JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT ("AGREEMENT") is effective as of January 31,
1997, by and between PREMIER LASER SYSTEMS, INC., a California corporation
("PREMIER"), RSS, LLC, a Kansas limited liability company ("RSS"), and
XXXX.XXXX, a California limited liability company ("XXXX.XXXX").
R E C I T A L S:
A. Premier and RSS desire to form a joint venture to develop and market
"outcomes" software in multiple medical specialties and to market and distribute
certain other products of Premier.
B. The parties have caused the formation of Xxxx.Xxxx, through which the
operations of the joint venture will be conducted.
C. The parties desire to exchange certain assets and to contribute
certain assets to Xxxx.Xxxx in accordance with the terms and conditions of this
Agreement.
D. Xx. Xxxxxx Xxxxxx, Xx. Xxxxxxxx Xxx and Xx. Xxxx Xxxxxxxx are members
of RSS (the "Members").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:
1. FORMATION AND OPERATION OF LIMITED LIABILITY COMPANY.
1.1 ARTICLES OF ORGANIZATION. The parties previously have caused to be
filed with the California Secretary of State the Articles of Organization for
Xxxx.Xxxx, a copy of which is attached hereto as EXHIBIT A.
1.2 OPERATING AGREEMENT. The parties shall execute the Operating
Agreement for Xxxx.Xxxx, which is attached hereto as EXHIBIT B and incorporated
herein by this reference (the "OPERATING AGREEMENT").
1.3 BUSINESS OF XXXX.XXXX. Xxxx.Xxxx has been formed for the purpose of
developing and marketing "outcomes" software in multiple medical specialties and
to market and distribute certain other products of Premier. Upon reasonable
request of Premier, and upon mutual agreement concerning the terms of such
arrangement, Xxxx.Xxxx shall market and sell certain products of Premier through
Xxxx.Xxxx's distribution channels and the efforts of Xxxx.Xxxx's employees.
Upon reasonable request of Xxxx.Xxxx, and upon mutual
agreement concerning the terms of such arrangement, Premier shall market and
sell certain products of Xxxx.Xxxx through Premier's distribution channels
and the efforts of Premier's employees.
2. ISSUANCE OF COMMON STOCK.
2.1 PRESENT ISSUANCE. Premier hereby sells and issues to RSS 159,787
shares (the "Shares") of Class A Common Stock (the "COMMON STOCK"), such number
being that number of shares of Common Stock equal to $1,200,000 divided by the
average of the closing price of such Common Stock during the last fifteen (15)
days immediately preceding the Closing. For all purposes of this Agreement, the
date of the "CLOSING" shall be the date hereof. In consideration for the
issuance of such Shares, RSS hereby transfers to Premier an undivided 30%
interest in all of the intangible assets of RSS (the "INTANGIBLE ASSETS"),
including but not limited to, intellectual property rights (including the
"Intellectual Property" as defined in SECTION 6.16), copyrights, contractual
rights and trade secrets, and more particularly described in the Xxxx of Sale
attached hereto as EXHIBIT C and incorporated herein by this reference.
2.2 FUTURE ISSUANCE. If Xxxx.Xxxx's gross revenue (as determined in
accordance with generally accepted accounting principles) equals or exceeds
$1,500,000 for the year ending December 31, 1997, then Premier will pay to RSS
an additional $300,000 in cash or Common Stock, at Premier's option (the
"ADDITIONAL PAYMENT"). Premier shall give written notice to RSS on or before
January 31, 1998 of its determination to pay the Additional Payment in the form
of cash or Common Stock (the "DETERMINATION NOTICE"). If Premier issues Common
Stock to RSS pursuant to this Section 2.2, the number of shares so issued shall
be equal to $300,000 divided by the average of the closing price of such Common
Stock during, at Premier's option, either (i) the last fifteen (15) days
immediately preceding the date the Determination Notice is given, or (ii) the
thirty (30) day period ending fifteen (15) days prior to the date the
Determination Notice is given. Common Stock issued pursuant to this SECTION 2.2
shall be restricted securities and shall be subject to SECTIONS 6.8, 6.9 AND
6.10 hereof. RSS agrees that it shall acquire any shares of Common Stock
pursuant to this SECTION 2.2 solely for the purpose of investment for its own
account. It will not acquire such shares with a view to distribution in
connection with any resale or other distribution of those shares.
