EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
among
CAS MEDICAL SYSTEMS, INC.
and
STATCORP, INC.
and
THE STOCKHOLDERS OF STATCORP, INC. (as listed on Schedule A herein)
May 15, 2005
TABLE OF CONTENTS
1. Definitions.................................................................1
2. Basic Transaction...........................................................1
(a) Purchase and Sale of the Shares........................................1
(b) Purchase Price.........................................................1
(c) Escrow.................................................................2
(d) Working Capital Adjustment.............................................2
(e) Qualifying Revenues Adjustment.........................................3
(f) Calculation of Qualifying Revenues; Disputes...........................5
(g) The Closing............................................................5
(h) Deliveries at the Closing..............................................5
(i) Sellers' Representative................................................5
3. Representations and Warranties Concerning the Transaction...................7
(a) The Sellers' Representations and Warranties............................7
(b) The Buyer's Representations and Warranties.............................8
4. Representations and Warranties Concerning the Company.......................8
(a) Organization, Qualification, and Corporate Power.......................8
(b) Authorization of Transaction...........................................9
(c) Capitalization.........................................................9
(d) Noncontravention.......................................................9
(e) Brokers' Fees..........................................................9
(f) Title to Assets........................................................9
(g) Subsidiaries..........................................................10
(h) Financial Statements..................................................10
(i) Events Subsequent to Most Recent Fiscal Year End......................10
(j) Undisclosed Liabilities...............................................12
(k) Legal Compliance......................................................12
(l) Tax Matters...........................................................12
(m) Real Property.........................................................14
(n) Intellectual Property.................................................15
(o) Tangible Assets.......................................................15
(p) Inventory.............................................................16
(q) Contracts.............................................................16
(r) Insurance.............................................................16
(s) Litigation............................................................17
(t) Warranty..............................................................17
(u) Employees.............................................................17
(v) Employee Benefits.....................................................17
(w) Environmental, Health, and Safety Matters.............................18
(x) Certain Business Relationships with The Sellers.......................19
(y) Company Products......................................................19
i
(z) Disclosure............................................................20
5. Disposition of Xxxxxx Stock and Note Receivable............................20
6. Pre-Closing Covenants......................................................20
(a) General...............................................................20
(b) Notices and Consents..................................................21
(c) Operation of Business.................................................21
(d) Preservation of Business..............................................21
(e) Full Access...........................................................21
(f) Notice of Developments................................................21
(g) Exclusivity...........................................................21
(h) Tax Matters...........................................................21
7. Post-Closing Covenants.....................................................22
(a) General...............................................................22
(b) Litigation Support....................................................22
(c) Transition............................................................22
(d) Confidentiality.......................................................22
(e) Covenant Not to Compete...............................................22
8. Conditions to Obligation to Close..........................................23
(a) Conditions to Obligation of The Buyer.................................23
(b) Conditions to Obligations of The Sellers and the Company..............25
9. Remedies for Breaches of this Agreement....................................26
(a) Survival of Representations and Warranties............................26
(b) Indemnification Provisions for Benefit of The Buyer...................26
(c) Indemnification Provisions for Benefit of The Sellers and
the Stockholders......................................................27
(d) Limitation on Indemnification.........................................27
(e) Further Limitation on Indemnification; Right of Offset................27
(f) Matters Involving Third Parties.......................................28
(g) Exclusive Remedy......................................................29
10 Dispute Resolution.........................................................29
(a) Binding Arbitration...................................................29
(b) Governing Rules.......................................................29
(c) Statute of Limitations................................................29
(d) Scope of Award; Modification or Vacation of Award; Qualifications.....29
(e) Confidentiality.......................................................29
(f) Other Matters.........................................................30
11. Miscellaneous.............................................................30
(a) Incorporation of Exhibits, Annexes, and Schedules.....................30
(b) Press Releases and Public Announcements...............................30
(c) No Third-Party Beneficiaries..........................................30
(e) Succession and Assignment.............................................30
(f) Counterparts..........................................................30
(g) Headings..............................................................30
(h) Notices...............................................................30
(i) Governing Law.........................................................31
ii
(j) Amendments and Waivers................................................31
(k) Severability..........................................................31
(l) Expenses..............................................................31
(m) Construction..........................................................31
(n) Submission to Jurisdiction............................................32
Appendix A - Definitions
Schedule A--List of Stockholders
Exhibit A--Form of Escrow Agreement
Exhibit B--Form of General Release
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT, dated as of May 15, 2005 (this
"Agreement") is by and among CAS MEDICAL SYSTEMS, INC., a Delaware corporation
(the "Buyer"), STATCORP, INC., a Delaware corporation (the "Company") and the
stockholders (including the option holders who have exercised their options in
full on or just prior to the Closing Date) of the Company listed on Schedule A
hereto (collectively the "Sellers" and each a "Seller"). The Buyer, the Sellers
and the Company are collectively referred to herein as the "Parties."
WHEREAS, the Company is engaged in the business of developing,
assembling and selling liquid infusion devices, blood pressure cuffs, and blood
transfusion filters for worldwide use in the medical industry (the "Business");
and
WHEREAS, the Sellers are the record and beneficial owners of common
stock of the Company, par value $0.10 per share, comprising 100% of the issued
and outstanding shares of capital stock of the Company (the "Shares"); and
WHEREAS, the Sellers desire to sell the Shares to the Buyer, and the
Buyer desires to purchase such Shares from the Sellers, upon the terms and
subject to the conditions set forth below (the "Acquisition");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the Buyer, the Company and the Sellers agree as follows:
1. Definitions. Capitalized terms used but not otherwise defined
herein have the meanings ascribed to such terms in Appendix A hereto.
2. . Basic Transaction.
(a) Purchase and Sale of the Shares. Subject to the terms and
conditions set forth herein, on the Closing Date, each Seller shall sell to the
Buyer, and the Buyer shall purchase from each Seller, all of such Seller's
right, title and interest in and to such Seller's "Net Shares" (being the number
of shares reflected in Column C of Schedule A after consummation of the
transactions described in ss. 5) opposite the name of such Seller. On the
Closing Date, each Seller shall deliver to the Buyer all certificates
representing such Seller's Net Shares, together with stock powers separate from
the certificates duly executed by such Seller in blank and sufficient to convey
to the Buyer good and marketable title to such Seller's Net Shares, free and
clear of any and all Liens and together with all accrued benefits and rights
attaching thereto.
(b) Purchase Price. In consideration for the Net Shares and subject
to ss. 2(c), ss. 2(d) and ss. 2(e) hereof, and in reliance on the Sellers'
representations, warranties and covenants herein, the Buyer shall pay to the
Sellers an amount equal to Four Million Two Hundred Thousand Dollars
($4,200,000.00) less the amount of principal and interest due and payable on the
Closing Date to satisfy the Xxxxxxx Xxxxx Indebtedness (as so adjusted, the
"Purchase Price"). On the Closing Date, the Buyer shall pay off the Xxxxxxx
Xxxxx Indebtedness and make arrangements for the release of all liens and
agreements securing the Xxxxxxx Xxxxx Indebtedness. On the Closing Date, the
Buyer shall pay into a segregated bank account maintained by the Sellers'
Representative (as hereinafter defined) the amount of the Purchase Price, less
the amount placed in escrow in accordance with ss. 2(c) hereof, in cash or
immediately available funds (the "Initial Payment"). On the Closing Date and
from the Initial Payment, the Sellers' Representative shall pay the sum of
$160,000 to the Sellers' broker, The Xxxxxx Group, Inc. ("WGI") and an
additional $144,000 as directed by the Sellers. The Sellers' Representative
shall not disburse the net Initial Payment to the Sellers until the adjustment
described in ss. 2(d) has been made and agreed to (or any
dispute has been resolved as therein provided). The Purchase Price shall be
allocated among the Sellers in proportion to their respective holdings of the
Net Shares as set forth in Column D on Schedule A.
(c) Escrow.
(i) Escrowed Funds. The parties hereto agree that an
amount equal to Seven Hundred Thousand Dollars ($700,000) (the "Escrow
Amount") shall be delivered by the Buyer to M&T Bank (the "Escrow Agent") at the
Closing to be held in an interest-bearing escrow account to secure the Sellers'
obligations set forth in ss. 2(d), ss. 2(e) and ss. 9(b) hereof and subject to
the terms of an escrow agreement in the form of Exhibit A hereto (the "Escrow
Agreement").
(ii) Partial Return of Escrowed Funds. If the Qualifying
Revenues during the period commencing on the Closing Date and ending
twelve months thereafter (the "Measurement Period"), reach or exceed an amount
equal to the Base Qualifying Revenue, then an amount shall be released from
escrow and paid to the Sellers' Representative for the benefit of the Sellers
within forty-five (45) days thereof, in accordance with the Escrow Agreement,
such that the amount then held in escrow shall equal Three Hundred Fifty
Thousand Dollars ($350,000). On the date that is fifteen (15) months after the
Closing Date, the balance of the amount in the Escrow Account, less any pending
Indemnification claims as to which notice has been given by Buyer by such date
under ss. 9(b), will be disbursed to the Sellers' Representative for the benefit
of the Sellers in accordance with the Escrow Agreement.
(d) Working Capital Adjustment.
(i) As soon as practicable following the Closing Date
(but not later than 30 days after the Closing Date), the Buyer shall prepare
and deliver to the Sellers' Representative a balance sheet of the Company (such
balance sheet, as finally agreed to as set forth below, the "Closing Balance
Sheet") as of the Closing Date. The Closing Balance Sheet shall be prepared in
accordance with GAAP in a manner consistent in all material respects with the
audited balance sheet of the Company as of December 31, 2004 (the "Preliminary
Balance Sheet", which has been delivered to the Buyer herewith) except as
provided in the last sentence of the definition of Closing Working Capital, so
as to present fairly in all material respects the financial condition of the
Company. For purposes of this ss. 2(d), Buyer agrees that it will not create on
the Closing Balance Sheet any reserves for bad debts or for slow-moving
inventory that were not a part of the Preliminary Balance Sheet, nor will it
write off any receivable that was on the Preliminary Balance Sheet.
(ii) Based on the Preliminary Balance Sheet, the parties
agree that the Preliminary Working Capital is $959,746. If the Closing
Working Capital exceeds the Preliminary Working Capital, then the Purchase Price
shall be increased by the amount of the excess and the amount of such excess
shall be paid to the Sellers' Representative on behalf of the Sellers in cash or
immediately available funds by wire transfer within two (2) business days after
the Closing Working Capital is deemed final and conclusive pursuant hereto. If
the Preliminary Working Capital exceeds the Closing Working Capital, then the
Purchase Price shall be reduced by the amount of such excess and the Sellers'
Representative shall pay the amount of such excess to the Buyer from the Initial
Payment held by the Sellers' Representative in cash or in immediately available
funds by wire transfer within two (2) business days after the Closing Working
Capital is deemed final and conclusive pursuant hereto.
(iii) In the event the Sellers' Representative does not
agree with the Closing Working Capital as reflected on the Closing Balance
Sheet, the Sellers' Representative shall so inform the Buyer in writing within
10 business days of the Sellers' Representative's receipt thereof, such writing
to set forth the objections of the Sellers' Representative in reasonable detail.
If the Sellers' Representative and the Buyer cannot reach agreement as to any
disputed matter relating to the Closing Working Capital within 15 business days
after notification by the Sellers' Representative to the Buyer of a dispute,
they shall forthwith refer the dispute to an accounting firm mutually agreeable
to the Sellers' Representative and the Buyer for resolution, with the
understanding that such
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firm shall resolve all disputed items within 20 business days after such
disputed items are referred to it. If the Buyer and the Sellers' Representative
are unable to agree on the choice of an accounting firm, they shall select a
nationally recognized accounting firm by lot (after excluding their respective
regular outside accounting firms). The Sellers (from the Initial Payment held by
the Sellers' Representative) and the Buyer shall each bear one-half of the costs
of such accounting firm. The decision of the accounting firm with respect to all
disputed matters relating to the Closing Working Capital shall be deemed final
and conclusive and shall be binding upon the Sellers and the Buyer. In addition,
if the Sellers' Representative does not object to the Closing Working Capital
within the 10 business day period referred to above, the Closing Working Capital
as reflected on the Closing Balance Sheet as so prepared shall be deemed final
and conclusive and binding upon the Sellers and the Buyer.
(iv) After the calculation of the Closing Working
Capital is deemed final and conclusive pursuant hereto and the payment of the
difference between the Closing Working Capital and the Preliminary Working
Capital has been made to the Sellers' Representative or the Buyer, as the case
may be, pursuant to ss.2(d)(ii) above, the Sellers' Representative shall
disburse the Initial Payment (as increased or decreased pursuant to ss.2(d)(ii)
above) to the Sellers (minus the payment of any expenses of the Acquisition that
are to be paid by the Sellers, including, but not limited to, any additional
amount that may be due to WGI as a result of an increase in the Purchase Price
or that was not paid on the Closing Date).
(e) Qualifying Revenues Adjustment.
(i) The Purchase Price shall be adjusted downward, up to
a maximum reduction of Seven Hundred Thousand Dollars ($700,000), as
follows, and an amount equal to such Purchase Price adjustment, if any, shall be
paid to the Buyer within forty-five (45) days after the conclusion of the
Measurement Period.
(A) If the Qualifying Revenues for the
Measurement Period are an amount that is between the Base Qualifying
Revenue (exclusive of such amount) and Ninety Percent (90%) of the
Base Qualifying Revenue (inclusive of such amount), then the
Purchase Price shall be adjusted downward by One Hundred Seventy
Five Thousand Dollars ($175,000).
(B) If the Qualifying Revenues for the
Measurement Period are an amount that is between Ninety Percent
(90%) of the Base Qualifying Revenue (exclusive of such amount) and
Eighty Percent (80%) of the Base Qualifying Revenue (inclusive of
such amount), then the Purchase Price shall be adjusted downward by
Three Hundred Fifty Thousand Dollars ($350,000).
(C) If the Qualifying Revenues for the
Measurement Period are an amount that is less than Eighty Percent
(80%) of the Base Qualifying Revenue (exclusive of such amount),
then the Purchase Price shall be adjusted downward by Seven Hundred
Thousand Dollars ($700,000).
Any adjustment pursuant to this ss.2(e)(i) shall be
payable solely from funds held in the Escrow Account.
(ii) The Purchase Price shall be adjusted upward, up to
a maximum Purchase Price increase of One Million Dollars ($1,000,000), as
follows, and an amount equal to such Purchase Price adjustment, if any, less the
amount of any unpaid indemnification claims as to which Buyer has given timely
notice pursuant to ss.9(b), shall be paid to the Sellers' Representative on
behalf of the Sellers (on a pro rata basis) within forty-five (45) days after
the conclusion of the Measurement Period.
(A) If the Qualifying Revenues for the
Measurement Period equal or exceed One Hundred Five Percent (105%)
of the Base Qualifying Revenue but are less than One Hundred Ten
Percent (110%) of the Base Qualifying Revenue, then the Purchase
Price shall be increased by One Hundred Thousand Dollars ($100,000).
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(B) If the Qualifying Revenues for the
Measurement Period equal or exceed One Hundred Ten Percent (110%) of
the Base Qualifying Revenue but are less than One Hundred Fifteen
Percent (115%) of the Base Qualifying Revenue, then the Purchase
Price shall be increased by Two Hundred Thousand Dollars ($200,000).
