EXHIBIT 1
STOCK PURCHASE AGREEMENT
BETWEEN
PROACTIVE FINANCE GROUP, LLC
AND
THE X.X. XXXXXXXX COMPANY
JANUARY 2, 1999
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of January
2, 1999, by and between Proactive Finance Group, LLC, a Texas limited liability
company (the "Purchaser") and The X.X. Xxxxxxxx Company, a Delaware corporation
(the "Shareholder"). The Purchaser and the Shareholder are sometimes
collectively referred to herein as the "Parties" and individually referred to
herein as a "Party." Capitalized terms used herein are defined in Section VIII
hereof.
The Shareholder owns 3,157,190 shares of the issued and outstanding
Common Stock, par value $.0002 per share (the "Common Stock"), of DTM
Corporation, a Texas corporation (the "Company"). In addition, the Company owes
Shareholder approximately $907,000, plus any accrued and unpaid interest owing
thereon as of the Closing Date (as defined below), for advances by Shareholder
to Company (together with any Shareholder Claims, the "Purchased Debt"). The
Purchaser desires to acquire, and the Shareholder desires to sell, all right,
title and interest of Shareholder in and to the Purchased Shares (as defined
below) and the Purchased Debt, on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and understandings herein contained, the Parties hereby agree as follows:
SECTION I
STOCK PURCHASE
A. Transactions. On the basis of the representations, warranties, covenants and
agreements and subject to the satisfaction or waiver of the conditions set forth
herein, the Shareholder agrees to sell to the Purchaser, and the Purchaser
agrees to purchase from the Shareholder, all of Shareholder's right, title and
interest in and to 3,157,190 shares of the outstanding Common Stock of the
Company (together with all rights related thereto, the "Purchased Shares") and
all right, title and interest of Shareholder in the Purchased Debt for an
aggregate purchase price of $3,500,000 (the "Purchase Price"), payable by wire
transfer of immediately available funds to an account designated by Shareholder.
B. The Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Xxxx Xxxx Xxxx & Freidenrich LLP,
000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, at 10:00 a.m. on a date
which is no more than three (3) days after all of the conditions set forth in
Section II and Section III have been satisfied or waived in writing (other than
actions the respective Parties will take at the Closing itself) or at such other
place or on such other date as may be mutually agreeable to each of the Parties
(the "Closing Date"). At the Closing, (i) the Shareholder will deliver to the
Purchaser the various certificates, instruments, and documents referred to in
Section II below, (ii) the Purchaser will deliver to the Shareholder the various
certificates, instruments and documents referred to in Section III below, (iii)
the Shareholder shall deliver to the Purchaser the stock certificates evidencing
all of the Purchased Shares, together with stock powers related thereto duly
executed in blank or accompanied by duly executed assignment documents
satisfactory to Purchaser, (iv) the Shareholder shall deliver to the Purchaser
evidence of the assignment to Purchaser of the Purchased Debt, free and clear of
any Liens; and (v) the Purchaser will deliver to the Shareholder the
consideration specified in Paragraph I.A.
SECTION II
CONDITIONS OF THE PURCHASER'S OBLIGATIONS
The obligation of the Purchaser to take the actions set forth in
Section I at the Closing is subject to the satisfaction as of the Closing of the
following conditions:
A. Representations and Warranties. The representations and warranties contained
in Section V hereof shall be true and correct at and as of the Closing as though
then made and the Company and the Shareholder shall have performed all of the
covenants required to be performed by each such Person hereunder prior to the
Closing.
B. Material Adverse Effect. There will not have occurred or be reasonably
expected to occur any Material Adverse Effect.
C. Acquisition of Shares from the Shareholder. Shareholder shall have delivered
to the Purchaser certificates representing all of the Purchased Shares duly
executed in blank or accompanied by duly executed assignment documents
satisfactory to Purchaser, and shall have received payment therefor in full, in
the manner set forth in Paragraph I.A.
D. Assignment and Assumption Agreement. Shareholder shall have simultaneously
delivered to the Purchaser the duly authorized and executed Assignment and
Assumption Agreement attached hereto as Exhibit A.
E. Resignation of Directors. The following members of the Board of Directors of
the Company (the "Board") shall have resigned in accordance with the Company's
bylaws, such resignations to be effective upon the consummation of the Closing:
Xxxxxx X. Xxxxx Xx., Xxxxxxxx X. Xxxxxx, and Xxx X. Xxxxxx.
F. Size of Board. The size of the Board, including any vacancies created
pursuant to Paragraph II.D or otherwise, shall be no more than six (6)
directorships.
