EXHIBIT 10.20(a)
STOCK PURCHASE AGREEMENT
BY AND AMONG
EPI TECHNOLOGIES, INC.
and
Each of the undersigned Investors
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINED TERMS 1
ARTICLE II PURCHASE AND SALE TERMS 3
Section 2.1 Purchase and Sale 3
Section 2.2 Payment 3
Section 2.3 Transfer Legends and Restrictions 3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4
Section 3.1 Corporate Existence 4
Section 3.2 Power and Authority 5
Section 3.3 Financial Condition 5
Section 3.3.1 Absence of Undisclosed Liabilities 5
Section 3.3.2 Taxes 6
Section 3.3.3 Subsidiaries 6
Section 3.3.4 Capitalization 6
Section 3.3.5 Conduct of Business 6
Section 3.4 No Material Adverse Change 6
Section 3.5 Litigation 6
Section 3.6 Licenses; Compliance with Laws, Other
Agreements,.. 6
Section 3.6.1 Government Approvals 7
Section 3.6.2 Investment Company Act 7
Section 3.7 Ownership and Status of Stock 7
Section 3.8 Brokers, etc. 7
Section 3.9 Registration Statement 7
Section 3.10 Relationship with Meridian 8
Section 3.11 Intellectual Property Rights 8
Section 3.12 No Misrepresentation 8
Section 3.13 Investigation 8
ARTICLE IV COVENANTS OF THE COMPANY 8
Section 4.1 Accounts and Reports 8
Section 4.2. Use of Proceeds 9
Section 4.3. Rule 144 9
Section 4.4. Taxes and Assessments 10
Section 4.5. Maintenance of Corporate Existence 10
Section 4.6. Governmental Consents 10
Section 4.7. Further Assurances 10
Section 4.8. Preemptive Rights 10
Section 4.9. Auditor 11
Section 4.10. Waiver 11
Section 4.11. Termination of Covenants 11
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE [INVESTORS 12
Section 5.1. Power and Authority 12
Section 5.2. Purchase for Investment 12
Section 5.3. Financial Matters 12
Section 5.4. Brokers, etc. 13
ARTICLE VI THE CLOSING AND CLOSING CONDITIONS 13
Section 6.1. The Closing 13
Section 6.2. Issuance of Common Stock ....13
Section 6.3. Legal Opinion from Counsel for
the Company ....13
Section 6.4. Certificate of Officer of the Company ....13
Section 6.5. Execution of Related Documents 13
Section 6.6. Stockholders Agreement 14
Section 6.7. Representations and Warranties to be
True and Correct 14
Section 6.8. Contribution by Meridian 14
Section 6.9. Certificate of Incorporation and Bylaws 14
Section 6.10. Performance 14
Section 6.11. All Proceedings to Be Satisfactory 14
ARTICLE VII MISCELLANEOUS 14
Section 7.1. Expenses 14
Section 7.2. Remedies Cumulative 14
Section 7.3. Brokerage 14
Section 7.4. Severability 15
Section 7.5. Parties in Interest 15
Section 7.6. Notices 15
Section 7.7. No Waiver 15
Section 7.8. Amendments and Waivers 15
Section 7.9. Rights of Investors 15
Section 7.10. Survival of Agreements, etc. 15
Section 7.11. Construction 16
Section 7.12. Entire Understanding 16
Section 7.13. Counterparts 16
Section 7.14. Assignment; No Third-Party Beneficiaries 16
ARTICLE VIII ARBITRATION 16
EXHIBIT
Exhibit 2.1 List of Investors
Exhibit 3.3.1 Undisclosed Liabilities
Exhibit 3.3.4 Capitalization
Exhibit 3.4 Material Adverse Change
Exhibit 3.9 Exceptions to Registration Statement
Exhibit 6.3 Opinion of Company Counsel
Exhibit 6.5 Registration Rights Agreement
Exhibit 6.6 Stockholders Agreement
STOCK PURCHASE AGREEMENT
AGREEMENT dated November 19, 1996, between EPI Technologies, Inc., a
Delaware corporation (formerly named "Environmental Purification Industries,
(Inc.") (the "Company") and each of the undersigned Investors (the "Investors").
PREAMBLE
The Company wishes to obtain equity financing. The Investors are willing,
on the terms contained in this Agreement, to purchase Common Stock, $.01 par
value, of the Company.
ARTICLE I
DEFINED TERMS
The following terms, when used in this Agreement, have the following
meanings, unless the context otherwise indicates:
"33 Act" means the Securities Act of 1933, as amended.
"34 ACT" means the Securities Exchange Act of 1934, AS amended.
"Affiliate" means, with respect to any specified Person, (1) any other
Person who, directly or indirectly, owns or controls, is under common ownership
or control with, or is owned or controlled by, such -fled Person, (2) any other
Person who is a director, officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities, of the
specified Person or a Person described in clause (1) of this paragraph, (3)
another Person of whom the specified Person is a director, officer or partner or
is, directly or indirectly, the beneficial owner of 10 percent or more of any
class of equity securities, (4) another Person in whom the specified Person has
a substantial beneficial interest or as to whom the -fled Person serves as
trustee or in a similar capacity, or (5) any relative or spouse of the specified
Person or any of the foregoing Persons, any relative of such spouse or any
spouse of any such relative.