2.3 DISCLAIMER CONCERNING LIABILITIES. Premier does not assume and shall
not be required to assume, pay or discharge any duties, obligations or
liabilities of RSS whatsoever, past or present or future, fixed or contingent,
direct or indirect, known or unknown, express or implied.
2.4 SALES TAX. RSS shall be responsible for the payment of any sales or
use tax or other transfer, registration or recordation
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tax, fee or charge levied by any governmental authority upon the transfer to
Premier of the Intangible Assets.
2.5 REGISTRATION RIGHTS.
(a) If Premier proposes to register any of its stock or other
securities under the Securities Act of 1933, as amended (the "ACT") in
connection with the public offering of such securities solely for cash
(other than a registration relating solely to the sale of securities to
employee participants in an employee benefit plan or a sale with respect to
a transaction to which Rule 145 promulgated under the Act or any successor
to such Rule, is applicable or otherwise pursuant to a registration on Form
S-4), Premier shall, at such time, promptly give RSS written notice of such
registration. Upon the written request of RSS given within thirty (30)
days after such notice is given by Premier, Premier shall, subject to the
following provisions, use all reasonable efforts to cause to be included in
such public offering all of the Shares issued to RSS hereunder that RSS has
requested to be registered. Premier shall not be required under this
SECTION 2.5 to include any of RSS's Shares in an underwritten offering of
Premier's Common Stock unless RSS accepts the terms of the underwriting as
agreed upon between Premier and the underwriters selected by it, and then
only in such quantity as will not, in the opinion of the managing
underwriter, interfere with the successful marketing of the offering by
Premier; provided, however, the terms of the underwriting applied to RSS
shall be no less favorable than the terms applied to other persons holding
Premier's Common Stock and who are selling such shares in such offering.
(b) Beginning on the date six (6) months after the Closing, Premier
shall (provided Premier has not previously commenced a public offering
since the Closing), as promptly as practicable (but in any event within
sixty (60) days), after written request (the "REQUEST") by RSS or persons
holding 100% of the Shares, prepare and file at its own expense a
Registration Statement with the Securities and Exchange Commission and
appropriate Blue Sky authorities sufficient to permit the public offering
of the Shares and will use its best efforts at its own expense through its
officers, directors, auditors and counsel, in all matters necessary or
advisable, to cause such Registration Statement to become effective as
promptly as practicable and to maintain such effectiveness so as to permit
resale of the Shares covered by the Request until the earlier of the time
that all such Shares have been sold or the expiration of two (2) years from
the effective date of the Registration Statement (the "MINIMUM PERIOD");
provided, however, that Premier shall only be obligated to file and have
declared effective one such Registration Statement under this SECTION 2.5.
If a Registration Statement is filed pursuant to this subsection but not
declared effective, or is not kept effective for the Minimum Period, then
it shall not be deemed
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to be a Registration Statement meeting the requirements hereunder.
(c) Premier shall not be required by this SECTION 2.5 to file a
Registration Statement if, in the opinion of counsel for RSS and Premier
(or, if they do not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for RSS and Premier), the
proposed public offering or other transfer as to which such Registration
Statement is requested is exempt from applicable federal and state
securities laws and would result in all purchasers or transferees obtaining
securities which are not "restricted securities," as defined in Rule 144
under the Act. In addition, Premier shall not be required to register the
Shares under SECTION 2.5(a) if the sale of the Shares was previously
registered under SECTION 2.5(b).
3. CONTRIBUTION OF ASSETS BY RSS.
3.1 CAPITAL CONTRIBUTION. In exchange for a 49% interest in Xxxx.Xxxx,
RSS hereby transfers to Xxxx.Xxxx all of its right, title and interest to its
equipment and machinery, its undivided 70% interest in the Intangible Assets,
and all of its other tangible and intangible property, as more particularly
described in the Xxxx of Sale attached hereto at EXHIBIT D and incorporated
herein by this reference (the Intangible Assets and all other property of RSS to
be transferred hereunder are collectively referred to herein as the "ASSETS").