G. Approval of Board of Directors. By the close of business on January 11, 1999,
the Company shall have delivered copies certified as true, correct and complete
by the Secretary of the Company of resolutions (in a form reasonably
satisfactory to Purchaser and its counsel) duly adopted by the Board (1)
approving the purchase and acquisition of the Purchased Shares by Purchaser for
purposes of Article 13.03 of the Texas Business Corporation Act, such approval
to be effective prior to the Closing Date; (2) appointing the following persons
to the Board in accordance with the Company's bylaws, such appointments to be
effective upon the consummation of the Closing: Xxxxxxx Xxxxxxxx, Xxxxxx X.
Xxxxx, and Xxxxx Xxxxxxxxx (collectively, the "Purchaser Designees"); and (3)
waiving all provisions of that certain Confidentiality Agreement, dated April
24, 1998, between the Company and Purchaser, as amended, with respect to the
transactions contemplated hereby and the actions and involvement of the
Purchaser Designees on the Board, such waivers to be effective upon the
consummation of the Closing.
H. Operation of Business. The Company will not have since the Execution Date (i)
entered into any transaction, arrangement or contract except on an arm's-length
basis in the ordinary course of business consistent with past custom and
practice, (2) increase any officer's or employee's compensation, incentive
arrangements or other benefits out of the ordinary course of business and
consistent with past practice, (3) redeemed, purchased or otherwise acquired,
directly or indirectly, any of the Company's issued and outstanding capital
stock or equity interests, or any outstanding rights or securities exercisable
or exchangeable for or convertible into capital sock of the Company, (4) amended
its articles of incorporation or bylaws, (5) recharacterized, paid, extended,
modified, or caused a default under the Company's obligations and liabilities
with respect to the Purchased Debt, or (6) bought or sold any assets out of the
ordinary course of business.
I. Proceedings. All corporate and other proceedings taken or required to be
taken by the Company or the Shareholder in connection with the transactions
contemplated hereby shall be consummated at or prior to the Closing and all
documents incident thereto shall be satisfactory in form and substance to the
Purchaser and its counsel.
J. Litigation. The Purchaser, in its sole discretion, shall be satisfied with
the status of the resolution of the claims that had been brought against any
parties to that certain class action styled In re DTM Corp. Securities
Litigation, Case No. 97-CI-16633 (the "Class Action"), under the terms of that
certain Memorandum of Understanding, dated August 4, 1998, among the parties
thereto (the "Settlement"), and parties to the Class Action holding
(beneficially or by record) an aggregate of not less than ninety percent (90%)
of the total shares represented by the class, shall have agreed to and not
opted-out of, whether in part or in whole, the Settlement.
K. Compliance with Applicable Laws. The acquisition of the Purchased Shares and
the Purchased Debt by the Purchaser in accordance with the terms contained
herein shall not be prohibited by any applicable law or governmental rule or
regulation and shall not subject the Purchaser to any penalty or liability under
or pursuant to any applicable law or governmental rule or regulation, and the
acquisition of the Purchased Shares and the Purchased Debt by the Purchaser
hereunder shall be permitted by laws, rules and regulations of the jurisdictions
and governmental authorities and agencies to which the Purchaser is subject.
L. Filings. The Company and the Shareholder shall have made all filings required
to be made by the Company and the Shareholder under all applicable federal and
state laws, including, without limitation, federal and state securities laws, to
consummate the transactions contemplated by this Agreement in compliance with
such laws.
M. Consents and Approvals. All consents and approvals by governmental agencies
that are required for the consummation of the transactions contemplated hereby
or the other agreements contemplated hereby or by third parties that are
required in order to prevent a breach of, a default under, or a termination,
change in the terms or conditions or modification of, any instrument, contract,
lease, license or other agreement to which the Company or the Shareholder is a
party will have been obtained on terms and conditions satisfactory to the
Purchaser.
N. Financing. The Purchaser shall have received financing proceeds necessary to
consummate the transactions described herein, on terms satisfactory in all
respects to the Purchaser and its counsel.
O. Capital Structure. Between the Execution Date and the Closing, the Company
will not have issued or entered into any agreement to issue any shares of its
capital stock or options, warrants or securities convertible into or exercisable
for shares of its capital stock other than (i) shares issuable upon the exercise
of options, warrants or securities convertible into or exercisable for shares of
its capital stock that are outstanding as of the Execution Date or granted prior
to Closing under existing option plans on an arm's-length basis in the ordinary
course of business consistent with past practices and (ii) up to 500,000 shares
issued as required by the Settlement.
