% interest in the capital stock of MCM USA, as more particularly
described below, upon the terms and subject to the conditions hereinafter set
forth.
THEREFORE, in consideration of the representations, warranties and
covenants made by MCM USA and MCM Israel to Caprius and by Caprius to MCM USA
and MCM Israel, and in consideration of the other agreements hereinafter set
forth, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the Parties hereby enter into this Stock Purchase
Agreement (this "Agreement"), as follows:
AGREEMENT
Article I
Recitals; Exhibits and Schedules
--------------------------------
1.1 Recitals. The Companies hereby represent and warrant to Caprius that the
matters set forth in Recitals A through C above are accurate and complete, and
constitute an integral part of this Agreement to the same extent as if set forth
in this Section 1.1.
1.2 Exhibits and Schedules. All Exhibits and Schedules referenced herein are
attached hereto and constitute an integral part of this Agreement.
2
Article II
Definitions
-----------
As used in this Agreement, the following terms have the following meanings:
"Assets" means all property and assets of the Companies of every kind,
tangible and intangible, and wheresoever situate, including (i) all Products
(completed and in production) and spare parts in connection therewith, and all
machinery, equipment, handling equipment, furniture, furnishings and accessories
and supplies of all kinds; (ii) all trucks, cars and other vehicles; (iii) the
Inventories; (iv) all accounts receivable of the Companies; (v) all prepaid
expenses; (vi) the leasehold interests of the Companies in and to the Facilities
leased by either Company and all right, title and interest of either Company in
and benefits of either Company to and under such leases; (vii) the Proprietary
Rights; (viii) the Books and Records and the corporate records; (ix) all real
estate properties owned by either Company; (x) the Permits; and (xi) the
goodwill of the Business, including the right of either Company to represent
itself as carrying on the Business from and after the Closing Date, and to use
any words indicating that the Business is so carried on, including all of each
Company's right, title and interest in and to its corporate names.
"Balance Sheet" means the audited consolidated balance sheet of the
Companies as at December 31, 2001, together with the notes thereto, previously
delivered to Purchaser and constituting part of Schedule 9.11A hereto.
"Balance Sheet Date" means December 31, 2001.
"Benefit Arrangement" means any written employment, consulting, severance
or other similar contract, arrangement or policy and each written plan,
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arrangement, program, trust, agreement or commitment with respect thereto, under
ERISA or otherwise, providing insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, retirement benefits,
life, health, disability or accident benefits, or for deferred compensation,
profit-sharing bonuses, stock options, stock appreciation rights, stock purchase
or other forms of incentive compensation, or post-retirement insurance,
compensation or benefits, or any pension, profit-sharing or similar plan, which
covers any officer, director, employee, consultant or agent of the Companies.
"Books and Records" means all technical, business and financial and
accounting records, financial books and records of account, books, data,
reports, files, lists, drawings, plans, logs, briefs, customer and supplier
lists, deeds, certificates, contracts, surveys, title policies or any other
documentation and information in any form whatsoever (including written,
printed, electronic or computer printout form) relating to the Business.
"Business" means the business presently and heretofore carried on by the
Companies consisting of the manufacture, distribution and sale, lease or license
of infectious waste disinfecting and disposal units.
"Business Day" means a day other than Saturday, Sunday and any other day on
which commercial banks are authorized or required by law to close under the laws
applicable to such banks in New Jersey.
"Companies" means "either or both of the Companies".
"Closing Date" has the meaning set forth in Section 3.5 hereof.
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"employees of the Companies" means any and all current and former employees
of the Companies.
"Encumbrance" means any lien, pledge, option, charge, security interest,
mortgage, right-of-way, encumbrance or other right of any third party.
"Environmental Liabilities" has the meaning set forth in Section 9.23(a)
hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow and Administration Agreement" means that certain Escrow and
Administration Agreement to be entered into at the Closing under this Agreement,
with Xxxxxx Xxxx & Priest LLP as the Escrow Agent and Yotan Trust, Ltd. as
Administrative Agent, in the form of Exhibit 15.11(b) hereto, pursuant to which
all shares of stock in MCM USA owned (legally or beneficially) by the Existing
Stockholders will be held in escrow by the Escrow Agent and certain
administrative duties are undertaken by the Administrative Agent, all pursuant
to the terms and conditions thereof,
"Existing Stockholders" means the stockholders of MCM USA immediately prior
to the time when Caprius becomes a stockholder in MCM USA at the Closing
hereunder, as more particularly described in the Stockholders Agreement.
"Facilities" means the plants, offices, storage yards, manufacturing
facilities, warehouses, administration buildings and other real property and
related facilities which are owned or leased by either Company.
5
"Financial Statements" means (i) the Balance Sheet and the audited
consolidated statements of income, retained earnings and changes in financial
position of the Companies for the year ended as at December 31, 2001, together
with the notes thereto, shown as Schedule 9.11A hereto, and (ii) the Interim
Balance Sheet for the 9-month period ended September 30, 2002, shown as Schedule
9.11B hereto.
"Fixtures and Equipment" means all of the furniture, fixtures, furnishings,
machinery and equipment owned by either Company and located in, at or upon the
Facilities as of the Balance Sheet Date, plus all additions, replacements or
deletions since the Balance Sheet Date in the ordinary course of the Companies'
business.
"Governmental Entity" means (i) any federal, provincial, state, municipal,
local or other governmental or public department, court, commission, board,
bureau, agency or instrumentality, domestic or foreign; (ii) any subdivision,
agent, commission, board, or authority of any of the foregoing; and (iii) any
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the foregoing.
"Income Taxes" means taxes measured by or with reference to net income
imposed by any federal, state, local or foreign governmental taxing authority,
including additions to tax and penalties related to such taxes, and interest on
such taxes and on such additions to tax and penalties.
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"Interim Balance Sheet" means the unaudited but reviewed consolidated
balance sheet of the Companies as at September 30, 2002, together with the notes
thereto, shown as Schedule 9.11B hereto.
"Interim Balance Sheet Date" means September 30, 2002.
"Inventory" or "Inventories" means all inventories of either Company
including (i) all Products (completed and in production) and all additions
thereto, and spare parts for same, (ii) all new and unused maintenance items,
and (iii) all other materials and supplies on hand to be used or consumed in
connection therewith.
"materiality" or "material" means any contract, obligation, commitment or
other agreement having an effect on either Company in excess of $20,000
individually or in the aggregate.
"Party" means either of the Companies, or Purchaser, or any of the Existing
Stockholders, or (to the extent applicable herein) any of the Key Persons, or
(to the extent applicable herein) the Escrow Agent or the Administrative Agent;
and "Parties" means both of the Companies and Purchaser and all of the Existing
Stockholders, and (to the extent applicable herein) all of the Key Persons, and
(to the extent applicable herein) the Escrow Agent and (to the extent applicable
herein) the Administrative Agent.
"Permits" has the meaning set forth in Section 9.24.
"Person" means any individual, corporation, partnership, limited liability
company, trust, estate, personal representative, or other entity of any kind.
"Products" means all those products, whether in final form, prototype or
working models, made by either or both of the Companies or licensed by either or
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both of the Companies, including without limitation the following: the
SteriMed(R) System, a medical waste treatment and disposal system; and the
SteriMed(R) Junior, which is a similar unit which is smaller in size.
"Proprietary Rights" has the meaning set forth in Section 9.18.
"Real Property" means all real estate owned or leased by either Company and
all improvements thereon.
"Stockholders Agreement" means that certain Stockholders Agreement among
Caprius, Inc. and the Existing Stockholders to be entered into at the Closing
under this Agreement, in the form of Exhibit 5.3(h) hereto.
"Subsidiaries" means all corporations, limited liability companies,
partnerships, joint ventures or other entities in which MCM USA or MCM Israel
owns, directly or indirectly, a majority of the capital stock or membership
interests, or is a general partner.
"Taxes" means any federal, state, local or foreign income, sales, use,
transfer, payroll, personal property, occupancy or other tax, levy, impost, fee,
imposition, assessment or similar charge, together with any related interest or
penalty thereon.
Article III
Stock Issuance; Purchase.
-------------------------
3.1 Issuance of Shares; Changes in Capitalization and Certain Stockholder
---------------------------------------------------------------------
Rights.
------
(a) MCM USA hereby agrees to issue and deliver to Caprius or to its
designated assignee ("Purchaser"), from its authorized but unissued shares of
8
Series A Preferred Stock, $0.001 par value per share (the "Series A Preferred
Stock"), that number of newly issued shares of Series A Preferred Stock of MCM
USA, which upon such issuance shall represent and constitute, on a fully
converted and fully diluted basis (including without limitation the
exercise/conversion of all MCM USA options, warrants, debentures, notes and
commitments to deliver options, into shares of capital stock of MCM USA),
fifty-seven and 53/100 percent (57.53%) of the total issued and outstanding
shares of all classes of the capital stock of MCM USA (the "New Shares").
(b) As a condition to Caprius making its investment in the Companies as
provided herein, the Existing Stockholders agree that (i) upon consummation of
the Closing hereunder the ownership of all shares of Series A Preferred Stock
and Common Stock of MCM USA shall be as set forth on the table shown as Schedule
9.2B hereto, and (ii) all rights of the present holders of Series A Preferred
Stock to adjustment in number of shares upon a subsequent investment (such as
that to be made by Caprius hereunder), and the liquidation, dividend and other
preferences based upon original purchase price, and subsequent adjustments
thereto, as set forth in the existing MCM USA Certificate of Incorporation, are
hereby waived and shall be terminated at the Closing, and replaced by the
provisions of the Amended and Restated Certificate of Incorporation shown as
Exhibit 5.3(d) hereto.
3.2 Sale and Delivery of Shares. At the Closing hereunder and subject to
the terms and conditions set forth in this Agreement, Issuer shall, in exchange
for the Purchase Price (as hereinafter defined), issue and deliver to Purchaser,
and Purchaser shall acquire, the New Shares, all fully paid and non-assessable,
and free and clear of any Encumbrance.
9
3.3 Purchase Price. The Parties have agreed that the aggregate purchase price
for the New Shares is Two Million Four Hundred Thousand ($2,400,000)
Dollars
(the "Purchase Price").
3.4 Terms of Payment. The Purchase Price shall be payable as follows:
(a) $1,850,000. On the Closing Date, Purchaser shall pay the amount of
One Million Eight Hundred Fifty Thousand ($1,850,000) Dollars to Issuer (less
the amounts shown on Schedule 3.4(a) hereto, which amounts Purchaser shall, at
the direction of the Issuer, pay directly), in immediately available funds by
wire transfer to such accounts of Issuer and other applicable payees as Issuer
and such other payees may designate in writing at least two (2) business days
prior to the Closing, as the purchase price for 77.0833% of the total New
Shares.