"Best Knowledge" shall mean and include (a) actual knowledge of the Person,
including, the actual knowledge of any of the officers or directors of the
Company and (b) that knowledge which a prudent businessperson could have
obtained in the management of his business after making due inquiry, and after
exercising due diligence, with respect thereto.
"Bylaws" means the bylaws of the Company.
"Certificate of Incorporation" means the certificate of incorporation of
the Company, as originally filed with the Delaware Secretary of State together
with all amendments thereto.
"Closing" and "Closing Date" mean the consummation of the Company's sale
and the Investors' purchase of the Common Stock, and the date on which the same
occurs or occurred.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the Common Stock of the Company.
"Financial Statements" shall mean all of the following:
(a) the audited financial statements of the Company contained in the
Registration Statement;
(b) the unaudited financial statements of NPI and MEPI contained in
the Registration Statement; and
(c) the unaudited financial statements of the Company and of NPI and
MEPI as of August 31, 1996 and for the six-month period then ended.
"Financial Statement Date" means the date of the most recent Financial
Statements of the Company.
"Holder" means an Investor (or its successors or assigns) who continues to
hold Common Stock.
"Independent Public Accountants" means that firm of independent certified
public accountants selected by the Company's Board of Directors.
"Investor Board Member" means that individual who sits on the Company's
Board of Directors at the request of the Investors.
"MEPI" means MEPI Corp., an Ohio corporation.
"NPI' means National Purification, Inc., an Ohio Corporation.
"Public Offering" means both (i) the date of the effectiveness of any
registration statement relating to the underwritten distribution Company's
Common Stock which is filed by the Company under the '33 Act with proposed
maximum offering proceeds to the Company (calculated in accordance with Rule 457
under the '33 Act, as such rule may be amended from time to time) of $3,000,000
or more, and (ii) the process of distributing such common stock to the public.
"Qualified Holder" means an Investor or a transferee of an Investor or
another Qualified Holder (assuming all such transfers were made in accordance
with this Agreement), provided that a transferee of an Investor who, in the
reasonable judgment of Company, is affiliated with an actual or potential
competitor of the Company may be deemed by the Company not to be a Qualified
Holder.
"Registration Statement" means the draft dated September 6, 1996 of
Amendment No. 1 to Registration Statement on Form S-I of the Company, a copy of
which has been furnished to the Investors.
"Shares" means any shares of the Company's Common Stock.
"Subsidiary" or "Subsidiaries" of any Person means any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other Persons performing
similar functions are at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person.
The masculine form of words includes the feminine and the neuter and vice
versa, and, unless the context otherwise requires, the singular form of words
includes the plural and vice versa. The words "herein," "hereof," "hereunder',"
and other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular section or subsection.
ARTICLE II
PURCHASE AND SALE TERMS
Section 2.1 PURCHASE AND SALE. Subject to the terms of this Agreement, the
Company shall issue and sell to the Investors and each Investor shall purchase
from the Company at the Closing the number of shares of Common Stock at the
aggregate purchase price set forth opposite its name in Exhibit 2.1. The
obligation of each Investor to purchase is several and not joint, but the
obligation of each Investor to purchase such shares is conditioned upon each
other Investor purchasing and paying for the shares to be purchased by it.
Section 2.2 PAYMENT. Each of the Investors shall pay the purchase price of
the Common Stock purchased by it in full at the Closing by a certified or
official bank check or by wire transfer to an account designated by the Company.
Section 2.3 TRANSFER LEGENDS AND RESTRICTIONS. The transfer of the Shares
will be restricted in accordance with the terms hereof Each certificate
evidencing the Shares, including any certificate issued to any transferee
thereof, shall be imprinted with legends in substantially the following form
(unless otherwise permitted under this Section or unless such Shares shall have
been effectively registered and sold under the '33 Act and the applicable state
securities laws):
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THESE SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT. TRANSFER OF THESE SHARES IS
FURTHER RESTRICTED AS PROVIDED IN A STOCK PURCHASE
AGREEMENT A REGISTRATION RIGHTS AGREEMENT AND A
STOCKHOLDERS AGREEMENT, ALL DATED NOVEMBER 19,1996, COPIES
OF WHICH ARE AVAILABLE AT THE COMPANY'S OFFICES."