P. Legal Opinion. The Purchaser shall have received a legal opinion of counsel
to the Shareholder with respect to the transactions contemplated hereby in form
and substance reasonably satisfactory to Purchaser and its counsel.
Q. Closing Documents. At the Closing, the Shareholder shall have delivered to
the Purchaser all of the following documents:
1. a certificate of an officer of the Shareholder, dated as of the Closing Date,
stating that the conditions specified in Section II (other than Paragraphs II.B,
II.C, II.D, II.G, II.H, II.J, II.N, II.P, II.R, and II.S) have been fully
satisfied.
2. copies of all third party and governmental consents, approvals and filings
required in connection with the consummation of the transactions hereunder
(including, without limitation, all blue sky law filings and waivers of all
preemptive rights and rights of first refusal);
3. documents effecting the assignment to the Purchaser of all of Shareholder's
rights under that certain Shareholders' Agreement; and
4. such other documents relating to the transactions contemplated by this
Agreement as the Purchaser or its special counsel may reasonably request.
R. Full Access. The Purchaser shall have had 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 properties, personnel, books, records
(including tax records), contracts and other documents of or pertaining to each
of the Company and its Subsidiaries for any reasonable and proper purpose.
S. Waiver. Any condition specified in this Section II may be waived only if
consented to in writing by the Purchaser.
SECTION III
CONDITIONS OF THE SHAREHOLDER'S OBLIGATIONS
The obligation of the Shareholder to take the actions set forth in
Section I at or prior to the Closing is subject to the satisfaction as of the
Closing of the following conditions:
A. Representations and Warranties; Covenants. The representations and warranties
of Purchaser contained in Section VI hereof shall be true and correct in all
material respects at and as of the Closing as though then made and the Purchaser
shall have performed all of the covenants required to be performed in all
material respects by it hereunder at or prior to the Closing.
B. Receipt of Purchase Price. The Shareholder shall have received from Purchaser
the consideration specified in Paragraph I.A.
C. Litigation. No action or proceeding before any court or governmental body
will be pending or threatened which will result in a judgment, decree or order
that would prevent the carrying out of this Agreement or the transactions
contemplated hereby, declare unlawful the transactions contemplated hereby or
cause such transactions to be rescinded.
D. Consents and Approvals. All consents and approvals of governmental agencies
that are required for the consummation of the transactions contemplated hereby
or the other agreements contemplated hereby will have been obtained.
E. Repayment of Debt. The Company shall have paid all amounts owing under that
certain Credit Agreement, dated August 6, 1997, between the Company and Chase
Bank of Texas, National Association (formerly known as Texas Commerce Bank
National Association, the "Bank"), as amended, and that certain Note, dated
August 6, 1997, from the Company in favor of the Bank, as amended.
F. Waiver. Any condition specified in this Section III may be waived only in
writing by the Shareholder.
SECTION IV
PRE-CLOSING COVENANTS AND AGREEMENTS
Each of the Parties agrees as follows with respect to the period
between the execution of this Agreement and the Closing:
A. General. Each of the Parties will use its reasonable best efforts to take all
actions 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 conditions set forth in Sections
II and III).
B. Notices and Consents. The Shareholder will use its best efforts to, and will
use its best efforts to cause the Company to, (i) give required notices to third
parties, (ii) obtain any required third party consents and (iii) take any
actions reasonably required by a third party, in each case, in connection with
the matters contemplated by this Agreement.
C. Notice of Material Developments. Each Party will give prompt written notice
to the other Party (i) if it becomes aware that any representation or warranty
contained in Sections V or VI as of the date hereof which to the best knowledge
of a Party has subsequently become untrue, (ii) of the breach of any covenant
hereunder by any Party and (iii) of any other material development that in its
reasonable judgment adversely affects its ability to consummate the transactions
contemplated by this Agreement; provided, however, that the Party receiving
notice shall have adequate opportunity for investigation, inquiry and
examination following such notice to assess compliance with this Paragraph IV.D
and other relevant provisions of this Agreement.
D. Exclusivity. Until consummation of the transactions contemplated hereby or
termination of this Agreement pursuant to Paragraph IX.A, the Shareholder will
not, directly or indirectly, (i) submit, solicit, initiate, encourage, vote for
or consent to any proposal or offer from any Person or enter into any agreement
or accept any offer relating to any (a) reorganization, liquidation, dissolution
or recapitalization of the Company, (b) merger or consolidation involving the
Company, (c) purchase or sale of any assets or capital stock (other than a
purchase or sale of equipment in the ordinary course of business consistent with
past custom and practice) of the Company or (d) similar transaction or business
combination involving the Company or the assets of any of them (each of the
foregoing actions described in clauses (a) through (d), a "Company Transaction")
or (ii) 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
to do any of the foregoing.