(b) $550,000. On the Closing Date, Purchaser shall agree to the
conversion of Five Hundred Fifty Thousand ($550,000) Dollars from its existing
loan status to the purchase price for 22.9167% of the total New Shares, which
conversion shall result in a full satisfaction of the June Loan, the September
Increase and the October Increases.
(c) Lien Discharges. At the Closing, Purchaser shall execute and
deliver to the Companies such lien discharge documentation respecting the June
Loan (and other advances thereafter) as may be necessary to remove all such
liens against the Collateral previously given to secure the June Loan (and other
advances thereafter).
3.5 Closing. Subject to the performance, satisfaction or waiver by the
relevant Party of the covenants and/or conditions of Closing set forth in
Articles V, VI and VII hereof, the closing of the transactions contemplated
hereunder (the "Closing") shall take place simultaneously with the mutual
10
execution and delivery of this Agreement, at the offices of Xxxxx Xxxxxx Xxxxx
Tischman Xxxxxxx & Xxxxx, P.A., Xxx Xxxxxxxxxx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000,
or on such other date as may be mutually agreed upon in writing by Purchaser and
Issuer. The date of the Closing is referred to herein as the "Closing Date".
3.6 Delivery of Possession. At the Closing, Issuer shall deliver to
Purchaser or its designee one or more certificates representing all of the New
Shares, in accordance with written instructions of Purchaser delivered to Issuer
not less than two (2) Business Days prior to the Closing Date.
Article IV
Application of Portions of Purchase Price
-----------------------------------------
The Companies covenant and agree that, at the Closing, the following
amounts will be paid to the following Persons from the Purchase Price:
1. $50,000 to Xxxx Xxxx pursuant to the agreement shown as Exhibit 7.1.3
hereto;
2. $100,000 to Sterimed International, Inc. pursuant to the agreement shown
as Exhibit 7.1.4 hereto;
3. $30,002 to Medical Services Options, Inc. pursuant to the agreement
shown as Exhibit 7.1.8 hereto;
4. $50,000 to Xxxxxxx Xxxxxxxx 0000 Xxxxx Xxxxxxxx Shitufit Ltd. No.
570039081 ("Moledet") pursuant to the agreement shown as Exhibit 7.1.11 hereto.
Any one or more of the foregoing payments may, in the discretion of
Purchaser, be made directly by Purchaser to the Persons designated above as part
of the Purchase Price due to Issuer under Section 3.4(a) hereof.
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In addition, the Companies hereby direct Purchaser to pay at the Closing as
part of the Purchase Price proceeds, those amounts and to those Persons set
forth on Schedule 3.4(a) hereto.
Article V
Closing Covenants
-----------------
5.1 Press Release. Upon delivery of the New Shares to Purchaser at the
Closing, Purchaser and MCM USA shall each have the right, subject to Section
15.10, to issue or cause the publication of a press release or other
announcement or public notice or disclosure with respect to the transactions
provided for hereunder.
5.2 Resignation of Directors and Officers. On the Closing Date, all of the
Directors and Officers of MCM USA and all of the Directors of MCM Israel shall
resign effective as of the Closing Date.
5.3 Deliveries by the Companies. At the Closing, the Companies shall
deliver to Purchaser:
(a) a certified copy of the minutes of the Board of Directors of MCM
USA authorizing its entering into and performing this Agreement, adopting the
Amended and Restated Certificate of Incorporation referenced below, authorizing
the issuance of the New Shares for the Purchase Price consideration, and
otherwise approving the transactions provided for in this Agreement;
(b) a certified copy of the minutes of the Board of Directors of MCM
Israel authorizing its entering into and performing this Agreement;
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(c) a certified copy of the minutes of the Stockholders of MCM USA
approving the Amended and Restated Certificate of Incorporation of MCM USA
referenced below;
(d) a certified copy of the filed Amended and Restated Certificate of
Incorporation of MCM USA in the form of Exhibit 5.3(d) hereto;
(e) the certificate(s) representing the New Shares, as described in
Section 3.6;
(f) a certificate signed by the Chairman of the Board of each Company,
certifying that all covenants and conditions to closing of that Company have
been complied with, in the form of Exhibit 5.3(f) hereto;
(g) an opinion of counsel from Xxxxxx Xxxx & Priest LLP, counsel to the
Companies, substantially in the form of Exhibit 5.3(g) hereto;
(h) the written resignations of all of the Directors of each Company
and of all of the Officers of MCM USA, effective as of the Closing Date;
(i) the Stockholders Agreement in the form of Exhibit 5.3(i) hereto,
duly executed by all parties other than Purchaser;
(j) the agreement termination documentation referenced in Section
7.1.9;
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(k) the debenture conversion and loan conversion documentation
referenced in Sections 7.1.12 and 7.1.13; and
(l) the EAA referenced in Section 11.5(b) duly executed by all parties
thereto.
5.4 Deliveries by Purchaser. At the Closing, Purchaser shall deliver to the
Companies (and others) the following:
(a) a certified copy of the minutes of the Board of Directors of
Purchaser authorizing its entering into and performing this Agreement, and
otherwise approving the transactions provided for in this Agreement;
(b) a certificate signed by the president or chief executive officer of
Purchaser, certifying that all covenants and conditions of Purchaser have been
complied with, in the form of Exhibit 5.4(b) hereto;
(c) an opinion of counsel from Xxxxx Cummis Radin Tischman Xxxxxxx &
Xxxxx, P.A., counsel to Purchaser, substantially in the form of Exhibit 5.4(c)
hereto;
(d) payment of the Closing portion of the Purchase Price, as provided
in Section 3.4(a) hereof; and
(e) the Stockholders Agreement referenced above, duly executed by
Purchaser.
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Article VI
Conditions Precedent - General
------------------------------
6.1 General Conditions Precedent to Parties' Obligations. Each and every
obligation of the Parties under this Agreement shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions
precedent:
6.1.1 Approvals, Consents and Filing. Any approval, consent or filing
with any governmental, judicial or regulatory authority or Governmental Entity
or any third party which Purchaser reasonably believes is required in respect of
the transactions provided for in this Agreement shall have been obtained.
6.1.2 Waiting Periods. All applicable waiting periods under any
applicable law or regulation in any applicable jurisdiction imposing waiting
periods shall have expired or been terminated.
6.1.3 Action against Consummation of Transaction. No preliminary or
permanent injunction, restraining order, or other order of any court, regulatory
body or agency in any applicable jurisdiction which prevents the consummation of
the transactions contemplated by this Agreement shall have been issued and
remain in effect, and no action or proceeding to obtain such an order shall be
pending or threatened.
15
6.2 General Conditions Precedent for Benefit of Purchaser. The purchase of
the New Shares is subject to the following conditions to be fulfilled or
performed at, or prior to, the Closing, which conditions are for the exclusive
benefit of Purchaser and may be waived in whole or in part by Purchaser in its
sole discretion:
6.2.1 Truth of Representations and Warranties of Companies. The
representations and warranties of the Companies contained in Article IX of this
Agreement and in any ancillary agreement shall be true and complete as of the
Closing Date, and so certified by the chief executive officer and chief
financial officer of each Company.
6.2.2 Performance of Covenants. The Companies shall have duly performed
any and all covenants set forth hereunder and to be performed at or prior to the
Closing.
6.2.3 Deliveries to Purchaser. Purchaser shall have duly received all
of the items set forth in (a) through (l) of Section 5.3 hereof.
6.2.4 Deleted.
6.2.5 Material Adverse Change. Neither of the Companies shall have
experienced any material adverse change in its business, condition (financial,
legal or otherwise), operations, properties, assets, liabilities, or prospects
since the Balance Sheet Date.
6.2.6 Issuer's Stockholders' Approval. Purchaser shall have received
documentation satisfactory to it to evidence that Issuer has obtained the
approval of the transactions contemplated hereunder by the requisite percentage
vote of the stockholders of Issuer.
6.3 General Conditions Precedent for the Benefit of the Companies. The
issuance and sale of the New Shares is subject to the following conditions to be
fulfilled or performed at or prior to the Closing, which conditions are for the
exclusive benefit of the Companies and may be waived in whole or in part by the
Companies in their sole discretion:
16
6.3.1 Truth of Representations and Warranties of Purchaser. The
representations and warranties of Purchaser contained in Article X of this
Agreement and in any ancillary agreement shall be true and complete as of the
Closing Date.
6.3.2 Deliveries. Purchaser shall have delivered or caused to be
delivered to the Companies all of the items set forth in (a) through (e) of
Section 5.4 hereof.
Article VII
Conditions Precedent - Special
------------------------------
7.1 Special Conditions Precedent for Benefit of Purchaser.
-----------------------------------------------------
7.1.1 Regulatory Approvals. The Companies shall have obtained from the
Office of the Chief Scientist, from the Office of Investment Center, and from
each other regulatory or governmental agency as shall regulate or otherwise
govern the operation of either of the Companies whatever approvals may be
necessary to authorize the transactions contemplated hereby.
7.1.2 Limitation on Companies' Liabilities. The aggregate amount of
liabilities of the Companies shall not exceed the aggregate amount of
liabilities set forth on Schedule 7.1.2 hereof.
7.1.3 Dvir. An agreement between MCM USA and Xxxx Xxxx providing for
the termination of his employment by the Companies, in the form of Exhibit 7.1.3
hereto, shall have been fully executed and delivered.
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7.1.4 Sterimed; Sassoon. The Convertible Debenture dated February 21,
2001 issued by MCM Israel to Sterimed International, Inc. ("Sterimed") shall
have been converted from debt status in accordance with an agreement with
Sterimed and Xxxxx Xxxxxxx in the form of Exhibit 7.1.4 hereto, which agreement
shall have been fully executed and delivered.
7.1.5 Special Agreements. Agreements with the Companies respecting
non-competition, non-solicitation of customers and non-solicitation of employees
on the part of those key persons and the parties identified on Schedule 7.1.5
hereto (including without limitation Xxxx Xxxxxxxx), in the form of Exhibit
7.1.5 hereto, shall have been fully executed and delivered.
7.1.6 Addady. An agreement between Xxxx Addady and related entities,
MCM USA, MCM Israel and Purchaser, in the form of Exhibit 7.1.6 hereto, shall
have been fully executed and delivered.