3.2 DISCLAIMER CONCERNING LIABILITIES. Xxxx.Xxxx will not assume and
shall not be required to assume, pay or discharge any duties, obligations or
liabilities of RSS whatsoever, past or present or future, fixed or contingent,
direct or indirect, known or unknown, express or implied, except for those
specific liabilities identified on EXHIBIT 3.2 hereto (the "ASSUMED
LIABILITIES").
3.3 SALES TAX. RSS shall be responsible for the payment of any sales or
use tax or other transfer, registration or recordation tax, fee or charge levied
by any governmental authority upon the transfer to Xxxx.Xxxx of the Assets.
4. CONTRIBUTION OF INTANGIBLE ASSETS BY PREMIER.
4.1 CAPITAL CONTRIBUTION. In exchange for a 51% interest in Xxxx.Xxxx:
(i) Premier hereby transfers to Xxxx.Xxxx its undivided 30% interest in the
Intangible Assets, as set forth in the Xxxx of Sale attached hereto as EXHIBIT E
and incorporated herein by this reference; and (ii) during the two year period
following the Closing, Premier agrees to contribute to Xxxx.Xxxx an additional
$1,000,000 in cash or "cash equivalent services" (as defined below) pursuant to
SECTION 4.2.
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4.2 CASH OR CASH EQUIVALENT SERVICES. During the two year period
following the Closing, Premier shall provide such cash or cash equivalent
services at the times and in the amounts as determined by the Board of Managers
of Xxxx.Xxxx. "CASH EQUIVALENT SERVICES" are payments made by Premier to
individuals or entities to perform services on behalf of Xxxx.Xxxx, including
but not limited to payments to Premier's personnel who perform functions such as
accounting, research and development, or attending a trade show on behalf of
Xxxx.Xxxx. RSS hereby acknowledges that Premier has, as of the date hereof,
funded $100,000 towards its obligation to contribute cash or cash equivalent
services under SECTION 4.1 above.
4.3 DISCLAIMER CONCERNING LIABILITIES. Xxxx.Xxxx will not assume and
shall not be required to assume, pay or discharge any duties, obligations or
liabilities of Premier whatsoever, past or present or future, fixed or
contingent, direct or indirect, known or unknown, express or implied.
5. CLOSING.
5.1 CLOSING. The closing of the transactions contemplated by this
Agreement shall occur simultaneously with the execution of this Agreement by all
parties hereto (the "CLOSING").
5.2 DELIVERY BY RSS. Concurrently herewith, RSS is delivering to Premier
(or to Xxxx.Xxxx as applicable) the following:
(a) the Operating Agreement (EXHIBIT B) duly executed by RSS and the
Members;
(b) the Xxxx of Sale (EXHIBIT C) duly executed by RSS;
(c) the Xxxx of Sale (EXHIBIT D) duly executed by RSS;
(d) certified copies of resolutions adopted by the Managers and
Members of RSS authorizing and approving the execution, delivery and
performance of this Agreement.
(e) evidence, satisfactory to Premier, that all consents of third
parties required for RSS's consummation of the transactions contemplated by
this Agreement have been obtained.
(f) an opinion of counsel in the form attached hereto as EXHIBIT F.
5.3 DELIVERY BY PREMIER. Concurrently herewith, Premier is delivering to
RSS (or to Xxxx.Xxxx as applicable) the following:
(a) the Operating Agreement (EXHIBIT B) duly executed by Premier;
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(b) a Stock Certificate duly executed by Premier evidencing the
Shares issued to RSS hereunder (provided that at the option of Premier such
stock certificate may be delivered within five (5) business days of the
date hereof, and provided further that such certificate shall be held by
Premier in accordance with SECTION 10.5; below);
(c) the Xxxx of Sale (EXHIBIT E) duly executed by Premier;
(d) certified copies of resolutions adopted by the Board of Directors
of Premier authorizing and approving the execution, delivery and
performance of this Agreement.
(e) evidence, satisfactory to RSS, that all consents of third parties
required for Premier's consummation of the transactions contemplated by
this Agreement have been obtained.