E. Actions with Respect to Purchased Shares and Purchased Debt. Until
consummation of the transactions contemplated hereby or termination of this
Agreement pursuant to Paragraph IX.A, the Shareholder agrees that it will not
(i) sell, redeem, convert, assign, exchange, transfer, pledge or otherwise
dispose of any of Shareholder's right, title and interest in and to the
Purchased Shares or Purchased Debt, except as expressly contemplated by this
Agreement, or (ii) enter into any other transaction or agreement with the
Company not at arm's-length in the ordinary course of the Company's business
consistent with the Company's past practice. The Shareholder will not modify,
extend, waive, accept payment for or release any of the Company's obligations or
liabilities with respect to the Purchased Debt.
SECTION V
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER
As a material inducement to the Purchaser to enter into this Agreement
and acquire the Purchased Shares and Purchased Debt hereunder, the Shareholder
hereby represents and warrants that, except as disclosed on the Schedule of
Shareholder Exceptions attached hereto:
A. Power and Authority. The Shareholder is a corporation which possesses all
requisite power and authority necessary to carry out the transactions
contemplated by this Agreement.
B. Authorization; No Breach. This Agreement and the Transaction Documents to
which the Shareholder is a party each constitutes a valid and binding obligation
of Shareholder, enforceable in accordance with its terms. The execution and
delivery by the Shareholder of this Agreement and all other agreements
contemplated hereby to which Shareholder is a party, the sale of the Purchased
Shares and the Purchased Debt hereunder, and the fulfillment of and compliance
with the respective terms hereof and thereof by Shareholder, do not and shall
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under, (iii) result in the creation of
any Lien upon the Purchased Shares or the Purchased Debt pursuant to, (iv) give
any third party the right to modify, terminate or accelerate any obligation
under, (v) result in a violation of, or (vi) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency pursuant to, or
any law, statute, rule or regulation to which Shareholder is subject, or any
agreement, instrument, order, judgment or decree to which Shareholder is subject
other than as required by the federal securities laws.
C. Title to Purchased Shares. Shareholder owns beneficially and of record and
has good and marketable title to all of the Purchased Shares, free and clear of
any Liens.
D. Title to Purchased Debt. Shareholder owns and has good and marketable title
to all of the Purchased Debt, free and clear of any Liens. Since the Execution
Date, the Shareholder has not modified, extended, waived, accepted payment for
or released any of the Company's obligations or liabilities with respect to the
Purchased Debt.
E. Brokerage. There are no claims for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon the Shareholder.
Shareholder shall pay, and hold the Purchaser harmless against, any liability,
loss or expense (including, without limitation, reasonable attorneys' fees and
out-of-pocket expenses) arising in connection with any such claim.
F. Company Transactions. The Shareholder is not a party to or bound by any
agreement with respect to a Company Transaction other than this Agreement, and
the Shareholder has terminated all discussions with third parties regarding
Company Transactions.
G. Disclosure. Neither this Agreement nor any other statements or certificates
made or delivered by Shareholder or its representatives in connection herewith
contains, to the best knowledge of Shareholder, any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
herein or therein not misleading. For purposes of this Paragraph V.G, the
Company shall be deemed not to be a representative of the Shareholder.
H. Closing Date. The representations and warranties of the Shareholder contained
in this Section V and elsewhere in this Agreement, and all information contained
in any exhibit, schedule or attachment hereto or in any certificate or other
writing delivered by, or on behalf of, the Shareholder to the Purchaser or its
representatives shall be true and correct in all material respects on the date
of the Closing as though then made, except as affected by the transactions
expressly contemplated by this Agreement and except as expressly disclosed in
writing to the Purchaser by Shareholder prior to the Closing. Shareholder may
revise or supplement the disclosure schedules attached hereto, or otherwise
amend or modify its representations and warranties hereunder, at any time at or
prior to the Closing Date to reflect information that came into existence after
the date hereof and would have been required to be disclosed on one or more
schedules or reflected in such representations or warranties if such information
was in existence on the date hereof; it being understood that prior to Closing,
the Purchaser, as its sole remedy for the receipt of additional materially
adverse information on the Schedule of Shareholder Exceptions attached hereto,
shall be entitled to terminate this Agreement with the consequences specified in
Paragraph IX.B below; provided, however, that such disclosure shall not cure any
default or limit any liability resulting from a breach of any of Shareholder's
covenants contained in this Agreement.
