Execution Copy
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ASSET PURCHASE AGREEMENT
BETWEEN
CENTRA INDUSTRIES, INC.
AND
TWS INTERNATIONAL, INC.
JANUARY 30, 2003
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of January 30, 2003 (this
"Agreement"), is made and entered into by and between Centra Industries, Inc., a
Delaware corporation (the "Buyer") and TWS International, Inc., a Delaware
corporation (the "Seller"). The Buyer and the Seller are referred to
collectively herein as the "Parties."
WITNESSETH:
WHEREAS, this Agreement contemplates a transaction in which the Buyer
will purchase the business and assets of the Seller as a going concern (and
assume certain liabilities).
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Definitions.
"Acquired Assets" means all right, title, and interest in and to all of
the assets of the Seller, including all of its: (a) tangible personal property
(such as machinery, equipment, inventories of raw materials and supplies,
manufactured and purchased parts, goods in process and finished goods,
furniture, trucks, tractors, trailers, other vehicles (excluding leased
vehicles), tools, jigs, and dies); (b) Intellectual Property, goodwill
associated therewith, licenses and sublicenses granted and obtained with respect
thereto, and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all jurisdictions;
(c) agreements, contracts, Security Interests, guarantees, other similar
arrangements, other than insurance policies, and rights thereunder; (d)
franchises, approvals, permits, licenses, orders, registrations, certificates,
variances, and similar rights obtained from governments and governmental
agencies; (e) books, records, ledgers, files, documents, correspondence, lists,
studies, reports, and other printed or written materials; (f) prepaid expenses;
and (g) all accounts, deposits and prepayments, receivables and Cash relating to
contracts assigned to Buyer and for work not performed prior to the Closing;
provided, however, that the Acquired Assets shall not include and the Seller
shall retain: (i) the corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of the Seller as a corporation;
(ii) any of the rights of the Seller under this Agreement; (iii) Cash earned for
work performed prior to the Closing; (iv) the acknowledgement of indebtedness
agreements issued by TWS do Brasil Ltda. in favor of the Seller in the aggregate
principal amount of 2,164,000 Brazilian Reais (the "TWS Brasil Note"); (v)
accounts, notes and other receivables for work performed prior to the Closing
(but excluding the TWS Brasil Note and subtracting from those amounts the
principal balance of the TWS Brasil Note, if the balance is included in such
amounts); (vi) deposits, other than advances for work not performed prior to the
Closing; (vii) insurance policies, claims or proceeds; (viii) income tax refunds
or claims; (ix) checkbooks, tax returns, or bank accounts; (x) accounts
receivable due from employees; (xi) the name "TWS International, Inc"; and (xii)
all capital stock in subsidiaries and Affiliates owned by the Seller.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Applicable Rate" means the corporate base rate of interest publicly
announced from time to time by Citibank, N.A., plus 3% per annum.
"Assumed Liabilities" means all obligations of the Seller under the
agreements, contracts, leases, licenses, and other arrangements referred to in
the definition of Acquired Assets either (i) to furnish goods, services, and
other non-Cash benefits to another party after the Closing or (ii) to pay for
goods, services, and other non-Cash benefits that another party will furnish to
it after the Closing; provided, however, that the Assumed Liabilities shall not
include any Excluded Liability or any other Liability of the Seller not
specifically included in this definition.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Disclosure Statement" means the disclosure statement attached
as Exhibit A to this Agreement.
"Cash" means cash and cash equivalents (including marketable securities
and short term investments).
"Closing" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Environmental, Health, and Safety Requirement" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as in effect on the Closing
Date.
"Excluded Liabilities" means any Liability or other obligation of the
Seller (i) set forth on the face of the Most Recent Balance Sheet (rather than
in any notes thereto), (ii) which has arisen after the Most Recent Fiscal Month
End, (iii) for costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby, (iv) any Tax or penalties due in respect
of income Tax withholding, FICA or Medicare; (v) owed to TWS do Brasil or any
other Affiliate of Seller, whether or not incurred in the Ordinary Course of
Business, including, without limitation, any loans, interest thereon or any
other amounts payable by Seller to any stockholder or any Affiliate thereof;
(vi) arising out of or in connection with any employee benefit plan, including
unfunded pension obligations or retiree medical benefits; (vii) for workers'
compensation (both long-term and short-term) benefits, whether insured or
self-insured, to the extent accruing or based upon exposure to conditions prior
to the Closing Date or for claims incurred or for disabilities commencing prior
to the Closing Date; (viii) arising out of or in connection with any insurance
policy maintained by Seller; (ix) arising out of or in connection with any
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litigation pending on or prior to the Closing to which Seller is a party; (x)
Taxes owed by the Seller for periods prior to the Closing; (xi) product
liability or environmental claims or actions based on events or transactions
before the Closing; (xii) undisclosed or contingent Liabilities of the Seller,
based on events or transactions before the Closing; (xiii) amounts due as
refunds or adjustments on contracts performed prior to the Closing; (xiv)
deposits or prepayments for work not performed prior to the Closing which are
not transferred to the Buyer; and (xv) any Liability not specifically included
in the definition of "Assumed Liabilities".
"Financial Statements" has the meaning set forth in Section 3(g) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section 9(d) below.
"Indemnifying Party" has the meaning set forth in Section 9(d) below.
"Intellectual Property" means: (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof; (b) all trademarks, service marks, trade
dress, logos, trade names, brands, brand names, and corporate names (but
excluding, as it relates to the Seller, the corporate name "TWS International,
Inc."), together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith; (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith; (d) all mask works and all applications,
registrations, and renewals in connection therewith; (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals); (f) all computer software (including data and related
documentation); (g) all other proprietary rights; and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any Liability for Taxes.
"License Agreement" means the form of license agreement attached as
Exhibit B.
"Major Customers and Suppliers" has the meaning set forth in Section
3(s).
"Material Adverse Effect" means any change, effect, event, occurrence
or state of facts that is or could reasonably be expected to be materially
adverse to the Party or to the properties (including intangible assets),
financial condition or results of operations of the Party or on the ability of
the Party to consummate the transactions contemplated by, or to perform its
obligations under, this Agreement. For purposes of this Agreement, the term
"Material Adverse Effect" shall include any change, effect, event,
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occurrence or state of facts that would or could reasonably be expected to
result in a change of $50,000 or more in the value of the Party or in the annual
operating income of the Party before interest, taxes and amortization.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section
3(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
3(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 3(g)
below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a limited liability
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
"Purchase Price" has the meaning set forth in Section 2(c) below.
"RAKO" means RAKO Capital Corporation, a Nevada corporation.
"Registration Rights Agreement" means the form of agreement attached as
Exhibit C.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preamble above.
"Seller's Disclosure Schedule" means the disclosure schedule attached
as Exhibit D to this Agreement.