(C) If the Qualifying Revenues for the
Measurement Period equal or exceed One Hundred Fifteen Percent
(115%) of the Base Qualifying Revenue but are less than One Hundred
Twenty Percent (120%) of the Base Qualifying Revenue, then the
Purchase Price shall be increased by Three Hundred Thousand Dollars
($300,000).
(D) If the Qualifying Revenues for the
Measurement Period equal or exceed One Hundred Twenty Percent (120%)
of the Base Qualifying Revenue but are less than One Hundred
Twenty-Five Percent (125%) of the Base Qualifying Revenue, then the
Purchase Price shall be increased by Four Hundred Thousand Dollars
($400,000).
(E) If the Qualifying Revenues for the
Measurement Period equal or exceed One Hundred Twenty Five Percent
(125%) of the Base Qualifying Revenue but are less than One Hundred
Thirty Percent (130%) of the Base Qualifying Revenue, then the
Purchase Price shall be increased by Five Hundred Thousand Dollars
($500,000).
(F) If the Qualifying Revenues for the
Measurement Period equal or exceed One Hundred and Thirty Percent
(130%) of the Base Qualifying Revenue but are less than One Hundred
Thirty-Five Percent (135%) of the Base Qualifying Revenue, then the
Purchase Price shall be increased by Six Hundred Thousand Dollars
($600,000).
(G) If the Qualifying Revenues for the
Measurement Period equal or exceed One Hundred Thirty Five Percent
(135%) of the Base Qualifying Revenue but are less than One Hundred
Forty Percent (140%) of the Base Qualifying Revenue, then the
Purchase Price shall be increased by Seven Hundred Thousand Dollars
($700,000).
(H) If the Qualifying Revenues for the
Measurement Period equal or exceed One Hundred Forty Percent (140%)
of the Base Qualifying Revenue but are less than One Hundred
Forty-Five Percent (145%) of the Base Qualifying Revenue, then the
Purchase Price shall be increased by Eight Hundred Thousand Dollars
($800,000).
(I) If the Qualifying Revenues for the
Measurement Period equal or exceed One Hundred Forty Five Percent
(145%) of the Base Qualifying Revenue but are less than One Hundred
Fifty Percent (150%) of the Base Qualifying Revenue, then the
Purchase Price shall be increased by Nine Hundred Thousand Dollars
($900,000).
(J) If the Qualifying Revenues for the
Measurement Period equal or exceed One Hundred Fifty Percent (150%)
of the Base Qualifying Revenue, then the Purchase Price shall be
increased by One Million Dollars ($1,000,000).
(iii) During the Measurement Period, the Buyer shall
maintain the Company as a separate subsidiary of the Buyer and will not cause
the Company to be merged or combined with any other entity. Further, the Buyer
shall cause the Qualifying Revenues of the Company to be determined in
accordance with GAAP and in a manner materially consistent with the manner in
which revenues have been accounted for by the Company in the three years prior
to the Closing Date (except for consolidation with its wholly-owned subsidiary,
Xxxxxx).
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(f) Calculation of Qualifying Revenues; Disputes. As soon as
practicable following the Measurement Period, the Buyer shall prepare and
deliver to the Sellers' Representative a statement of Qualifying Revenues (the
"Revenues Statement"). In the event the Sellers' Representative does not agree
with the Revenues Statement, the Sellers' Representative shall so inform the
Buyer in writing within 10 business days of the Sellers' Representative's
receipt thereof, such writing to set forth the objections of the Sellers'
Representative in reasonable detail. If the Sellers' Representative and the
Buyer cannot reach agreement as to any disputed matter relating to the Revenues
Statement within 15 business days after the date of the Sellers'
Representative's objection notice, they shall forthwith refer the dispute to the
Jacksonville, Florida office of Deloitte & Touche or another accounting firm
mutually agreeable to the Sellers' Representative and the Buyer for resolution,
with the understanding that such firm shall resolve all disputed items within 20
business days after such disputed items are referred to it. If the Buyer and the
Sellers' Representative are unable to agree on the choice of an accounting firm,
they shall select a nationally recognized accounting firm by lot (after
excluding their respective regular outside accounting firms). The Sellers and
the Buyer shall each bear one-half of the costs of such accounting firm. The
decision of the accounting firm with respect to all disputed matters relating to
the Revenues Statement shall be deemed final and conclusive and shall be binding
upon the Sellers and the Buyer. In addition, if the Sellers' Representative does
not object to the Revenues Statement within the 10 business day period referred
to above, the Revenues Statement as so prepared shall be deemed final and
conclusive and binding upon the Sellers and the Buyer.
(g) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxx and
Xxxx LLP in New Haven, Connecticut commencing at 9:00 a.m. local time on May 15,
2005, or 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 and time
as the Parties may mutually determine (the "Closing Date"), but in no event
shall the Closing Date be later than May 31, 2005. If the Closing has not
occurred on or before May 31, 2005, then either the Buyer or the Sellers'
Representative may terminate this Agreement and the transactions contemplated
hereby immediately by written notice to the other.
(h) Deliveries at the Closing. At the Closing, (i) the Sellers and
the Company will deliver to the Buyer the various certificates, instruments, and
documents referred to in ss.8(a) below, (ii) the Buyer will deliver to the
Sellers' Representative the various certificates, instruments, and documents
referred to in ss.8(b) below, (iii) the Sellers will deliver to the Buyer stock
certificates representing all of their Net Shares, endorsed in blank or
accompanied by duly executed stock powers, and (iv) the Buyer will deliver to
the Sellers' Representative the Initial Payment specified in ss.2(b) above and
to the Escrow Agent the amount specified in ss. 2(c) above.
(i) Sellers' Representative. In order to facilitate the process of
administering and distributing the Initial Payment and any additional Purchase
Price payments, determining the Purchase Price adjustments pursuant to ss.2(d)
and ss.2(e), handling certain indemnification claims pursuant to ss.9 and for
certain other matters provided herein, the Sellers agree to appoint a sellers'
representative (the "Sellers' Representative").
(A) Xxxxxxx X. Xxxxxxx, Esq. shall be the Sellers'
Representative and as such serve as and have all powers as agent and
attorney-in-fact of the Sellers, for and on behalf of the Sellers: (i) to give
and receive notices and communications; (ii) to agree to, negotiate, enter into
settlements and compromises of, and comply with orders of courts and awards of
arbitrators, with respect to any disputes related to the indemnification and
Purchase Price adjustment provisions of this Agreement; (iii) to litigate,
mediate, arbitrate, defend, enforce or to take any other actions and execute the
Escrow Agreement and any other documents that the Sellers' Representative deems
advisable in connection with enforcing any rights or obligations or defending
any claim or action under this Agreement on behalf of the Sellers or their
property or against any Person who has caused a loss or damage to the Sellers;
(iv) to sign receipts, consents, or other documents to effect the transactions
contemplated by this Agreement; and (v) to take any and all actions necessary or
appropriate in the judgment of
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the Sellers' Representative for the accomplishment of the foregoing.
Notwithstanding the foregoing, the Sellers' Representative shall not be the
agent of any Seller with respect to an indemnification claim by the Buyer
against a specific Seller pursuant to ss.9(b)(ii) or ss. 9(b)(iii)(A). If
Xxxxxxx X. Xxxxxxx, Esq. ceases to act as a Sellers' Representative for any
reason, such Sellers' Representative or his agent shall notify the Buyer of such
Sellers' Representative's intent to resign as Sellers' Representative, and a
majority in percentage ownership interest of the Sellers (determined as of the
Closing) (a "Sellers Majority") shall, by written notice to the Buyer, appoint a
successor Sellers' Representative within thirty (30) days. Notice or
communications to or from the Sellers' Representative shall constitute notice to
or from the Sellers.
(B) Subject to ss. 2(i)(A), in the event of (i) the
death or permanent disability of the Sellers' Representative, (ii) his,
her or its resignation as a Sellers' Representative, or (iii) the removal of the
Sellers' Representative by a Sellers Majority, a successor Sellers'
Representative shall be elected by a Sellers Majority. Each successor Sellers'
Representative shall have all of the power, authority, rights and privileges
conferred by this Agreement upon the original Sellers' Representative, and the
term "Sellers' Representative" as used herein shall be deemed to include any
successor Sellers' Representative.
(C) The Sellers' Representative may, in all questions
arising under this Agreement within the scope of his authority
described above, rely on the advice of counsel, and shall not be liable to the
Sellers for any action taken or not taken as a Sellers' Representative in the
absence of such Sellers' Representative's willful misconduct or bad faith.
(D) A decision, act, consent or instruction of the
Sellers' Representative within the scope of his authority described
above shall constitute a decision of the Sellers, and shall be final, binding
and conclusive upon the Sellers. The Buyer may rely upon any decision, act,
consent or instruction of the Sellers' Representative as being the decision,
act, consent or instruction of the Sellers. Although the Sellers' Representative
shall not be obligated to obtain instructions from the Sellers prior to any
decision, act, consent or instruction, if, and to the extent that, the Sellers'
Representative receives any written instructions from a Sellers Majority, the
Sellers' Representative shall comply with such instructions.
(E) The Sellers agree (on a pro rata basis in relation
to their proportionate interest in the Purchase Price) to indemnify
and hold harmless the Sellers' Representative from and against, any and all
loss, liability, cost, damage and expense, including, without limitation,
reasonable counsel fees, which the Sellers' Representative may suffer or incur
by reason of any action, claim or proceeding brought against the Sellers'
Representative arising out of or relating in any way to this Agreement or any
transaction to which this Agreement relates unless such action, claim or
proceeding is the result of the gross negligence or willful misconduct of the
Sellers' Representative. The Sellers' Representative may consult counsel in
respect of any question arising under this Agreement and the Sellers'
Representative shall not be liable for any action taken or omitted in good faith
upon advice of such counsel.
(F) The Sellers shall share, on a pro rata basis in
relation to their proportionate interest in the Purchase Price, the
professional fees and expenses of any attorney, accountants or other advisors
retained by the Sellers' Representative in connection with any action taken or
not taken as the Sellers' Representative. The Sellers' Representative may
compensate such advisors from any escrowed funds being released to the Sellers
hereunder. The Sellers' Representative shall also be entitled to request in
writing payment from the Sellers of their ratable portion of amounts payable to
such attorney, accountants or other advisors, which amounts shall be paid upon
such request to such individuals or the Sellers' Representative, as set forth in
the request submitted by the Sellers' Representative. The Sellers'
Representative is authorized to withhold up to $50,000 to pay his fees and
expenses for acting in such capacity after the Closing Date (which shall be
separate and apart from his legal fees for work performed in connection with the
negotiation, drafting and closing under this Agreement).
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(G) The power of attorney granted by the Sellers to the
Sellers' Representative pursuant to this ss. 2(i) is coupled with an
interest and is irrevocable and shall not terminate or otherwise be affected by
the death, disability, incompetence, bankruptcy or insolvency of any of the
Sellers.
3. Representations and Warranties Concerning the Transaction.
(a) The Sellers' Representations and Warranties. Each Seller
represents and warrants to the Buyer that the statements contained in this ss.
3(a) 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 substituted for the date of this Agreement throughout this
ss. 3(a)), but only with respect to himself, herself or itself.
(i) Organization of Certain of the Sellers. The Seller
(if a corporation or other entity) is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of
its incorporation or other formation.
(ii) Authorization of Transaction. The Seller has full
power and authority (including full corporate or other entity power
and authority, as applicable) to execute and deliver this Agreement
and the other documents referenced herein and to perform his, her,
or its obligations hereunder and thereunder. This Agreement
constitutes the valid and legally binding obligation of the Seller,
enforceable in accordance with its terms and conditions. The Seller
need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement. The execution, delivery and
performance of this Agreement and all other agreements contemplated
hereby have been duly authorized by the Seller.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) 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, if the Seller is an
entity, any provision of its charter, bylaws, or other governing
documents, (B) 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 he, she or it is bound, or (C) result in the imposition or
creation of a Lien upon or with respect to the Net Shares he, she,
or it is transferring to the Buyer hereunder.
(iv) Brokers' Fees. Except for a broker's fee to be paid
by all the Sellers to WGI from the Initial Payment on the Closing
Date (and thereafter if there are increases in the Purchase Price),
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.
(v) The Shares. Immediately prior to the date of this
Agreement, the Seller held of record and owned beneficially the
number of Shares set forth next to his, her or its name in Column A
of Schedule A and as of the Closing Date the Seller will hold of
record and beneficially the number of Net Shares set forth next to
his, her or its name in Column C of Schedule A, in both instances,
free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws),
Taxes (except Taxes payable by the Seller on the disposition
thereof), Liens, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. The Seller is not a
party to any option, warrant, purchase right, or other contract or
commitment that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of the Company (other than
this
7
Agreement and the transactions contemplated hereby). The Stockholder
is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of the
Company, except as executed to effect the transactions contemplated
by this Agreement.
(b) The Buyer's Representations and Warranties. The Buyer represents
and warrants to the Sellers that the statements contained in this ss. 3(b) 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 substituted for the date of this Agreement throughout this ss. 3(b)).
(i) Organization of the Buyer. The Buyer is a
corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has full
corporate power and authority to execute and deliver this Agreement
and the other documents referenced herein and to perform its
obligations hereunder and thereunder. This Agreement constitutes the
valid and legally binding obligation of the Buyer, enforceable in
accordance with its terms and conditions. The Buyer need not give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.
The execution, delivery and performance of this Agreement and all
other agreements contemplated hereby have been duly authorized by
the Buyer.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) 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, bylaws, or other governing documents or (B) 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.
(iv) 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 any of the Sellers could become liable or
obligated.
(v) Investment. The Buyer is not acquiring the Shares
with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act.
4. Representations and Warranties Concerning the Company. Except as
otherwise expressly provided below, as used in this ss. 4, the term "Company"
does not include Xxxxxx. The Company represents and warrants to the Buyer that
the statements contained in this ss. 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 substituted for the date of
this Agreement throughout this ss. 4), except as set forth in the disclosure
schedule delivered by the Company to the Buyer on the date hereof (the
"Disclosure Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this ss. 4.
(a) Organization, Qualification, and Corporate Power. The Company is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. The Company is in good standing and is qualified
and licensed to do business in every jurisdiction in which the nature of its
business and operations would require qualification as a foreign corporation.
The Company has all requisite power and authority to own and operate its
properties and to carry on its business as now conducted.
8
(b) Authorization of Transaction. The Company has full corporate
power and authority to execute and deliver this Agreement and the other
documents referenced herein and to perform its obligations hereunder and
thereunder. This Agreement constitutes the valid and legally binding obligation
of the Company, enforceable in accordance with its terms and conditions. The
Company need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement and all other agreements
contemplated hereby have been duly authorized by the Company.
(c) Capitalization. The entire authorized capital stock of the
Company consists of 1,250,000 shares of common stock, $0.10 par value, of which
immediately prior to the transactions set forth in ss.5, 903,652 shares were
issued and outstanding, 10,000 shares were held in treasury and 110,506 shares
were issuable upon exercise of outstanding stock options, and on the Closing
Date following the transactions set forth in ss. 5, 917,112.63 shares are issued
and outstanding, 107,045.37 shares are held in treasury and no shares are
issuable upon exercise of outstanding stock options. All of the issued and
outstanding shares have been duly authorized, are validly issued, fully paid,
and nonassessable, and such Shares are held of record by the respective Sellers
as set forth in Schedule A and were not issued in violation of any preemptive
rights. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Company.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement and the documents referenced herein by the Sellers and the Company,
nor the consummation of the transactions contemplated hereby will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any Governmental Authority to
which the Company is subject or any provision of the charter or bylaws of the
Company 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 (except as described in ss. 4(d) of the
Disclosure Schedule), or require any notice under any Contract, Permit or other
arrangement to which the Company 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 Lien upon any
of the Company's assets). The Company is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
Governmental Authority in order for the Parties to consummate the transactions
contemplated by this Agreement or continue the effectiveness of any Permits
relating to the Business following the Closing.