So long as any legend described in this Section shall remain on the
certificates evidencing the Shares, prior to any transfer of any of the same
(except for a transfer effected pursuant to an effective registration statement
under the '33 Act) the Holder of any Shares shall give written notice, to the
Company of such Holder's intention to effect such transfer. Such notice shall
describe the proposed method of transfer of the Shares in question. Upon receipt
by the Company of such notice and if in the opinion of counsel to such Holder,
which counsel and opinion shall be reasonably satisfactory to the Company, the
proposed transfer may be effected without registration under the '33 Act in
compliance with Section 4(2) or Rules 144 or 144A thereunder and under
applicable state securities laws, then the proposed transfer may be effected;
provided, however, that in the case of any Holder which is a partnership, no
such opinion of COUNSEL shall be necessary for a transfer by such partnership to
a partner of such partnership, or a retired partner of such partnership who
retires after the date such partnership became a Holder, or the estate of any
such partner or retired partner, if the transferee agrees in writing to be
subject to the terms of this Section to the same extent as if such transferee
were originally a signatory to this Agreement. Upon receipt by the Company of
such opinion and of such agreement by the transferee to be bound by this
Section, the Holder of such Shares shall thereupon be entitled to transfer the
same in accordance with the terms of the notice delivered by such Holder to the
Company. Each certificate evidencing the Shares issued upon any such transfer
shall bear the
legend set forth in this Section. Upon the written request of a Holder of the
Shares, the Company shall remove the foregoing legend from the certificates
evidencing such Shares and issue to such Holder new certificates therefor, free
of any transfer legend if; with such request, the Company shall have received an
opinion of counsel selected by the Holder, such counsel and opinion to be
reasonably satisfactory to the Company, to the effect that any transfers by said
Holder of such Shares may be made to the public without compliance with either
Section 5 of the '33 Act or Rule 144 thereunder and applicable state securities
laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors, at and as of the
Closing, that:
Section 3.1 CORPORATE EXISTENCE. The Company is a corporation duly
incorporated, validly existing and in good standing under Delaware law and has
unconditional power and authority to conduct its business and own its properties
as now conducted and owned and as proposed to be conducted and owned as set
forth in the Registration Statement. The Company is qualified as a foreign
corporation to do business in all jurisdictions in which the nature of its
properties and business requires such qualification and in which noncompliance
with such qualification would materially affect the Company's business. Without
limiting the preceding sentence, the Company is qualified as a foreign
corporation to do business in the State of Ohio.
Section 3.2 POWER AND AUTHORITY. The Company has unconditional power and
authority, and has taken all required corporate and other action necessary
(including stockholder approval, if necessary) to permit it to own and hold
properties to carry on its current business, to execute and deliver this
Agreement, to issue and sell the Common Stock as herein provided and otherwise
to carry out the terms of this Agreement and all other documents, instruments,
or transactions required by this Agreement, and none of such actions will
violate any provision of the Company's Bylaws or Certificate of Incorporation,
or result in the breach of or constitute a default under any agreement or
instrument to which the Company is a party or by which it is hound or result in
the creation or imposition of any material lien, claim or encumbrance on any
Company asset. This Agreement has been duly executed and delivered by the
Company and (assuming the due authorization, execution and delivery hereof by
the Investors) constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. No event has
occurred and no condition exists which would constitute a violation of this
Agreement. Neither this Agreement nor any other gives any person rights to
terminate any agreements with the Company or otherwise to exercise rights
against the Company.
Section 3.3 FINANCIAL CONDITION. The Company has previously furnished to
the Investors the Financial Statements, which, together with the footnotes
thereto, are complete and correct and fairly present the financial condition of
the Company as of the dates specified. The Financial Statements are in
accordance with the books and records of the Company, NPI or MEPI, as the case
may be, as of the dates and for the periods indicated, present fairly the
financial position, results of operations, shareholders' equity and changes in
financial position of such corporations
as of the respective dates and for the respective periods indicated, and have
been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis (except (i) as described in such
statements, notes thereto and reports and (ii) in the case of interim Financial
Statements, for normal year-end adjustments and for the omission of footnote
disclosures). The Company has made no change in accounting principles since the
Financial Statement Date.
Section 3.3.1 ABSENCE OF UNDISCLOSED LIABILITIES. As of the Financial
Statement Date, the Company had (and on the date hereof the Company has) no
material liabilities (matured or unmatured,, fixed or contingent, which are not
fully reflected or provided for on the balance sheet of the Company as at the
Financial Statement Date), or any material loss contingency (as defined in
Statement of Financial Accounting Standards No.5) whether or not required by
GAAP to be shown on the Financial Statements, except (i) obligations to perform
under commitments incurred in the ordinary course of business after the
Financial Statement Date, and (ii) other liabilities as set forth in Exhibit
3.3.1.
Section 3.3.2 TAXES. For all periods ended on or prior to the
Financial Statement Date, the Company has filed or will file within the time
prescribed by law (including extensions of time approved by the appropriate
taxing authority) all federal and state income and franchise tax returns and
reports required to be filed by it with the Internal Revenue Service or state
taxing authority (and such returns and reports are true and correct in all
material respects), and has paid in full or made adequate provision in the
Financial Statements dated the Financial Statement Date for the payment of, all
taxes, interest, penalties, assessments or deficiencies shown to be due thereon,
except where the failure to file such tax return or pay such taxes would not
have a material adverse effect on the financial condition of the Company.
Section 3.3.3 SUBSIDIARIES. The Company has no subsidiaries and owns
no capital stock or other securities, or rights or obligations to acquire the
same, of any other entity, except that on the Closing Date the Company will own
all of the outstanding shares of NPI and MEPI.