(f) an opinion of counsel in the form attached hereto as EXHIBIT G.
5.4 DELIVERY BY XXXX.XXXX. Concurrently herewith, Xxxx.Xxxx is delivering
to RSS the following:
(a) An instrument by which Xxxx.Xxxx is assuming the Assumed
Liabilities.
6. RSS'S REPRESENTATIONS AND WARRANTIES.
RSS and the Members, jointly and severally, represent, warrant and agree,
as follows:
6.1 ORGANIZATION AND RELATED MATTERS. RSS is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Kansas. RSS has all necessary power and authority to own its
properties and conduct its business as now being conducted by it and to
consummate the transactions contemplated hereby. RSS is duly qualified and in
good standing in each of the jurisdictions in which it is required by the nature
of its business so to qualify, and where failure so to qualify might have a
material adverse effect upon its business or assets or impair the ability of RSS
to consummate the transactions contemplated hereby.
6.2 VALID AND BINDING AGREEMENT. The execution, delivery and performance
by RSS of this Agreement have been duly and validly authorized by all necessary
action on the part of RSS and its members and managers, and the Agreement
constitutes the valid and binding obligation of RSS, enforceable against RSS in
accordance with its terms, except as limited or otherwise affected by
bankruptcy, insolvency, reorganization, moratorium or other similar
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laws relating to or affecting creditors' rights generally and by the
application of general equitable principles.
6.3 INFORMATION. RSS has received, reviewed and is familiar with
Premier's Annual Report on Form 10-KSB filed for the fiscal year ended March 31,
1996 (the "ANNUAL REPORT"), Quarterly Report on Form 10-QSB filed for the
quarter ended September 30, 1996 (the "QUARTERLY REPORT"), and Registration
Statement on Form SB-2 declared effective on October 15, 1996 (the
"REGISTRATION STATEMENT"). RSS has had an opportunity to ask questions and
receive answers from Premier's officers and directors concerning such documents
and any other aspects of Premier's business or operations. RSS acknowledges
that Premier has made no representation or warranty regarding any projections,
estimates or budgets of future revenues or expenses, future results of
operations, or the future business and operations of Premier.
6.4 NO GOVERNMENTAL RECOMMENDATION/INDORSEMENT. RSS is aware that no
federal or state agency has made any finding or determination concerning the
fairness for public investment in, nor any recommendation or endorsement of, the
Shares.
6.5 RISK. RSS recognizes and has assessed the risk involved in investing
in the Shares and has determined based on sufficient experience in business and
financial matters that it is capable of bearing that risk.
6.6 INVESTMENT INTENT. RSS is acquiring the Shares solely for the purpose
of investment for its own account. It is not acquiring the Shares with a view
to distribution in connection with any resale or other distribution of the
Shares. RSS was not formed for the purpose of acquiring or investing in the
Shares. The principal executive offices of RSS are located in Kansas City,
Kansas, and RSS's operations have been conducted from such offices.
6.7 PREEXISTING RELATIONSHIP. RSS has a preexisting personal or business
relationship with Premier or one or more of its officers, directors or
controlling persons, which relationship is of a nature and duration as to permit
RSS to be aware of the character, business acumen and general business and
financial circumstances of the person with whom such relationship exists.
6.8 LEGEND. RSS agrees and represents that it will not transfer or
distribute any of the Shares to its members or make any other disposition of the
Shares unless a registration statement under the Securities Act of 1933, as
amended, is in effect with respect to such securities or, in the alternative, an
exemption from registration under said Act is found to be available to the
reasonable satisfaction of Premier. RSS further understands that an opinion of
counsel with respect thereto may be required by Premier in its sole discretion.
RSS further understands and agrees that the following legend will be placed on
the certificates representing the Shares:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933 AND
THE RULES AND REGULATIONS THEREUNDER.
6.9 STOP TRANSFER NOTICE. RSS understands and is aware that, in order to
insure that transfers of the Shares are made in strict accordance with all
limitations upon transfer imposed by the federal securities laws, the books and
records of Premier will include a "stop transfer" notation to the effect that no
transfer of any shares shall be effective unless strict compliance with such
limitation has been made, the determination of which will be made at the
absolute discretion of Premier.