(e) Brokers' Fees. Except for its obligation to pay WGI a broker's
fee (which obligation will be paid by the Sellers) the Company does not have any
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
(f) Title to Assets. The Company has good and marketable title to,
or a valid leasehold interest in, the material properties and assets used by it,
located on its premises, or shown on the Most Recent Balance Sheet or acquired
after the date thereof, free and clear of all Liens, except for the encumbrances
set forth on ss. 4(f) of the Disclosure Schedule ("Permitted Encumbrances"),
properties disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet, and the items of personal property owned by employees
and described in ss.4(o) of the Disclosure Schedule. The Company has delivered
to the Buyer copies of the deeds and other instruments (as recorded) by which
the Company acquired such real property and interests, copies of all title
insurance policies, opinions, abstracts, and surveys in the possession of the
Company and relating to such property or interests.
9
(g) Subsidiaries. The Company has one subsidiary, Xxxxxx, a Georgia
corporation, which will be or has been disposed of prior to the Closing in
accordance with ss. 5 below and the Company does not control, directly or
indirectly, or have any direct or indirect equity participation in any other
Person.
(h) Financial Statements. The Company has delivered to the Buyer
herewith the following financial statements of the Company (collectively the
"Financial Statements"): (i) audited consolidated and unaudited consolidating
balance sheets and statements of income as of and for the fiscal years ended
December 31, 2002, 2003, and 2004 (including Xxxxxx) (the "Most Recent Fiscal
Year End"); and (ii) unaudited balance sheets and statements of income
(exclusive of Xxxxxx) (the "Most Recent Financial Statements") as of and for the
three months ended March 31, 2005 (the "Most Recent Fiscal Month End"). The
Financial Statements (including the notes thereto) have been prepared based upon
the books and records of the Company applied on a consistent basis throughout
the periods covered thereby (except as specifically agreed herein), present
fairly the financial condition of the Company as of such dates and the results
of operations of the Company for such periods, are consistent with the books and
records of the Company (which books and records are correct and complete in all
material respects), and provide adequate reserves for inventory, accounts
receivable and warranty claims; 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 and do not include the assets or liabilities or results of
operations of Xxxxxx (other than trade payables due to Xxxxxx in the ordinary
course of business).
(i) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, the Business of the Company has been operated in the
Ordinary Course of Business and there has not been any material adverse change
in the business, financial condition, operations, results of operations, or
future prospects of the Company. Without limiting or being limited by the
generality of the foregoing, except as set forth in ss. 4(i) of the Disclosure
Schedule, since that date:
(i) the Company 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 and other than
the disposition of the Xxxxxx stock and the note receivable from
Xxxxxx pursuant to ss. 5 below;
(ii) the Company has not entered into any agreement,
contract, lease, pricing arrangement or license (or series of
related agreements, contracts, leases, pricing arrangements and
licenses) either involving more than $10,000 (and not terminable on
30 days notice) or outside the Ordinary Course of Business;
(iii) the Company has not, nor has it received notice
that any other party has, accelerated, terminated, modified, or
cancelled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more
than $10,000 to which the Company is a party or by which it or its
assets are bound;
(iv) the Company has not imposed or, to its Knowledge,
permitted any Lien upon any of its assets other than Permitted
Encumbrances;
(v) the Company has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$10,000 or outside the Ordinary Course of Business;
(vi) the Company has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $10,000 or outside the
Ordinary Course of Business;
10
(vii) the Company has not issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation
either involving more than $10,000 in the aggregate or outside the
Ordinary Course of Business;
(viii) the Company has not delayed or postponed the
payment of accounts payable and other Liabilities outside the
Ordinary Course of Business;
(ix) the Company has not cancelled, 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 other than the exchange of the note receivable
from Xxxxxx (in an amount of $317,184.29 as of April 20, 2005) in
accordance with ss. 5 hereof;
(x) the Company has not transferred, assigned, or
granted any license or sublicense of any rights under or with
respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
charter or bylaws of the Company;
(xii) the Company has not issued, sold, or otherwise
disposed of any of its capital stock (other than in connection with
the exercise of the options shown in Schedule A), or granted any
options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock;
(xiii) the Company has not declared, set aside, or paid
any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock, except for the
distribution of the Xxxxxx stock in accordance with ss. 5 hereof;
(xiv) the Company has not cancelled, 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 except for the exchange of the Xxxxxx
note receivable in accordance with ss.5 hereof;
(xv) the Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance)
individually, in the aggregate, more than $10,000 to its property;
(xvi) the Company has not made any loan to, or entered
into any other transaction with, any of its directors, officers,
employees or stockholders outside the Ordinary Course of Business,
except for the transactions described in ss. 5 hereof;
(xvii) except for Stay Pay Agreements with 5 employees
and the employment agreements described in ss.8(a)(ix), the Company
has not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(xviii) the Company has not (a) granted any increase in
the base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business or (b) made any
other change in employment terms for any of its directors, officers,
or employees outside the Ordinary Course of Business;
(xix) the Company has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with
respect to any other Employee Benefit
11
Plan), except for amendments to the Company's 2000 Long Term Stock
Incentive Plan as described in ss.4(i) of the Disclosure Schedule;
(xx) the Company has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course
of Business;
(xxi) no material customer, supplier, representative,
distributor, lessee, or lessor has terminated or given notice of its
intent to terminate or, to the Company's Knowledge, threatened to
terminate its relationship with the Company;
(xxii) to the Company's Knowledge, there has not been
any other occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business involving the
Company or the Company's assets which would have a material adverse
effect on the Company;
(xxiii) the Company has not discharged a material
Liability or Lien outside the Ordinary Course of Business (except
for payment on the Closing Date of the Xxxxxxx Xxxxx Indebtedness);
(xxiv) the Company has not made any loans or advances of
money, except for amounts represented by the note receivable from
Xxxxxx;
(xxv) the Company has not disclosed any Confidential
Information (except to the Sellers in connection with this
Agreement); and
(xxvi) the Company has not committed to any of the
foregoing.
(j) Undisclosed Liabilities. The Company does not have any Liability
(and the Company has received no notice of any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
it giving rise to any Liability), except for (i) Liabilities set forth in the
Most Recent Balance Sheet (including any Liabilities specified or quantified in
the notes thereto), and (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).
(k) Legal Compliance. The Company has complied in all material
respects with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of all
Governmental Authorities, and the Company has received no notice that any
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against it alleging any failure so
to comply. The Company possesses, and is in compliance with, the terms and
conditions of, all franchises, consents, approvals, licenses, permits,
certificates and other authorizations ("Permits") from any Governmental
Authority that are necessary for the ownership of its assets and the conduct of
its business as presently conducted in the Ordinary Course of Business. With
respect to each such Permit: (A) to the Company's Knowledge the Permit is in
full force and effect; (B) the Company is not in breach or default, and no event
has occurred which, with notice or lapse of time, or both, would constitute a
breach or default, or permit termination or modification of the Permit; and (C)
to the Company's Knowledge the Permit will continue in full force and effect on
identical terms for the benefit of the Buyer following the consummation of the
transactions contemplated hereby.
(l) Tax Matters.
(A) The Company has timely filed all material Tax
Returns that it was required to file (taking into account applicable
extensions), and all such Tax Returns are correct and complete. (The return for
2004 is on extension until September 15, 2005, but all estimated taxes due have
been paid). The Company has
12
paid on a timely basis or fully reserved for all Taxes that were or will be due
and owed by the Company (whether or not shown on such Tax Returns) with respect
to any periods ending on or prior to the Closing Date. The unpaid Taxes of the
Company did not, as of the Most Recent Fiscal Month End, exceed the reserve for
Tax Liability (rather than any reserves for "deferred Taxes" or similar items
that reflect timing differences between Tax and financial accounting principles)
set forth on the face of the Most Recent Financial Statement (rather than in any
notes thereto). All Taxes attributable to periods commencing after the date of
the Preliminary Balance Sheet have arisen in the Ordinary Course of Business and
are consistent with regard to type and amount with Taxes incurred in comparable
historical periods. All Taxes that the Company is or was required by law to
withhold or collect have been duly withheld or collected in connection with any
amounts paid or owing to any employee, independent contractor or stockholder
and, to the extent required, have been paid to the proper Governmental Entity.
(B) The Company has made available to the Buyer correct
and complete copies of all federal income Tax Returns, examination
reports and statements of deficiencies filed by or on behalf of, assessed
against or agreed to by the Company for any period commencing after December 31,
1999. The Company has made available to the Buyer correct and complete copies of
all other material Tax Returns of the Company together with all related
examination reports and statements of deficiency for all periods commencing
after December 31, 1999. No examination or audit of any Tax Return of the
Company by any Governmental Entity is currently in progress or, to the Knowledge
of the Company, threatened or contemplated. The Company has not been informed in
writing by any Governmental Entity that the Governmental Entity believes that
the Company was required to file any material Tax Return that was not filed. The
Company has not waived any statute of limitations with respect to Taxes or
agreed to or been the beneficiary of an extension of time with respect to a Tax
Return, assessment or deficiency.
(C) The Company: (i) is not a "consenting corporation"
within the meaning of Section 341(f) of the Code, and none of the assets of the
Company are subject to an election under Section 341(f) of the Code; (ii) has
not been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; (iii) has not made any payments, is not obligated
to make any payments, nor is a party to any agreement that could obligate it to
make any payments that may be treated as an "excess parachute payment" as
defined in Section 280G of the Code (determined without regard to Section
280G(b)(4) of the Code or any similar provision of law in any jurisdiction);
(iv) does not have any actual or potential liability for any Taxes of any person
(other than the Company) under Treasury Regulation Section 1.1502-6 (or any
similar provision of law in any jurisdiction), or as a transferee or successor,
by contract, or otherwise; (v) has not been a member of an affiliated group
filing a consolidated federal income Tax Return (other than a group the common
parent of which was the Company); and (vi) is not a party to or bound by any tax
allocation or sharing agreement.
(D) The Company has not undergone, nor will it undergo
solely as a result of the consummation of the transactions
contemplated by this Agreement, a change in its method of accounting resulting
in an adjustment to its taxable income pursuant to Section 481(h) of the Code.
(E) There is no limitation on the utilization by the
Company of its net operating losses, built-in losses, Tax credits or
similar items under Sections 382 or 383 of the Code or comparable provisions of
state law (other than any such limitation arising as a result of (i) the
consummation of the transactions contemplated by this Agreement, excluding the
transaction described in ss.5 or (ii) the remaining usable life of such losses
or credit).
(F) Except for the distribution of the Xxxxxx stock as
described in ss. 5 below, the Company has not distributed to its shareholders or
security holders stock or securities of a controlled corporation, nor has stock
or securities of the Company been distributed, in a transaction to which Section
355 or 361 of the Code
13
applies (i) in the two years prior to the date of this Agreement or (ii) in a
distribution that could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code).
(G) The Company will not be required to include any item
of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any (i) "closing agreement" as described in Section 7121 of the
Code (or any comparable provision of law in any jurisdiction) executed on or
prior to the Closing Date, (ii) installment sale or open transaction disposition
made on or prior to the Closing Date, (iii) prepaid amount received on or prior
to the Closing Date, or (iv) intercompany transactions or any excess loss
account described in Treasury Regulations under Section 1502 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law).
(H) There are no Liens for Taxes (other than Taxes not
yet due and payable) upon any of the assets of the Company.
(I) Notwithstanding any other provision of this
Agreement, none of the Sellers will have any obligation under this
Agreement with respect to tax effects on the Company occasioned by any election
made by the Buyer after the Closing Date, including without limitation any
election under ss.338 of the Code, except as required by law or by any
Governmental Authority.
(J) The Company has fully accrued for Taxes and related
amounts resulting from the distribution of the stock of Xxxxxx
pursuant to ss. 5.
(m) Real Property.
(i) The Company does not own any real property. ss.
4(m)(i) of the Disclosure Schedule lists and describes briefly the
only real property leased or subleased to or otherwise occupied by
the Company (such real property together with all buildings and
other improvements thereon, the "Leased Real Property").
(ii) Regarding the existing lease with respect to the
Leased Real Property (the "Existing Lease"):
(A) the Existing Lease is legal, valid,
binding, enforceable, and in full force and effect;
(B) the Existing Lease 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;
(C) the Company is not, and to the Knowledge
of the Company no other party to the Existing Lease is,
in breach or default, and to the Knowledge of the
Company, 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) the Company has not, and to the
Knowledge of the Company no other party to the Existing
Lease has, repudiated any provision thereof;
(E) there are no oral agreements or
forbearance programs in effect, or to the Knowledge of
the Company any disputes, as to the Existing Lease;
14
(F) the Company has not, prior to the
acquisition of the Net Shares by the Buyer, assigned,
transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the Existing Lease;
(G) to the Company's Knowledge, the Leased
Real Property has received all approvals of Governmental
Authorities (including licenses and permits) required in
connection with the operation thereof and has been
operated and maintained in accordance with applicable
laws, rules, and regulations; and
(H) the Leased Real Property is supplied
with utilities and other services necessary for the
operation of said facilities.
(n) Intellectual Property.
(i) The Company owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of its business as presently
conducted. The Company possesses all right, title and interest in
and to each item of owned Intellectual Property, free and clear of
any Security Interest or other restriction or claim. With respect to
each material item of Intellectual Property that any third party
owns and that the Company uses, the license, sublicense, agreement
or permission pursuant to which the Company has the right to use
such item is legal, valid, binding, enforceable and in full force
and effect. Each material item of Intellectual Property owned or
used by the Company 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
Company has taken all necessary action to maintain and protect each
material item of Intellectual Property that it owns or uses.
(ii) ss. 4(n) of the Disclosure Schedule identifies each
material item of Intellectual Property owned or used by the Company
in the Business. ss. 4(n)(ii) of the Disclosure Schedule identifies
each patent or registration which has been issued to the Company
with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which the
Company has made with respect to its Intellectual Property, and
identifies each license, agreement, or other permission which the
Company has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). The Company
has delivered to the Buyer correct and complete copies of all such
patents, registrations, applications, licenses, agreements, and
permissions (as amended to date) and has made available to the Buyer
correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such
item. ss. 4(n)(ii) of the Disclosure Schedule also identifies each
registered or unregistered trade name, service xxxx or trademark
used by the Company in connection with any part of the Business. The
Company has delivered to the Buyer correct and complete copies of
all licenses, sublicenses, agreements, and permissions (as amended
to date) relating to material Intellectual Property.
(iii) The Company has not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and, except as
described on ss.4(n) of the Disclosure Schedule, the Company has not
ever received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or
violation (including any claim that the Company must license or
refrain from using any Intellectual Property rights of any third
party). To the Company's Knowledge, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(o) Tangible Assets. The Company owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of its
business as presently conducted. All agreements pursuant to
15
which any such assets are leased are set forth in ss.4(o) of the Disclosure
Schedule. Each such material tangible asset is free from defects (patent and
latent), has been maintained in accordance with normal industry practice, is in
good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used.