7.1.7 Disinfectant Contract. All agreements between CID Lines,
Tivonchem and either of the Companies relating to the sale and distribution of
disinfectant for use by MCM USA or MCM Israel shall have been terminated and a
new agreement among CID Lines, MCM USA, MCM Israel and Tivonchem, in the form of
Exhibit 7.1.7 hereto, shall have been fully executed and delivered.
7.1.8 MSO (Dagan). Medical Services Options, Inc. ("MSO") through its
principal Xxxxx Xxxxx shall have executed and delivered a Payment Agreement in
the form of Exhibit 7.1.8 hereto, respecting compensation for brokerage and
other services.
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7.1.9 Termination of Certain Agreements. Set forth on Schedule 7.1.9
hereto is a true and complete list of all stockholders' agreements, voting
agreements, investor rights agreements and other agreements relating to
stockholders and their rights, to which either of the Companies is a party. Each
of the stockholders' agreements, voting agreements, investor rights agreements
and other agreements set forth on Schedule 7.1.9 hereto shall have been
terminated, and Purchaser shall have received documentation satisfactory to it
to evidence that such agreements have been terminated.
7.1.10 MCM USA Capitalization. The capitalization of MCM USA shall have
been changed as reflected on its Amended and Restated Certificate of
Incorporation in the form attached as Exhibit 5.3(d) hereto.
7.1.11 Conversion of Certain Loans. The loans entitled the Moshav Loan
and the Bridge as set forth in the Conversion Agreement in the form of Exhibit
7.1.11 hereto, shall have been converted from debt status in accordance with
such Agreement, which Agreement shall have been fully executed and delivered.
7.1.12 Conversion of Debentures. Set forth on Schedule 7.1.12 hereto is
a true and complete list of all currently outstanding debentures issued by
either of the Companies. Each of such debentures shall have been converted to
equity securities of the Issuer in accordance with their respective terms and
Purchaser shall have received documentation satisfactory to it to evidence such
conversion.
7.1.13 Conversion of Loan Obligations. Set forth on Schedule 7.1.13
hereto is a true and complete list of all loan obligations of each of the
19
Companies other than (1) the loans from Caprius to be converted as described in
Section 3.4(b), and (2) the obligations described in Sections 7.1.4, 7.1.11 and
7.1.12 hereto. Any such loan obligations described in (2) herein and set forth
on Schedule 7.1.13 hereto shall have been converted to common stock of the
Issuer at such conversion rate as the Companies may deem appropriate, provided
only that such shares shall be included as already issued in the determination
of New Shares to be issued to the Purchaser hereunder and that Purchaser shall
have received documentation satisfactory to it to evidence such conversion.
7.1.14 Royalty Agreement. An agreement between Moledet and MCM Israel,
in the form of Exhibit 7.1.14 hereto, shall have been fully executed and
delivered.
7.1.15 Memorandum of Agreement. The Memorandum of Agreement described
in Section 15.11(d) and shown on Exhibit 15.11(d) hereto shall have been fully
executed and delivered, and received by Purchaser.
7.1.16 Escrow and Administration Agreement. The EAA described in
Section 15.11(b) and shown on Exhibit 15.11(b) hereto shall have been fully
executed and delivered, and received by Purchaser.
Article VIII
Anti-Dilution
-------------
Anything to the contrary notwithstanding, in no event shall Purchaser's
equity in the Companies as provided for in this Agreement, at any time and from
time to time, be diluted by reason of any obligation(s) of the Companies to
issue or otherwise provide any additional shares of stock of any class(es) in
either or both of the Companies ("Stock"), or any option, warrant or other right
of any kind to acquire, obtain or receive any such additional shares of stock
20
("Stock Rights"). In the event any Person should be or become entitled to any
such Stock or Stock Rights which are not fully disclosed in this Agreement or in
the appropriate accompanying Exhibit or Schedule hereto, such Stock or Stock
Rights shall be charged against, and reduce, the stockholdings of the Existing
Stockholders, pro rata, so as to leave intact Purchaser's 57.53% equity interest
in the Companies (or such other percentage as may then be applicable to
Purchaser as provided in this Agreement or in the Stockholders Agreement shown
in Exhibit 5.3(i) hereto).
Article IX
Representations and Warranties Regarding the Companies
------------------------------------------------------
Each of the Companies and the Existing Stockholders (as defined in Section
12.4(a)), jointly and severally, hereby represent and warrant to Purchaser as
follows:
9.1 Organization and Foreign Qualifications of Companies. MCM USA is duly
incorporated, validly existing and in good standing under the laws of State of
Delaware, and has all requisite corporate power and authority to conduct its
business as it is presently being conducted and to own and lease its properties
and assets. MCM Israel is duly incorporated, validly existing and in good
standing under the laws of Israel, and has all requisite corporate power and
authority to conduct its business as it is presently being conducted and to own
and lease its properties and assets. Except as set forth in Schedule 9.1 hereto,
each Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which such qualification is necessary
under applicable law as a result of the conduct of its business or the ownership
of its properties in such jurisdictions.
9.2 Capital Stock of Companies. Schedule 9.2A hereto sets forth the
accurate and complete listing of all shares of capital stock issued and
21
outstanding of MCM USA and MCM Israel together with all options, warrants and
other rights (pursuant to any ESOP plan or otherwise) to acquire any shares of
capital stock of either Company, all immediately before the issuance of the New
Shares; and Schedule 9.2B hereto sets forth the accurate and complete listing of
all shares of capital stock issued and outstanding of MCM USA and MCM Israel
together with all options, warrants and other rights (pursuant to any ESOP plan
or otherwise) to acquire any shares of capital stock of either Company, all
immediately after the issuance of the New Shares. All of the shares of the
Companies, including without limitation the New Shares upon their issuance at
the Closing, have been and will be duly authorized, validly issued and fully
paid and non-assessable. Except as set forth in Schedule 9.2B hereto, there are
no pending, outstanding or authorized subscriptions, options, warrants, calls,
rights (including conversion rights), commitments or any other agreements of any
character obligating either MCM USA or MCM Israel to issue, sell or transfer any
additional shares of its common stock, or any other securities convertible into
or evidencing the right to subscribe for any shares of its common stock.
9.3 Qualification as Foreign Corporation. Schedule 9.3 hereto sets forth a
list of (i) each jurisdiction in which each Company is qualified to do business
as a foreign corporation, and (ii) each jurisdiction in which each Company is
conducting business under an assumed name (if any).
9.4 Subsidiaries. The Companies have no Subsidiaries except as set forth in
Schedule 9.4 hereto.
9.5 Absence of Certain Changes or Events. Except as set forth in Schedule
9.5 hereto, since the Balance Sheet Date, there has not been any:
22
(a) material adverse change in the financial condition, Assets,
liabilities, working capital, reserves, or results of operations of either
Company;
(b) (i) increase in the compensation payable or to become payable
by each Company to any of its employees or consultants whose total compensation
for services rendered to either Company is currently at an annual rate of more
than $35,000, (ii) material bonus, incentive compensation, service award or
other like benefit granted, made or accrued, contingently or otherwise, (iii)
material employee welfare, pension, retirement, profit-sharing or similar
payment or arrangement made or agreed to by either Company for any employee or
consultant except pursuant to such existing plans and arrangements as may be
described in Section 9.19 (if any), or (iv) new written employment or consulting
agreement to which either Company is a party paying in excess of $35,000 per
annum, or any loan or indirect benefit to any employee or consultant;
(c) material addition to or material modification of the employee
benefit plans, arrangements or practices as may be described in Section 9.19 (if
any) other than (i) contributions made in accordance with the normal practices
of either Company or (ii) the extension of coverage to other employees who
became eligible after the Balance Sheet Date;
(d) sale, assignment or transfer of any of the Assets of either
Company (other than in the ordinary course of business), that is material in the
aggregate to either Company;
23
(e) cancellation of any indebtedness or waiver of any rights by
either Company, whether or not in the ordinary course of business, that is
material in the aggregate to either Company;
(f) amendment, cancellation or termination of any contract, license
or other instrument that is material in the aggregate to either Company;
(g) capital expenditures or execution of any lease or incurrence of
liability therefor by either Company involving payments in excess of an
aggregate of $50,000;
(h) change in accounting methods or practices by either Company
affecting its assets, liabilities or business;
(i) revaluation by either Company of any of its Assets, including
without limitation writing off of notes or accounts receivable, except for
revaluations in the ordinary course of business consistent with normal practices
or revaluations that would not, in the aggregate, have a material adverse effect
on the financial condition of either Company;
(j) mortgage, pledge or other encumbrance of any Assets of the
Company, other than the June Loan, the September Increase or the October
Increases;
(k) declaration, setting aside or payment of dividends or
distributions in respect of any capital stock of either Company or any
redemption, purchase or other acquisition of any of the equity securities of
either Company;
24
(l) except as expressly provided for in this Agreement, issuance by
either Company of, or commitment of either Company to issue, any shares of stock
or other equity securities or obligations or securities convertible into or
exchangeable for shares of stock or other equity securities or obligations of
either Company;
(m) guarantee or the incurrence of any liability for the payment or
performance of any obligations or liabilities of any other Person, by either
Company; or
(n) agreement or commitment by either Company to do any of the
foregoing.
9.6 Title to Owned Assets. Except as shown in the consolidated Financial
Statements of the Companies as at December 31, 2001 constituting Schedule 9.11A
hereto and the internally prepared consolidated financial statements of the
Companies as at September 30, 2002 constituting Schedule 9.11B hereto, the
Companies have good and marketable title to the Assets reflected on the Interim
Balance Sheet or acquired in the ordinary course of business since September 30,
2002 (except assets sold or otherwise disposed of in the ordinary course of
business since that date) and the Assets are not subject to any Encumbrances,
except for statutory liens arising or incurred in the ordinary course of
business with respect to which the underlying obligations are not delinquent, or
25
such Encumbrances which did not, in the aggregate, materially impair the use of
the assets subject thereto in the ordinary course of business of the Companies
or Encumbrances which will be discharged by the Companies at or prior to the
Closing. Set forth on Schedule 9.6 hereto is a list of all of the Companies'
Products, identified by serial number; to the extent any such Product is under
lease to a third party, such Schedule shows the identity of the third party, a
description of the agreement pursuant to which the third party leases the
Product and the location at which each such Product is located; and to the
extent any such Product has been sold, such Schedule shows the identity of the
purchaser thereof, a description of the revenues which the Companies continue to
receive for servicing and providing disinfectant and other supplies, and the
location at which each such Product is located.