Section 3.3.4 CAPITALIZATION. The table set forth on Exhibit 3.3.4
sets forth, as of August 31, 1996, (i) the actual capitalization of the Company
as derived from the Financial Statements and (ii) the capitalization of the
Company adjusted as set forth on such Exhibit.
Section 3.3.5 CONDUCT OF BUSINESS. Since the Financial Statement
Date, the Company has conducted its business in the regular and ordinary course,
except as set forth (I) in this Agreement and (ii) in the sections of the
Registration Statement referred to in Section 3.9.
Section 3.4 NO MATERIAL ADVERSE CHANGE. Since the Financial Statement
Date there has been no material adverse change in the financial or other
condition, properties or business operations of the Company, except as set forth
in Exhibit 3.4.
Section 3.5 LITIGATION. There are no suits, proceedings or
investigations pending or threatened against or affecting the Company or an
officer of the Company which could have a material adverse effect on the
business, assets, or financial condition of the Company or the
ability of any officer to participate in the affairs of the Company, or which
concern in any material way the transactions contemplated by the Agreement.
Section 3.6 LICENSES: COMPLIANCE WITH LAWS. OTHER AGREEMENTS ETC. The
Company has all material franchises, permits, licenses, and other rights which
it currently deems necessary for the conduct of its business. The Company is not
in violation of any order or decree of any court, and neither this Agreement nor
the transactions contemplated hereby will result in any such violation. To its
best knowledge, the Company is not in violation of the provisions of any
contract or agreement to which it is a xxxxx or by which it may be bound, or of
any law, order, or regulation of any governmental authority, and neither this
Agreement nor the transactions contemplated hereby will result in any such
violation.
Section 3.6.1 GOVERNMENT APPROVALS. Except as may be required by any
state "blue sky" laws, no authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency, regulatory authority or
political subdivision thereof, any securities exchange or any other Person
is required in connection with the execution, delivery or performance by
the Company of this Agreement in order to consummate the TRANSACTIONS
contemplated in this Agreement. All such authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations and
registrations have been obtained or made, as the case may be, and are in
full force and effect and are not the subject of any pending or, to the
knowledge of the Company, threatened attack by appeal or direct proceeding
or otherwise.
Section 3.6.2 INVESTMENT COMPANY ACT. The company is not, and
immediately after the Closing will not be, and "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act.
Section 3.7 OWNERSHIP AND STATUS OF STOCK. The Company is currently
authorized to issue 3,000 shares of Common Stock, of which 100 shares are issued
and outstanding and owned by Meridian National Corporation. Upon issuance of and
payment for the shares of Common Stock to be issued hereunder in accordance with
the terms of this Agreement, all of the outstanding shares of the Common Stock
will be, validly issued, fully paid and nonassessable. All the outstanding
Common Stock has been issued in full compliance with applicable law. The Company
has outstanding no option, warrant or other commitment to issue or to acquire
any shares of its capital stock, or any securities or obligations convertible
into or exchangeable for its capital stock, nor, except as contemplated hereby,
has it given any person any right to acquire from the Company or sell to the
Company any shares of its capital stock. There is, and immediately upon
consummation of the transactions contemplated hereby there will be, no
Agreement, restriction or encumbrance with respect to the sale or voting of any
shares of capital stock of the Company (whether outstanding or issuable upon
conversion or exercise of outstanding securities) except for the offering and
sale of Common Stock pursuant to this Agreement. Except as set forth in this
Agreement, the Company has no obligation to register any of its presently
outstanding securities or any of its securities which may thereafter be issued
under the '33 Act.
Section 3.8 BROKERS ETC. The Company has not dealt with any broker,
finder, or other similar person in connection with the offer or sale of the
shares of Common Stock to be issued hereunder and the transactions contemplated
by this Agreement, and the Company is not under any obligation to pay any
broker's fee, finder's fee or commission in connection with such transactions.
Section 3.9 REGISTRATION STATEMENT. The Company has furnished the
Investors with a copy of the Registration Statement. The sections of the
Registration Statement entitled Business, Management, Management's Discussions
and Analysis of Financial Condition and Results of Operations and Relationships
Between the Company and Meridian do not contain any untrue statement of a
material fact nor do they omit to state any material fact necessary to make the
statement therein not misleading, except as set forth on Exhibit 3.9. Investors
acknowledge that, notwithstanding the statements to the contrary set forth in
the Registration Statement, Meridian has not made any contributions to capital
in repayment of advances from Meridian to the Company; provided) however, that,
in the event of a Public Offering, Meridian agrees to make such contributions in
the amount of up to $1,400,000 to the extent required to effectuate such Public
Offering.
Section 3.10 RELATIONSHIP WITH MERIDIAN. The Company has no material
relationships with Meridian other than those described in the section of the
Registration Statement entitled "Relationships Between the Company and Meridian"
and in Exhibit 3.9.