(p) Inventory. Except as reserved on the Preliminary Balance Sheet,
the inventory of the Company is fit for the purpose for which it was procured or
manufactured, and none of such Inventory is obsolete, damaged, or defective.
Each item of inventory of the Company is valued in the Financial Statements at
average cost (except for the year ended December 31, 2002, when inventory was
valued at the lower of cost or market, on a FIFO basis). ss.4(p) of the
Disclosure Schedule sets forth the locations of the inventory and the
approximate dollar amounts thereof at April 27, 2005.
(q) Contracts. ss. 4(q) of the Disclosure Schedule lists all
purchase orders, contracts, commitments, obligations, plans, agreements,
instruments, arrangements, understandings, bids, undertakings and proposals
written or oral including all amendments and supplements thereto, or series of
any of the foregoing, to which the Company is a party or by which any of its
assets are bound involving consideration in excess of $10,000 per year or which
are otherwise material to the Company (including, without limitation, any
Contract concerning confidentiality or non-competition or limiting the Company's
ability to do business in any line of business or geographical area) (the
"Contracts"). The Company has delivered to the Buyer a correct and complete copy
of each written Contract listed in ss. 4(q) of the Disclosure Schedule (as
amended to date) (other than purchase orders submitted to the Company, correct
and complete copies of which have been made available to the Buyer, but not
delivered) and a written summary setting forth the terms and conditions of each
oral Contract referred to in ss. 4(q) of the Disclosure Schedule. Other than
purchase orders cancelable upon less than 30 days' notice, with respect to each
such Contract: (A) the Contract is legal, valid, binding, enforceable, and in
full force and effect; (B) to the Company's Knowledge, no party 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, under the Contract; and (C) the Company has not and, to the
Company's Knowledge, no other party has repudiated any provision of any
Contract. Except as set forth in ss. 4(q) of the Disclosure Schedule, (i) no
purchase Contracts of the Company are in excess of the normal and ordinary
requirements of the Company and (ii) the Company is not, and from and after the
Closing will not be, contractually restricted from carrying out its business in
any geographic area. There are no outstanding powers of attorney executed on
behalf of the Company. The Company is not a guarantor or otherwise liable for
any Liability or obligation (including Indebtedness) of any other Person.
(r) Insurance. ss. 4(r) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, title, officer and shareholder life,
and workers' compensation coverage and bond and surety arrangements) to which
the Company has been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past 2 years:
(i) the name, address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and
amount (including a description of how deductibles and ceilings are
calculated and operate) of coverage;
(v) a description of the annual premiums payable,
deductibles and limits with respect thereto and any retroactive
premium adjustments or other loss-sharing arrangements; and
16
(vi) the claims history of the Company with respect to
such policy.
Except as set forth in ss. 4(r) of the Disclosure Schedule, there are no claims
pending under any of said policies or bonds or disputes with underwriters, and
all premiums due and payable have been paid. Except as set forth in ss. 4(r) of
the Disclosure Schedule, there are no pending or threatened terminations with
respect to any of such policies and bonds and the Company is in compliance with
all conditions contained therein. All such policies and bonds are in full force
and effect. True, correct and complete copies of each such insurance policy have
been delivered to the Buyer. ss. 4(r) of the Disclosure Schedule describes any
self-insurance arrangements affecting the Company.
(s) Litigation. ss. 4(s) of the Disclosure Schedule sets forth each
instance in which the Company (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of the Company, 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. None of the actions, suits, proceedings,
hearings, and investigations set forth in ss. 4(s) of the Disclosure Schedule
could result in any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of the
Company.
(t) Warranty. Except for deficiencies that are de minimis in the
aggregate, each product manufactured, sold, leased, or delivered by the Company
has been in conformity with all applicable contractual commitments and all
express and implied warranties, and the Company does not have any Liability (and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) for replacement or repair thereof or other damages in
connection therewith, subject only to the reserve for product warranty claims
set forth in the Most Recent Balance Sheet (or specified or quantified in any
notes thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company. ss. 4(t) of the
Disclosure Schedule includes copies of the standard terms and conditions of sale
or lease for the Company (containing applicable guaranty, warranty, and
indemnity provisions). No product manufactured, sold, leased, or delivered by
the Company is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease set forth in ss. 4(t)
of the Disclosure Schedule.
(u) Employees. To the Knowledge of the Company, no executive, key
employee, or group of employees has any plans to terminate employment with the
Company. The Company is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. The Company has not
committed any unfair labor practice. The Company has no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company. All salaried employees of
the Company are listed in ss. 4(u) of the Disclosure Schedule. The
qualifications of each employee of the Company for employment under applicable
immigration laws have been reviewed, a properly completed Form I-9 is on file
with respect to each such employee, as applicable, and the Company has complied
with the Immigration and Nationality Act, as amended from time to time, and the
rules and regulations promulgated thereunder, and the Company has no Knowledge
of any basis for any claim that the Company is not in compliance with the terms
thereof.
(v) Employee Benefits. ss. 4(v) of the Disclosure Schedule lists
each Employee Benefit Plan maintained by the Company or to which the Company is
obligated (or at any time within the last six years, has been obligated) to
contribute or with respect to which the Company has any Liability ("Company
Employee Benefit Plans"). None of the Company Employee Benefit Plans that are
not qualified plans under Section 401(a) of the Code and exempt from income
taxation under Section 501(a) of the Code provides or promises benefits to
ex-employees (including retirees) of the Company and its dependents and
beneficiaries, except as specifically required under Section 4980B of the Code
with respect to continuation of coverage. All Company Employee Benefit Plans
have been operated in accordance with their terms. All Company Employee
17
Benefit Plans that are not Multiemployer Plans and that are subject to the terms
of ERISA, the Code, or other statutes, laws, ordinances, codes, rules and
regulations comply in all material respects with ERISA, the Code, and such other
statutes, laws, ordinances, codes, rules and regulations, as applicable. In the
case of each Company Employee Benefit Plan which is intended to be a qualified
plan under Section 401(a) of the Code and exempt from income taxation under
Section 501(a) of the Code, a determination has been received within the last
two years from the appropriate District Director of the Internal Revenue Service
that such plan is qualified under Section 401(a) of the Code and the trust
created thereunder is exempt from federal taxation under Section 501(a) of the
Code. No such Company Employee Benefit Plan has incurred any accumulated funding
deficiency (within the meaning of ERISA or the Code) and the Company does not
have any Liability or potential Liability on account of an accumulated funding
deficiency with respect to any Company Employee Benefit Plan. There has been no
transaction involving any Company Employee Benefit Plan which is a "prohibited
transaction" under ERISA or the Code in connection with which the Company would
be subject to Liability under ERISA or any tax liability imposed by the Code, or
which would subject any Company Employee Benefit Plan or the Company to a
penalty under ERISA, the Code or any other statute, law, ordinance, code, rule
or regulation. There has been no complete or partial termination of any Company
Employee Benefit Plan. None of the Company Employee Benefit Plans provides for
additional or accelerated payments or other consideration to be made on account
of the transactions contemplated hereby.
The market value of assets under each Company Employee
Benefit Plan equals or exceeds the present value of all vested and nonvested
liabilities thereunder determined in accordance with the provisions of ERISA and
the Code applicable to an Employee Benefit Plan terminating on the date such
determination is made.
No suit, action, claim, proceeding, investigation or
arbitration has been made or instituted or, to the Knowledge of the Company,
threatened, with respect to any Company Employee Benefit Plan or any assets
thereof; except for routine claims for benefits made in accordance with the
terms thereof.
All contributions or payments required to be made to
such Company Employee Benefit Plans by their terms, the terms of any relevant
collective bargaining agreement(s) or any other applicable law, before or after
the Closing Date, with respect to all periods or events occurring prior to the
Closing Date (including all insurance premiums) have been properly paid or
accrued (to the extent required under ERISA or the Code) on the books of account
of the Company prior to the Closing Date (including, without limitation, a pro
rata share with respect to any period including the Closing Date based on the
ratio of the number of days in such period to the total number of days in the
fiscal year of the applicable Company Employee Benefit Plan). The Liabilities
for all benefits provided pursuant to the Company Employee Benefit Plans have
been truly and accurately provided for on the books of account of the Company.
True, complete and accurate copies of the documents
setting forth the terms of each Company Employee Benefit Plan, including,
without limitation, plans, agreements, amendments, trusts and all related
contracts and other agreements (including, without limitation, corporate
resolutions and minutes relating to any Company Employee Benefit Plan) and,
where applicable, copies of each Company Employee Benefit Plan's: (i) most
recent summary plan descriptions and modifications thereto; (ii) notices
distributed to employees, consultants, agents, dependents and other
beneficiaries with regard to any Company Employee Benefit Plan and any
continuation of coverage required under law; (iii) most recent favorable
Internal Revenue Service determination letters; (iv) five most recent annual
reports (IRS Forms 5500), including, without limitation, audited financial
statements (if any) and all schedules thereto; and (v) five most recent
actuarial reports, have heretofore been delivered to the Buyer. There are no
oral modifications to any of such Company Employee Benefit Plans.
(w) Environmental, Health, and Safety Matters.
18
(i) The Company has complied and is in compliance in all
material respects with all Environmental, Health, and Safety
Requirements.
(ii) Without limiting the generality of the foregoing,
the Company has obtained and complied with, and is in compliance in
all material respects 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.
(iii) The Company 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 (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to it or its facilities
arising under Environmental, Health, and Safety Requirements.
(iv) To the Company's Knowledge, none of the following
exists at any property or facility owned or operated by the Company:
(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 Company uses a glue that contains
cyclohexanone, a hazardous substance. The Company has furnished the
Buyer with an MSDS regarding this product. The Company also uses
Super Bonder 496 Instant Adhesive, which contains cyanocrylate, and
the Company has provided the Buyer an MSDS regarding this product.
(v) The Company has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or
released 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.
(vi) Except as set forth in ss. 4(w) of the Disclosure
Schedule, 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 Governmental Authorities or third parties, pursuant to
any of the so-called "transaction-triggered" or "responsible
property transfer" Environmental, Health, and Safety Requirements.
(vii) The Company has not, either expressly or 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.
(x) Certain Business Relationships with the Company. Except as set
forth in ss. 4(x) of the Disclosure Schedule, no Seller or any Affiliate of a
Seller has been involved in any business arrangement or relationship with the
Company within the past 12 months, and none of the Sellers owns any asset,
tangible or intangible, which is used by the Company.
(y) Company Products. Since January 1, 2000, except as set forth in
ss. 4(y) of the Disclosure Schedule:
(i) there have not been any written notices, citations
or published decisions by any Governmental Authority that any Company Product is
defective or fails to meet any applicable regulations or standards promulgated
by any such Governmental Authority;
19
(ii) To the Company's Knowledge, each of the Company's
clinical investigators has complied in all material respects with the
applicable laws and specifications with respect to design, manufacture,
labeling, testing and inspection of each Company Product promulgated by the
United States Food and Drug Administration (the "FDA") or any other Governmental
Authority having authority and jurisdiction over the Company and/or a Company
Product ("Regulatory Requirements"). The Regulatory Requirements include quality
system regulations (QSR), current good manufacturing practices (cGMP)
regulations, good clinical practices (GCP) regulations, good laboratory
practices (GLP) regulations, and adverse event reporting requirements;
(iii) The Company has made all submissions (of any kind
and in any written, electronic, oral, or other forms) in connection with
Company Products that are required by Regulatory Requirements. These submissions
include adverse event reports to a Governmental Authority and communications
with clinical investigators. All submissions and representations concerning
Company Products which the Company has made to any Governmental Authority or
clinical investigator have been made in good faith, and have contained accurate
and complete data and information in all material respects;
(iv) there have been no recalls, field notifications or
seizures ordered or, to the Knowledge of the Company, threatened by any
Governmental Authority with respect to any Company Product;
(v) the Company has not received any warning letter or
Section 305 notice from the FDA; and
(vi) the Company has not received any written notice
that there exist any reasonable grounds for a claim of defectiveness of any
Company Product or for the recall of any Company Product. No Person has been
required to file any written notification or other written report with or
provide information to any Governmental Authority or product safety standards
organization or to disclose any information to any Person or the public at large
with respect to actual or potential defects, hazards or adverse events with
respect to any Company Product.
(z) Disclosure. The representations and warranties contained in this
ss. 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 ss. 4 not misleading.
5. Disposition of Xxxxxx Stock and Note Receivable. On or
immediately prior to the Closing Date, and as a part of the Closing, but after
the exercise of any outstanding options to purchase Company stock and the
exchange of the Company's note receivable from Xxxxxx for 9,900 shares of Xxxxxx
common stock, all as approved by the Company's directors and/or shareholders,
the Company shall distribute all shares of capital stock of Xxxxxx held by the
Company, free and clear of all encumbrances, pro rata in exchange for certain
shares of the Company's capital stock (including shares acquired by the holders
of the Company's options, all of which will be exercised on or immediately prior
to the Closing) as reflected on Schedule A hereto. As a result of the foregoing,
on the Closing Date, each Seller shall own such Seller's "Net Shares" (being the
number of shares reflected in Column C of Schedule A) opposite the name of such
Seller.
6. 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 Seller who executes this Agreement, the Company
and the Buyer will use his, her, or its reasonable best 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
ss. 8 below).
20
(b) Notices and Consents. The Company will give any notices to third
parties, and use its best efforts to obtain any third party consents referred to
in ss. 4(d) above. Each of the Parties will give any notices to, make any
filings with, and use its best efforts to obtain any authorizations, consents,
and approvals of governments and governmental agencies in connection with the
matters referred to in ss. 3(a)(ii), ss. 3(b)(ii), and ss. 4(d) above.
(c) Operation of Business. The Company will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business, except as provided in ss. 5. Without limiting the generality
of the foregoing, except as provided in ss. 5, the Company will not (i) declare,
set aside, or pay any dividend or make any distribution with respect to its
capital stock or redeem, purchase, or otherwise acquire any of its capital
stock, or (ii) otherwise engage in any practice, take any action, or enter into
any transaction of the sort described in ss. 4(i) above.
(d) Preservation of Business. The Company will keep its business and
properties substantially intact, including its present operations, physical
facilities, working conditions, insurance policies, and relationships with
lessors, licensors, suppliers, customers, and employees.
(e) Full Access. The Company will permit, representatives of Buyer
(including legal counsel and accountants) to have full access at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of the Company, to all premises, properties, personnel, books,
records (including Tax records), contracts, and documents of or pertaining to
the Company.
(f) Notice of Developments. The Company will give prompt written
notice to Buyer of any development causing a breach of any of the
representations and warranties in ss. 4 above. Each Party will give prompt
written notice to the others of any development causing a breach of any of his,
her or its own representations and warranties in ss. 3 above. Upon receipt by
the Buyer of any such notice provided in the foregoing two sentences with
respect to the Company or any Seller, the Buyer shall have the right to
terminate this Agreement within five (5) business days of receipt of such
notice; provided that, if the Buyer does not terminate this Agreement, it shall
be deemed to have accepted a revised Disclosure Schedule incorporating the
developments set forth in the notice. Upon receipt by the Sellers'
Representative of any such notice provided in the first two sentences of this
ss. 6(f) with respect to the Buyer, the Sellers' Representative shall have the
right to terminate this Agreement within five (5) business days of receipt of
such notice; provided that, if the Sellers' Representative does not terminate
this Agreement, it shall be deemed to have accepted a disclosure schedule
incorporating the developments set forth in the notice.