"Stockholders Agreement" means the Buyer's Stockholders Agreement, a
copy of which is attached as Exhibit E.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors of the Subsidiary.
"Tax" means any federal, state, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, FICA, Medicare,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added,
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alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9(d) below.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey and deliver to the Buyer, all of the
Acquired Assets at the Closing for the consideration specified below in this
Section 2.
(b) Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to assume and become responsible
for all of the Assumed Liabilities at the Closing. The Buyer will not assume or
have any responsibility, however, with respect to any Excluded Liability or any
other obligation or Liability of the Seller not specifically included within the
definition of Assumed Liabilities.
(c) Purchase Price. Subject to adjustment as provided in Exhibit F,
Buyer agrees to deliver to the Seller at the Closing shares of Buyer's Common
Stock, par value $.00001 per share, calculated according to Exhibit F attached
hereto, but not to exceed four million four hundred sixteen thousand nine
hundred twenty-four (4,416,924) shares (the "Centra Shares") (the "Purchase
Price").
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Reitler Xxxxx LLC,
000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, commencing at 10:00 a.m.
local time on the second business day following the satisfaction or waiver of
all conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the "Closing Date").
(e) Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 6(a) below; (ii) the Buyer will deliver to the Seller the
various certificates, instruments, and documents referred to in Section 6(b)
below; (iii) the Seller will execute, acknowledge (if appropriate), and deliver
to the Buyer assignments (including Intellectual Property transfer documents)
and such other instruments of sale, transfer, conveyance, and assignment as the
Buyer and its counsel reasonably may request; (iv) the Buyer will execute,
acknowledge (if appropriate), and deliver to the Seller an assumption and such
other instruments of assumption as the Seller and its counsel reasonably may
request; and (v) the Buyer will deliver to the Seller the Centra Shares
specified in Section 2(c) above.
(f) Allocation. The Parties agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets for all purposes
(including financial accounting and tax purposes) in accordance with the
allocation schedule attached hereto as Exhibit G. Any adjustment to the Purchase
Price shall be allocated as provided by Temp. Treas. Reg.ss.1.1060-1T(f).
3. Representations and Warranties of the Seller. The Seller represents
and warrants to the Buyer that the statements contained in this Section 3 are
correct and complete as of the date of this
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Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3), except as set forth in the Seller's
Disclosure Schedule.
(a) Organization of the Seller. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Authorization of Transaction. The Seller has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the Board of Directors and the Seller's
stockholders have duly authorized the execution, delivery, and performance of
this Agreement by the Seller. This Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with its terms and
conditions, except as such enforceability may be (i) limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws
affecting the rights and remedies of creditors generally and (ii) subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) Noncontravention. Except as set forth in Section 3(c) of the
Seller's Disclosure Schedule, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or any provision of
the charter or bylaws of any of the Seller and its Subsidiaries or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets), which conflict, breach,
default or acceleration could have a Material Adverse Effect. The Seller does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Section 2
above).
(d) Brokers' Fees. Except as set forth in Section 3(d) of the Seller's
Disclosure Schedule, the Seller has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could become liable or
obligated.
(e) Title to Assets. The Seller has good and marketable title to, or a
valid leasehold interest in, all material properties and assets used by it,
located on its premises, or shown on the Seller's Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Seller's Most Recent Balance Sheet. Without limiting the
generality of the foregoing, the Seller has good and marketable title to all of
the Acquired Assets, free and clear of any Security Interest or restriction on
transfer.
(f) Subsidiaries. Except as set forth in Section 3(f) of the Disclosure
Schedule, the Seller has no Subsidiaries and no direct or indirect equity
participation in any corporation, partnership, trust, or other business
association.
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(g) Financial Statements. Attached hereto as Exhibit H are the
following financial statements (collectively the "Financial Statements"): (i)
unaudited balance sheets and statements of income, and cash flow as of and for
the fiscal year ended December 31, 2001 (the "Most Recent Fiscal Year End") for
the Seller; and (ii) unaudited balance sheets and statement of income (the "Most
Recent Financial Statements") as of and for the nine months ended September 30,
2002 (the "Most Recent Fiscal Month End") for the Seller. The Financial
Statements (including the notes thereto) present fairly in all material respects
the financial condition of the Seller as of such dates and the results of
operations of the Seller for such periods, are correct and complete, and are
consistent with the books and records of the Seller (which books and records are
correct and complete); provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which will not be
material individually or in the aggregate) and lack footnotes and other
presentation items. The books of account, financial statements, and other
financial records of the Seller, all of which have been made available for
inspection by the Buyer, are complete and correct in all material respects and
have been maintained in accordance with sound business practices.
(h) Events Subsequent to Most Recent Fiscal Month End. Except as set
forth in Section 3(h) of the Seller's Disclosure Schedule, since the Most Recent
Fiscal Month End, there has not been any change in the business, financial
condition, operations, results of operations, or future prospects of the Seller
that, individually or in the aggregate, would have a Material Adverse Effect.
Without limiting the generality of the foregoing, except as set forth in Section
3(h) of the Seller's Disclosure Schedule, since that date:
(i) the Seller has not sold, leased, transferred, or assigned any
of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) the Seller has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases,
and licenses) either involving more than $10,000 or outside the
Ordinary Course of Business;
(iii) no party (including the Seller) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses)
involving more than $10,000 to which the Seller is a party or by which
it is bound;
(iv) the Seller has not imposed any Security Interest upon any of
its assets, tangible or intangible;
(v) the Seller has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
(vi) the Seller has not canceled, compromised, waived, or released
any right or claim (or series of related rights and claims) either
involving more than $10,000 or outside the Ordinary Course of Business;
(vii) the Seller has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(viii) the Seller has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property which,
individually or in the aggregate, would have a Material Adverse Effect;
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(ix) there has not been any adverse change in the business
relationship, and there has been no material dispute, between the
Company and any Major Customers and Suppliers, and there are no
indications that any of the Major Customers and Suppliers intends to
reduce its purchases from or sales to the Company;
(x) to the Knowledge of the Seller, there has not been any other
material occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business involving the
Seller; and
(xi) the Seller has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Seller does not have any Liability
(and to the Knowledge of the Seller, there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Seller giving rise to any Liability), except for: (i)
Liabilities reflected on the face of the Most Recent Balance Sheet (rather than
in any notes thereto); (ii) Liabilities which have arisen after the Most Recent
Fiscal Month End in the Ordinary Course of Business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law); (iii)
Liabilities which would not, individually or in the aggregate, have a Material
Adverse Effect; and (iv) Liabilities disclosed on Section 3(i) of the Seller's
Disclosure Schedule.
(j) Legal Compliance. The Seller has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) except for such non-compliance as would
not have a Material Adverse Effect, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against it alleging any failure so to comply.
(k) Tax Matters.