SECTION VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As a material inducement to the Shareholder to enter into this
Agreement and take the actions set forth in Section I, the Purchaser hereby
represents and warrants that, except as disclosed on the Schedule of Purchaser
Exceptions attached hereto:
A. Organization, Power and Authority. The Purchaser is a limited liability
company duly organized, validly existing and in good standing under Texas law.
The Purchaser possesses all requisite power and authority necessary to carry out
the transactions contemplated by this Agreement.
B. Authorization; No Breach. The execution, delivery and performance of this
Agreement and the Transaction Documents to which the Purchaser is a party have
been duly authorized by the Purchaser. This Agreement and the Transaction
Documents to which the Purchaser is a party each constitutes a valid and binding
obligation of the Purchaser, enforceable in accordance with its terms except as
limited by bankruptcy, insolvency and similar laws. The execution and delivery
by the Purchaser of this Agreement and all other agreements contemplated hereby
to which the Purchaser is a party, the purchase of the Purchased Shares
hereunder and the fulfillment of and compliance with the respective terms hereof
and thereof by the Purchaser, do not and shall not (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any Lien upon the Purchaser's assets
pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of, or (vi) require
any authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or governmental body
or agency pursuant to, the organizational documents of the Purchaser or any
agreement, instrument, order, judgment or decree to which the Purchaser is
subject.
C. Brokerage. There are no claims for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon the Purchaser.
Purchaser shall pay, and hold the Shareholder harmless against, any liability,
loss or expense (including, without limitation, reasonable attorneys' fees and
out-of-pocket expenses) arising in connection with any such claim.
D. Disclosure. Neither this Agreement nor any other statements or certificates
made or delivered by Purchaser or its representatives in connection herewith
contains, to the best knowledge of Purchaser, any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading.
E. Closing Date. The representations and warranties of the Purchaser contained
in this Section VI and elsewhere in this Agreement shall be true and correct in
all material respects on the date of the Closing as though then made and except
as expressly disclosed in writing to the Company and the Shareholder by the
Purchaser prior to the Closing. The Purchaser may revise or supplement the
disclosure schedules attached hereto, or otherwise amend or modify its
representations and warranties hereunder, at any time at or prior to the Closing
Date to reflect information that came into existence after the date hereof and
would have been required to be disclosed on one or more schedules or reflected
in such representations or warranties if such information was in existence on
the date hereof; it being understood that prior to Closing, the Shareholder, as
its sole remedy for the receipt of additional materially adverse information on
the Schedule of Purchaser Exceptions attached hereto, shall be entitled to
terminate this Agreement with the consequences specified in Paragraph IX.B
below; provided, however, that such disclosure shall not cure any default or
limit any liability resulting from a breach of any of Purchaser's covenants
contained in this Agreement.
SECTION VII
INDEMNIFICATION AND OTHER AGREEMENTS
A. Survival of Representations and Warranties. The Shareholder is selling, and
the Purchaser is purchasing, the Purchased Shares AS IS so that none of the
representations or warranties, set forth in this Agreement or in any writing
delivered by any Party in connection with this Agreement shall survive the
Closing except for (i) Paragraphs V.A Power and Authority, V.C Title to
Purchased Shares, V.D Title to Purchased Debt, VI.A Organization Power and
Authority and (ii) Paragraphs V.G Disclosure and VI.D Disclosure which shall
survive for a period of eighteen (18) months following the Closing with respect
to any matter as to which the representing party had actual knowledge.
B. Indemnification.
1. Basic Indemnification. Each Party (the "Indemnifying Party") shall indemnify
and defend and hold harmless the other Party, its Affiliates, stockholders,
members, partners, officers, directors, employees, managers, agents,
representatives, successors and assigns (each, an "Indemnified Party") from and
against the entirety of any Losses which an Indemnitee may suffer, sustain or
become subject to as the result of the misrepresentation in, omission from or
breach of any representation, warranty, covenant or agreement made by the
Indemnifying Party contained in this Agreement or any Transaction Document
(including the schedules or exhibits attached hereto or thereto).