Section 3.11 INTELLECTUAL PROPERTY RIGHTS. The section of the Registration
Statement entitled "Business Technology Licenses" contains an accurate
description of the technology licenses held by the Company. Such licenses
constitute all of the technology rights that are required to enable the Company
to conduct its business as now conducted and as proposed to be conducted as set
forth in the Registration Statement. No royalties, honorariums or fees are or
will be payable by the Company to other persons by reason of the use by the
Company of the technology described in such section of the Registration
Statement' except as set forth in such section of the Registration Statement. To
the best knowledge of the Company, the Company's operations infringe no rights
under patents, trademarks, service marks, trade names, trade secrets, copyrights
or licenses or any other proprietary rights of others.
Section 3.12 NO MISREPRESENTATIONS. No representation or warranty in this
Agreement, or in any exhibit hereto, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
Section 3.13 INVESTIGATION. It shall he no defense to an action for breach
of this Agreement that the Investors or their agents have (or have not) made
investigations into the affairs of the Company.
ARTICLE IV
COVENANTS OF THE COMPANY
Section 4.1 ACCOUNTS AND REPORTS. Until a Public Offering occurs, the
Company shall furnish to each Qualified Holder copies of the following
certificates, filings and reports:
(a) ANNUAL REPORTS. As soon as available, and in any event within 90
days after the end of each fiscal year, annual financial statements of the
Company (including all schedules and notes thereto), consisting of the
balance sheet as of year end and the related statements of income and
expenses, retained earnings, changes in financial position and cash flows
for the 12-month period then ended, all prepared in accordance with GAAP
consistently applied and certified by the Company's independent public
accountants. Such statements shall be accompanied by the Company's
narrative discussion comparing the financial results to those of the prior
year.
(b) QUARTERLY REPORTS. As soon as available, and in any event within
45 days after the end of each of the first three quarters of each fiscal
year, an unaudited balance sheet and the unaudited statements of income and
cash flow for the year to date, all prepared in accordance with generally
accepted accounting principles consistently applied and accompanied by the
certificate of an officer of the Company.
(c) FORECASTS. As soon as available, but in no event later than one
month after the start of each fiscal year, financial forecasts by month
and, promptly after preparation, any revisions thereto, for the current
fiscal year, unless, in the opinion of counsel to the Company, providing
any such forecast will require inclusion of the same in a subsequent Public
Offering.
(d) OTHER INFORMATION. Upon the reasonable request of a Qualified
Holder, the Company will deliver to such Qualified Holder other information
and data, not proprietary in nature (in the good-faith judgment of the
Company), pertaining to its business, financial and corporate affairs to
the extent that such delivery will not violate any then applicable laws and
any contracts of the Company with third persons. The Company will permit
any person designated by a Qualified Holder in writing, at the expense of
such Qualified Holder, to visit and inspect any of the properties of the
Company, including its hooks of account, and to discuss its affairs,
finances, and accounts with the Company's officers or directors, all at
such reasonable times and as often as a Qualified Holder may reasonably
request, all in a manner consistent with the reasonable security and
confidentiality needs of the Company, provided that the Company shall be
under no such obligation (i) with respect to information deemed in good
faith by the Company to be proprietary or (ii) if the Company's board of
directors reasonably believes such visit, inspection, or discussion would
violate applicable laws or any contract with third persons.
(e) All information furnished under this Section is confidential and
each recipient shall (i) maintain the same in confidence and (ii) take all
reasonable measures to prevent any officer or agent of such recipient from
disclosing the same.
Section 4.2. USE OF PROCEEDS. The Company shall use the proceeds of the
sale of the Common Stock as follows: (i) approximately $225,000, and any
additional amounts to cover any cost overruns, for completion of installation of
the Polymeric Recovery System at the Company's Toledo, Ohio facility; (ii)
$55,000 for repayment of a promissory note to Xxxxxxx X. Xxxxxxx, and (iii) the
balance of the proceeds for working capital and general corporate purposes,
which may include, but is not limited to, the payment of expenses related to the
sale of Common Stock pursuant to this Agreement, and unpaid legal, accounting
and printing costs of approximately $400,000 previously incurred related to the
Company's previous attempt to complete a public offering.
Section 4.3. RULE 144. The Company covenants that (a) at all times after
the Company first becomes subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company will comply with the current public
information requirements of Rule 144(c)(l) under the '33 Act; and (b), the
Company will furnish any Investor upon request with all information within the
possession of the Company required for the preparation and filing of Form 144.
Section 4.4. TAXES AND ASSESSMENTS. The Company will pay any taxes,
assessments and governmental charges, and any liabilities thereon, outstanding
as of the Closing Date. The Company will pay and discharge, before the same
become delinquent and before penalties accrue thereon, all taxes, assessments
and governmental charges upon or against the Company or any of its properties,
and all other material liabilities at any time existing, except to the extent
and so long as (a) the same are being contested in good faith and by appropriate
proceedings in such manner as not to cause any material adverse effect upon the
financial condition of the Company, or the loss of any right of redemption from
any sale thereunder and (b) the Company shall have set aside on its books
adequate reserves with respect thereto.