6.10 HOLDING PERIOD FOR SHARES. Until January 31, 1997, RSS agrees that it
shall not sell, assign, pledge, transfer or otherwise dispose of the Shares or
any interest therein until the expiration of the period set forth in SECTION
10.3, except that RSS may pledge the Shares in accordance with the terms of
SECTION 10.5(b).
6.11 TITLE TO AND SUFFICIENCY OF ASSETS. RSS has good and marketable title
to all of the Assets and other property being transferred to Premier and to
Xxxx.Xxxx pursuant to this Agreement, and RSS will transfer and convey the
Assets and other property to Premier and Xxxx.Xxxx, as provided herein, free and
clear of all mortgages, liens, pledges, charges, agreements, title retention or
security agreements, claims, restrictions, defects of title, easements or other
encumbrances other than those which do not and will not materially impair the
value or use of any of the Assets or other property subject thereto. The Assets
being transferred to Xxxx.Xxxx hereunder constitute all of the tangible and
intangible assets of RSS, and are sufficient for the operation of the business
of Xxxx.Xxxx in substantially the same manner as currently conducted by RSS.
There are no other assets used by RSS in connection with the conduct of its
business which are not being transferred to Xxxx.Xxxx hereunder.
6.12 LITIGATION. RSS is not involved in any pending or threatened
investigation, litigation or legal proceeding that may have a material adverse
effect upon the assets, business operations or condition (financial or
otherwise) of RSS, nor is it subject to any order, judgment or decree that may
have such an effect. RSS has no knowledge of any facts which may give rise to
such an investigation or legal proceeding.
6.13 DEFAULTS. The execution, delivery and performance of this Agreement
and the consummation of the transactions provided for in this Agreement do not
and will not (i) violate any provision of law applicable to RSS, the Articles of
Organization, Bylaws or Operating Agreement of RSS, or any order, judgment or
decree of any court or other agency of government binding on RSS, (ii) conflict
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with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any contractual obligation of RSS, or (iii) result in or
require the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the assets or properties of RSS.
6.14 CONSENTS. No approval, authorization, consent, order or other action
of, or filing with, any third party, including without limitation, any private
party or public, governmental, administrative or regulatory authority or agency,
is required in connection with the execution, delivery or performance of this
Agreement by RSS or the consummation of the transactions contemplated hereby,
except such approvals, authorizations, consents or orders as have been obtained.
6.15 INTELLECTUAL PROPERTY. RSS owns, or is licensed or otherwise has the
full right to use, all Intellectual Property (as defined below) necessary for
the conduct of its business. All such Intellectual Property owned, held by, or
licensed to RSS and used or intended for use in connection with the business of
RSS is valid and does not infringe any similar rights owned or controlled by
others. RSS is in compliance with all licenses of Intellectual Property. For
purposes hereof, "INTELLECTUAL PROPERTY" means all intellectual property rights,
both registered and at common law, relating to the RSS's business, irrespective
of where any of the same were issued, whether pending or existing, including,
without limitation, all: United States and foreign patents or any description
and applications therefor; registrations of trademarks, service marks and of
other marks, registrations of trade names, labels, logos, trading styles or
other trade rights, registered user entries, and applications for any such
registrations or entries; United States and foreign copyrights, copyright
registrations and applications therefor; United States and foreign trademarks
and other marks, trade names, labels and other trade rights, whether or not
registered, and applications therefor; trade secrets, know-how, inventions,
discoveries, improvements, engineering or other drawings, designs, processes and
formulae, whether patented or patentable or not; customer lists, technical data,
marketing information and plans, software and software documentation source
codes; any other proprietary information or intangible rights; shop rights,
license agreements and other agreements relating in whole or in part to any of
the foregoing; and all claims and causes of action on behalf of RSS or against
third parties relating to any of the foregoing, including claims and causes of
action for past infringement. SCHEDULE 6.15 contains a true and complete list
of (a) the Intellectual Property used or proposed to be used by the RSS in
connection with the conduct of its business, all applications therefor and all
licenses and other agreements relating thereto and (b) all agreements relating
to technology, know-how or processes which RSS is licensed or authorized to use
by others or which the RSS licenses or authorizes others to use in connection
with the conduct of its business. No consent of any third party is required for
the use of the Intellectual Property by Xxxx.Xxxx upon the consummation of the
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transactions contemplated hereby, except for such consents as have been
obtained.