2. Defense of Claims. An Indemnified Party seeking indemnification under this
Paragraph VII.B shall give written notice to the other Indemnifying Party of the
facts and circumstances giving rise to the claim. In that regard, if any suit,
action, claim, liability or obligation (a "Proceeding") shall be brought or
asserted by any third party which, if adversely determined, would entitle the
Indemnified Party to indemnity pursuant to this Paragraph VII.B, the Indemnified
Party shall within thirty (30) days notify the Indemnifying Party of the same in
writing, specifying in detail the basis of such claim and the facts pertaining
thereto; provided that the failure to so notify an Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder except to the extent
such failure shall have harmed the Indemnifying Party. The Indemnifying Party,
if it so elects, shall assume and control the defense of such Proceeding (and
shall consult with the Indemnified Party with respect thereto), including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of expenses; provided that in the event any Proceeding shall be brought
or asserted by any third party which, if adversely determined, would not entitle
the Indemnified Party to full indemnity pursuant to this Paragraph VII.B, the
Indemnified Party may elect to participate in a joint defense of such Proceeding
(a "Joint Defense Proceeding") for which the expenses of such joint defense will
be shared equally by such parties and the employment of counsel shall be
reasonably satisfactory to both parties. If the Indemnifying Party elects to
assume and control the defense of a Proceeding, it will provide notice thereof
within thirty (30) days after the Indemnified Party has given notice of the
matter and if such Proceeding is not a Joint Defense Proceeding, the Indemnified
Party shall have the right to employ counsel separate from counsel employed by
the Indemnifying Party in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel employed by the Indemnified
Party shall be at the expense of the Indemnified Party unless (a) the employment
thereof has been specifically authorized by the Indemnifying Party in writing,
or (b) the Indemnifying Party has failed to assume the defense and employ
counsel reasonably satisfactory to the Indemnified Party. Neither the
Indemnified Party nor the Indemnifying Party may consent to the entry of any
judgment with respect to the matter or enter into any settlement with respect to
the matter which judgment or settlement does not release the other Party from
all liability to the third party with respect thereto without the consent of the
other Party, which consent shall not be unreasonably withheld (it being
understood that the extent to which any Party will be obligated to pay for
Losses resulting from such matter as compared to the other Party shall be
considered in determining whether it is reasonable for such Party to withhold
its consent from the entry of any judgment or settlement with respect to such
matter); provided that no settlement of a Joint Defense Proceeding may be
effected without the written consent of both parties. If there shall be a
settlement to which the Indemnifying Party consents or a final judgment for the
plaintiff in any Proceeding, the defense of which the Indemnifying Party has
elected to assume, the Indemnifying Party shall indemnify the Indemnified Party
with respect to the settlement or judgment.
3. Payments. Any payment pursuant to a claim for indemnification shall be made
not later than thirty (30) days after receipt by the Indemnifying Party of
written notice from the Indemnified Party stating the amount of the claim,
unless the claim is subject to defense as provided in Paragraph VII.B.2, in
which case payment shall be made not later than thirty (30) days after the
amount of the claim is finally determined. Any payment required under this
Paragraph VII.B.3 shall bear interest at eighteen percent (18%) per annum or, if
less, the maximum rate permitted by applicable usury laws from the date that the
Indemnified Party incurred the Loss for which indemnification is sought.
Interest on any such unpaid amount shall be compounded monthly, computed on the
basis of a 365-day year and shall be payable on demand. In addition, such party
shall reimburse the other party for any and all costs or expenses of any nature
or kind whatsoever (including, without limitation, all attorneys' fees) incurred
in seeking to collect such Losses following repeated refusal by the owing Party
to pay such losses and the non-existence of any good faith defense to payment.
SECTION VIII
DEFINITIONS
A. Definitions. For the purposes of this Agreement, the following terms have
the meanings set forth below:
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"Execution Date" means the date of the last signature hereon.
"Lien" or "Liens" means any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including, without
limitation, any conditional sale or other title retention agreement or lease in
the nature thereof), any sale of receivables with recourse against the Company,
any of its Subsidiaries or any Affiliate, any filing or agreement to file a
financing statement as debtor under the Uniform Commercial Code or any similar
statute other than to reflect ownership by a third party of property leased to
the Company or any of its Subsidiaries under a lease which is not in the nature
of a conditional sale or title retention agreement, or any subordination
arrangement in favor of another Person (other than any subordination arising in
the ordinary course of business).
"Loss" or "Losses" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Material Adverse Effect" means a material and adverse effect
upon the business, assets, liabilities, condition (financial or otherwise),
operating results, employee, customer or supplier relations, business prospects,
cash flow or working capital of the Company.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Shareholder Claims" means all rights and interest of
Shareholder, its Affiliates, stockholders, members, partners, officers,
directors, employees, managers, agents, representatives, successors and assigns
(a "Shareholder Party") in and to any obligations, liabilities or Losses
(contingent or otherwise, know or unknown) of the Company and its Subsidiaries
owed to or arising in favor of a Shareholder Party or a third party on its
behalf.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
the limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing member or general partner of
such limited liability company, partnership, association or other business
entity.