9.7 Title to Leased Assets. Except as shown in the Financial Statements
shown as Schedules 9.11A hereto and 9.11B, the Companies have good and valid
leasehold interests in all properties (real and personal) held under lease, none
of which are subject to any Encumbrances, other than statutory liens arising or
incurred in the ordinary course of business with respect to which the underlying
obligations are not delinquent, or Encumbrances which would not in the aggregate
materially impair the use of the leasehold interest subject thereto in the
ordinary conduct of the business of the Companies, or Encumbrances which will be
discharged by the Companies at or prior to the Closing, and neither Company is
in breach under any of such leasehold interests other than breaches which would
not, in the aggregate, have a material adverse effect upon the financial
condition of the Companies.
9.8 Material Contracts, Commitments and Licenses. Except as set forth on
Schedule 9.8 hereto, neither Company is a party to, nor are the Assets bound by,
any:
(a) commitment, contract, note, loan, evidence of indebtedness,
purchase order or letter of credit involving any obligation or liability on the
part of either Company of more than $50,000 and not cancelable (without
liability) within thirty (30) days;
26
(b) lease of any real property (Schedule 9.8 hereto indicates with
respect to each such lease the term, annual base rent, additional rent,
escalations, renewal options and number of square feet leased);
(c) lease of personal property involving any annual expense in excess
of $100,000 and not cancelable (without liability) within thirty (30) days
(Schedule 9.8 hereto indicates with respect to each such lease a general
description of the leased items, term, annual base rent, additional rent,
escalations and renewal options);
(d) material governmental or regulatory licenses or permits required to
conduct the business of either Company as presently conducted;
(e) contract, agreement or commitment containing covenants limiting the
freedom of either Company to engage in any line of business or compete with any
person;
(f) license, franchise, distributorship or other agreement;
(g) contract, agreement or commitment with or to any stockholder,
director, officer, employee, consultant or agent; or
(h) contract, agreement or commitment not otherwise listed in Schedule
9.8 hereto materially affecting the financial condition of either Company.
All the contracts and other instruments, obligations, evidences of
indebtedness or other commitment of either Company listed on Schedule 9.8 hereto
are valid and binding obligations enforceable in accordance with their
27
respective terms. Except as set forth in Schedule 9.8 hereto, neither Company is
in breach or violation of, nor is there any default on the part of either
Company under, any of the contracts or other instruments, obligations, evidences
of indebtedness or commitments described in (a) - (h) above, which breach or
default will have a material adverse effect on the financial condition of either
Company.
The Companies have delivered to Purchaser true and complete copies of
all the contracts and other instruments, obligations, evidences of indebtedness
or other commitments of either Company listed on Schedule 9.8 hereto, together
with accurate copies of each form used in the business of that Company and which
is in effect with respect to any third party on the date hereof.
9.9 No Conflict or Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
cause or result in:
(a) a violation of or a conflict with any provision of the Certificate
of Incorporation or Bylaws of MCM USA or the Articles of Association of MCM
Israel;
(b) a breach of, or a default under, any term or provision of any
contract, commitment or license to which either Company is a party or by which
any of the Assets are bound, which breach or default would have a material
adverse effect on the financial condition of either Company;
(c) a violation by either Company of any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or award, which
violation would have a material adverse effect on the financial condition of
either Company;
28
(d) an imposition of any Encumbrance on any of the Assets which
Encumbrance would have a material adverse effect on the financial condition of
either Company;
(e) a loss of any interest in or benefit of any asset, license or other
right or privilege by either Company; or
(f) any indebtedness to become due prior to its stated maturity or any
option or right of pre-emption to become exercisable.
9.10 Consents and Approvals. Except as set forth on Schedule 9.10 hereto,
no consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority, or any other Person whatsoever,
is required to be made or obtained by the Company in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby.
9.11 Financial Statements. Schedules 9.11A and 9.11B hereto show the
Financial Statements as described in Section 9.6, all of which have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved. The Financial Statements
fairly present the consolidated financial position, assets, and liabilities
(whether accrued, absolute, contingent or otherwise) of the Companies at the
dates indicated, and such statements of income, cash flow and changes in
shareholders equity fairly present the results of operations, cash flow and
changes in shareholders equity of the Companies for the periods indicated.
9.12 Litigation. Except as set forth on Schedule 9.12 hereto, there is no
action, order, writ, injunction, judgment or decree outstanding or claim, suit,
29
litigation, arbitration, proceeding, or investigation (collectively, "Actions")
pending, or to the knowledge of the Companies threatened against either Company.
Since the Balance Sheet Date, neither Company has entered into any agreement to
settle or compromise any Actions pending or threatened against it. Neither
Company is in default with respect to any judgment, order, writ, injunction or
decree of any court or governmental agency.
9.13 Labor Matters. Except as set forth on Schedule 9.13 hereto:
(a) (i) neither Company is a party to any labor agreement with any
labor organization, group or association;
(ii) there is no unfair labor practice, charge or complaint
against either Company pending before any governmental agency arising out of the
activities of either Company;
(iii) there is no labor strike or labor disturbance pending
against either Company which would materially adversely affect the financial
condition of either Company;
(iv) each Company is in compliance in all material respects with
all federal, state and local laws respecting employment and employment
practices, terms and conditions of employment and wages and hours;
(v) neither Company is engaged in any unfair labor practice; and
30
(vi) no labor union is, to the knowledge of the Companies, now
seeking to represent the employees of either Company nor has any labor union
sought such representation in the last two (2) years.
(b) No grievance arbitration proceeding is pending, and to the
knowledge of the Companies no claim therefor has been asserted, and there are no
pending actions, suits, claims, arbitrations, either administrative or judicial,
against either Company involving actual or alleged discrimination.
(c) Schedule 9.13 hereto also sets forth the names and current annual
salary rates or current hourly wages of all present employees of each Company,
together with the date of commencement of employment of each employee with each
Company or its predecessor, each such person's title, and each such person's
bonus and other compensation, if any, paid or payable during the period from the
Balance Sheet Date to the date hereof. Schedule 9.13 hereto also sets forth the
names and current salaries of employees and unions with whom either Company is
currently in negotiations, together with the status of such negotiations.
(d) Except as set forth in Schedule 9.13(d) hereto, no employees of
either Company are subject to any contract, agreement or commitment which would
be binding upon either Company from and after the Closing Date.
(e) No agreement between either Company and any of its employees
contains any provision to the effect that any such agreement may be deemed
terminated in the event of a change in control of either Company.
31
9.14 No Undisclosed Liabilities. The Companies have no liabilities or
obligations (absolute, accrued, contingent or otherwise) except (i) liabilities
which are reflected and reserved against on the Financial Statements, (ii)
liabilities incurred in the ordinary course of business and consistent with past
practice since the Balance Sheet Date, (iii) liabilities disclosed in Schedule
9.14 hereto, and (iv) such liabilities which would not, in the aggregate, have a
material adverse effect on the financial condition of either Company.
9.15 Compliance with Law. Except as set forth in Schedule 9.15 hereto, each
Company is in substantial compliance with all applicable laws, statutes,
ordinances, orders and regulations, whether federal, state, local or foreign,
and neither Company has received notice claiming any asserted past or present
failure to comply with any applicable laws, statutes, ordinances, orders and
regulations, whether federal, state, local or foreign.
9.16 No Brokers. Except as set forth in Schedule 9.16 hereto, neither
Company has entered into or will enter into any contract, agreement, arrangement
or understanding with any person or entity which will result in the obligation
of Purchaser or either Company to pay any finder's fee, brokerage commission or
similar payment in connection with the transactions contemplated hereby.
9.17 No Other Agreements to Sell Assets or Companies. Neither Company has
any legal obligation, absolute or contingent, to any other Person to do any of
the following: sell any of the Assets, sell any capital stock of either Company,
or effect any merger, consolidation or other reorganization of either Company,
or enter into any agreement with respect thereto.
32
9.18 Proprietary Rights.
------------------
(a) Schedule 9.18 hereto sets forth a true and complete list of all
trademarks, service marks, trade names and other trade rights, trademark and
service xxxx registrations and applications, patents, patent applications,
copyrights, copyright registrations and applications, trade secrets, know how,
grants of a license to either Company with respect to any of the foregoing, both
domestic and foreign, both registered and not registered, and both owned or
claimed by either Company, or used or proposed to be used by either Company in
the conduct of its business, if any (collectively, "Proprietary Rights"). If
applicable, Schedule 9.18 hereto also sets forth, as to any such Proprietary
Right, the date of registration or application thereof, the remaining duration
thereof, and the territory or jurisdiction covered thereby.
(b) Except for Proprietary Rights which are subject to agreements
listed on Schedule 9.18 hereto, either or both of the Companies owns and has the
unrestricted right to use the Proprietary Rights, free and clear of any and all
Encumbrances; it being agreed that, for purposes of this Agreement, the term
"Proprietary Rights" shall also include each and every trade secret, know-how,
process, discovery, design, development, technique, invention, confidential data
and other information required for or incident to the design, development,
manufacture, operation, sale and use of all products and services sold or
rendered by either Company. The Proprietary Rights comprise all of the
intellectual property or proprietary rights required for or incident to the
design, development, manufacture, operation, sale and use of all products and
services sold or rendered by either Company.
(c) Except for Proprietary Rights which are subject to agreements
listed on Schedule 9.18 hereto, no Person has a right to receive or has claimed
33
a right to receive a royalty or similar payment in respect of any Proprietary
Right pursuant to any contractual arrangement entered into by either Company,
and no Person otherwise has a right to receive or has claimed a right to receive
a royalty or similar payment in respect of any such Proprietary Rights. Either
Company's use of the Proprietary Rights or other intellectual property rights is
not infringing upon or otherwise violating the rights of any third party in or
to such Proprietary Rights. No proceedings have been instituted against, or
notices received by, either Company alleging, nor do the Companies know of any
basis for any allegation, that either Company's use of its Proprietary Rights
infringes upon or otherwise violates any rights of a third party in or to such
Proprietary Rights.
(d) Except as otherwise set forth on Schedule 9.18 hereto, the
Proprietary Rights described in Section 9.18 have been duly registered with,
filed in or issued by, as the case may be, the United States Patent and
Trademark Office, United States Copyright Office or such other appropriate
filing offices, domestic or foreign; and all such registrations, filings,
issuances and other actions (if any) are valid and remain in full force and
effect.
(e) Except as disclosed in Schedule 9.18(e) hereto, the Companies have
not licensed any Proprietary Rights from third parties (not including off the
shelf software licensed from third parties and not to be incorporated in
intellectual property distributed by the Companies).
(f) Except as disclosed in Schedule 9.18(f) hereto, the Companies have
not granted any license of any Proprietary Rights to third parties.