(i) The Seller has filed all material Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all
material respects and all Taxes owed by the Seller (whether or not
shown on such Tax Returns) have been paid. The Seller currently is not
the beneficiary of any extension of time within which to file any Tax
Return. No written claim has ever been made by an authority in a
jurisdiction where the Seller does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of the Seller that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) The Seller has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(iii) There is no dispute or claim concerning any Tax Liability of
the Seller either (A) claimed or raised by any authority in writing or
(B) as to which any of the directors and officers (and employees
responsible for Tax matters) of the Seller has Knowledge based upon
personal contact with any agent of such authority. The Seller has not
waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
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(l) Real Property.
(i) The Seller does not own any real property.
(ii) Section 3(1) of the Seller's Disclosure Schedule lists and
briefly describes the real property leased or subleased to the Seller.
(iii) No real property leased or subleased by the Seller lies in an
area which is, or to the Knowledge of the Seller, will be, subject to
zoning, use, or building code restrictions which would prohibit, and no
state of facts relating to the actions or inaction of another person or
entity or his or its ownership, leasing, subleasing, or use of any real
or personal property exists or will exist which would prevent, the
continued effective subleasing or use of such real property in the
business in which Seller is now engaged.
(m) Intellectual Property.
(i) The Seller owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the businesses of the Seller as
presently conducted. Each item of Intellectual Property owned or used
by the Seller immediately prior to the Closing hereunder will be owned
or available for use by the Buyer on identical terms and conditions
immediately subsequent to the Closing hereunder. The Seller has taken
all necessary action to maintain and protect each item of Intellectual
Property that it owns or uses.
(ii) To the Knowledge of the Seller, the Seller has not interfered
with, infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of third parties, and neither the
Seller nor any of the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Seller has
ever received any charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation, or violation
(including any claim that the Seller must license or refrain from using
any Intellectual Property rights of any third party). To the Knowledge
of the Seller and the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Seller, no
third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
the Seller.
(iii) Section 3(m)(iii) of the Seller's Disclosure Schedule
identifies each item of Intellectual Property that any third party owns
and that the Seller uses pursuant to license, sublicense, agreement or
permission. The Seller has delivered to the Buyer correct and complete
copies of all such licenses, sublicenses, agreements, and permissions
(as amended to date). With respect to each item of Intellectual
Property required to be identified in Section 3(m)(iii) of the Seller's
Disclosure Schedule:
(A) the license, sublicense, agreement or permission covering
the item is legal, valid, binding, enforceable and in full
force and effect;
(B) the license, sublicense, agreement or permission will
continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the consummation
of the transactions contemplated hereby (including the
assignments and assumptions referred to in Section 2 above);
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(C) to the Knowledge of the Seller, no party to the license,
sublicense, agreement or permission is in breach or default,
and no event has occurred which with notice or lapse of time
would constitute a breach or default or permit termination,
modification or acceleration thereunder;
(D) no party to the license, sublicense, agreement or
permission has repudiated any provision thereof;
(E) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(F) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the
Knowledge of the Seller, is threatened which challenges the
legality, validity, or enforceability of the underlying item
of Intellectual Property; and
(G) the Seller has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or
permission.
(iv) The Seller will not interfere with, infringe upon,
misappropriate or otherwise come into conflict with any Intellectual
Property rights of third parties as a result of the continued operation
of its businesses as presently conducted.
(n) Tangible Assets. The Acquired Assets include all machinery,
equipment and other tangible assets reasonably necessary for the conduct of the
Seller's business as presently conducted. Each such tangible asset is free from
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in operating condition (subject to normal wear and tear),
and is suitable for the purposes for which it presently is used.
(o) Contracts. Section 3(o) of the Seller's Disclosure Schedule lists
the following contracts and other agreements to which the Seller is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, result in a material loss to the Seller, or involve consideration
in excess of $10,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of
$10,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
10
(vi) any agreement involving any of the Seller's stockholders and
their Affiliates (other than the Seller);
(vii) any agreement under which it has advanced or loaned any
amount to any of its directors, officers or employees outside the
Ordinary Course of Business;
(viii) any agreement for or relating to the sale or distribution of
equipment, parts, supplies, expendables or tools, including, without
limitation, such agreements directly or indirectly with manufacturers,
co-ops and other retail or distribution businesses providing for
payments in excess of $10,000 per annum;
(ix) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect on the business,
financial condition, operations, results of operations, or future
prospects of the Seller; or
(x) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000 per
annum.
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement (as amended to date) listed in Section 3(o) of the Seller's
Disclosure Schedule and a written summary setting forth the terms and conditions
of each oral agreement referred to in Section 3(o) of the Seller's Disclosure
Schedule. With respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect with regard to the
Seller, except as such enforceability may be (i) limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws
affecting the rights and remedies of creditors generally and (ii) subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); (B) the agreement will continue
to be legal, valid, binding, enforceable, and in full force and effect with
regard to the Seller on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Section 2 above); (C) the Seller is not in breach or default, and
no event has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or acceleration, under
the agreement; and (D) the Seller has not repudiated any provision of the
agreement.
(p) Insurance. The Seller is covered by insurance in scope and amount
customary and reasonable for the businesses in which it is engaged. Section 3(p)
of the Seller's Disclosure Schedule describes any self-insurance arrangements
affecting the Seller.
(q) Litigation. Section 3(q) of the Seller's Disclosure Schedule sets
forth each instance in which the Seller (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to
the Knowledge of the Seller, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator. Except as set forth on Section 3(q) of
the Seller's Disclosure Schedule, none of the actions, suits, proceedings,
hearings, and investigations set forth on such Seller's Disclosure Schedule
could result in any Material Adverse Effect on the business, financial
condition, operations, results of operations, or future prospects of the Seller.
(r) Environmental, Health, and Safety Matters.
(i) The Seller is in compliance with all Environmental, Health, and
Safety Requirements, except for such noncompliance which would not,
individually or in the aggregate, have a Material Adverse Effect.
11
(ii) Without limiting the generality of the foregoing, the Seller
is in compliance with all permits, licenses and other authorizations
that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation of its facilities and the operation of
its business; a list of all such permits, licenses and other
authorizations is set forth on the attached "Environmental and Safety
Permits Schedule", except for such noncompliance which would not,
individually or in the aggregate, have a Material Adverse Effect.
(iii) The Seller has not received any written or oral notice,
report or other information regarding any actual or alleged violation
of Environmental, Health, and Safety Requirements, or any Liabilities
or potential Liabilities, including any investigatory, remedial or
corrective obligations, relating to it or its facilities arising under
Environmental, Health, and Safety Requirements.
(iv) To the Knowledge of the Seller, none of the following exists
at any property or facility owned or operated by the Seller: (1)
underground storage tanks; (2) asbestos-containing material in any form
or condition; (3) materials or equipment containing polychlorinated
biphenyls; or (4) landfills, surface impoundments, or disposal areas.