(g) Exclusivity. Neither the Sellers nor the Company will (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 Company (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. None of the Sellers will vote their Shares in favor of any such
acquisition. The Sellers will notify the Buyer immediately if any Person makes
any proposal, offer, inquiry, or contact with respect to any of the foregoing.
(h) Tax Matters. Without the prior written consent of the Buyer, the
Company shall not make or change any election, change an annual accounting
period, adopt or change any accounting method, file any amended Tax Return,
enter into any closing agreement, settle any Tax claim or assessment relating to
the Company, surrender any right to claim a refund of Taxes, consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to the Company or Xxxxxx, or take any other similar action
relating to the filing of any Tax Return or the payment of any Tax, if such
election, adoption, change, amendment, agreement, settlement, surrender, consent
or other action would have the effect of increasing the
21
Tax liability of the Company for any period ending after the Closing Date or
decreasing any Tax attribute of the Company existing on the Closing Date.
7.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 may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under ss. 9 below).
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or 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 Company, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their 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 ss.
9 below).
(c) Transition. The Sellers 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 Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing. The preceding sentence shall
not apply with respect to any decision made after the Closing Date by Xxxxxx or
any entity in which any Seller has an equity interest or is an officer or
director as of the Closing Date to change its business relationship with the
Company or to cease to do business as a licensor, customer or supplier or other
business associate of the Company.
(d) Confidentiality. The Sellers will treat and hold as such all of
the Confidential Information, 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 his or
its possession. In the event that the Sellers are 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, the Seller will notify the Company
promptly of the request or requirement so that the Buyer or the Company may seek
an appropriate protective order or waive compliance with the provisions of this
ss. 7(d). If, in the absence of a protective order or the receipt of a waiver
hereunder, the Sellers are, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, the
Sellers may disclose the Confidential Information to the tribunal; provided,
however, that the disclosing Sellers shall use his, her or its best efforts to
obtain, at the request of the Buyer or the Company, 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 or the Company shall
designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure through no fault of the Sellers.
(e) Covenant Not to Compete. The Key Sellers agree as follows:
(i) For a period of four (4) years from and after the
Closing Date (the "Noncompetition Period"), none of the Key Sellers will
engage directly or indirectly in any business that is competitive with the
Business in any geographic area in which the Business is conducted or in which
the Buyer plans to conduct the Business as of the Closing Date; provided,
however, that for avoidance of doubt, the business of developing,
22
assembling or selling subassemblies or parts contained within liquid infusion
devices, blood pressure cuffs, and blood transfusion filters (but not entire
liquid infusion devices, blood pressure cuffs, and blood transfusion filters)
shall not constitute engaging in a business that is competitive with the
Business for purposes of this sentence; and provided, further, that this
sentence shall not prevent a Key Seller from working solely as an employee of a
division of a company where such division does not conduct any business that is
competitive with the Business, even though the company owning such division may
do so; and provided, further, that Xxxxx Xxxx shall not be deemed in violation
of this sentence by virtue of the fact that T-Med, an entity of which he is an
officer and director, develops, assembles and sells blood pressure cuffs with a
separate internal bladder. During the period of four (4) years from and after
the Closing Date (the "Non-Solicitation Period"), Key Sellers shall not induce
or attempt to induce any customer or supplier of the Company or any Affiliate to
terminate its relationship with the Buyer or any Affiliate or to enter into any
business relationship to provide or purchase the same or substantially the same
services as are provided to or purchased from the Company which might harm the
Company or any Affiliate. During the Non-Solicitation Period, the Key Sellers
shall not on behalf of any entity other than the Company or an Affiliate, hire
or retain, or attempt to hire or retain, in any capacity any person who is, or
was at any time during the preceding twelve (12) months, an employee or officer
of the Company or an Affiliate; provided, however, that the parties acknowledge
that Xxxxx X. Xxxxxxxx, Xx. and Xxxxxx X. Xxxxxx are officers and/or directors
of Xxxxxx and Xxxxx Xxxx is an officer and director of T-Med, and their
continuing service as such shall not violate the prohibitions set forth in this
sentence. If the final judgment of a court of competent jurisdiction declares
that any term or provision of this ss. 7(e) is invalid or unenforceable, the
Parties agree that the court making the determination of invalidity or
unenforceability shall reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable 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.
(ii) Each of the Key Sellers acknowledges and agrees
that the Buyer would be damaged irreparably in the event any of the
provisions of this ss. 7(e) are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Key Sellers agrees
that the Buyer shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this ss. 7(e) and to enforce specifically this ss.
7(e) 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 (subject to the provisions set forth in ss. 11(n) below), in
addition to any other remedy to which they may be entitled, at law or in equity.
(iii) Notwithstanding the preceding provisions of
ss.7(e)(i) and (ii) above, nothing in this ss.7(e) shall apply or be deemed to
apply to Xxxx X. Xxxxxx with respect to any action or activity of The Metrix
Company, an entity of which Xxxx X. Xxxxxx is a controlling shareholder. In
addition, if a Key Seller is a holder of a minority interest in the capital
stock of a company that following the Closing Date becomes a entity that is
competitive with the Business, the mere ownership of such capital stock shall
not be deemed to violate the preceding provisions of ss.7(e)(i) above as long as
such Key Seller is not in any other way affiliated with such entity (whether as
an employee, director, officer, consultant or otherwise).
8. Conditions to Obligation to Close.
(a) Conditions to Obligation 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 ss.
3(a) and ss. 4 above shall be true and correct at and as of the
Closing Date;
(ii) The Sellers and the Company shall have performed
and complied with all of their covenants hereunder through the
Closing;
23
(iii) The Sellers and the Company shall have procured
all of the third party consents specified in ss. 4(d) of the
Disclosure Schedule;
(iv) All of the Sellers shall have executed this
Agreement and the other agreements contemplated herein; all Sellers
shall have delivered to the Sellers' Representative all of their Net
Shares, together with stock powers endorsed to the Buyer or in
blank, to be held in escrow and delivered to the Buyer at Closing.
(v) The Company shall have completed the transactions
concerning Xxxxxx that are described in ss. 5 above.
(vi) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, county, 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, or (C) affect
adversely the right of the Buyer to own the Company and operate its
business (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(vii) The Company and the Sellers' Representative shall
have delivered to the Buyer a certificate to the effect that each of
the conditions specified above in ss. 8(a)(i)-(vi) is satisfied in
all respects;
(viii) The Sellers and the Buyer shall have received all
authorizations, consents, and approvals of Governmental Authorities
referred to in ss. 3(a)(ii), ss. 3(b)(ii) and ss. 4(b) above, and
none of such authorizations, consents, and approvals shall contain
any terms, limitations, or conditions which the Buyer determines in
good faith to be materially burdensome to the Buyer;
(ix) Xxxxx Xxxxxxxx, Xxxxx Xxxx and Xxxxx Xxxxxx shall
have executed employment agreements in form and substance
satisfactory to the Buyer;
(x) the Buyer shall have received from each Seller an
executed general release in form and substance as set forth in
Exhibit B attached hereto;
(xi) the Buyer shall have received such pay-off letters
and releases relating to the Xxxxxxx Xxxxx Indebtedness as it shall
have requested and such pay-off letters shall be in form and
substance satisfactory to it;
(xii) the Buyer shall have received UCC, judgment lien
and tax lien searches with respect to the Company, the results of
which indicate no liens on the Company's assets other than those as
to which the Company has delivered releases and terminations of lien
satisfactory to the Buyer;
(xiii) the Company shall have delivered evidence
reasonably satisfactory to the Buyer of its corporate organization
and proceedings and its existence in each jurisdiction in which it
is incorporated, including evidence of such existence as of the
Closing;
(xiv) all actions to be taken by the Sellers and the
Company in connection with consummation of the transactions
contemplated hereby and all certificates, instruments, and other
documents required to effect the transactions contemplated hereby
will be satisfactory in form and substance to the Buyer; and
24
(xv) the Buyer shall have obtained financing to
consummate the transactions contemplated by this Agreement, which
financing shall be satisfactory in the Buyer's sole discretion.
The Buyer may waive any condition specified in this ss. 8(a) if it executes a
written instrument so stating at or prior to the Closing.
(b) Conditions to Obligations of the Sellers and the Company. The
obligations of the Sellers and the Company to consummate the transactions to be
performed by them in connection with the Closing are subject to satisfaction of
the following conditions:
(i) the representations and warranties set forth in ss.
3(b) above shall be true and correct at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with
all of its covenants hereunder 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 Sellers'
Representative a certificate to the effect that each of the
conditions specified above in ss. 8(b)(i)-(iii) is satisfied in all
respects;
(v) the Buyer, the Sellers and the Company shall have
received all authorizations, consents, and approvals of Governmental
Agencies referred to in ss. 3(a)(ii), ss. 3(b)(ii) and ss. 4(b)
above;
(vi) All of the Sellers shall have executed this
Agreement and the other agreements contemplated herein; all Sellers
shall have delivered to the Sellers' Representative all of their Net
Shares, together with stock powers endorsed to the Buyer or in
blank, to be held in escrow and delivered to the Buyer at Closing.
(vii) The Company shall have completed the transactions
concerning Xxxxxx that are described in ss. 5 above.
(viii) the Company shall have executed the employment
agreements described in ss. 8(a)(ix) above; and
(ix) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably satisfactory
in form and substance to the Sellers' Representative.
The Sellers' Representative may waive any condition specified in this ss. 8(b)
if he executes a written instrument so stating at or prior to the Closing.
25
9. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties.
The representations and warranties of each Seller contained in ss.
3(a) of this Agreement shall survive the Closing and continue in full force and
effect for a period of fifteen (15) months after the Closing Date; provided that
the representations and warranties contained in ss. 3(a)(v) shall continue in
full force and effect indefinitely. The representations and warranties of the
Company contained in ss. 4 of this Agreement shall survive the Closing and
continue in full force and effect for a period of fifteen (15) months after the
Closing Date; provided that the representations and warranties contained in ss.
4(b), ss. 4(c) and ss. 4(f) shall continue in full force and effect indefinitely
and the representations and warranties contained in ss. 4(l) shall continue in
full force and effect for a period equal to the applicable statute of
limitations plus sixty (60) days. The representations and warranties of the
Buyer contained in ss. 3(b) of this Agreement shall survive the Closing and
continue in full force and effect for a period of fifteen (15) months after the
Closing Date. This ss. 9 shall survive so long as any representations,
warranties or indemnification obligations of any Party survive hereunder;
provided that no claim may be brought for indemnification hereunder after the
expiration of the survival period of the applicable representation or warranty
in question. Each Party agrees that it shall not make an indemnification claim
under this ss. 9 without a reasonable basis therefor.
(b) Indemnification Provisions for Benefit of the Buyer.
(i) Subject to ss. 9(d) and ss. 9(e), in the event the
Company breaches any of its representations and warranties contained
in ss. 4 of this Agreement (other than the representations set forth
in ss. 4(b), ss. 4(c), ss. 4(f) and ss. 4(l), which shall be covered
pursuant to ss. 9(b)(iii) below), and, if there is an applicable
survival period pursuant to ss. 9(a) above, provided that the Buyer
makes a good faith written claim for indemnification to the Sellers'
Representative pursuant to ss. 11(h) below within such survival
period, which written claim shall, to the extent possible, identify
the basis for indemnification and any relevant facts forming the
basis for such claim, then each of the Sellers agrees to indemnify
the Buyer and any Affiliate thereof from and against the entirety
(subject to ss. 9(d) and ss. 9(e) below) of any Adverse Consequences
the Buyer or such Affiliate may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences
the Buyer or such Affiliate may suffer after the end of the
applicable survival period) resulting from, arising out of, relating
to, in the nature of, or caused by the breach.
(ii) Subject to ss. 9(d) and ss. 9(e), in the event any
Seller breaches any of any of his, her or its representations and
warranties contained in ss. 3 of this Agreement (other than the
representations set forth in ss. 3(a)(v), which shall be covered
pursuant to ss. 9(b)(iii) below), and, if there is an applicable
survival period pursuant to ss. 9(a) above, provided that the Buyer
makes a good faith written claim for indemnification to and against
the breaching Seller pursuant to ss. 11(h) below within such
survival period, which written claim shall, to the extent possible,
identify the basis for indemnification and any relevant facts
forming the basis for such claim, then such breaching Seller agrees
to indemnify the Buyer and any Affiliate thereof (but only as to
such Seller and not as to other Sellers) from and against the
entirety (subject to ss. 9(d) and ss. 9(e)) of any Adverse
Consequences the Buyer or such Affiliate may suffer through and
after the date of the claim for indemnification (including any
Adverse Consequences the Buyer or such Affiliate may suffer after
the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach.
(iii) In addition to the indemnification provided in ss.
9(b)(i) and ss. 9(b)(ii), each of the Sellers agrees to indemnify
the Buyer and any Affiliate thereof from and against the entirety
(subject in the case of in ss. 9(b)(iii)(B) to the limitation set
forth therein with respect to Sellers who are not Key Sellers) of
26
any Adverse Consequences the Buyer and any Affiliate thereof may
suffer resulting from, arising out of, relating to, in the nature
of, or caused by:
(A) Any breach of the representations and
warranties set forth ss. 3(a)(v) (but only as to such Seller and not
as to other Sellers); or
(B) Such Seller's pro rata portion (based on
percentage of the Purchase Price received by such Seller) of the
Adverse Consequences arising from any breach of the representations
and warranties set forth in ss. 4(b), ss. 4(c), ss. 4(f) and ss.
4(l), provided that if the Adverse Consequences set forth in this
clause (B) exceed the undisbursed balance in the Escrow Account plus
the amount of the additional Purchase Price that may be owed to the
Sellers pursuant to ss. 2(e)(ii) above and that has not been
disbursed to the Sellers pursuant to such ss. 2(e)(ii), then the Key
Sellers shall share the entirety of such Adverse Consequences
(beyond the undisbursed balance of the Escrow Account and the
undisbursed portion of any additional Purchase Price owed pursuant
to ss.2(e)(ii) above) on a pro rata basis (and not jointly and
severally) and no further amounts shall be due from the Sellers who
are not Key Sellers.
(c) Indemnification Provisions for Benefit of the Sellers.
(i) In the event the Buyer breaches any of its
representations and warranties contained in this Agreement, and,
during the applicable survival period pursuant to ss. 9(a) above,
provided that the Sellers' Representative makes a good faith written
claim for indemnification against the Buyer pursuant to ss. 11(h)
below within such survival period which written claim shall, to the
extent possible, identify the basis for indemnification and any
relevant facts forming the basis for such claim, then the Buyer
agrees to indemnify the Sellers from and against the entirety of any
Adverse Consequences the Sellers may suffer through and after the
date of the claim for indemnification (including any Adverse
Consequences the Sellers may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach.
(d) Limitation on Indemnification. Anything to the contrary herein
notwithstanding, in no event shall the Sellers have or assert any claim against
the Buyer, or the Buyer have or assert any claim against the Sellers based upon
or arising out of the breach of any representation or warranty pursuant to ss.
9(b)(i), ss. 9(b)(ii) or ss. 9(c)(i), unless, until and to the extent that the
aggregate of all such claims underss. 9(c)(i), in the case of claims by the
Sellers, or under ss. 9(b)(i) and ss. 9(b)(ii), in the case of claims by the
Buyer, exceeds a Forty-Two Thousand Dollar ($42,000) aggregate threshold (the
"Threshold").