6.16 FINANCIAL STATEMENTS. RSS has heretofore delivered to Premier the
following financial statements:
(a) the unaudited balance sheet as of December 31, 1996 for RSS (the
"BALANCE SHEET"); and
(b) the unaudited statement of income as of December 31, 1996 for
RSS.
All such statements were prepared in accordance with generally accepted
accounting principles and fairly present the financial position of RSS at the
respective dates thereof and the results of operations and changes in financial
position of RSS for each of the periods then ended, subject to changes for
normal year-end adjustments.
6.17 NO MATERIAL ADVERSE CHANGE. Since December 31, 1996, there has not
been any material adverse change in the financial condition, business, assets or
liabilities of RSS.
6.18 LIABILITIES OR DEBTS. RSS has no liabilities or debts, fixed or
contingent, liquidated or unliquidated, secured or unsecured, or of any other
kind, other than those specifically disclosed and identified as to nature and
amount on the Balance Sheet. All salaries and compensation, including without
limitation any bonuses or other variable compensation, of all employees and
others who perform personal service for RSS have been paid when due.
6.19 CONDITIONS OF PROPERTIES. All machinery and equipment, furniture,
fixtures and improvements and other assets and properties of RSS to be
transferred pursuant to this Agreement are in good operating condition and
repair, ordinary wear and tear excepted, and have been reasonably serviced and
maintained since the time of installation.
6.20 PERFORMANCE OF SOFTWARE PRODUCTS. The software products of RSS
transferred to Xxxx.Xxxx hereunder shall operate and perform in substantial
conformance with the standards and specifications described in the brochures and
product material attached hereto in SCHEDULE 6.20, and will be free of defects
which substantially affect system performance, except for those defects of which
RSS has notified Premier in writing.
6.21 REGULATORY MATTERS. RSS has all licenses, permits, authorizations,
approvals, consents, franchises, and orders, including but not limited to all
federal, state and local regulatory approvals and clearances, (individually, a
"PERMIT" and, collectively, the "PERMITS") required for the conduct and
operation of its business and the marketing, sale and distribution of its
products. No violations have been recorded in respect of any such
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Permit. There is no claim or action pending, or, to the best of the RSS's
knowledge, after due inquiry and diligent investigation, threatened, which
disputes the validity of any such Permit or threatens to revoke, cancel,
suspend or limit any such Permit.
6.22 EMPLOYEE BENEFIT PLANS. Except as set forth on SCHEDULE 6.22, RSS has
no pension, retirement, severance, welfare, profit-sharing, stock purchase,
stock option, vacation, deferred compensation, bonus or other incentive plan, or
other employee benefit program, arrangement, agreement or understanding, or
medical, vision, dental or other health plan, or life insurance or disability
plan, retiree medical or life insurance plan or any other employee benefit
plans, to which RSS contributes or is a party or by which it is bound or under
which it may have liability and under which employees or former employees of RSS
(or their beneficiaries) are eligible to participate or derive a benefit.
6.23 EMPLOYMENT LAW MATTERS.
(a) RSS (i) is in compliance with all applicable laws respecting
employment, employment practices, terms and conditions of employment and
wages and hours with respect to the conduct of its business; (ii) is in
compliance with all applicable laws and regulations relating to the
employment of aliens or similar immigration matters with respect to the
conduct of its business; and (iii) is not engaged in any unfair labor
practice, including, but not limited to, discrimination or wrongful
discharge with respect to the conduct of its business.
(b) None of the employees of RSS is represented by a labor union, and
no petition has been filed or proceedings instituted by any employee or
group of employees with any labor relations board seeking recognition of a
bargaining representative. RSS is not a party to any multi-employer
collective bargaining agreement covering any of its employees involved in
its business.