(v) The Seller has not treated, stored, disposed of, arranged for
or permitted the disposal of, transported, handled, or released any
substance, including without limitation any hazardous substance, or
owned or operated any property or facility (and no such property or
facility is contaminated by any such substance) in a manner that has
given or would give rise to Liabilities, including any Liability for
response costs, corrective action costs, personal injury, property
damage, natural resources damages or attorney fees, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as amended
("SWDA"), or any other Environmental, Health, and Safety Requirements,
except for such Liabilities which would not, individually or in the
aggregate, have a Material Adverse Effect.
(vi) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations
for site investigation or cleanup, or notification to or consent of
government agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
(vii) The Seller has not, either expressly or, to the Knowledge of
the Seller, by operation of law, assumed or undertaken any Liability,
including without limitation any obligation for corrective or remedial
action, of any other Person relating to Environmental, Health, and
Safety Requirements.
(viii) To the Knowledge of the Seller, no facts, events or
conditions relating to the past or present facilities, properties or
operations of the Seller will prevent, hinder or limit continued
compliance with Environmental, Health, and Safety Requirements, give
rise to any investigatory, remedial or corrective obligations pursuant
to Environmental, Health, and Safety Requirements, or give rise to any
other Liabilities pursuant to Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or
offsite releases or threatened releases of hazardous materials,
substances or wastes, personal injury, property damage or natural
resources damage, except for such Liabilities which would not,
individually or in the aggregate, have a Material Adverse Effect.
12
(s) Customers, Suppliers, etc. Section 3(s) of the Seller's Disclosure
Schedule sets forth a true and complete list of all customers and accounts of
the Company which produced gross sales in excess of $10,000 during the 2002
fiscal year and all suppliers of the Company which furnished services or
supplies in excess of $10,000 to the Company in the 2002 fiscal year
(collectively, the "Major Customers and Suppliers"), in each case showing the
total revenue received or services purchased, as applicable, in each such period
from each such customer or supplier.
(t) Certain Business Relationships With the Seller. Except as set forth
on Section 3(t) of the Seller's Disclosure Schedule, none of the Seller's
stockholders and their Affiliates has been involved in any business arrangement
or relationship with the Seller within the past 12 months, and none of the
Seller's stockholders and their Affiliates owns any asset, tangible or
intangible, which is used in the business of the Seller.
(u) Disclosure. The representations and warranties contained in this
Section 3 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 3 not misleading.
(v) Questionable Payments. To the Knowledge of the Seller, neither the
Seller, nor any director, officer, agent, employee, or other person associated
with or acting on behalf of Seller, nor any of Seller's stockholders has,
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses to obtain favorable treatment
in securing business or to obtain special concessions, or to pay for favorable
treatment for business secured or for special concessions already obtained.
(w) Investment Representations and Covenants.
(i) The Seller represents that it is acquiring the Centra Shares
for its own account and for investment only and not with a view to
distribution or resale thereof, other than a transfer of the Centra
Shares to the Seller's parent or Affiliates. The Seller may not dispose
of any part or all of the Centra Shares in violation of the provisions
of the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations promulgated under the Securities Act by the
Securities and Exchange Commission ("SEC") and all applicable
provisions of State securities laws and regulations.
(ii) Legend. The certificate or certificates representing the
Centra Shares shall bear a legend in substantially the following form:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE. SUCH SHARES MAY NOT BE SOLD, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF A
STOCKHOLDERS AGREEMENT DATED JANUARY __, 2003. A COPY OF THE STOCKHOLDERS
AGREEMENT MAY BE EXAMINED AT THE COMPANY'S OFFICES.
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH 13 OF CODE
SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT."
(iii) Acknowledgment of Restrictions. The Seller acknowledges being
informed that the Centra Shares are unregistered and must be held
indefinitely unless they (i) are subsequently
13
registered under the Securities Act, or (ii) an exemption from such
registration is available, and (iii) the Buyer will not have an
obligation to currently register the Centra Shares for the account of
the Seller other than as contemplated in the Registration Rights
Agreement.
(iv) Access to Information. The Seller acknowledges that it has
been afforded access to all material information which it has requested
relevant to Seller's decision to acquire the Centra Shares and to ask
questions of Buyer's management and that, except as set forth herein,
neither the Buyer nor anyone acting on behalf of the Buyer has made any
representations or warranties to the Seller which has induced,
persuaded or stimulated Seller to acquire the Centra Shares.
(v) Eligibility. Either alone, or together with its investment
advisor(s), the Seller has the knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of the prospective investment in the Centra Shares, and the Seller will
be able to bear the economic risk of the investment in the Centra
Shares.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were submitted for the date of this Agreement throughout this Section 4),
except as set forth in the Buyer's Disclosure Statement.
(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions, except as such enforceability may
be (i) limited by bankruptcy, insolvency, reorganization, liquidation,
moratorium or other similar laws affecting the rights and remedies of creditors
generally and (ii) subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The Buyer's Board of Directors has approved the Buyer entering into this
Agreement and consummating the transactions contemplated herein. Approval of the
Buyer's shareholders to enter into this Agreement and consummate the
transactions contemplated herein (including the issuance of the Centra Shares)
is not required.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject. The Buyer does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement (including the assignments and assumptions referred to in Section
2 above).
(d) Centra Shares. The Centra Shares, when issued and delivered to the
Seller, will be duly authorized, fully paid, validly issued and non-assessable.
The issuance of the Centra Shares will not
14
violate the preemptive or other rights of any other person or entity and will
not violate any stockholders' agreement, voting trust or similar agreement.
(e) Financial Information. The Buyer's financial statements for its
fiscal year ended December 31, 2001, and as of September 30, 2002 and for the
nine months then ended, all of which will be provided to the Seller during its
due diligence investigation of Buyer, have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, and fairly
present the financial condition of Buyer and its results of operations as of the
dates and for the periods indicated, subject in the case of the September 30,
2002 financial statements only to normal year-end adjustments (none of which
will be material in amount). Since September 30, 2002, there has been no
Material Adverse Effect on the Buyer and no event has occurred which is
reasonably likely, individually or in the aggregate, to result in any Material
Adverse Effect on the Buyer. The Buyer has no material Liability of any kind,
except (a) Liabilities reflected in the September 30, 2002 financial statements
and (b) Liabilities in the Ordinary Course of Business since September 30, 2002.
(f) Events Subsequent to Most Recent Fiscal Month End. Since the Most
Recent Fiscal Month End, there has not been any change in the business,
financial condition, operations, results of operations, or future prospects of
the Buyer that, individually or in the aggregate, would have a Material Adverse
Effect.