"Tax" or "Taxes" means federal, state, county, local, foreign
or other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real or
personal property, capital stock, license, payroll, pension, wage or other
withholding, employment, social security, severance, stamp, occupation,
alternative or add-on minimum, estimated and other taxes of any kind whatsoever
(including, without limitation, deficiencies, penalties, additions to tax, and
interest attributable thereto) whether disputed or not.
"Transaction Documents" means, collectively, this Agreement,
the Assignment and Assumption Agreement, and the other documents and instruments
contemplated by this Agreement to be executed by the Parties in connection with
the consummation of the transactions contemplated herein.
SECTION IX
TERMINATION
A. Conditions of Termination. This Agreement may be terminated at any time
prior to the Closing only as follows:
1. by mutual written consent of the Parties;
2. by the Shareholder if there has been a material misrepresentation or breach
of warranty or breach of covenant on the part of the Purchaser in the
representations and warranties or covenants set forth in this Agreement, or if
events have occurred which have made it impossible to satisfy a condition
precedent to the Shareholder's obligation to consummate the transactions
contemplated hereby, unless such Shareholder has caused, directly or indirectly,
the condition to the Shareholder's obligations hereunder to be unsatisfied;
3. by the Purchaser if there has been a material misrepresentation or breach of
warranty or breach of covenant on the part of the Shareholder in the
representations and warranties or covenants set forth in this Agreement, or if
events have occurred which have made it impossible to satisfy a condition
precedent to the Purchaser's obligation to consummate the transactions
contemplated hereby, unless the Purchaser has caused, directly or indirectly,
the condition to the Purchaser's obligations hereunder to be unsatisfied;
4. by either Party if the transactions contemplated hereby have not been
consummated by February 15, 1999.
B. Effect of Termination. In the event of termination of this Agreement as
provided in Paragraph IX.A, this Agreement will forthwith become void and there
will be no liability hereunder on the part of any of the Parties, except for the
provisions of this Section IX and Paragraph X.A, and except for liability for
any breach of this Agreement prior to the time of such termination, which shall
survive any termination of this Agreement.
C. Waiver of Right to Terminate. Each of the Parties shall be deemed to have
waived its respective right to terminate this Agreement upon consummation of the
Closing. No such waiver shall constitute a waiver of any other rights arising
from the non-fulfillment of any condition precedent set forth in Sections II or
III hereof or any misrepresentation or breach of any warranty, covenant or
agreement contained herein unless such waiver is made in writing and then any
such written waiver shall only constitute a waiver of the specific matters set
forth therein.
SECTION X
MISCELLANEOUS
A. Fees and Expenses. Except as provided in Paragraph X.B below, the Shareholder
and the Purchaser will pay all of their own fees and expenses (including,
without limitation, fees and expenses of legal counsel, accountants, investment
bankers or other representatives and consultants) in connection with this
Agreement and the consummation of the transactions contemplated hereby.
B. Dispute Resolution.
1. The Parties desire that any controversy or claim arising out of or related to
this Agreement or the formation of this Agreement will be resolved in an
expeditious and efficient manner exclusively in accordance with this Paragraph
X.B. A dispute under this clause shall be initiated by delivering written notice
to the other Party briefly stating the nature of the dispute and requesting
resolution. Any Party required to make a payment or provide a remedy (equitable
or otherwise) to the other Party pursuant to this Paragraph X.B shall reimburse
the other Party for any and all costs or expenses of any nature or kind
whatsoever (including, without limitation, attorneys' fees) incurred in seeking
to assess and collect such damage or to enforce any such award.
2. The Parties agree that before initiation of any legal or arbitration
proceeding with respect to any issue arising out of the transactions
contemplated by the Agreement, they shall cause their respective representatives
to attempt to resolve in good faith all disputes between the Parties. The
Parties agree that they will cause, in the case of Shareholder, Xx. Xxxxx
Xxxxxxx, or his successor-in-interest, and, in the case of the Purchaser, Xx.
Xxxxxxx Xxxxxxxx, or his successor-in-interest, to meet in person in Austin,
Texas, to attempt in good faith to resolve such dispute within fifteen (15)
business days of notification of such dispute. In the event that the
representatives are unable to resolve such a dispute, the aggrieved Party must
refer the dispute to mediation under Paragraph X.B.3.