34
(g) The Companies own or have the right to use all of the Proprietary
Rights required for their business as currently conducted or as contemplated to
be conducted in their business plan.
(h) The Companies will be able to obtain or acquire rights to use all
of the Proprietary Rights required for the future conduct of the business as
contemplated to be conducted in the Companies' business plan.
(i) There is not any Proprietary Right required for the Companies'
business as currently conducted or as contemplated to be conducted in the
Companies' business plan, the use of which by the Companies require or would
require the payment of a royalty to a third party.
(j) It is not and will not be necessary to use any inventions of any
employees (or Persons that the Companies currently intend to engage) made prior
to their employment or engagement by the Companies.
9.19 Employee Benefit Plans.
----------------------
(a) MCM USA has not adopted, is not otherwise a party to, and is not
otherwise subject to (by virtue of any law, rule or regulation of any
Governmental Agency, or otherwise), any Benefit Arrangement, and has no past,
present or future liability or obligation with respect to any of same.
(b) MCM Israel has not adopted, is not otherwise a party to, and is not
otherwise subject to (by virtue of any law, rule or regulation of any
35
Governmental Agency, or otherwise), any Benefit Arrangement, and has no past,
present or future liability or obligation with respect to any of same.
9.20 Transactions with Certain Persons and Affiliates. Except as set forth
on Schedule 9.20 hereto, no officer, director or employee of either Company, or
any member of any such person's immediate family, is presently a party to any
transaction with either Company, including without limitation any contract,
agreement or other arrangement providing for furnishing of services by,
providing for the rental of real or personal property from, or otherwise
requiring payments to any such Person in which any such Person owns more than 5%
of the outstanding ownership interests, or is an officer, director, manager,
trustee or general partner.
9.21 Tax Representation. Except as set forth on Schedule 9.21 hereto: (A)
each Company has paid in full on a timely basis all Income Taxes and all other
Taxes which that Company has been required to pay for all periods ending on or
before the Closing Date ("Company Periods"), and has duly collected or withheld
all such Income Taxes and all other Taxes which each Company has been required
to collect or withhold for all Company Periods; (B) each Company has timely
filed all tax returns required to be filed by it for all Company Periods,
including all federal, state, local and foreign tax returns and reports; (C) the
tax returns of each Company have not been audited by any federal, state, local
or foreign governmental taxing authority for any Company Period; (D) each
Company has made adequate provision on the Financial Statements, in conformity
with generally accepted accounting principles consistently applied, for the
payment of all Income Taxes and all other Taxes for that and all prior periods;
(E) no deficiencies for taxes have been asserted in writing or assessed against
36
either Company which remain unpaid; (F) there are no audits or examinations
pending of either Company's tax returns nor has either Company received any
notice of an audit or examination, and (G) there have been no waivers of
statutes of limitations by either Company.
Except as set forth on Schedule 9.21 hereto, there are no circumstances
which will or may, whether by lapse of time or the issue of any notice of
assessment or otherwise, give rise to any dispute with any relevant taxation
authority in relation to the Companies' liability or accountability for taxation
under currently enacted statutes and regulations, or any claim made by or any
relief, deduction or allowance afforded to either Company, or in relation to the
status or character of the Companies under or for the purpose of any provision
of any legislation relating to taxation.
9.22 Insurance. Schedule 9.22 hereto contains a complete and accurate list
of all policies or binders of fire, liability, title, worker's compensation and
other forms of insurance (showing as to each policy or binder the carrier,
policy number, coverage limits, expiration dates, annual premiums and a general
description of the type of coverage provided) maintained by each Company on its
business, property or employees. Neither Company is in default in any material
respect under any of such policies or binders. Neither Company has any claim
pending under any such policy, nor has there been any denial of coverage under
any such policy.
9.23 Compliance with Legislation Regulating Environmental Quality. Except
as set forth on Schedule 9.23 hereto:
(a) the Real Property and all other properties owned or used by either
Company during the period of either Company's ownership or use thereof have been
maintained, and all activities of each Company have been conducted, in
substantial compliance with all federal, state and local environmental laws,
37
licenses and regulations of any applicable jurisdiction (including Israel and
within the United States), and without liability in respect thereof
("Environmental Liabilities");
(b) neither Company has received notification from any federal, state
or local governmental authority of any applicable jurisdiction (including Israel
and within the United States) with respect to current, existing violations of
any of the laws enumerated in clause (a) above, or pursuant to any of the
respective implementing regulations to such laws, or of any Environmental
Liabilities.
9.24 Licenses and Permits. Schedule 9.24 hereto sets forth a correct and
complete list of all permits, licenses, orders, certificates or approvals
(collectively, the "Permits") of all governmental authorities presently held by
each Company for the Business. The Permits constitute all Permits which are
required in order to allow each Company to continue to carry on the Business and
use its properties as now conducted. Each Company holds valid Permits to use all
of its properties necessary for the conduct of the Business. Without any other
action required by Purchaser, all of the Permits will continue in accordance
with their terms as valid Permits to allow each Company to operate the Business,
without interruption, through and after the Closing Date, subject to the terms
and conditions set forth therein.
9.25 Bank Accounts. Schedule 9.25 hereto sets forth the name and location
of each bank in which either Company has an account, lock box or safe deposit
and the number of each such account or box and the names of the authorized
signatories thereto.
9.26 Improper and Other Payments. Neither Company nor any party on behalf
of either Company has made, paid or received any bribes, kickbacks or other
38
similar payments to or from any person, whether lawful or unlawful, and no
improper foreign payment has been made by or on behalf of either Company.
9.27 Real Property Representations. In connection with the Real Property,
the Companies make the following representations and warranties to Purchaser
which are and will be true and complete on the Closing Date:
(a) Ownership; Leases. Neither Company owns any Real Property. Set
forth in Schedule 9.27 hereto is a brief description of every lease or agreement
(including, in each case, the annual rental payable, the lessor and the
expiration date) under which the Companies or either of them is lessee of, or
holds or operates, any Real Property owned by a third party. Each of such leases
and agreements is in full force and effect and constitutes a legal, valid and
binding obligation of the respective parties thereto. Neither Company is in
default under any such lease or agreement nor has any event occurred or is
alleged to have occurred which constitutes or with the lapse of time or the
giving of notice or both would constitute a basis for a claim of breach.
(b) No Litigation. No action or proceeding relating to the Real
Property is pending or overtly threatened.
(c) No Violations. No notice of violations of law, ordinances,
regulations, orders or requirements relating to the Real Property have been
received by either Company; and the Companies have no reason to believe that any
such notices will be sent.
(d) Assessment Liens. There is no assessment payable in annual
installments, or any part thereof, which has become a lien on the Real Property.
39
(e) Condemnation. There is no pending or threatened condemnation or
eminent domain proceedings that would affect any portion of the Real Property.
(f) Condition of Premises. There will be no material adverse change in
the physical condition of the Real Property between the date hereof and the
Closing Date. (g) Covenants and Restrictions. Neither Company has received
written notice of any default or breach by either Company under any of the
covenants, conditions, restrictions, rights of way or easements affecting the
Real Property or any portion thereof, no such default or breach now exists, and
no event has occurred and is continuing which with notice and/or the passage of
time would constitute a default thereunder, other than as disclosed on Schedule
9.27(g) hereto.
(h) Mechanic's Liens. No work has been performed or is in progress at,
and no materials have been furnished to, the Real Property or any portion
thereof which would give rise to mechanic's, materialmen's or other liens
against the Real Property or any portion thereof, other than as disclosed on
Schedule 9.27(h) hereto.
(i) Repairs. There are no outstanding requirements or recommendations
by the holder of any existing mortgage, or any insurance company that issued a
policy with respect to the Real Property or any part thereof, or by any Board of
Fire Underwriters or other body exercising similar functions, requiring or
recommending any repairs or work to be done on or to the Real Property or any
part thereof, other than as disclosed on Schedule 9.27(i) hereto.
40
(j) Commitments to Government. Except as disclosed on Schedule 9.27(j)
hereto, no commitments have been or will be made to any governmental authority
or agency, utility company, school board, church, synagogue or other religious
body, or any homeowners or homeowner's association, or to any other
organization, group or individual, relating to the Real Property which would
impose an obligation upon Purchaser or its successors or assigns to make any
contribution or dedication of money or land, or to construct, install or
maintain any improvements of a public or private nature on or off the Real
Property.
(k) Utilities. All water, sewer, gas, electricity, telephone and other
utilities serving the Real Property are supplied directly to the Real Property
by facilities of public utilities. All of such utilities are installed and
operating and all installation and connection charges have been paid in full.
9.28 Conduct of Business Prior to Closing. Since the Balance Sheet Date and
to the Closing Date, the Companies have:
9.28.1 Conduct in Ordinary Course. Conducted the Business only in the
ordinary course thereof, including without limitation keeping in full force and
effect the full coverage of all insurance policies of the Companies in force as
set forth in Schedule 9.22 hereto, and refrained from any transaction which was
not in the ordinary course and consistent in both nature and scope with prior
practice.
9.28.2 Inventories. Maintained levels of Inventories to carry on the
Business in the ordinary course consistent with past practice.
41
9.28.3 Services; Relationships. Kept available (except as otherwise
expressly provided herein) the services of employees and agents of the
Companies, and maintained relationships and goodwill with its suppliers,
customers, distributors and others having business relations with the Companies;
with respect to key employees, other than Xxxx Xxxx, no key employee of either
Company has been dismissed or has terminated or given notice of termination of
his/her employment with either Company.
9.28.4 Notifications to Purchaser. Notified Purchaser, in writing, in
this Agreement or otherwise, of all notices from, proceedings before, or order
of, any judicial authority or any Governmental Entity or any other lawful
authority alleging any violation of or non-compliance with any applicable law,
rule or regulation, or requiring either Company to take any action or refrain
from taking any action respecting any applicable law, rule or regulation in any
applicable jurisdiction.
9.29 Obligations to Employees. There are no agreements or arrangements for
the payment of any pensions, allowances, lump sums or other like benefits on
retirement or on death or termination of employment or during periods of
sickness or disablement for the benefit of any employee or former employee or
consultant of the Companies or for the benefit of the dependents of any such
Person in operation at the date hereof except as disclosed in relevant Schedules
attached to this Agreement. The Companies have fulfilled all their obligations
under applicable law to all of their employees.
9.30 Compliance with Employment Requirements. The Companies have complied
with all legislative or other official provisions relating to employees and
their terms and conditions of employment and has made all deductions and
42
payments required to be made by Israeli and United States federal, state, local
or other applicable law (including without limitation to the Israeli Tax
Authorities and National Insurance).