(g) Undisclosed Liabilities. The Buyer does not have any Liability (and
to the Knowledge of the Buyer, there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Buyer giving rise to any Liability), except for: (i)
Liabilities reflected on the face of the Most Recent Balance Sheet (rather than
in any notes thereto); (ii) Liabilities which have arisen after the Most Recent
Fiscal Month End in the Ordinary Course of Business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law); and
(iii) Liabilities which would not, individually or in the aggregate, have a
Material Adverse Effect.
(h) Legal Compliance. The Buyer has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) except for such non-compliance as would
not have a Material Adverse Effect, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against it alleging any failure so to comply.
(i) Tax Matters.
(i) The Buyer has filed all material Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all
material respects and all Taxes owed by the Buyer (whether or not shown
on such Tax Returns) have been paid. The Buyer currently is not the
beneficiary of any extension of time within which to file any Tax
Return. No written claim has ever been made by an authority in a
jurisdiction where the Buyer does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction.
(ii) The Buyer has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
15
(iii) There is no dispute or claim concerning any Tax Liability of
the Buyer either (A) claimed or raised by any authority in writing or
(B) as to which any of the directors and officers (and employees
responsible for Tax matters) of the Buyer has Knowledge based upon
personal contact with any agent of such authority. The Buyer has not
waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(j) Real Property.
(i) The Buyer's Disclosure Statement lists and briefly describes
the real property owned, leased or subleased to the Buyer.
(ii) No real property owned, leased or licensed by the Buyer lies
in an area which is, or to the Knowledge of the Buyer, will be, subject
to zoning, use, or building code restrictions which would prohibit, and
no state of facts relating to the actions or inaction of another person
or entity or his or its ownership, leasing, subleasing or use of any
real or personal property exists or will exist which would prevent, the
continued effective ownership, leasing, subleasing or use of such real
property in the business in which Seller is now engaged.
(k) Intellectual Property.
(i) The Buyer owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the businesses of the Buyer as presently
conducted. The Buyer has taken all necessary action to maintain and
protect each item of Intellectual Property that it owns or uses.
(ii) To the Knowledge of the Buyer, the Buyer has not interfered
with, infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of third parties, and neither the
Buyer nor any of the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Buyer has ever
received any charge, complaint, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or violation
(including any claim that the Buyer must license or refrain from using
any Intellectual Property rights of any third party). To the Knowledge
of the Buyer and the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Buyer, no
third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
the Buyer.
(iii) The Buyer will not interfere with, infringe upon,
misappropriate or otherwise come into conflict with any Intellectual
Property rights of third parties as a result of the continued operation
of its businesses as presently conducted.
(l) Litigation. The Buyer's Disclosure Statement sets forth each
instance in which the Buyer (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of the Buyer, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator. Except as set forth in the Buyer's
Disclosure Statement, none of the actions, suits, proceedings, hearings, and
investigations set forth on such Disclosure Statement could result in any
Material Adverse Effect on the business, financial condition, operations,
results of operations, or future prospects of the Buyer.
16
(m) Environmental, Health, and Safety Matters.
(i) The Buyer is in compliance with all Environmental, Health, and
Safety Requirements, except for such noncompliance which would not,
individually or in the aggregate, have a Material Adverse Effect.
(ii) To the Knowledge of the Buyer, to the extent any of the
following exists at any property or facility owned or operated by the
Buyer: (1) underground storage tanks; (2) asbestos-containing material
in any form or condition; (3) materials or equipment containing
polychlorinated biphenyls; or (4) landfills, surface impoundments or
disposal areas: the same is in compliance with applicable
Environmental, Health and Safety Requirements.
(iii) The Buyer has not treated, stored, disposed of, arranged for
or permitted the disposal of, transported, handled, or released any
substance, including without limitation any hazardous substance, or
owned or operated any property or facility (and no such property or
facility is contaminated by any such substance) in a manner that has
given or would give rise to Liabilities, including any Liability for
response costs, corrective action costs, personal injury, property
damage, natural resources damages or attorney fees, pursuant to CERCLA,
SWDA, or any other Environmental, Health, and Safety Requirements,
except (A) for such Liabilities which would not, individually or in the
aggregate, have a Material Adverse Effect and (B) with respect to RAKO,
as disclosed in its filings with the SEC.
(iv) The Buyer has not, either expressly or, to the Knowledge of
the Buyer, by operation of law, assumed or undertaken any Liability,
including without limitation any obligation for corrective or remedial
action, of any other Person relating to Environmental, Health, and
Safety Requirements.
(n) Customers, Suppliers, etc. The Buyer's Disclosure Statement sets
forth information about Buyer's principal customers and suppliers.
(o) Securities Law Compliance. The Buyer has complied in all respects
with the Securities Act and applicable state securities law in offering the
Centra Shares to the Seller and in selling such Centra Shares to the Seller upon
the consummation of the transactions contemplated hereby. The sale of the Centra
Shares to the Seller hereby is exempt from registration under the Securities Act
pursuant to Section 4(2) thereof and Regulation D promulgated thereunder and
from the Georgia Securities Act of 1973 pursuant to Section 10-5-9 (13) thereof.
(p) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
(q) Access to Information. The Buyer acknowledges that it has been
afforded access to all material information which it has requested relevant to
Buyer's decision to consummate the transactions completed hereby and to ask
questions of the Seller's management and that, except as set forth herein,
neither the Seller nor anyone acting on behalf of the Seller has made any
representations or warranties to the Buyer which has induced, persuaded or
stimulated the Buyer to acquire the Aquired Assets and assume the Assumed
Liabilities.
17
(r) Insurance. The Buyer is covered by insurance in scope and amount
customary and reasonable for the businesses in which it is engaged. The Buyer's
Disclosure Statement describes any self-insurance arrangements affecting the
Buyer.
(s) Brokers' Fees. The Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
(t) Disclosure Statement. The Buyer has delivered to the Seller a copy
of the Buyer's Disclosure Statement dated January 24, 2003 which sets forth the
disclosure of certain information about the Buyer. Such disclosures do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in such
Disclosure Statement not misleading.
(u) RAKO Acquisition of Buyer. The Buyer has advised the Seller that it
intends to become a public company through a business combination with RAKO, a
"shell" company, whereby the Buyer's outstanding shares will be exchanged for
shares of RAKO's common stock on a share for share basis. Thereafter, RAKO will
have 17,549,584 shares outstanding. Upon the consummation of the RAKO
transaction and the issuance of the Centra Shares to the Seller (assuming that
the Seller is entitled to all of such Centra Shares), the Seller will hold
approximately 20.11% of RAKO's then outstanding shares (exclusive of shares to
be issued to Stanford Venture Capital Holdings, Inc. simultaneously with the
Closing hereunder). RAKO's SEC filings are available through XXXXX, and RAKO's
CIK number is 0001063111.
(v) RAKO Assumption. Upon consummation of the transaction with RAKO
described above, the Buyer will assign this Agreement to RAKO and RAKO will
assume Buyer's obligations. At the Closing, RAKO will issue its shares to the
Seller in place of the Centra Shares. In connection with such assumption, RAKO
will perform all of Centra's closing obligations, and RAKO will make all of the
representations and warranties that the Buyer is making hereunder, mutatis
mutandis.