Notwithstanding anything set forth within the preceding paragraph,
and for avoidance of doubt, the Threshold shall not apply to any breach of the
representations and warranties which is the result of fraud or any breach of the
representations and warranties contained in ss. 3(a)(v), ss. 4(b), (c), (f) and
(l) hereof.
(e) Further Limitation on Indemnification; Right of Offset. Anything
to the contrary herein notwithstanding, in no event shall the Sellers have any
indemnification obligation to the Buyer under ss. 9(b)(i) or ss. 9(b)(ii) above,
nor shall the Buyer have or assert indemnification claims against the Sellers
under ss. 9(b)(i) or ss. 9(b)(ii) above, in an aggregate amount greater than the
undisbursed balance in the Escrow Account plus the amount of the additional
Purchase Price that may be owed to the Sellers pursuant to ss. 2(e)(ii) above
and that has not been disbursed to the Sellers pursuant to such ss. 2(e)(ii).
Sellers acknowledge and agree the Buyer shall have the right to offset its
indemnification claims against any undisbursed balance in the Escrow Account and
any undisbursed additional Purchase Price that may be owed to the Sellers
pursuant to ss. 2(e)(ii) above. Buyer acknowledges and agrees it may assert any
indemnification claim against any Seller pursuant to ss. 9(b)(i) or ss. 9(b)(ii)
above only against undisbursed funds in the Escrow Account or the amount of any
undisbursed additional
27
Purchase Price determined under ss. 2(e)(ii) and not against any Seller
personally or against any other assets of any Seller.
(f) 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 ss. 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 any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is
materially prejudiced.
(ii) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified
Party so long as (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
(subject to any applicable limitation in this ss. 9) 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 (which financial
resources may include the undisbursed balance of the Escrow Account
and any undisbursed additional Purchase Price owed pursuant to
ss.2(e)(ii)), (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 (it being understood that any Third Party Claim
involving a person or entity which is a customer or supplier of the
Buyer following the Closing, will be deemed to involve the
possibility of such a precedential custom or practice), 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 ss. 9(f)(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 (not to be withheld unreasonably), 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 (not to
be withheld unreasonably).
(iv) In the event any of the conditions in ss. 9(f)(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) subject to any
applicable limitation in this ss. 9 the Indemnifying Parties 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
Parties will remain responsible (subject to any applicable
limitation in this ss. 9) 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 ss. 9.
28
(g) Exclusive Remedy. Other than with respect to matters that
constitute fraud, each party hereto acknowledges and agrees that its sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement shall be pursuant to the indemnification provisions set
forth in this ss. 9 (other than the equitable remedy of specific performance in
connection with the breach of any covenant contained in this Agreement).
10. Dispute Resolution.
(a) Binding Arbitration. Other than disputes with respect to ss.
7(e) hereof, any dispute, claim or controversy of any kind (e.g., whether in
contract or in tort, statutory or common law, legal or equitable) arising
between or among any Party hereto in any way arising out of, pertaining to or in
connection with the Company, the Acquisition or this Agreement, or any claim or
dispute between any one or more of the Parties to this Agreement, shall, except
as expressly and specifically noted to the contrary in this Agreement, be
resolved by binding arbitration pursuant to this ss. 10. The foregoing matters
shall be referred to as a "Dispute". Each of the Parties agrees on behalf of
itself and its affiliates to arbitrate any Dispute unless the opposing party
shall specifically waive arbitration in writing. Any Party to this Agreement
may, by summary proceedings, bring an action in court to compel arbitration of
any Disputes not referred to arbitration as required by this Agreement.
(b) Governing Rules. All Disputes between the parties shall be
resolved by binding arbitration in accordance with the terms of this Agreement,
the Commercial Arbitration Rules of the American Arbitration Association, and,
to the maximum extent applicable, the Federal Arbitration Act (Title 9 of the
United States Code). In the event of any inconsistency between this Agreement
and such statute and rules, this Agreement shall control. Judgment upon the
award rendered by the arbitrators shall be binding and not subject to appeal,
but may be reduced to judgment in any court having jurisdiction.
(c) Statute of Limitations. All statutes of limitation of the State
of Connecticut that would otherwise be applicable shall apply to any arbitration
proceeding; provided, however, the survival periods for the assertion of
indemnification claims as set forth in ss.9(a) shall control over any
inconsistent statute of limitation.
(d) Scope of Award; Modification or Vacation of Award;
Qualifications. Unless the parties agree in writing to the contrary, all
arbitration proceedings shall be arbitrated by a panel of three (3) independent
arbitrators, each party to the Dispute selecting one independent arbitrator and
the two so chosen selecting the third independent arbitrator. In the event that
any of the three arbitrators shall not be serving, the others serving shall
appoint a replacement from the same profession as the arbitrator not serving.
The arbitrators shall resolve all Disputes in accordance with the applicable
substantive law. The arbitrators may grant any remedy or relief that the
arbitrators deem just and equitable and within the scope of this Agreement;
provided, however, the arbitrators shall have no power to grant punitive or
exemplary damages or grant damages in excess of amounts allowable under ss.9.
The arbitrators may also grant such ancillary relief as is necessary to make
effective the award. In all arbitration proceedings in which the amount in
controversy exceeds $100,000, in the aggregate, the arbitrators shall make
specific, written findings of fact and conclusions of law. In all arbitration
proceedings in which the amount in controversy exceeds $100,000, in the
aggregate, the Parties shall have, in addition to the limited statutory right,
the right to seek vacation or modification of any award that is based in whole
or in part on an incorrect or erroneous ruling of law by appeal to an
appropriate court having jurisdiction; provided, however, that any such
application for vacation or modification of an award based on any incorrect
ruling of law must be filed in a court having jurisdiction over the Dispute
within fifteen (15) days from the date the award is rendered. The arbitrators'
findings of fact shall be binding on all Parties and shall not be subject to
further review except as otherwise allowed by applicable law.
(e) Confidentiality. Each Party agrees to keep all Disputes and
arbitration proceedings strictly confidential (provided the Sellers'
Representative may communicate with the Sellers and vice versa), except for
disclosures of information required in the Ordinary Course of Business of the
parties or by applicable law or
29
regulation. In no event shall a Party issue a press release or discuss with or
reveal to the press the existence or status of a dispute or the status of any
arbitration proceeding.
(f) Other Matters. To the maximum extent practicable, an arbitration
proceeding hereunder shall be concluded within one hundred eighty (180) days of
the filing of the Dispute for arbitration by notice from either party to the
other. Arbitration proceedings hereunder shall be conducted in Washington, D.C.
Arbitrators shall be empowered to impose sanctions and to take such other
actions as the arbitrators deem necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the Connecticut Rules of Civil
Procedure and applicable law. To the extent permitted by applicable law and the
provisions and limitations of this Agreement, the arbitrators shall have the
power to award recovery of all costs and fees (excluding attorney's fees, but
including administrative fees and arbitrators' fees) to the prevailing party.
11. Miscellaneous.
(a) Incorporation of Exhibits, Annexes, and Schedules The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(b) Press Releases and Public Announcements. Except as required by
applicable law or regulation, no Party shall issue any press release or make any
public announcement relating to the subject matter of this Agreement prior to
the Closing without the prior written approval of the Buyer and the Sellers'
Representative.
(c) 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.
(d) Entire Agreement This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof, including, but not limited to, the Letter of Intent
between the Parties dated February 9, 2005.
(e) 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 his, her or its rights, interests, or obligations hereunder without the
prior written approval of the Buyer and the Sellers' Representative; provided,
however, that the Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates, (ii) designate one or more of its
Affiliates 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), and (iii) collaterally assign any or all of its rights
and interests hereunder to one or more lenders of the Buyer, provided such
lenders are bound to the limitations on liability of the Sellers hereunder.
(f) Counterparts This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. Facsimile or other
electronic execution and delivery of this Agreement shall be valid and binding
for all purposes.
(g) 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.
(h) 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 two
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:
30
If to the Sellers, in care of the Sellers' Representative:
----------------------------------------------------------
Xxxxxxx X. Xxxxxxx, Esquire
Xxxxxxxxx Xxxxxxx Law Firm
0000 Xxxxx Xxxx Xxxxx, Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
If to the Buyer:
----------------
CAS Medical Systems, Inc.
00 Xxxx Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
Attention: Chief Executive Officer
Copy to:
--------
Xxxxxx and Xxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxxxxx Xxxxxxx
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, overnight 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 Parties
notice in the manner herein set forth.
(i) Governing Law This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Connecticut without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Connecticut or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Connecticut.
(j) 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, the Sellers and the Company. 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.
(k) 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.
(l) Expenses Each of the Parties will bear his or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(m) 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
31
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 or local
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.
(n) Submission to Jurisdiction Strictly for the purposes of
enforcing the provisions of ss. 7(e) hereof or to enforce an arbitration ruling
pursuant to ss. 10 hereof, each of the Parties submits to the jurisdiction of
any state or federal court sitting in the State of Connecticut, in any action or
proceeding arising out of or relating to the foregoing matters and agrees that
all claims in respect of the action or proceeding with respect to such matters
may be heard and determined in any such court. 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 any other
Party 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 ss. 11(h)
above. Nothing in this ss. 11(n), however, shall affect the right of any Party
to bring any action or proceeding to enforce the provisions of ss. 7(e) hereof
or to enforce an arbitration ruling pursuant to ss. 10 hereof in any other court
or to serve legal process in any other manner permitted by law or at 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 judgment or in any other
manner provided by law or at equity.
[signature page follows]
32
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the date first above written.
THE BUYER:
CAS MEDICAL SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
THE COMPANY:
STATCORP, INC.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
---------------------------
Name: Xxxxx X. Xxxxxxxx, Xx.
Title: President
THE SELLERS:
Key Sellers:
XXXXXX HOLDINGS USA, INC.
By: /s/ X. Xxxxxxxx Xxxx
----------------------------
Name: X. Xxxxxxxx Xxxx
Title: Vice President
BUNTER HOLDINGS
By: /s/ X. Xxxxxxxx Xxxx
----------------------------
Name: X. Xxxxxxxx Xxxx
Title: Owner
/s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx (including shares held
jointly with Xxxxxx Xxxxxx)
S-1
/s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx (including shares held jointly
with Xxxxxx X. Xxxxxx)
/s/ Xxxxx Xxxx
------------------------------
Xxxxx Xxxx
/s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxxx, Xx.
------------------------------
Xxxxx X. Xxxxxxxx, Xx.
/s/ Xxxxx Xxxxxxxx
------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxx Xxxxx
------------------------------
Xxxx Xxxxx
/s/ Xxxxx Xxxxxx
------------------------------
Xxxxx Xxxxxx
Other Sellers:
/s/ Xxxxxxx X. Xxxxxxxx, XX
------------------------------
Xxxxxxx X. Xxxxxxxx, XX
/s/ Xxxxx X. Xxxxxxx, Xx.
------------------------------
Xxxxx X. Xxxxxxx, Xx.
/s/ F. Xxxxxx Xxxxx, Jr.
------------------------------
F. Xxxxxx Xxxxx, Jr.
/s/ Xxxxxx X. Xxxx
------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxxx X. Xxxx
------------------------------
Xxxxxx X. Xxxx
2
/s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxx, Xx.
------------------------------
Xxxxxxx X. Xxxxxx, Xx.
RAM BAY CORPORATION
By: /s/ X. X. Xxxxxxxx
------------------------------
Name: W. H Xxxxxxxx
Title: Chairman
/s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxx, Xx.
------------------------------
Xxxxx X. Xxxxxx, Xx.
/s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
/s/ Mr. & Mrs. Xxxx Xxxxx
------------------------------
Mr. & Mrs. Xxxx Xxxxx
/s/ Xxxx Xxxxx, Jr.
------------------------------
Xxxx Xxxxx, Jr.
/s/ S. Xxxxxxx Xxxxx, III
------------------------------
S. Xxxxxxx Xxxxx, III
/s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx
3
XXXXXX FAMILY LP
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: General Partner
/s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx
/s/ Xxxx XxxXxxxxxxx Xxxxx
------------------------------
Xxxx XxxXxxxxxxx Xxxxx
/s/ Xxx Xxxxx
------------------------------
Xxx Xxxxx
/s/ Xxxx Xxxxx
------------------------------
Xxxx Xxxxx
/s/ Xxxxx Xxxxxxxxx
------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxx Xxxxxx
------------------------------
Xxxxx Xxxxxx
THE UNDERSIGNED, being the appointed Sellers' Representative, hereby agrees to
be bound by the terms and conditions of the foregoing Agreement, subject to
Sellers' Representative's right to resign at any time by giving written notice
to the Sellers.
/s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx, Esq., as Sellers
Representative
4
APPENDIX A
DEFINITIONS
As used herein, the following terms have the respective meanings set
forth below:
"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, lost
value, expenses, and fees, including court costs and 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.
"Affiliated Group" means any affiliated group within the meaning of
Code ss. 1504(a) or any similar group defined under a similar provision of state
or local law.
"Xxxxxx" means Xxxxxx International, Inc., a Georgia corporation.
"Base Qualifying Revenue" means Five Million Nine Hundred
Seventy-Five Thousand Dollars ($5,975,000).
"Business" has the meaning set forth in the recitals above.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents (including marketable
securities and short term investments) applied on a basis consistent with the
preparation of the Financial Statements.
"CERCLA" has the meaning set forth in ss. 4(w) above.
"Closing" has the meaning set forth in ss. 2(g) above.
"Closing Date" has the meaning set forth in ss. 2(g) above.
"Closing Balance Sheet" has the meaning set forth in ss.2(d)(i)
above.
"Closing Working Capital" means the difference, as of the Closing
Date, between (a) the sum of the net trade receivables, inventory, cash and cash
equivalents, and other prepaid expenses of the Company, as reflected on the
Closing Balance Sheet, less (b) the accounts payable and accrued expenses of the
Company as reflected on the Closing Balance Sheet, in each case, determined in
accordance with GAAP. The calculation of Closing Working Capital will include
the cash paid to the Company by the holders of its options upon exercise thereof
on or prior to the Closing Date and will exclude the Xxxxxxx Xxxxx Indebtedness,
which the Buyer will pay in full on the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Employee Benefit Plans" has the meaning set forth in ss.
4(v) above.
"Company Product" means any product that is produced, manufactured,
marketed, tested, distributed, sold or offered for sale by the Company to third
parties in or outside of the United States, or at the written request
of the Company has been approved for sale in or outside of the United States by
any authorized Governmental Authority, whether or not such systems are or have
been sold, offered for sale or approved for sale.
"Confidential Information" means any information concerning the
business and affairs of the Company that is not generally available to the
public.
"Contracts" has the meaning set forth in ss. 4(q) above.
"Disclosure Schedule" has the meaning set forth in ss. 4 above.
"Employee Benefit Plan" means any (a) Employee Pension Benefit Plan
(including any Multiemployer Plan), (b) Employee Welfare Benefit Plan, or (c)
fringe benefit plan or program whether written or oral.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Sec. 3(1).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state and local statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations 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 now or
hereafter in effect.
"Environmental Liability" means any Liability arising under any
Environmental, Health and Safety Requirements relating to or arising out of the
ownership, use or operation of the Company's assets and business prior to the
Closing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Existing Lease" has the meaning set forth in ss. 4(m)(ii) above.