Section 4.5. MAINTENANCE OF CORPORATE EXISTENCE. Unless otherwise
determined by the Board of Directors of the Company, the Company will preserve,
renew and keep in full force and effect, its corporate existence, qualification
in requisite jurisdictions and rights and privileges necessary or desirable in
the normal conduct of its business.
Section 4.6. GOVERNMENTAL CONSENTS. The Company will obtain all consents,
approvals, licenses and permits required by federal, state, local and foreign
law to carry on its business.
Section 4.7. FURTHER ASSURANCES. The Company will cure promptly any
defects in the creation and issuance of the Shares, and in the execution and
delivery of this Agreement. The Company, at its expense, will promptly execute
and deliver promptly to each Investor upon request all such other and further
documents, agreements and instruments in compliance with or pursuant to its
covenants and agreements herein, and will make any recordings, file any notices,
and obtain any consents as may be necessary or appropriate in connection
therewith.
Section 4.8. PREEMPTIVE RIGHTS.
(a) The Company hereby grants to each Holder a right of first refusal to
purchase, on a pro rata basis, all or any part of New Securities (as defined
below) which the Company may,
from time to time, propose to sell and issue subject to the terms and conditions
set forth below. A Holder's pro rata share, for purposes of this subsection 4.8,
shall equal a fraction, the numerator of which is the number of shares of Common
Stock then held by such Holder, and the denominator of which is the total number
of shares of Common Stock then outstanding plus the number of shares of Common
Stock issuable upon conversion or exercise of then outstanding convertible
securities, options, rights or warrants.
(b) "NEW SECURITIES" shall mean any capital stock of the Company whether
now authorized or not and rights, options or warrants to purchase capital stock,
and securities of any type whatsoever which are, or may become, convertible into
capital stock; PROVIDED, HOWEVER, that the term "New Securities" does not
include (I) the Shares issuable under this Agreement; (II) securities offered
to the public pursuant to a Public Offering; (iii) securities issued for the
acquisition of another corporation by the Company by merger, purchase of
substantially all the assets of such corporation or other reorganization
resulting in the ownership by the Company of not less than 51% of the voting
power of such corporation; or (iv) securities issued as a result of any stock
split, stock dividend or reclassification of Common Stock, distributable on a
pro rata basis to all holders of Common Stock.
(c) If the Company intends to issue New Securities, it shall give each
Holder written notice of such intention, describing the type of New Securities
to be issued, the price thereof and the terms upon which the Company proposes to
effect such issuance. Each Holder shall have twenty (20) days from the date of
any such notice to agree to purchase all or part of its or his pro rata share of
such New Securities for the price and upon the general terms and conditions
specified in the Company's notice by giving written notice to the Company
stating the quantity of New Securities to be so purchased. Each Holder shall
have a right of overallotment such that if any Holder fails to exercise his or
its right hereunder to purchase his or its total pro rata portion of New
Securities, the other Holders may purchase such portion on a pro rata basis, by
giving written notice to the Company within five days from the date that the
Company provides written notice to the other Holders of the amount of New
Securities with respect to which such nonpurchasing Holder has failed to
exercise its or his right hereunder. All Securities issued to Holders hereunder
shall, upon payment of the applicable purchase price therefor, be fully paid and
non-assessable, and the Company shall bear all of the costs and expenses of such
issuance.
(d) if any Holder or Holders fail to exercise the foregoing right of first
refusal with respect to any New Securities within such 20-day period (or the
additional five-day period provided for overallotments), the Company may within
60 days thereafter sell any or all of such New Securities not agreed to be
purchased by the Holders, at a price and upon general terms no more favorable to
the purchasers thereof than specified in the notice given to each Holder
pursuant to paragraph (c) above. In the event the Company has not sold such New
Securities within such 60-day period, the Company shall not thereafter issue or
sell any New Securities without first offering such New Securities to the
Holders in the manner provided above.
Section 4.9. AUDITOR The Company shall retain a firm of certified public
accountants of established reputation to audit its books and records at least
annually.
Section 4.10 WAIVER. Any violation of an affirmative or negative covenant
of the Company may be waived prospectively or retrospectively in a given
instance by a vote of the Required Majority (as defined in Section 7.8) of
Holders, but such waiver shall operate only with respect to the particular
violation specified in the waiver.
Section 4.11 TERMINATION OF COVENANTS. The covenants of the Company
contained in this Section shall terminate, and be of no further force or effect,
upon the effective date of a Public Offering.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors severally represents and warrants to the Company, at
and as of the Closing that:
Section 5.1. POWER AND AUTHORITY. Such Investor has full power and
authority and, if not an individual Investor, has taken all required corporate
(or trust or partnership, as the case may be) and other action necessary to
permit it to execute and deliver this Agreement, and all other documents or
instruments required by this Agreement, and to carry out the terms of this
Agreement and of all such other documents or instruments.