(w) Contracts. The Buyer's Disclosure Statement sets forth information
about material contracts and other agreements to which the Buyer is a party.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Section 6 below).
(b) Notices and Consents. The Seller will give any notices to third
parties (including Major Suppliers and Major Customers), and the Seller will use
commercially reasonable efforts to obtain any third party consents that the
Buyer reasonably may request in connection with the matters referred to in
Section 3(o) above. Each of the Parties will give any notices to, make any
filings with, and use commercially reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Section 3(c) and Section 4(c)
above. Without limiting the generality of the foregoing, each of the Parties
will file any Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will
use commercially reasonable efforts to obtain an early termination of the
applicable waiting period, and will
18
make any further filings pursuant thereto that may be necessary, proper or
advisable in connection therewith.
(c) Operation of Business. Neither Party will engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business, although the Seller acknowledges and agrees that the Buyer will engage
in the transaction with RAKO. Without limiting the generality of the foregoing,
the Seller will not (i) pay any amount to any third party with respect to any
Liability or obligation (including any costs and expenses the Seller has
incurred or may incur in connection with this Agreement and the transactions
contemplated hereby) which would not constitute an Assumed Liability if in
existence as of the Closing, or (ii) otherwise engage in any practice, take any
action, or enter into any transaction of the sort described in Section 3(h)
above or (iii) acquire, or agree to acquire, any business or business
organization or substantial portion of the assets of another Business.
(d) Preservation of Business. Each Party will use commercially
reasonable efforts to keep its business and properties substantially intact,
including its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
(e) Full Access. The Seller will permit representatives of the Buyer
and the Buyer's financing sources to have full access during normal business
hours to all premises, properties, personnel, customers, suppliers, wholesalers,
books, records, contracts and documents of or pertaining to the Seller. The
Buyer shall also have access to the Seller's employees, customers and suppliers
in connection with its due diligence review. The Buyer will likewise permit
representatives of the Seller to have access to all information that the Seller
reasonably requests in connection with its due diligence review of the Buyer.
Each Party will treat and hold information concerning the other Party that is
not already generally available to the public that the first Party discovered
during its due diligence review of the other Party as "Proprietary Information,"
as such term is defined in the Non-Disclosure Agreement dated November 6, 2002,
between the Parties.
(f) Notice of Developments. Each Party will give prompt written notice
to the other Party of any material adverse development causing a breach of any
of its own representations and warranties in Sections 3 and 4 above. No
disclosure by any Party pursuant to this Section 5(f), however, shall be deemed
to amend or supplement the Disclosure Schedule of such Party or to prevent or
cure any misrepresentation, breach of warranty or breach of covenant.
(g) Exclusivity. The Seller will not directly or indirectly, through
any director, officer, employee, agent, representative (including, without
limitation, investment bankers, attorneys and accountants) or otherwise (i)
solicit, initiate, or encourage the submission of any proposal or offer from any
Person relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets, of the Seller (including
any acquisition structured as a merger, consolidation, or share exchange) or
(ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Seller will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
19
6. Conditions to Obligation to Close.
(a) Conditions to Obligations of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) the Seller shall have procured all of the third party
consents specified in Section 5(b) above;
(iv) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation,
(C) affect adversely the right of the Buyer to own the Acquired Assets
or to operate the former businesses of the Seller;
(v) the Seller shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in Section
6(a)(i)-(iv) is satisfied in all respects; together with a xxxx of
sale, assignment of Intellectual Property rights and such other
instruments of transfer or conveyance as Buyer and its counsel
reasonably may request;
(vi) if applicable, the waiting period (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated and the Seller and the Buyer shall have received all
applicable authorizations, consents and approvals of governments and
governmental agencies referred to in Section 3(c) and Section 4(c)
above;
(vii) the Buyer shall have received approval and/or transfer of
Major Customers and Suppliers agreements on terms no less favorable
than exist on the date of this Agreement and consent of any third party
required pursuant to Section 3(o);
(viii) the Buyer shall have concluded its due diligence review of
the Seller, the Acquired Assets and the Assumed Liabilities and found
the results of its investigation acceptable;
(ix) the Seller (and upon distribution of the Centra Shares to its
shareholders, such shareholders) will enter into the Stockholders
Agreement;
(x) the Seller (and upon distribution of the Centra Shares to its
shareholders, such shareholders) will enter into the Registration
Rights Agreement;
(xi) the first closing of a Securities Purchase Agreement between
Centra and Stanford Venture Capital Holdings, Inc. shall occur
simultaneously with the Closing hereof;
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(xii) the Buyer and Seller shall have entered into a mutually
acceptable sublease or license agreement for Buyer's use of the
premises at Alpharetta, Georgia during an agreed transition period (the
"Alpharetta Agreement"); and
(xiii) all actions to be taken by the Seller in connection
with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 6(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation
(and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) the Buyer shall have delivered to the Seller a certificate to
the effect that each of the conditions specified above in Section
6(b)(i)-(iii) is satisfied in all respects; together with an assumption
of the Assumed Liabilities;
(v) if applicable, the waiting period (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated and the Seller and the Buyer shall have received all
authorizations, consents and approvals of governments and governmental
agencies referred to in Section 3(c) and Section 4(c) above;
(vi) the Seller shall have concluded its due diligence review of
the Buyer and found the results of the Seller's investigation
acceptable;
(vii) the Centra Shares shall be delivered to the Seller;
(viii) the Buyer will enter into the License Agreement;
(ix) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller;
21
(x) the Buyer shall have consummated its transaction with RAKO and
shall have become a public company on the terms previously disclosed to
the Seller;
(xi) the Buyer shall have delivered to Seller an opinion of counsel
that the Centra Shares, upon being issued to Seller pursuant to the
terms of this Agreement, will be duly authorized, fully paid, validly
issued and non-assessable; and
(xii) Buyer and Seller shall have entered into the Alpharetta
Agreement.
The Seller may waive any condition specified in this Section 6(b) if it executes
a writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event the
Seller has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Buyer has
notified the Seller of the breach in writing and with specificity as to
the nature of the breach, and the breach has continued without cure for
a period of thirty (30) days after the notice of breach;
(iii) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing in the event the
Buyer has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Seller has
notified the Buyer of the breach in writing and with specificity as to
the nature of the breach, and the breach has continued without cure for
a period of thirty (30) days after the notice of breach; and
(iv) by either Buyer or Seller, if the transactions contemplated
hereby are not consummated on or before January 31, 2003.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except any Liability of any Party then in breach).
8. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing:
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request. The Seller acknowledges and agrees that from and after the Closing the
Buyer will be entitled to possession of all of the Acquired Assets.