"Financial Statements" has the meaning set forth in ss. 4(h) above.
"Governmental Authority" means any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court of the United States of America or any political
subdivision thereof, or of any other country.
"Indebtedness" of any Person means, in each case whether or not
accrued on the books of such Person, (a) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services, (b)
all obligations of such Person upon which interest charges are customarily paid
or which are evidenced by notes, bonds, debentures, credit agreements or similar
agreements or investments, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations of such Person under capitalized
leases, (e) all obligations of such Person in respect of acceptances, letters of
credit or letters of guaranty issued or created for the account of such Person,
and (f) all liabilities secured by any Security Interest on any property owned
by such Person, whether or not such Person has assumed or otherwise become
liable for the payment thereof.
6
"Indemnified Party" has the meaning set forth in ss. 9(f)(i) above.
"Indemnifying Party" has the meaning set forth in ss. 9(f)(i) above.
"Initial Payment" has the meaning set forth in ss. 2(b) above.
"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, and corporate names, 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,
diagrams, specifications, customer and supplier lists, catalogs, pricing and
cost information, and business and marketing plans and proposals), (f) all
computer software (including data and related documentation) (whether purchased
or internally developed), (g) all other proprietary rights, (h) all information
systems and management procedures, and (i) all copies and tangible embodiments
thereof (in whatever form or medium).
"Key Sellers" means Xxxxxx Holdings USA, Inc., Bunter Holdings,
Xxxxxx X. Xxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxx, Xxxx X. Xxxxxx, Xxxxx X. Xxxxxxxx,
Xx., Xxxxx Xxxxxxxx, Xxxx Xxxxx and Xxxxx Xxxxxx.
"Knowledge" means actual knowledge after reasonable investigation.
"Leased Real Property" has the meaning set forth in ss. 4(m)(i)
above.
"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.
"Liens" means any lien, claim, security interest, mortgage, pledge,
restriction, covenant, charge or encumbrance of any kind or character, direct or
indirect, whether accrued, absolute, contingent or otherwise.
"Measurement Period" has the meaning set forth in ss. 2(c)(ii)
above.
"Xxxxxxx Xxxxx Indebtedness" means collectively all components due
on a particular date as principal, interest and premium (if any) under the
Xxxxxxx Xxxxx Line of Credit and the Xxxxxxx Xxxxx Term Loan.
"Xxxxxxx Xxxxx Line of Credit" means the line of credit in the
maximum principal amount of $350,000 from Xxxxxxx Xxxxx Business Financial
Services, Inc. in favor of the Company.
"Xxxxxxx Xxxxx Term Loan" means the term loan from Xxxxxxx Xxxxx
Business Financial Services, Inc. to the Company which had an unpaid balance of
$359,300 as of March 31, 2005.
"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 ss.
4(h) above.
7
"Most Recent Fiscal Month End" has the meaning set forth in ss. 4(h)
above.
"Most Recent Fiscal Year End" has the meaning set forth in ss. 4(h)
above.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Net Shares" has the meaning set forth in ss. 2(a) above.
"Noncompetition Period" has the meaning set forth in ss. 7(e) above.
"Non-Solicitation Period" has the meaning set forth in ss. 7(e)
above.
"Ordinary Course of Business" means the ordinary course of business
consistent with the past custom and practice of the Company (including with
respect to quantity and frequency).
"Parties" has the meaning set forth in the preface above.
"Permits" has the meaning set forth in ss. 4(k) above.
"Permitted Encumbrances" has the meaning set forth in ss. 4(f)
above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a limited liability company, a
joint venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Preliminary Balance Sheet" has the meaning set forth in ss. 2(d)
above.
"Preliminary Working Capital" means the difference, as set forth on
the Preliminary Balance Sheet, between (a) the sum of the net trade receivables,
inventory, cash and cash equivalents, and other prepaid expenses of the Company,
as reflected on the Preliminary Balance Sheet, less (b) the accounts payable and
accrued expenses of the Company as reflected on the Preliminary Balance Sheet,
in each case, determined in accordance with GAAP.
"Purchase Price" has the meaning set forth in ss. 2(b) above.
"Qualifying Revenues" means the revenues of the Company (such
revenues, as determined in accordance with GAAP in a manner consistent with the
prior three fiscal years (except for consolidation with Xxxxxx)) less any
revenues of the Company arising from (i) Persons who were customers or
distributors of the Buyer prior to the Closing Date who were not customers or
distributors of the Company during the one year period prior to the Closing Date
and (ii) Persons who were not customers or distributors of the Company during
the one year period prior to the Closing Date and who became customers after the
Closing Date due to a referral from the Buyer. For the avoidance of doubt,
"Qualifying Revenues" includes all revenues of the Company from its existing
customers and distributors (as shown on a list of the Company's customers and
distributors for the one year period prior to the Closing Date has been provided
to the Buyer and the Sellers' Representative on a confidential basis) plus all
new customers and distributors who do not fall within either of the categories
described in clause (i) or (ii) of the prior sentence.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any adverse claim, mortgage, pledge, lien,
encumbrance, option, restriction on transfer, easement, right of way, matter of
survey, charge, or other security interest.
8
"Sellers" or "Seller" has the meaning set forth in the preface
above.
"Sellers' Representative" has the meaning set forth in ss. 2(i)
above.
"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.
"SWDA" has the meaning set forth in ss. 4(w) above.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales
and use, transfer, registration, value added, 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 ss. 9(f)(i) above.
"Threshold" has the meaning set forth in ss. 9(d) above.
"WGI" means The Xxxxxx Group, Inc.
9
Schedule A
List of Sellers
------------------------------------------------------------------------------------------------------------------------------------
1. Stockholders A B C D
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Name and Address No. of Shares Before Shares Added by Option No. of Shares After Option % of Purchase Xxxxx
Xxxxxx Transaction and Exercise Exercise and Xxxxxx Allocated to Such Person
Option Exercises Transaction
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx Holdings USA,
Inc. 190,396 172,176.896 18.774%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxxx X. Xxxxxxxx, XX 17,116 15,478.160 1.688%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxx X. Xxxxxxx, Xx. 61,591 55,697.321 6.073%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Bunter Holdings 5,695 5,150.042 0.562%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
F. Xxxxxx Xxxxx, Jr. 9,721 8,790.792 0.959%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx X. Xxxxxx 90,527 81,864.419 8.926%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx Xxxxxx 14,040 12,696.504 1.384%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx & Xxxxxx Xxxxxx 8,996 8,135.168 0.887%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx X. Xxxx 9,336 8,442.633 0.921%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx X. Xxxx 19,388 17,532.751 1.912%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx X. Xxxxx 3,883 3,511.433 0.383%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxx X. Xxxxxxxx 500 452.155 0.049%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxx Xxxx 71,448 35,475 96,691.476 10.543%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxxx X. Xxxxxx, Xx. 38,073 34,429.772 3.754%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Ram Bay Corporation 21,687 19,611.758 2.138%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx X. Xxxxxxx 22,417 20,271.904 2.210%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxx X. Xxxxxx, Xx. 4,776 4,318.982 0.471%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx X. Xxxxxx 4,776 4,318.982 0.471%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxx X. Xxxxxx 68,252 61,720.926 6.730%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Mr. & Mrs. Xxxx Xxxxx 8,558 7,739.080 0.844%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxx Xxxxx, Jr. 9,977 9,022.295 0.984%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
S. Xxxxxxx Xxxxx, III 29,122 26,335.299 2.872%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxx X. Xxxxxxxx, Xx. 50,056 22,314 65,444.873 7.136%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxx Xxxxxxxx 68,267 49,467 106,467.965 11.609%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx Xxxxxx 1,404 1,269.650 0.138%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx Family LP 1,762 1,593.393 0.174%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxx X. Xxxxxx 12,416 11,227.906 1.224%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxx Xxxxx 59,472 53,781.090 5.864%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxxx Xxxxxx 0 750 678.232 0.074%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxx XxxXxxxxxxx Xxxxx 0 250 226.077 0.025%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxx Xxxxxx 0 750 678.232 0.074%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxx Xxxxx 0 500 452.155 0.049%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxx Xxxxx 0 500 452.155 0.049%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxx Xxxxxxxxx 0 250 226.077 0.025%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Xxxxx Xxxxxx 0 250 226.077 0.025%
-------------------------- ---------------------- ---------------------- -------------------------- ------------------------
Totals 903,652 110,506 917,112.630 100.000%
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is dated as of May 15, 2005
by and among M&T Bank (the "Escrow Agent"), CAS Medical Systems, Inc., a
Delaware Corporation (the "Buyer"), and Xxxxxxx X. Xxxxxxx, Esq. (the "Sellers
Representative"), as agent of and attorney-in-fact for the respective
individuals and entities identified on Schedule A hereto (each a "Seller" and,
collectively, the "Sellers").
RECITALS
The Buyer, Statcorp, a Delaware corporation (the "Company") and the
Sellers, have entered into that certain Stock Purchase Agreement dated as of May
15, 2005 (the "Stock Purchase Agreement").
This is the Escrow Agreement referred to in ss.2(c)(i) of the Stock
Purchase Agreement.
Immediately prior to the Closing, the Sellers collectively owned
100% of the outstanding shares of the capital stock of the Company.
Schedule A hereto sets forth the follo.wing information for each
Seller: (i) name and address, (ii) the percentage economic ownership of such
Seller in the Purchase Price and (iii) the amount of cash deposited into escrow
by the Buyer with respect to such Seller pursuant to the Stock Purchase
Agreement.
Pursuant to the Stock Purchase Agreement, the Sellers Representative
is willing to act as the Sellers' representative in respect of the Escrow Fund
(as defined below) upon the terms and conditions hereinafter set forth.
The Escrow Agent is willing to act as escrow agent in respect of the
Escrow Fund upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
Defined Terms. Capitalized terms used in this Agreement (including,
without limitation, the Recitals set forth above) but not otherwise defined
herein shall have the meanings given to such terms in the Stock Purchase
Agreement, a copy of which has been provided to the Escrow Agent.
Appointment of Escrow Agent. M&T Bank is hereby appointed to act as
Escrow Agent hereunder, and agrees to act as such, with respect to the escrow
fund established pursuant to Section 3(d) of this Agreement, consisting of the
Escrow Cash (as defined below). The Escrow Agent agrees to accept delivery of
and to hold the Escrow Cash in escrow, subject to the terms and conditions of
this Agreement.
Escrow Fund.
At the Closing (which is taking place concurrently with
the execution of this Agreement and the other agreements, documents and
instruments deliverable at Closing), the Buyer is depositing $700,000.00 in cash
(as increased by any earnings thereon or additional deposits and as reduced by
any losses on investments or releases of cash in accordance with this Agreement,
the "Escrow Cash") (any such earnings less any such losses, referred to as "Net
Earnings") with the Escrow Agent, receipt of which is hereby acknowledged by the
Escrow Agent.
1
The Escrow Agent shall update the amount of the Escrow
Cash contingently payable to each Seller set forth in Schedule A to this
Agreement promptly upon the increase by any earnings thereon or additional
deposits or any reduction thereof by any losses on investments or releases of
cash in accordance with this Agreement, and in no event more than 30 days
following the previous update to Schedule A.
Additional amounts of Escrow Cash may be hereafter
deposited into the Escrow Fund pursuant to this Agreement and the Escrow Agent
shall update Schedule A to reflect the aggregate amount of Escrow Cash so
deposited and deemed contingently payable to each Seller.
The Escrow Agent will establish an account for the
deposit of the Escrow Cash (the "Escrow Fund"). The Escrow Agent shall deposit
the Escrow Cash in the Escrow Fund and shall invest and reinvest the Escrow Cash
only in investments which are obligations of, issued by or guaranteed as to
payment of principal and interest by the full faith and credit of the United
States or instrumentalities or any money market fund that invests in such
securities. Investments shall be made promptly, on a best efforts basis, upon
receipt of available funds by the Escrow Agent. Except as agreed by the Buyer
and the Sellers Representative, the period of maturity of any such investment
shall not exceed 90 days. The Escrow Agent shall not be responsible for or
liable for any loss suffered in connection with any investments of funds made by
it in accordance with this Section 3. The Escrow Agent shall be entitled to sell
or redeem any such investment as necessary to make any distributions required
under this Agreement. Income, if any, resulting from the investment of the
Escrow Cash shall be retained by the Escrow Agent and shall be considered, for
all purposes of this Agreement, to be part of the Escrow Cash.
The Escrow Fund shall be held as a trust fund and shall
not be subject to any lien, attachment, trustee process or any other judicial
process of any creditor of any party hereto.
Transferability. The interests of the Sellers in the Escrow Fund
shall not be assignable or transferable (other than by operation of law), except
with the prior written consent of the Buyer. No transfer of any of such
interests by operation of law shall be recognized or given effect until the
Escrow Agent shall have received legal evidence to its reasonable satisfaction
that such transfer occurred. The Escrow Agent shall promptly thereafter give
written notice of any such transfer by operation of law to the Buyer.
Payment of Claims. Except as otherwise provided in this Agreement,
the Escrow Agent will hold the Escrow Cash in its possession until instructed
hereunder to deliver such Escrow Cash or any specified portion thereof as
follows:
Procedure. If a claim for amounts due arising pursuant
to the Stock Purchase Agreement (a "Claim") is made by the Buyer against the
Company, against any individual Seller or with respect to any downward
adjustment of the Purchase Price pursuant to Section 2(e)(i) of the Stock
Purchase Agreement, the Buyer shall give written notice (a "Notice") to the
Sellers Representative (or to an individual Seller if the Claim is pursuant to
ss. 9(b)(ii) or ss. 9(b)(iii)(A) of the Stock Purchase Agreement) and the Escrow
Agent specifying in reasonable detail the nature and dollar amount of the Claim
for which it may be entitled to recover pursuant to the Stock Purchase
Agreement. This obligation to give notice shall be in addition to, and not in
lieu of, all notice obligations under the Stock Purchase Agreement. If the
Sellers Representative (or the individual Seller, as the case may be) gives
notice to the Buyer and the Escrow Agent disputing any Claim (a "Contest
Notice") within 10 business days following receipt by the Sellers Representative
(or the individual Seller, as the case may be) of the Notice regarding such
Claim, such Claim shall be resolved as provided in Section 5(c). If no Contest
Notice is received by the Escrow Agent within such 10 business-day period, then
the dollar amount of the Claim by the Buyer as set forth in its Notice shall be
deemed established for purposes of this Agreement and the Stock Purchase
Agreement and, at the end of such 10 business-day period, the Escrow Agent shall
pay to the Buyer the dollar amount claimed in the Notice from (and only to the
extent of) the Escrow Cash in the Escrow Fund as provided in Section 5(b);
provided that no amount contingently payable to any Seller shall be used to pay
any Claim that is the sole obligation of another Seller under ss.
2
9(b)(ii) or ss. 9(b)(iii)(A) of the Stock Purchase Agreement. The Escrow Agent
shall not inquire into or consider whether a Claim complies with the
requirements of the Stock Purchase Agreement.