9.31 Representations. This Agreement and the Exhibits and Schedules hereto
do not contain any untrue statements of material fact with respect to either
Company, or omit to state a material fact necessary to make the statements
contained herein and therein not misleading. All of the Exhibits and Schedules
hereto applicable to either or both of the Companies are deemed to be a part of
the joint and several representations and warranties by the Companies herein.
Article X
Representations and Warranties of Purchaser
-------------------------------------------
Purchaser hereby represents and warrants to the Companies as follows:
10.1 Organization of Purchaser. Purchaser is duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to conduct its business as it is
presently being conducted and to own and lease its properties and assets.
10.2 Authorization. Purchaser has all necessary corporate power and
authority to enter into this Agreement and has taken all corporate action
necessary to authorize same and to consummate the transactions contemplated
hereby and to perform its obligations hereunder. This Agreement has been duly
executed and delivered by Purchaser and is a legal, valid and binding obligation
of Purchaser enforceable against Purchaser in accordance with its terms, except
43
that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
10.3 No Conflict or Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
result in:
(a) a violation of or a conflict with any provision of the Certificate
of Incorporation or Bylaws of Purchaser;
(b) a breach of, or a default under, any term or provision of any
contract, commitment or license to which Purchaser is a party or by which its
assets are bound, which breach or default would have a material adverse affect
on Purchaser's ability to consummate the transactions contemplated hereby; or
(c) a violation by Purchaser of any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or award, which
violation would have a material adverse effect on Purchaser's ability to
consummate the transactions contemplated hereby.
10.4 Consents and Approvals. Except as set forth on Schedule 10.4 hereto,
no consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority, or any other person or entity,
is required to be made or obtained by Purchaser in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby.
44
10.5 No Brokers. Except with respect to Purchaser's arrangement with Seneca
Partners, L.L.C., neither Purchaser nor any affiliate of Purchaser has entered
into or will enter into any contract, agreement, arrangement or understanding
with any person or entity which will result in the obligation of the Companies
to pay any finder's fee, brokerage commission or similar payment in connection
with the transactions contemplated hereby.
Article XI
Survival of Representations and Warranties
------------------------------------------
All representations and warranties contained herein and in any Schedule,
Exhibit, certificate or other document delivered in connection with the
transactions contemplated hereby shall survive the Closing for a period equal to
(a) eighteen (18) months following the Closing or (b) with respect to any matter
made known to an Indemnified Party during the eighteenth month following the
Closing, nineteen (19) months following the Closing. If a Party gives notice
with respect to a claim for Losses prior to the expiration of such applicable
time period, the indemnifications provided in this Agreement with respect to
such claim shall survive such time period for the purpose of remedy and
collection if it is subsequently determined that such alleged breach giving rise
to a claim for Losses in fact occurred or existed within such applicable time
period.
Article XII
Post-Closing Covenants and Indemnification
------------------------------------------
12.1 Books and Records. The Companies and Purchaser agree that each Party
at its expense shall have the right to inspect and to make copies of any Books
and Records of the Companies, to the extent that they pertain to the operations
45
of the Companies prior to the Closing Date, at any time during business hours
for any proper purpose for a period of at least five (5) years from the Closing
Date, except as such period may be extended by other provisions of this
Agreement. The Companies and Purchaser agree not to destroy or dispose of any
such Books and Records and files without giving the other Party a reasonable
opportunity to remove such documents at such other Party's expense.
12.2 Further Assurances. On and after the Closing Date, the Companies and
Purchaser shall take all appropriate action and execute all documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof.
12.3 Deleted.
12.4 Indemnification.
---------------
(a) General Indemnification Obligation of Indemnitors. From and after
the Closing Date, the Companies and the Responsible Stockholders (collectively,
"Indemnitors"), jointly and severally, shall reimburse, defend, indemnify and
hold harmless Purchaser and the Companies, and the officers, directors,
shareholders, affiliates, successors and permitted assigns of Purchaser (each an
"Indemnified Purchaser Party") against and in respect of:
(i) any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified Purchaser Party that result
from, or arise out of:
46
(A) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of either or both of the
Companies under this Agreement, or from any misrepresentation in or omission
from any certificate, schedule, statement, document or instrument furnished by
the Companies to Purchaser pursuant to this Agreement;
(B) any and all liabilities and obligations of either or both
of the Companies which accrued prior to the Closing Date and which are not
disclosed to Purchaser pursuant to this Agreement;
(C) any and all liabilities and obligations of either Company
which accrued prior to the Closing Date, even if disclosed on the Balance Sheet
or otherwise in this Agreement or in the Schedules hereto, but only to the
extent exceeding the amount accrued or reserved therefor on the Balance Sheet or
exceeding the amount thereof disclosed and attributed thereto in the Schedules
hereto; and
(D) any and all liabilities and obligations of the Companies
and/or Purchaser and/or any officer, director or agent of Purchaser, arising out
of any claim or controversy in respect of this Agreement or any negotiations in
connection herewith or the transactions provided for hereunder which relate to
or arise out of the matters described in the Complaint filed in that certain
civil action in Broward County, Florida entitled BDC Corp. d/b/a BDC Consulting
Corp. vs. Caprius, Inc. and Xxxxxx Xxxxx, including any amendment(s) thereto and
any other suits, actions or proceedings based in whole or in part on such
matters.
47
(ii) any and all actions, suits, claims, proceedings, demands,
fines, judgments, costs and other expenses (including without limitation
reasonable legal fees and expenses) incident to any of the foregoing or to the
enforcement of this Section 12.4(a).
Any and all such damages, losses, deficiencies, actions, suits, claims,
proceedings, demands, fines, judgments, costs and other expenses (including
without limitation reasonable legal fees and expenses) are referred to herein as
"Losses". As used herein, "Responsible Stockholders" means all of the Existing
Stockholders of MCM USA other than Trefoil Tech Investors, L.P. [Shamrock], as
more particularly shown on Schedule 12.4(a) hereto.
(b) General Indemnification Obligation of Purchaser. From and after the
Closing, Purchaser shall reimburse, defend, indemnify and hold harmless the
Companies and the Responsible Stockholders and their successors and permitted
assigns (each an "Indemnified Company Party") against and in respect of:
(i) any and all Losses incurred or suffered by any Indemnified
Company Party that result from or arise out of any misrepresentation, breach of
warranty or nonfulfillment of any agreement or covenant on the part of Purchaser
under this Agreement, or from any misrepresentation in or omission from any
certificate, schedule, statement, document or instrument furnished by Purchaser
to the Companies pursuant to this Agreement; and
(ii) any and all actions, suits, claims, proceedings, demands,
fines, judgments, costs and other expenses (including without limitation
reasonable legal fees and expenses) incident to any of the foregoing or to the
enforcement of this Section 12.4(b).
48
(c) Method of Asserting Claims by Purchaser. In the event that any
claim or demand for which any one or more of Indemnitors would be liable to an
Indemnified Purchaser Party hereunder is asserted against or sought to be
collected from an Indemnified Purchaser Party by a third party, the Indemnified
Purchaser Party shall promptly notify Indemnitors of such claim or demand,
specifying the nature of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim and demand) (the "Claim Notice").
Indemnitors agree that a delay in the Indemnified Purchaser Party's providing
such Claim Notice shall not affect Indemnitors' indemnification obligations
hereunder, unless and except to the extent that such delay causes material
prejudice to Indemnitors. Indemnitors shall have fifteen (15) Business Days from
the giving of the Claim Notice hereunder (the "Notice Period") to notify the
Indemnified Purchaser Party, (A) whether or not they dispute their liability to
the Indemnified Purchaser Party hereunder with respect to such claim or demand,
(B) notwithstanding any such dispute, whether or not such Indemnified Purchaser
Party should defend itself against such claim or demand, and be reimbursed for
reasonable expenses incurred in such defense by Indemnitors or (C)
notwithstanding any such dispute, whether or not, at their option, they intend,
at their sole cost and expense, to defend the Indemnified Purchaser Party
against any portion of such claim or demand.
(i) If Indemnitors dispute their liability with respect to such
claim or demand or the amount thereof (whether or not Indemnitors intend to
defend the Indemnified Purchaser Party against such claim or demand as provided
in paragraphs (ii) and (iii) below), such dispute shall be resolved between the
Parties or by judicial proceeding.
49
(ii) In the event that Indemnitors notify the Indemnified
Purchaser Party within the Notice Period that the Indemnified Purchaser Party
should defend itself against such claim or demand, then the Indemnified
Purchaser Party shall have the right and obligation to defend itself by
appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by them to a final conclusion in a reasonable manner in which the
Indemnified Purchaser Party adequately defends itself without exposing the
Indemnitors to unreasonable or unnecessary liability or excessive or
unreasonable cost; provided, however, that the Indemnified Purchaser Party shall
not, without the prior written consent of Indemnitors, (A) enter into any
settlement or compromise of any claim or demand for other than monetary damages
which does not include, as an unconditional term thereof, the giving by the
claimant or plaintiff to Indemnitors a release, in form and substance reasonably
satisfactory to Indemnitors, from all further liability in respect of such claim
or litigation. The amount of any such claim or demand, or the portion thereof as
to which a defense of the Indemnified Purchaser Party is unsuccessful, in each
case shall be conclusively deemed to be a liability of Indemnitors hereunder
(unless Indemnitors shall have disputed their liability to the Indemnified
Purchaser Party hereunder as provided in paragraph (i) above, in which event
such dispute shall be resolved between the Parties or by judicial proceeding);
(iii) In the event that Indemnitors notify the Indemnified
Purchaser Party within the Notice Period that they intend to defend the
Indemnified Purchaser Party against a portion or all of such claim or demand,
then Indemnitors shall have the right to defend the Indemnified Purchaser Party,
50
to the extent stated in such notification (it being understood that any portion
of the claim or demand not defended by Indemnitors shall be the obligation of
the Indemnified Purchaser Party pursuant to Section 12.4(c)(ii) above), by
appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by them to a final conclusion in such a manner as to avoid any risk
of the Indemnified Purchaser Party becoming subject to liability for any other
matter; provided, however, that Indemnitors shall not, without the prior written
consent of the Indemnified Purchaser Party, (A) consent to the entry of any
judgment against the Indemnified Purchaser Party, (B) enter into any settlement
or compromise of any claim or demand for other than monetary damages, or (C)
enter into any settlement or compromise of any claim or demand for monetary
damages which does not include, as an unconditional term thereof, the giving by
the claimant or plaintiff to the Indemnified Purchaser Party of a release, in
form and substance reasonably satisfactory to the Indemnified Purchaser Party,
from all liability in respect of such claim or litigation. If any Indemnified
Purchaser Party desires to participate in any such defense or settlement, it may
do so at its sole cost and expense, but the Indemnifying Party shall have the
sole right to control such defense or settlement.