(b) Litigation Support. In the event and for so long as either Party is
actively contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or
22
demand in connection with (i) any transaction contemplated under this Agreement
or (ii) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or
transaction on or prior to the Closing Date involving the Seller, the other
Party will cooperate with the contesting or defending Party and his or its
counsel in the contest or defense, make available his or its personnel, and
provide such testimony and access to his or its books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefor under Section 9 below).
(c) Transition. During the three month period immediately following
Closing, authorized representatives of Seller (not employed by Buyer) shall
provide consultation and take any other action reasonably requested by the Buyer
to assist the Buyer in (i) assuming and operating the Seller's business to the
Buyer, (ii) the transfer to Buyer of the Acquired Assets and the goodwill and
reputation of the Seller, and (iii) continuing the Seller's relationships with
customers and suppliers; provided, however, that in no event shall the
consultation or other actions required of such persons by this sentence exceed
an aggregate of five (5) hours per week. The Buyer will pay $250.00 for each
hour of consulting services, plus expenses, and such person(s) will be
indemnified by the Buyer for any actions taken by on behalf of Buyer so long as
such persons acted in good faith. The Seller will not take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Seller from maintaining
the same business relationships with the Buyer after the Closing as it
maintained with the Seller prior to the Closing. The Seller will refer all
customer inquiries relating to the businesses of the Seller to the Buyer from
and after the Closing.
23
(d) Confidentiality. The Seller will treat and hold as such all of the
Confidential Information (as hereinafter defined), refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information which are
in its possession. In the event that the Seller is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, then the Seller will notify the Buyer
promptly of the request or requirement so that the Buyer may seek an appropriate
protective order or waive compliance with the provisions of this Section 8(d).
If, in the absence of a protective order or the receipt of a waiver hereunder,
the Seller is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, then the Seller
may disclose the Confidential Information to the tribunal; provided, however,
that the Seller shall use its reasonable best efforts to obtain, at the
reasonable request and expense of the Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Buyer shall designate. To the extent
that the Seller or its Affiliates has provided any Confidential Information to
the Buyer regarding the Seller's assets and Liabilities not being assigned to
the Buyer or regarding the Seller's Affiliates, then the Buyer agrees to treat
all such information as Confidential Information of the Seller and to comply
with this Section 8(d) as if the Buyer was the Seller named herein. For purposes
hereof, "Confidential Information" shall mean information relating to the
financial condition, results of operations, business, properties, assets,
liabilities, and future prospects of Buyer or Seller, as the case may be, or any
customer or supplier of either of them or any Affiliate, which information
affords a perceived competitive advantage and is held in confidence; provided,
however, that Confidential Information shall not include information which (a)
shall have become publicly available without violation of this Agreement, (b)
which is known to a party prior to its disclosure, (c) which is available from a
third party free of any restriction for the benefit of Buyer or Seller (as the
case may be) or (d) which is independently developed by a party without
reference to the Confidential Information of the other party.
(e) Covenant Not to Compete. For a period of two (2) years from and
after the Closing Date, the Seller agrees that it will not engage, directly or
indirectly, in the territory described on Exhibit I hereto, in the businesses
also described on such Exhibit. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 8(e) is invalid
or unenforceable, then the Parties agree that the court making the determination
of invalidity or unforceability shall have the power to reduce the scope,
duration, or area of the term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
(f) Non-solicitation. For a period of two years from and after the
Closing Date, the Seller will not, directly or indirectly, (A) recruit, solicit
or otherwise induce or influence any employee, sales agent, joint venturer,
lessor, supplier, agent, buyer or any other person that has or had during the
one year period initially preceding the Closing Date a business relationship
with the Seller, to discontinue, reduce or adversely modify such employment,
agency or business relationship with the Buyer or the business as conducted by
the Seller prior to the Closing Date, or (B) employ or seek to employ or cause
any Person to employ or seek to employ any person or agent who is employed or
retained by the Buyer.
(g) Taxes. The Buyer shall bear all sales, use, conveyance, stamp
duty, transfer, sales, registration, recording or other similar fees and taxes
imposed as a result of the transactions contemplated herein. The obligations of
the Buyer set forth in this Section 8(g) shall be unconditional and absolute and
shall remain in effect until the expiration of the applicable statutes of
limitation (including waivers and extensions thereof) for the taxable year or
period at issue.
24
(h) Bulk Transfer Laws. The Buyer hereby waives compliance by the
Seller with the provisions of any "bulk transfer", "bulk sales" or equivalent
laws of any jurisdiction in connection with the sale of the Acquired Assets to
Buyer. However, the Seller agrees to indemnify the Buyer and its Affiliates, in
accordance with the terms of Section 9, for any Adverse Consequences occurring
due to the Seller's failure to comply with any such laws.
(i) Insurance. After the Closing Date and for a period of (2) two
years, the Seller shall maintain any policies of insurance which cover
liabilities associated with the operation of the Seller's business prior to the
Closing Date, to the extent necessary to maintain coverage during such 2-year
period. The Buyer will have no obligations or liabilities under such insurance
policies for additional premiums or similar payments after the Closing Date,
either due to retroactive adjustments, audits, roll-backs or otherwise. The
Seller will cooperate after the Closing Date with the Buyer and its insurance
carriers and agents in connection with the foregoing and with the Buyer in
establishing new insurance policies and coverage for the Buyer from and after
the Closing Date.
(j) Record Retention and Access. The Parties shall maintain possession
of all books and records related to the Acquired Assets at least as long as
required by applicable law or regulation; provided, that thereafter the Parties
shall give the other not less than sixty (60) days prior written notice of its
intention to dispose of any such books and records. During such notice period,
one Party may direct the other Party to ship such books and records to it or to
a location designated by it and the other Party shall comply with such direction
at the requesting Party's expense. So long as any books and records related to
the Acquired Assets remain in its possession, the Parties shall, upon reasonable
notice, make such books and records available to the other Party and their
designees, representatives and agents for inspection and copying (at the
requesting Party's expense) insofar as is necessary for the preparation of tax
returns and similar matters. Without limiting the foregoing, the Parties shall
have the right for a period of five (5) years following the Closing Date to have
reasonable access to such books, correspondence, production records and other
records (and for a period of six (6) years following the Closing Date with
respect to the tax records of the Acquired Assets) that are transferred to the
Buyer or retained by the Seller pursuant to the terms of this Agreement and for
complying with their respective obligations pursuant to this Agreement and under
applicable securities, tax, environmental, employment or other laws and
regulations.
(k) Offer of Employment. As of the Closing Date, the Buyer may offer
employment to those persons it chooses who were active employees of the Seller
on the day immediately preceding the Closing Date. Such employees who accept
such offer of employment and become employees of the Buyer shall be referred to
herein as the "Transferred Employees". The offer of employment shall be upon
such terms and conditions as the Buyer determines. Notwithstanding the
foregoing, the Buyer retains the right to amend the terms and conditions of
employment and to terminate the employment of any of the Transferred Employees
as it may determine in its sole discretion.