Section 5.2. PURCHASE FOR INVESTMENT. Such Investor is purchasing the
Common Stock for investment, for its own account and not for the account of any
Employee Benefit Plan (or if such Common Stock is being acquired for the account
of any such Plan, such acquisition does not involve a nonexempt prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code) and not with a view to distribution thereof, except for transfers
permitted hereunder. Such Investor understands that the Common Stock must be
held indefinitely unless it is registered under the '33 Act or an exemption from
such registration becomes available, and that the Common Stock may only be
transferred as provided in this Agreement.
Section 5.3. FINANCIAL MATTERS. Such Investor represents and warrants to
the Company that it understands that the purchase of the Shares involves
substantial risk and that its financial condition and investments are such that
it is in a financial position to hold the Shares for an indefinite period of
time and to bear the economic risk of; and withstand a complete loss of, such
Shares. In addition, by virtue of its expertise, the advice available to it and
previous investment experience, such Investor has extensive knowledge and
experience in financial and business matters, investments, securities and
private placements and the capability to evaluate the merits and risks of the
transactions contemplated by this Agreement. Such Investor represents that it is
an "accredited investor" as that term is defined in Regulation D promulgated
under the '33 Act.
During the negotiation of the transactions contemplated herein, the Investor and
its representatives have been afforded full and free access to corporate books,
financial statements, records, contracts, documents, and other information
concerning the Company and to its offices and facilities, have been afforded an
opportunity to ask such questions of the Company's officers
and employees concerning the Company's business, operations, financial
condition, assets, liabilities and other relevant matters as they have deemed
necessary or desirable, and have been given all such information as has been
requested, in order to evaluate the merits and risks of the prospective
investment contemplated herein.
Section 5.4. BROKERS ETC. Such Investor has dealt with no broker, finder,
commission agent, or other similar person in connection with the offer or sale
of the Common Stock and the transactions contemplated by this Agreement, and is
under no obligation to pay any broker's fee, finder's fee, or commission in
connection with such transactions.
ARTICLE VI
THE CLOSING AND CLOSING CONDITIONS
Section 6.1. THE CLOSING. The purchase and sale of the Common Stock shall
take place at the Closing to be held at the offices of Benesch, Friedlander,
Xxxxxx & Aronoff P.L.L., 0000 XX Xxxxxxx Xxxxxxxx 000 Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxx 000x0-0000. The Closing shall occur on the date of this Agreement.
The obligation of each Investor to purchase the Common Stock at the Closing
shall be subject to satisfaction of the following conditions at and as of the
Closing:
Section 6.2. ISSUANCE OF COMMON STOCK. The Company shall have duly issued
and delivered certificates to each of the Investors for the number shares of the
Common Stock purchased by such Investor as provided in Exhibit 2.1.
Section 6.3. 1- OPINION FROM COUNSEL FOR THE COMPANY. There shall be made
available to each of the Investors the written opinion of Benesch, Friedlander,
Xxxxxx & Xxxxxxx, counsel for the Company, in substantially the form attached as
Exhibit 6.3.
Section 6.4. CERTIFICATE OF OFFICER OF THE COMPANY. The Company shall have
delivered to the Investors a certificate of its chief executive and chief
financial officers, or alternatives therefor satisfactory to counsel for the
Investors, dated the date of the Closing, to the effect that the representations
and warranties of the Company are true at and as of the Closing as if made at
and as of the Closing, and that each of the conditions in this Article 6 has
been satisfied.
Section 6.5. EXECUTION OF RELATED DOCUMENTS. The Company and the Investors
shall have duly authorized and executed a Registration Rights Agreement in the
form set forth as Exhibit 6.5 hereof
Section 6.6. STOCKHOLDERS AGREEMENT. The Company and the Investors shall
have duly authorized and executed a Stockholders Agreement in the form set forth
as Exhibit 6.6 hereof
Section 6.7. REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties contained in Article III shall be true and
correct on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of such date (except to the extent that any representations and
warranties of the Company specifically apply to conditions existing at a
particular date), and the Company shall have certified to such effect to the
Investors in writing.
Section 6.8. CONTRIBUTION BY MERIDIAN. Meridian shall have contributed to
the capital of the Company all of the issued and outstanding shares of NPI and
MEPI.
Section 6.9. CERTIFICATE OF INCORPORATION AND BYLAWS. The Company shall
have delivered to each Investor (i) a copy of the Company's Certificate of
Incorporation, certified by the Delaware Secretary of State and (ii) a copy of
the Company's Bylaws, certified by an officer of the Company.
Section 6.10. PERFORMANCE. The Company shall have performed and complied
with all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the Closing Date, and the Company shall have
certified to such effect to the Investors in writing.
Section 6.11. ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Investors and their special counsel, and the Investors
and said counsel shall have received all such counterpart originals or certified
or other copies of such documents as they may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1. EXPENSES. The Company will bear the reasonable fees and
expenses of the Investors in connection with this Agreement.
Section 7.2. REMEDIES CUMULATIVE. Except as herein provided, the remedies
provided herein shall be cumulative and shall not preclude assertion by any
party hereto of any other rights or the seeking of any other remedies against
the other party hereto.