3. In the event any dispute is not resolved by a meeting of the Parties, the
dispute shall be referred to non-binding mediation. The mediation shall occur
within forty (40) days of the meeting of the Parties. Mediation fees shall be
split equally among the Parties. The mediator shall be selected by agreement of
the Parties or, in the event of no agreement, shall be designated by JAMS. The
mediation shall be attended by the Parties' representatives designated in
Paragraph X.B.2 and, if desired, the Parties' attorneys.
4. In the event a dispute is not resolved by mediation, the aggrieved Party
shall refer the dispute to binding arbitration. The arbitration shall be
governed by the procedures set forth below. The arbitrator shall give written
notice to the parties of the arbitrator's determination, which shall be
conclusive on the Parties. The parties agree to act in compliance with the
arbitrator's determination, and judgment upon the same may be entered by any
court of competent jurisdiction. The arbitrator may not award exemplary or
punitive damages.
5. Within thirty (30) days of referral of a dispute to arbitration, a single
arbitrator will be selected by agreement of the parties or, in the event of no
agreement, shall be designated by JAMS. Unless agreed otherwise by the parties,
the arbitrator shall be a retired judge with arbitration experience.
6. The parties agree to submit discovery plans to the arbitrator within fifteen
(15) days following the date that the arbitrator accepts his appointment to this
matter. The discovery plan will describe all discovery contemplated. The
arbitrator will schedule a meeting of counsel to occur within fifteen (15) days
of his receipt of the discovery plans, at which time the arbitrator will issue a
written order scheduling dates for all depositions and completion dates for all
additional discovery. The written discovery plan may only be modified by a
written order from the arbitrator.
7. The arbitration hearing shall take place in Austin, Texas within ninety (90)
days of the arbitrator's acceptance of his appointment. The hearing is not to
exceed two (2) days. Introduction of evidence and testimony at the hearing will
be subject to the Federal Rules of Civil Procedure and Evidence. Each Party is
entitled to be heard, to present material evidence and testimony, and to
cross-examine witness appearing at the hearing.
C. Remedies. The Purchaser and the Shareholder shall have all of the rights and
remedies set forth in this Agreement and all rights and remedies which such
Persons have been granted at any time under any other agreement or contract and
all of the rights which such Persons have under any law. Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.
D. Press Releases and Announcements. No Party shall issue any press release or
make any public announcement relating to the subject matter of this Agreement or
the agreements contemplated hereby (other than those required by any applicable
statute or regulation or by judicial order), nor instruct or cause any other
Person (including, without limitation, the Company) to effect the same without
the express written consent of the other Party.
E. Consent to Amendments. Except as otherwise expressly provided herein, the
provisions of this Agreement may be amended and each may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if such Party has obtained the written consent of the other Party.
F. Successors and Assigns. Except as otherwise expressly provided herein, all
covenants and agreements contained in this Agreement by or on behalf of any of
the Parties shall bind and inure to the benefit of the respective successors and
assigns of the Parties whether so expressed or not. The Purchaser may assign its
rights pursuant to this Agreement, including its right to indemnification, (i)
to any Person formed for the purpose of purchasing the Purchased Shares and/or
the Purchased Debt, (ii) to any of its equity investors, and (iii) to any of its
lenders as collateral security.
G. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
H. Counterparts. This Agreement may be executed simultaneously in counterparts,
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same Agreement.
I. Descriptive Headings; Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement. The use of the word "including" in this Agreement shall
be by way of example rather than by limitation.
J. Governing Law. All other issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Texas, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
K. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, one (1) day after being sent to the recipient by reputable overnight
courier service (charges prepaid) or three (3) days after being mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications shall be sent to the
Purchaser, the Shareholder and the Company at the addresses indicated below or
to such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party.
The Shareholder: The Purchaser:
The X.X. Xxxxxxxx Company Proactive Finance Group, LLC
0000 Xxxxxxx Xxxxx Xxxxxxx 000 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000 Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx Attn: Xxxxxxx Xxxxxxxx
Xxxxxx X. Xxxxx
A copy of any notice to the Purchaser shall be sent to Xxxx Xxxx Xxxx &
Freidenrich, LLP, 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attn: P.
Xxxxxx Xxxxxx and Xxxx X. Xxxxxxx.
L. No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, 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.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to
be effective on the date of the last signature hereon.
PROACTIVE FINANCE GROUP, LLC
By: /s/Xxxxxxx Xxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxx
President
Date: January 2, 1999
THE X.X. XXXXXXXX COMPANY
By: /s/Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
Vice President and Treasurer
Date: January 2, 1999