(iv) In the event an Indemnified Purchaser Party should have a
claim against Indemnitors that does not involve a claim or demand being asserted
against or sought to be collected from it by a third party, the Indemnified
Purchaser Party shall promptly send a Claim Notice with respect to such claim to
Indemnitors. If such claim or demand relates to any dispute respecting the
Companies' financial statements, such claim or demand shall be made within
ninety (90) days following Purchaser's receipt of such financial statements. If
Indemnitors dispute their liability with respect to such claim or demand, such
dispute shall be resolved between the Parties or by judicial proceeding; if
Indemnitors do not notify the Indemnified Purchaser Party within the Notice
Period that they dispute such claim, the amount of such claim shall be
conclusively deemed a liability of Indemnitors hereunder.
51
(d) Method of Asserting Claims by Indemnitors. In the event that any
claim or demand for which Purchaser would be liable to an Indemnified Company
Party hereunder is asserted against or sought to be collected from an
Indemnified Company Party by a third party, the Indemnified Company Party shall
promptly notify Purchaser of such claim or demand, specifying the nature of such
claim or demand and the amount or the estimated amount thereof to the extent
then feasible (which estimate shall not be conclusive of the final amount of
such claim and demand) (the "Claim Notice"). Purchaser agrees that a delay in
the Indemnified Company Party's providing such Claim Notice shall not affect
Purchaser's indemnification obligations hereunder, unless and except to the
extent that such delay causes material prejudice to Purchaser. Purchaser shall
have fifteen (15) Business Days from the giving of the Claim Notice hereunder
(the "Notice Period") to notify the Indemnified Company Party, (A) whether or
not it disputes its liability hereunder to the Indemnified Company Party with
respect to such claim or demand, and (B) notwithstanding any such dispute,
whether or not it intends, at its sole cost and expense, to defend the
Indemnified Company Party against such claim or demand.
(i) If Purchaser disputes its liability with respect to such claim
or demand or the amount thereof (whether or not Purchaser intends to defend the
Indemnified Company Party against such claim or demand as provided in paragraphs
(ii) and (iii) below), such dispute shall be resolved between the Parties or by
judicial proceeding.
(ii) In the event that Purchaser notifies the Indemnified Company
Party within the Notice Period that it intends to defend the Indemnified Company
Party against such claim or demand, then Purchaser shall have the right to
defend the Indemnified Company Party by appropriate proceedings, which
proceedings shall be promptly settled or prosecuted by it to a final conclusion
52
in such a manner as to avoid any risk of the Indemnified Company Party becoming
subject to liability for any other matter; provided, however, that Purchaser
shall not, without the prior written consent of the Indemnified Company Party,
(A) consent to the entry of any judgment against the Indemnified Company Party,
(B) enter into any settlement or compromise of any claim or demand for other
than monetary damages, or (C) enter into any settlement or compromise of any
claim or demand for monetary damages which does not include, as an unconditional
term thereof, the giving by the claimant or plaintiff to the Indemnified Company
Party of a release, in form and substance reasonably satisfactory to the
Indemnified Company Party, from all liability in respect of such claim or
litigation. If any Indemnified Company Party desires to participate in any such
defense or settlement, it may do so at its sole cost and expense, but the
Indemnifying Party shall have the sole right to control such defense or
settlement.
(iii) If Purchaser elects not to defend the Indemnified Company
Party against such claim or demand, whether by not giving the Indemnified
Company Party timely notice as provided above or otherwise, then the amount of
any such claim or demand, or if the same be defended by Purchaser or by the
Indemnified Company Party (but the Indemnified Company Party shall not have any
obligation to defend any such claim or demand), then that portion thereof as to
which such defense is unsuccessful, in each case shall be conclusively deemed to
be a liability of Purchaser hereunder, unless Purchaser shall have disputed its
liability to the Indemnified Company Party hereunder as provided in paragraph
(i) above, in which event such dispute shall be resolved between the Parties or
by judicial proceeding.
53
(iv) In the event an Indemnified Company Party should have a claim
against Purchaser that does not involve a claim or demand being asserted against
or sought to be collected from it by a third party, the Indemnified Company
Party shall promptly send a Claim Notice with respect to such claim to
Purchaser. If Purchaser disputes its liability with respect to such claim or
demand, such dispute shall be resolved between the Parties or by judicial
proceeding; if Purchaser does not notify the Indemnified Company Party within
the Notice Period that it disputes such claim, the amount of such claim shall be
conclusively deemed a liability of Purchaser hereunder.
(e) Payment. Upon any determination of liability under Section 12.4(c)
or 12.4(d) hereof, as the case may be, or otherwise between the Parties or by
judicial proceeding, the appropriate Party shall pay the amount of such
determined liability to the other within ten (10) Business Days after such
determination. Upon the payment or satisfaction in full of any claim, the
Indemnifying Party shall be subrogated to the rights of the indemnified Party
against any person, firm or corporation with respect to the subject matter of
such claim.
(f) Limitations on Indemnification. Anything to the contrary
notwithstanding:
(1) Except as provided in (2) immediately below:
(A) Any payment owed by the Responsible Stockholders
hereunder shall be made solely in the form of Indemnitor Stock (and the only
recourse therefor which Purchaser has against the Responsible Stockholders is to
the Indemnitor Stock, except to the extent a Responsible Stockholder may elect
54
to pay cash as provided herein), paid by the Responsible Stockholders based upon
their percentage interest (on a fully diluted basis) in MCM USA. For this
purpose, such Indemnitor Stock shall be valued at what Purchaser pays for the
Series A Preferred Stock under this Agreement ($72.31 per share).
(B) The Responsible Stockholders shall not have an obligation
to make any payment under this (1) in cash or in any other form other than in
Indemnitor Stock; provided, however, the Responsible Stockholders shall each
have the option to make any portion of such payment in cash. As used herein,
"Indemnitor Stock" means all the capital stock of MCM USA and any capital stock
equivalents (including without limitation all MCM USA options, warrants,
debentures, notes and commitments to deliver options, into shares of capital
stock of MCM USA) owned (legally or beneficially) by the Responsible
Stockholders.
(2)
(A) Reference is made to the Existing Stockholders Put Option
provided for in Section 8 of the Stockholders Agreement ("Put") and the
Corporation's Call Option provided for in Section 9 of the Stockholders
Agreement ("Call").
(B) In the event the Put or the Call is duly exercised, but a
Claim Notice is sent by Purchaser pursuant to Section 12.4(c) hereof (either
before or after the exercise of the Put or the Call), then the "Final Amount" to
be paid on consummation of the stock redemption pursuant to the Put or the Call
shall be paid directly to the Escrow Agent (as defined in Section 15.11(b)), and
held by the Escrow Agent pursuant to the terms of the Escrow Agreement shown in
Exhibit 15.11(b) hereto.
(3) The indemnity obligations of Indemnitors and Purchaser are
expressly subject to the limitations on survival set forth in Article XI hereof.
55
(g) Sole Remedy. If the Closing occurs, no Party shall have any
liability to any other Party or any affiliate of any of them arising out of this
Agreement, except pursuant to and in accordance with the terms and conditions of
Sections 12.4(a) through 12.4(g) hereof.
Article XIII
Confidential Information
------------------------
13.1 Confidentiality. Those persons named in Schedule 13.1 ("Key Persons")
hereto acknowledge that in the course of their relationship with the Companies,
including references to the transactions provided for in this Stock Purchase
Agreement, and/or any possible sale of either or both of the Companies to other
persons or entities, they have become familiar with certain Proprietary
Information related to the Companies. Key Persons hereby agree that they will
not disclose such Proprietary Information, directly or indirectly, or through
any corporation or other business entity utilize any such Proprietary
Information for their own benefit, or for the benefit of third parties, unless
they receive prior written authorization from Purchaser with respect thereto;
provided, however, that "Proprietary Information" does not include information
that (a) is or becomes generally available to the public; (b) was available to
Key Persons on a non-confidential basis; (c) becomes available to Key Persons on
a non-confidential basis from a source who is not known to Key Persons after due
inquiry of such source to be bound by a confidentiality agreement with regard to
such information; or (d) is required to be disclosed by law or legal process.
13.2 Remedy in the Event of Breach. The Parties specifically acknowledge
and agree that the remedy at law for any breach of the foregoing provisions of
56
this Article XIII may be inadequate and that Purchaser, in addition to any other
relief available to it, shall be entitled to such temporary and permanent
injunctive relief as a court of competent jurisdiction may determine without the
necessity of posting a bond. In the event that the provisions of this Article
XIII should ever be deemed to exceed any limitation provided by applicable law,
then the Parties agree that such provisions shall be reformed to set forth the
maximum limitations permitted.
Article XIV
Non-Solicitation; Non-Competition
---------------------------------
14.1 Non-Solicitation; Non-Competition. Until the third anniversary of the
Closing Date, each Existing Stockholder, each Key Person, and Purchaser, shall
not, directly or indirectly:
(a) solicit, offer employment to, or employ any Person (A) who is then
employed by either Company (other than one who is also an employee of Purchaser
or any affiliate of Purchaser), or (B) who was so employed but whose employment
terminated (without regard to why), within one year preceding such solicitation,
offer, or employment (other than one who is also an employee of Purchaser or any
affiliate of Purchaser);
(b) solicit, offer services to, or provide services to any customer of
either Company, whether such customer was a customer of either Company prior to
the Closing of the transactions contemplated hereunder; or
(c) own, manage, operate, control or participate in the ownership,
management, operation or control of, any person or entity, whether in corporate,
proprietorship or partnership form or otherwise, as more than a 5% owner of such
57
person or entity if such Person is engaged, directly or indirectly, in any
business anywhere in the world which is competitive with the Business.
14.2 Remedy in the Event of Breach. The Parties specifically acknowledge
and agree that the remedy at law for any breach of the foregoing provisions of
this Article XIV may be inadequate and that Purchaser, in addition to any other
relief available to it, shall be entitled to such temporary and permanent
injunctive relief as a court of competent jurisdiction may determine without the
necessity of posting a bond. In the event that any of the provisions of this
Article XIV should ever be deemed to exceed any limitations provided by
applicable law, then the Parties agree that such provisions shall be reformed to
set forth the maximum limitations permissible by such law.