Section 7.3. BROKERAGE. Each party hereto will indemnify and hold harmless
the others against and in respect of any claim for brokerage or other commission
relative to this Agreement or to the transaction contemplated hereby, based in
any way on agreements, arrangements or understandings made or claimed to have
been made by such party with any third party.
Section 7.4. SEVERABILITY. whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such
provisions shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
Section 7.5. PARTIES IN INTEREST. All covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective legal representatives, successors and
assigns of the parties hereto whether so expressed or not.
Section 7.6. NOTICES. All notices to be given to any party shall be in
writing and delivered by hand in person, or by express overnight courier
service, or by electronic facsimile transmission (with a copy sent by first-
class U.S. mail, postage prepaid), or by registered or certified mail, return
receipt requested, postage prepaid, addressed (a) if to an Investor, at such
Investor's address set forth on the books of the Company, or at such other
address as such Investor shall have furnished to the Company m writing, or b) if
to the Company, at the Company's current address (Attention: President) at or
at such other address as the Company shall have furnished to the Investors.
Section 7.7. NO WAIVER. No failure to exercise and no delay in exercising
any right, power or privilege granted under this Agreement shall operate as a
waiver of such right, power or privilege. No single or partial exercise of any
right, power or privilege granted under this Agreement shall preclude another or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Agreement are cumulative and are not
exclusive of any rights or remedies provided by law.
Section 7.8. AMENDMENTS AND WAIVERS. Except as herein provided, this
Agreement may be modified or amended only by a writing signed by the Company and
by the Holders of 75% of the Common Stock held by Holders (the "Required
Majority"). Each Investor acknowledges that by the operation of Section 7.8
hereof the Holders of 75% of the outstanding Common Stock held by all Holders
will have the right and power to diminish or eliminate all rights of such
Investor under this Agreement.
Section 7.9. RIGHTS OF INVESTORS. Each holder of Common Stock shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including without
limitation the right to consent to the waiver of any obligation of the Company
under this Agreement and to enter into an agreement with the Company for the
purpose of modifying this Agreement or any agreement effecting any such
modification, and such holder shall not incur any liability to any other holder
or holders of Common Stock with respect to exercising or refraining from
exercising any such right or rights.
Section 7.10. SURVIVAL OF AGREEMENTS ETC. All agreements, representations
and warranties contained in this Agreement or made in writing by or on behalf of
the Company or the Investors in connection with the transactions contemplated by
this Agreement shall survive the execution and delivery of this Agreement, the
Closing, and any investigation at any time made by or on behalf of any Investor.
Notwithstanding the preceding sentence, however, all such representations (other
than intentional misrepresentations) and warranties, but no such agreements,
shall expire three years after the date of this Agreement.
Section 7.11. CONSTRUCTION. The Company's principal place of business is in
Toledo, Ohio. This Agreement shall be governed by and construed in accordance
with the procedural and substantive laws of the State of Ohio without regard to
principles of conflicts of law.
Section 7.12. ENTIRE UNDERSTANDING. This Agreement expresses the entire
understanding of the parties and supersedes all prior and contemporaneous
agreements and undertakings of the parties with respect to the subject matter of
this Agreement.
Section 7.13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
taken together shall constitute one agreement.
Section 7.14. ASSIGNMENT: NO THIRD-PARTY BENEFICIARIES.
(a) This Agreement and the rights hereunder shall not be
assignable or transferable by the Investors or the Company except in
the case of an Investor, in accordance with the restrictions on
transfer set out in this Agreement and the Stockholders Agreement or
in the case of the Company by operation of law in connection with a
merger, consolidation or sale of substantially all the assets of the
Company without the prior written consent of the other parties hereto.
Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns. The assignment by any
Investor on a nonexclusive basis of any rights under this Agreement to
any such transferee shall not affect or diminish the rights or
obligations of such Investor under this Agreement and in no event
shall any assignment relieve any Investor of its obligations
hereunder.
(b) Except as provided in Section 7.14(a), this Agreement is for
the sole benefit of the parties hereto and their permitted assigns and
nothing herein expressed or implied shall give or be construed to give
to any Person, other than the parties hereto and such assigns, any
legal or equitable rights hereunder.
ARTICLE VIII
ARBITRATION
If at any time there shall be a dispute arising out of or relating to any
provision of this Agreement or any agreement contemplated hereby, such dispute
shall be submitted for binding and final determination by arbitration in
accordance with the regulations then obtaining of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator(s) resulting
from such arbitration shall be in writing, and shall be final and binding upon
all involved parties. The site of any arbitration shall be within Toledo, Ohio.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
EPI TECHNOLOGIES, INC.
By: /s/ Xxxxx Maison
---------------------------------------
President
INVESTORS:
/s/ Xxxxxxx Xxxxxx
--------------------------------------------
XXXXXXX XXXXXX
MNP CORPORATION
By: /s/ Xxxxx Xxxxxx
---------------------------------------
Xxxxx Xxxxxx, President
/s/ Xxxxxx Xxxxx
--------------------------------------------
XXXXXX XXXXX