(l) Audit. The Buyer shall, at the Buyer's expense, audit the Seller's
financial statements for fiscal year 2001 and a review of the 2002 interim
period to the Closing Date free of any material adjustments, revisions or
restatements to conform the financial statements to GAAP. The Seller agrees to
cooperate with the Buyer and take any further action requested by the Buyer to
facilitate the audit.
9. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Buyer and the Seller shall survive the
Closing (even if the damaged Party knew or had reason to know or any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect until the date that is eighteen (18) months after the
Closing Date; provided that (x) the
25
representations contained in Section 3(a) through (c) and Section 4(a) through
(d) shall continue in full force and effect forever thereafter and (y) the
representations contained in Sections 3(k), and 3(r) shall continue in full
force and effect until 30 days following the expiration of the applicable
statutes of limitations (including any extension or waiver thereof).
(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event the Seller breaches (or in the event any third
party alleges facts that, if true, would mean the Seller has breached)
any of its representations, warranties and covenants in this Agreement,
then the Seller agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer (including
any Adverse Consequences the Buyer may suffer after the end of any
applicable survival period as long as the indemnification claim is
brought before the end of such survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the
alleged breach); provided, however, that the Seller shall not have any
obligation to indemnify the Buyer from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or alleged breach) of any representation
or warranty of the Seller until the Buyer has suffered Adverse
Consequences by reason of all such breaches (or alleged breaches) in
excess of a $50,000 aggregate threshold (at which point the Seller will
be obligated to indemnify the Buyer from and against all such Adverse
Consequences by reason of all such breaches (or alleged breaches) in
excess of such $50,000 aggregate threshold.
(ii) The Seller agrees to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer may suffer resulting
from, arising out of, relating to, in the nature of, or caused by any
Liability of any of the Seller which is not an Assumed Liability
(including any Liability of the Seller that becomes a Liability of the
Buyer under any bulk transfer law of any jurisdiction, under any common
law doctrine of de facto merger or successor Liability, under
Environmental, Health, and Safety Requirements, or otherwise by
operation of law).
(c) Indemnification Provisions for Benefit of the Seller.
(i) In the event the Buyer breaches (or in the event any third
party alleges facts that, if true, would mean the Buyer has breached)
any of its representations, warranties and covenants in this Agreement,
then the Buyer agrees to indemnify the Seller from and against the
entirety of any Adverse Consequences the Seller may suffer (including
any Adverse Consequences the Seller may suffer after the end of any
applicable survival period as long as the indemnification claim is
brought before the end as such survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or
alleged breach); provided, however, that the Buyer shall not have any
obligation to indemnify the Seller from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or alleged breach) of any representation
or warranty of the Buyer until the Seller has suffered Adverse
Consequences by reason of all such breaches (or alleged breaches) in
excess of a $50,000 aggregate threshold (at which point the Buyer will
be obligated to indemnify the Seller from and against all such Adverse
Consequences by reason of all such breaches (or alleged breaches) in
excess of such $50,000 aggregate threshold..
(ii) The Buyer agrees to indemnify the Seller from and against the
entirety of any Adverse Consequences the Seller may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
Buyer's failure to pay the Seller the entire Purchase Price, any
26
Assumed Liability or from a claim made by a Transferred Employee
relating to actions taken or not taken by the Buyer following the
Closing.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 9, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party
in notifying the Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 15
days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party
from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (C)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing
business interests of the Indemnified Party, and (E) the Indemnifying
Party conducts the defense of the Third Party Claim actively and
diligently.
(iii) So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Section 9(d)(ii) above, (A)
the Indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim,
(B) the Indemnified Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party, and (C)
the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party.
(iv) In the event any of the conditions in Section 9(d)(ii) above
is or becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (C) the Indemnifying Party will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Section.
(e) Determination of Adverse Consequences. The Parties shall take into
account the cost of money (using the Applicable Rate as the discount rate) in
determining Adverse Consequences for
27
purposes of this Section 9. All indemnification payments under this Section 9
shall be deemed adjustments to the Purchase Price.
(f) Adjustment to Indemnities. The amount of indemnity payable under
Section 9(b) or Section 9(c) shall be treated by the Buyer and the Seller as an
adjustment to the Purchase Price, and shall be calculated after giving effect to
(i) any proceeds received from insurance policies covering the damage, loss,
liability or expense that is the subject of the claim for indemnity, net of any
increase in premium as a result of such claim and (ii) the actual realized Tax
benefit to the Indemnified Party resulting from the damage, loss, liability or
expense that is the subject of the indemnity and of the indemnity payment
itself; provided that, to the extent that any Tax benefit is realized in a Tax
year other than the year in which the indemnity is paid, the Indemnified Party
shall make a payment to the Indemnifying Party in the amount of such realized
Tax benefit in the year in which it is realized. For purposes of this Section
9(f), an actual realized Tax benefit is an actual reduction in Taxes payable or
a refund of Taxes previously paid.
(g) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy (including without limitation any such remedy
arising under Environmental, Health and Safety Requirements) any Party may have
with respect to Buyer or Seller, their Affiliates, or the transactions
contemplated by this Agreement.
10. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making the
disclosure).
(b) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party, which approval will not be unreasonably withheld; provided,
however, that the Buyer may (i) assign any or all of its rights and interest
hereunder to RAKO in connection with the business combination disclosed in
Section 4(u) and (ii) designate RAKO to perform its obligations hereunder (in
any or all of which cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
28
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then three
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller: TWS International, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
XxXxxxx Long & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 404-527-4198
If to the Buyer: Centra Industries, Inc.
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Reitler Xxxxx LLC
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to any
choice or conflict of law provision or rule.
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(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Buyer and the Seller will bear its own costs
and expenses (including legal fees and expenses) incurred in connections with
this Agreement and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with reasonable particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself). The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty or covenant contained herein
in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
(o) Submissions to Jurisdiction. Any action or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby may be
brought only in the U.S. District Court for Delaware or the Delaware state
courts. Each of the Parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety
or other security that might be required of any other Party with respect
thereto. Any Party may make service on the other Party
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by sending or delivering a copy of the process to the Party to be served at the
address and in the manner provided for the giving of notices in Section 10(g)
above. Nothing in this Section 10(o), however, shall affect the right of any
Party to bring any action or proceeding arising out of or relating to this
Agreement in any other court or to serve legal process in any other manner
permitted by law or in equity. Each Party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgement or in any other manner provided by law or in equity.
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IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of
the date first above written.
TWS INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxxxx
------------------------------
XXXX XXXXXXX
CEO
CENTRA INDUSTRIES, INC.
By: /s/ Xxxx Xxxxx
------------------------------
XXXX XXXXX
CEO
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