Article XV
Miscellaneous
-------------
15.1 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by the Companies without the prior written
consent of Purchaser, or by Purchaser without the prior written consent of the
Companies, except that Purchaser may, without such consent, but with prior
notice to the Companies, assign in writing its rights and obligations under this
Agreement to an affiliate of Purchaser; provided, however, that Purchaser shall
continue to be a Party to this Agreement and to be bound by the provisions
hereof. Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the Parties and their respective heirs, legal representatives,
successors and permitted assigns, and no other Person shall have any right,
benefit or obligation hereunder.
58
15.2 Notices. Any notice, request, demand, waiver, consent, approval or
other communication (a "Notice") which is required or permitted hereunder shall
be in writing as referenced below. All Notices may be delivered by telecopier or
similar device, with a true copy thereof sent on the same day by Federal
Express, DHL Courier, or other similar overnight delivery service providing
receipt against delivery, and shall be deemed given or made upon receipt of such
telecopy. All Notices are to be given or made to the Parties at the following
addresses (or to such other address as any Party may designate by a Notice given
in accordance with the provisions of this Section):
If to Purchaser: If to the Existing Stockholders,
--------------- --------------------------------
Responsible Stockholders,
-------------------------
Indemnitors or Key Persons:
--------------------------
Caprius, Inc.
One Xxxxxx Plaza c/o Yotan Trust Ltd.
Xxxx Xxx, Xxx Xxxxxx 00000 Xxxxxx Xxxxx & Co.
Attention: Chief Executive Officer 00 Xxxxxxxx Xx'Xxxxx Xxxxxx
Telefax No.: 000-000-0000 Herzelia, Israel
Telefax No.: 000(0)0-0000000
With a simultaneous With a simultaneous
------------------- -------------------
copy to its counsel: copy to the Escrow Agent:
------------------- ------------------------
Xxxxx Cummis Radin Tischman Xxxxxxx & Xxxxxx Xxxx & Priest LLP
Gross 00 Xxxx 00xx Xxxxxx
Xxx Xxxxxxxxxx Xxxxx Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx, Xxx Xxxxxx 00000 Attention: Xxxxxxx Xxxx, Esq.
Attention: Xxxxxxx X. Xxxxxxxx, Esq. Telefax No: 000-000-0000
Telefax No.: 973-643-6500
After November 15, 2002:
-----------------------
Xxxxxx Xxxx & Priest LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx, Esq.
Telefax No.: 000-000-0000
59
If to the Companies:
--------------------
MCM Environmental Technologies, Inc.
MCM Environmental Technologies, Ltd.
0 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
Telefax No.: 000-000-0000
With a simultaneous copy to
---------------------------
their counsel: After November 15, 2002:
------------- -----------------------
Xxxxxx Xxxx & Priest LLP Xxxxxx Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx, Esq. Attention: Xxxxxxx Xxxx, Esq.
Telefax No.: 000-000-0000 Telefax No.: 000-000-0000
15.3 Choice of Law. This Agreement shall be construed and interpreted, and
the rights of the Parties determined, in accordance with the laws of the State
of New Jersey, except that (i) with respect to matters of law concerning the
internal corporate affairs of MCM USA or MCM Israel, the law of the jurisdiction
under which such corporation is incorporated shall govern; and (ii) in any
jurisdiction where the Proprietary Rights have been registered or filed, the
mandatory laws and regulations of such jurisdiction applicable to such
Proprietary Rights shall govern.
15.4 Consent to Jurisdiction. The Parties hereby consent and submit to the
exclusive personal jurisdiction of the United States District Court for the
District of New Jersey and any New Jersey State court of competent jurisdiction
located in Bergen County, New Jersey for any suit, action or proceeding arising
out of or relating to this Agreement. The Parties further agree that process
will be sufficient and effective if served in accordance with the notice
provisions set forth in Section 15.2 hereof. Provided, that this Section 15.4
shall not apply to Yotan Trust Ltd., as to whom jurisdictional matters will be
determined under the EAA (hereafter defined).
15.5 Entire Agreement; Amendments and Waivers. This Agreement, together
with all Exhibits and Schedules hereto, and any other documents executed
contemporaneously herewith by any of the Parties, constitute the entire
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agreement among the Parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations, warranties,
representations and discussions, whether oral or written, of the Parties, or
their officers or agents. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided herein.
15.6 Counterparts; Delivery. This Agreement may be executed in two or more
counterparts, each of which shall be deemed a duplicate, but all of which
together shall constitute one and the same instrument, even where all Parties
have not signed the same counterpart so long as each Party has signed a
counterpart. The execution of the signature page by a Party and the telecopy
thereof to the adverse Party or its counsel shall constitute valid execution and
delivery of this Agreement by such sending Party.
15.7 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument or document required
hereunder, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or any other such
instrument or document.
15.8 Captions. The captions of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of those provisions, or any other
provision, of this Agreement.
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15.9 Expenses. The Companies shall be liable for, and pay when due, all
costs and expenses incurred by them and by Purchaser (including their respective
legal, accounting and brokerage fees and expenses, and including without
limitation those contemplated under Section 10.5 hereof), in connection with the
negotiation, preparation, execution and performance of this Agreement.
15.10 Confidential Information; Publicity. The Parties acknowledge that the
transaction described herein is of a confidential nature, and agree that the
terms hereof, including the purchase price hereunder, shall be maintained in
confidence. No Party shall issue any press release or, except as required by law
or legal process, make any public statement regarding the transactions
contemplated hereby or the purchase price hereunder without the prior approval
of the other Parties.
15.11 Trust; Escrow.
-------------
(a) On or about March 4, 2001, the Existing Stockholders entered into a
Trust Letter Agreement ("TLA") with Xxxx Xxxxxx Xxxxxxx Trust Ltd. ("Trustee")
pursuant to which certain of their shares of stock in MCM USA were deposited
with and registered in the name of the Trustee. The number of such shares
presently held by the Trustee pursuant to the TLA and the breakdown of that
number of shares among the beneficial owners thereof is set forth on Schedule
15.11(a) hereto. A true copy of the signed TLA is attached as Exhibit 15.11(a)
hereto.
(b) All of the shares of stock in MCM USA to be issued to the Existing
Stockholders pursuant to the conversion of debentures referenced in Sections
62
7.1.11 and 7.1.12 are set forth on Schedule 15.11(b) hereto; such shares will,
as of the Closing hereunder, be delivered to Xxxxxx Xxxx & Priest LLP, as
"Escrow Agent", to be held in escrow pursuant to an Escrow and Administration
Agreement in the form of Exhibit 15.11(b) hereto ("EAA").
(c) The purposes of the escrow arrangements provided for in the EAA
are: (i) to have all shares of stock in MCM USA which are subject to the Put and
Call provisions set forth in Sections 8 and 9 of the Stockholders Agreement
available for delivery on the exercise of either of such Put or such Call, and
(ii) to have all shares of stock of MCM USA owned (legally or beneficially) by
the Responsible Stockholders (and the cash proceeds of the redemption thereof as
referenced in Section 12.4(f)(2)(B)) serve as collateral for the indemnification
obligations of the Responsible Stockholders pursuant to Section 12.4 hereof. It
is agreed that at such time as the TLA is terminated, the Trustee will deliver
the shares of stock subject to the TLA to the Escrow Agent, which shares shall
be reissued in the names of the beneficial owners thereof and delivered directly
to the Escrow Agent to be held in escrow in accordance with the terms and
conditions of the EAA, or, if the Put or the Call has been exercised and the
purchase price pursuant to the Stockholders Agreement (as may be reduced as
provided therein) has been paid to the Trustee, then the Trustee will deliver
the shares of stock subject to the TLA to MCM USA.
(d) In pursuance of the objectives reflected in (c) immediately above,
the Trustee and the Existing Stockholders will provide a Memorandum of Agreement
substantially in the form of Exhibit 15.11(d) hereto, which document, fully
executed, shall be delivered to Caprius and to MCM USA at or before the Closing
hereunder.
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(e) Administrative Agent. At or before the Closing, Yotan Trust Ltd.,
an Israeli company, will enter into the EAA as Administrative Agent thereunder
(the "Administrative Agent"). Notwithstanding any provision to the contrary
contained herein, any notice to be provided to the Indemnitors, Existing
Stockholders, Responsible Stockholders and/or Key Persons, or any of them, shall
be deemed effectively given if provided to the Administrative Agent in
accordance with the provisions of Section 15.2; and all actions taken by the
Administrative Agent for or on behalf of the Indemnitors, Existing Stockholders,
Responsible Stockholders and/or Key Persons hereunder shall be deemed taken by
such Parties. Each of the Companies and Purchaser shall be entitled to rely on
all communications of the Administrative Agent, which communications shall in
all events be in writing, as action taken on behalf, and with the full
authorization, of the Indemnitors, Existing Stockholders, Responsible
Stockholders and/or Key Persons, as applicable. It is further agreed that in the
event of any inconsistency between the obligations of the Escrow Agent or the
Administrative Agent under this Agreement and their respective obligations under
the EAA, the provisions of the EAA shall prevail.
64
IN WITNESS WHEREOF, the Parties have duly executed this Stock Purchase
Agreement as of the date first above written.
M.C.M. Environmental Technologies, Inc. Caprius, Inc.
By:_______________________________ By:_______________________________
Name: Name:
Title: Title:
M.C.M. Environmental Technologies, Inc.
By:_______________________________
Name:
Title:
As to Articles XIII and XIV only: As to Sections 15.2 and 15.11 only:
Key Persons Escrow Agent: Xxxxxx Xxxx & Priest LLP
__________________________________ By:________________________________
Xxxx Xxxxxx Name:
Title:
__________________________________ As to Sections 15.2 and 15.11(e) only:
Xxxx Xxxxxxxx Administrative Agent: Yotan Trust Ltd.
__________________________________ By:________________________________
Xxxx Xxxx Name:
Title:
__________________________________
Gur Shahar
Existing Stockholders:
__________________________________ ___________________________________
Beni Xxxxxxxx Xxxx Addady
Mezam Capital Funds Management Xxxxxxx Xxxxxxxx 0000 Xxxxx Xxxxxxxx
(Xxxxxx) Ltd. Shitufit Ltd., No. 570039081
By:_______________________________ By:________________________________
Name: Name:
Title: Title:
65
M.G. Strategy Development and As to Articles III, VIII and XV only:
Export Development Ltd. Trefoil Tech Investors, L.P.
By:________________________________ By:________________________________
Name: Name:
Title: Title:
66