Payments. With respect to any Claim against the Company
for amounts due arising pursuant to the Stock Purchase Agreement or with respect
to any downward adjustment of the Purchase Price pursuant to Section 2(e)(i) of
the Stock Purchase Agreement, for each Seller the amount of Escrow Cash
contingently payable to such Seller as set forth on Schedule A shall be reduced
by a pro rata portion (based upon such Seller's percentage economic ownership
interest in the Purchase Price as set forth on Schedule A) of such Claim. The
amount of Escrow Cash to be paid to the Buyer from the Escrow Fund pursuant to a
Claim against the Company or pursuant to a downward adjustment to the Purchase
Price shall be equal to the aggregate amount of the corresponding reductions in
Escrow Cash as set forth in the immediately preceding sentence. With respect to
any Claim against an individual Seller for amounts due arising pursuant to the
Stock Purchase Agreement, the amount of Escrow Cash contingently payable to such
Seller as set forth on Schedule A shall be reduced by the amount of such Claim.
Contest Notice. If a Contest Notice is given by the
Sellers Representative (or to an individual Seller if the Claim is pursuant to
ss. 9(b)(ii) or ss. 9(b)(iii)(A) of the Stock Purchase Agreement) with respect
to a Claim, the Escrow Agent shall promptly make payment to the Buyer from the
Escrow Fund of any amount of such Claim that is not in dispute and make further
payment with respect thereto only in accordance with (i) joint written
instructions of the Buyer and the Sellers Representative (or the individual
Seller, as the case may be) or (ii) a final decision rendered pursuant to (A)
Section 2(f) of the Stock Purchase Agreement or (B) Section 10 of the Stock
Purchase Agreement, as applicable to the Claim in question.
Updates. Promptly upon any payments made from the Escrow
Fund pursuant to Section 5, the Escrow Agent shall update the amount of each
Seller's contingently payable Escrow Cash set forth in Schedule A.
Release of Escrow.
Partial Release of Escrow Fund. If during the
Measurement Period the Buyer determines that Qualifying Revenues reach or exceed
an amount equal to the Base Qualifying Revenue, then the Buyer shall instruct
the Escrow Agent and the Escrow Agent shall thereupon distribute to the Sellers
Representative on behalf of the Sellers, within five (5) days of receipt of
notice thereof, an amount, if any, such that the amount then held in the Escrow
Fund shall equal $350,000.00. All amounts paid to the Sellers Representative on
behalf of the Sellers pursuant to this Section 6(a) shall be distributed by the
Sellers Representative to each Seller in accordance with such Seller's pro rata
share as set forth in Schedule A, as adjusted to reflect any Claims against an
individual Seller.
Final Release of the Escrow Fund. On the fifteen month
anniversary of the date hereof, the Escrow Agent shall pay the remaining amount
of the Escrow Fund to the Sellers Representative on behalf of the Sellers in an
amount equal to the aggregate amount of Escrow Cash contingently payable to each
Seller as set forth in Schedule A hereto, as updated, unless (i) any Claims are
then pending, in which case an amount equal to the aggregate dollar amount of
such Claims (as shown in the Notices of such Claims) against such Sellers shall
be retained by the Escrow Agent in the Escrow Fund (and the balance paid to the
Sellers Representative) or (ii) the Buyer has given notice to the Sellers
Representative (and any individual Seller, if applicable) and the Escrow Agent
specifying in reasonable detail the nature of any other Claim it has pursuant to
the Stock Purchase Agreement with respect to which it is in good faith unable to
specify the amount of the Claim, in which case the amount otherwise payable to
the Sellers Representative from the Escrow Fund pursuant to this Section 6(b)
shall be retained by the Escrow Agent, in either case until it receives joint
written instructions of the Buyer and the Sellers Representative (or an
individual Seller, if applicable), or satisfactory evidence of a final and
binding decision in the form specified in Section 5(c). All amounts paid to the
Sellers Representative on behalf of the Sellers pursuant to this Section 6(b)
shall be distributed by the Sellers
3
Representative to each Seller in accordance with such Seller's pro rata share as
set forth in Schedule A, as adjusted to reflect any Claims against an individual
Seller.
Escrow Agent.
The Escrow Agent shall be entitled to fees for its
services hereunder as set forth in Schedule B hereto and shall be reimbursed for
all reasonable expenses, disbursements, and advances incurred or made by the
Escrow Agent in performance of its duties hereunder, which compensation and
expenses shall be paid solely by the Buyer and shall not be paid from the Escrow
Cash.
The Escrow Agent may resign and be discharged from its
duties hereunder at any time by giving written notice of such resignation to the
Sellers Representative and the Buyer specifying a date (not less than 30 days
after the giving of such notice) when such resignation shall take effect. Upon
such notice the Buyer and the Sellers Representative shall appoint a new Escrow
Agent who shall replace the resigning Escrow Agent hereunder upon the
resignation date specified in such notice. If the Buyer and the Sellers
Representative are unable to agree upon a successor escrow agent within 30 days
after such notice, the Escrow Agent shall be entitled to appoint its successor.
The Sellers Representative and the Buyer shall have the right at any time upon
their mutual consent to substitute a new Escrow Agent by giving notice thereof
to the Escrow Agent then acting.
The Escrow Agent shall have no duties or
responsibilities whatsoever with respect to the Escrow Fund except as are
specifically set forth herein and may conclusively rely, and shall be protected
in acting or refraining from acting, on any written notice, instrument, request,
consent, certificate, document, letter, telegram, order, resolution or signature
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties duly authorized to do so. The Escrow Agent shall
have no responsibility for the contents of any such writing contemplated herein
and may rely without any liability upon the contents thereof.
The Escrow Agent shall not be liable for any action
taken or omitted by it in good faith and believed by it to be authorized hereby
or within the rights or powers conferred upon it hereunder, nor for action taken
or omitted to be taken by it in good faith, or if taken or omitted to be taken
in accordance with advice of counsel (which counsel may be of the Escrow Agent's
own choosing), and shall not be liable for any mistake of fact or error of
judgment or for any acts or omissions of any kind except for its own fraud,
willful misconduct or gross negligence.
The Buyer and the Sellers agree to indemnify the Escrow
Agent and hold it harmless against any and all losses, liabilities or expenses
(including reasonable attorneys' fees and expenses) incurred by it hereunder as
a consequence of such party's action, except in any case for liabilities
incurred by the Escrow Agent resulting from its own fraud, willful misconduct or
gross negligence.
In the event that the Escrow Agent shall become involved
in any arbitration or litigation with regard to the Escrow Fund, the Escrow
Agent is authorized to comply with any decision reached through such arbitration
or litigation.
Termination of Agreement. This Agreement shall terminate upon the
final disposition of all of the Escrow Cash from the Escrow Fund, provided that
the rights of the Escrow Agent pursuant to Section 7(e) above shall survive such
termination.
Taxes. The parties acknowledge that, in accordance with Internal
Revenue Code Proposed Reg. Section 1-468B-8, for purposes of federal and other
taxes based on income, the Buyer will be treated as the owner of the Escrow Cash
and Net Earnings during all periods until any such funds are distributed to the
Sellers. The Escrow Agent shall furnish Buyer or Sellers, as the case may be,
with the necessary
4
documentation, in accordance with Internal Revenue Code Proposed Reg. Section
1-468B-8(g) to permit such parties to pay the taxes described above.
Inspection. The Escrow Fund shall at all times be clearly identified
by the Escrow Agent as being held by the Escrow Agent hereunder. Any party
hereto may at any time during the Escrow Agent's business hours (with reasonable
notice) inspect any records or reports related to the Escrow Fund. In addition,
the Escrow Agent shall from time to time, upon the request of any party to this
Agreement, provide to such party a then-current version of Schedule A.
Miscellaneous.
This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to its conflicts of laws provisions. This Agreement shall be binding upon
and shall inure to the benefit of the heirs, executors, administrators,
successors and assigns of the parties hereto. This Agreement may be executed in
one or more counterparts, but all such counterparts shall constitute but one and
the same instrument. This Agreement shall be effective only upon execution by
all parties hereto. Section headings contained in this Agreement have been
inserted for reference purposes only, and shall not be construed as part of this
Agreement.
This Agreement, together with the Stock Purchase
Agreement, constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof, and supersedes all prior agreements and
understandings (whether oral or written) among the parties hereto concerning the
matters contained herein. This Agreement may not be amended, waived, discharged,
or terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge, or termination is
sought.
All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given, when
delivered personally, or transmitted by telecopier, receipt acknowledged, or in
the case of documented overnight delivery service or registered or certified
mail, return receipt requested, postage prepaid, on the date shown on the
receipt therefor, to the parties at the following addresses (or at such other
address for a party as shall be specified in like notice):
If to the Buyer, to: With a copy to:
CAS Medical Systems, Inc. Xxxxxx and Xxxx LLP
00 Xxxx Xxxxxxxxxx Xxxx 000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Attention: Chief Financial Officer Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile No.: 000-000-0000 Facsimile No.: 203-763-7676
If to the Sellers Representative, to:
Xxxxxxx X. Xxxxxxx
c/o Xxxxxxxxx Xxxxxxx Law Firm
0000 Xxxxx Xxxx Xxxxx, Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
5
If to any individual Seller, to the address for such Seller set forth on
Schedule A hereto.
If to the Escrow Agent: M&T Bank
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxx
Facsimile No.: 000-000-0000
Each of the rights, powers, and remedies of the parties
hereunder shall be cumulative and concurrent, and shall be in addition to every
other right, power, or remedy provided for hereunder or under the Stock Purchase
Agreement and any exercise or beginning of the exercise by any party of any one
or more of such rights, powers, or remedies shall not preclude the simultaneous
or later exercise by such party of any or all such other rights, powers and
remedies.
(e) All amounts paid pursuant to this Agreement to the
Sellers Representative on behalf of the Sellers shall be received by the Sellers
Representative as the agent of, and for the benefit of, the Sellers.
[Signature page follows]
6
IN WITNESS WHEREOF, the Buyer, the Escrow Agent and the Sellers
Representative have caused this Agreement to be signed as of the date first
written above.
CAS MEDICAL SYSTEMS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
M&T BANK, Escrow Agent
By: ____________________________________
Name: __________________________________
Title: _________________________________
____________________________________________
XXXXXXX X. XXXXXXX as Sellers Representative
7
SCHEDULE A
----------
(Sellers' Information)
-------------------------- ----------------------- ----------------
Name and Ownership Interest in Seller's Balance
Address of Seller the Purchase Price (%) ($)
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
-------------------------- ----------------------- ----------------
Totals 100.000%
-------------------------- ----------------------- ----------------
8
SCHEDULE B
(Escrow Fees)
The escrow fee shall be 50 basis points.
9
EXHIBIT B
GENERAL RELEASE AGREEMENT
THIS GENERAL RELEASE AGREEMENT (this "Agreement"), dated as of May
15, 2005, is among CAS Medical Systems, Inc., a Delaware corporation (the
"Buyer"), Statcorp, Inc., a Delaware corporation (the "Company") and
_______________ (the "Seller"). Capitalized terms not defined herein shall have
the meanings ascribed to them in the Stock Purchase Agreement (as defined
below).
WHEREAS, the Buyer, the Company, the Seller and the other
stockholders named therein entered into that certain Stock Purchase Agreement
dated as of May 15, 2005 (the "Stock Purchase Agreement");
WHEREAS, this is the general release referred to in Section 8(a)(x)
of the Stock Purchase Agreement; and
WHEREAS, the Seller is the record and beneficial owner of the number
of Shares set forth opposite the name of the Seller in column C of Schedule A of
the Stock Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
1. Acknowledgement. The Seller hereby acknowledges that such Seller
has received and read a copy of the Stock Purchase Agreement.
2. Effectiveness. This Agreement shall become binding and
irrevocable upon the execution hereof by all parties hereto, but in no event
earlier than the Closing.
3. Release by the Seller.
(a) Effective as of the Closing, the Seller agrees not
to xxx and fully releases and discharges the Company and the Buyer, including,
without limitation, their directors, officers, employees, equity holders,
representatives, agents, assigns and successors, past and present (collectively
"Releasees"), with respect to and from any and all claims, issuances of the
Company's stock, notes or other securities, any demands, rights, liens,
agreements, contracts, covenants, actions, suits, causes of action, obligations,
debts, costs, expenses, damages, judgments, orders and liabilities of whatever
kind or nature in law, equity or otherwise, whether now known or unknown, and
whether or not concealed or hidden, all of which the Seller now owns or holds or
has at any time owned or held against Releasees, in each case solely with
respect to matters relating to the Company; provided, however, that nothing in
this Section 3(a) waives, releases or restricts in any manner:
(i) any claims the Seller may have against
the Buyer under, or any rights against the Buyer arising out of,
this Agreement, the Stock Purchase Agreement or other agreements,
instruments and documents delivered pursuant to this Agreement or
the Stock Purchase Agreement; and
(ii) any rights of the Seller to receive any
accrued but unpaid salary or vested benefits, including but not
limited to vacation pay, sick leave, personal leave or any other
rights to salary and benefits under and in accordance with the terms
of any existing employment agreement or Employee Benefit Plan
disclosed in or pursuant to the Stock Purchase Agreement or, if
applicable, under any new employment agreement entered into by the
Seller and the Company to become effective on the Closing Date.
2
The release contained in this Section 3(a) is expressly intended for the benefit
of each of the Releasees and their affiliates and shall be enforceable by any
one or more of the Releasees and their affiliates, in addition to each of the
parties to this Agreement. Seller hereby acknowledges that each other
stockholder of the Company who enters into an agreement in the same form as this
Agreement is doing so in reliance upon the Seller's release in this Section
3(a).
(b) It is the intention of the Seller that such release
be effective as a bar to each and every claim, demand and cause of action
hereinabove specified.
(c) Nothing in this Section 3 shall in any way affect
any rights that the Seller may have against the Buyer under this Agreement, the
Stock Purchase Agreement or other agreements, instruments and documents
delivered pursuant to this Agreement or the Stock Purchase Agreement, including,
without limitation, the Seller's right to receive the Seller's proportionate
share of the Purchase Price (including any upward Purchase Price adjustments)
under the Stock Purchase Agreement and any right of indemnification pursuant to
Section 9 of the Stock Purchase Agreement.
4. Miscellaneous.
(a) Binding Effect. The agreements and covenants
contained herein shall bind, and the benefits hereof shall inure to
the benefit of, the parties and their respective successors and
permitted assigns. This Agreement, and the covenants, agreements and
releases contained herein, will not be terminated or revoked without
the written consent of the Buyer, the Company and the Seller.
(b) Entire Agreement. This Agreement and the Stock
Purchase Agreement (including the schedules and exhibits thereto and
the documents and instruments referred to therein that are to be
delivered at the Closing) contain the entire agreement among the
parties hereto relating to the matters provided herein, and no
representations, promises or agreements, oral or otherwise, not
expressly contained or incorporated by reference herein shall be
binding on the parties hereto.
(c) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same agreement
and shall become effective when counterparts have been signed by
each of the parties hereto and delivered to the other parties, it
being understood that all parties need not sign the same
counterpart. This Agreement may be executed and delivered by
facsimile or other electronic transmission.
(d) Governing Law. The validity and construction of this
Agreement shall be governed by the laws of the State of Connecticut
without regard to principles of conflicts of laws.
[Signature page follows]
3
IN WITNESS WHEREOF, the Buyer, the Company and the Seller have
signed this Agreement, or have caused this Agreement to be signed by their
respective duly authorized officers, trustees or other representatives, as of
the date first written above.
CAS MEDICAL SYSTEMS, INC.
By: ________________________________
Name:
Title:
STATCORP, INC.
By: ________________________________
Name:
Title:
SELLER:
____________________________________
Name:
____________________________________
Name (if jointly held):
4