6.24 MATERIAL CONTRACTS. SCHEDULE 6.24 sets forth a complete list of all
contracts and commitments of RSS relating to the marketing, sale or distribution
of its products or services or which are otherwise material to the conduct of
its business (the "MATERIAL CONTRACTS"). Each of the Material Contracts has
been entered into in the ordinary course of business and is valid and binding,
and none of such contracts contains terms or conditions which are materially
adverse to RSS or its business. RSS is not, and no other party is, in default
under or in breach or violation of, nor has RSS received notice of any asserted
claim of default by RSS or by any other party under, or a breach or violation
of, any of the Material Contracts.
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6.25 SUPPLIERS AND CUSTOMERS.
(a) RSS enjoys good commercial relationships under all of its supply,
purchase, sale, distribution, sales representative and similar agreements
necessary for the normal operation of its business.
(b) SCHEDULE 6.25 contains a true and complete list of all suppliers,
customers and distributors of RSS, which during any of the calendar years
1995, 1994, or 1993, and for the nine (9) month period ended September 30,
1996, accounted for 5% or more of the RSS's gross purchases or sales,
respectively, during such period.
(c) RSS has no knowledge or basis for knowledge that any such
supplier, customer or distributor has cancelled or otherwise terminated or
threatened to cancel or otherwise terminate, its relationship with RSS,
which termination would have a material adverse effect on the business of
RSS, or has during the last twelve (12) months decreased materially, or
threatened to decrease or limit materially, its services, supplies or
materials to RSS or its usage or purchase of the services or products of
RSS, as the case may be, or that any such supplier, distributor or customer
expects to reduce its business with RSS (or Xxxx.Xxxx) by reason of the
transactions contemplated by this Agreement or for any other reason
whatsoever.
6.26 ACCOUNTS RECEIVABLE. The amount of all accounts receivable, unbilled
invoices and other debts due or recorded in the respective records and books of
account of RSS as being due to RSS as of the Closing (less the amount of any
provision or reserve therefor made in the respective records and books of
account of RSS) will be good and collectible in full in the ordinary course of
business without resort to legal proceedings and in any event not later than
sixty (60) days after the Closing; and none of such accounts receivable or other
debts is or will at the Closing be subject to any counterclaim or set-off except
to the extent of any such provision or reserve.
6.27 FINDERS. RSS has not made, nor will it make, any commitment to pay
any finder's or brokerage fee or commission on account of the execution of this
Agreement or the consummation of the transactions contemplated by this
Agreement.
6.28 ACCURACY OF INFORMATION FURNISHED. No representation, warranty or
statement made, or information provided by RSS in this Agreement, the schedules,
the exhibits hereto or included in any certificates or documents to be delivered
to Premier at the Closing, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements or facts contained therein, in light of the circumstances under
which they were made, not misleading.
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7. REPRESENTATIONS AND WARRANTIES BY PREMIER.
Premier hereby represents and warrants to RSS as follows:
7.1 ORGANIZATION AND RELATED MATTERS. Premier is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Premier has the corporate power and authority to own its properties
and conduct its business as now being conducted by it, to consummate the
transactions contemplated hereby and to issue the Shares to be issued and sold
to RSS hereunder. Premier is duly qualified and in good standing in each of the
jurisdictions in which it is required by the nature of its business or the
ownership of its properties so to qualify and where the failure so to qualify
might have a material adverse effect upon Premier, or its business or
properties.
7.2 VALID AND BINDING AGREEMENT. The execution, delivery and performance
by Premier of this Agreement have been duly and validly authorized by all
necessary corporate action on the part of Premier and the Agreement constitutes
the valid and binding obligation of Premier, enforceable against Premier in
accordance with its terms, except as limited or otherwise affected by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally and by the application of
general equitable principles.
7.3 ISSUANCE OF SHARES. All of the Shares issued to RSS hereunder shall
be validly issued, fully paid and nonassessable, and good title thereto shall be
vested in RSS, free and clear of all liens, claims and encumbrances, except
those created by RSS.
7.4 LITIGATION. Except as described in the Registration Statement or in
SCHEDULE 7.4 hereto, Premier is not involved in any pending or, to the best
knowledge of Premier, threatened investigation, litigation or legal proceeding
that may have a material adverse effect upon the assets, business operations or
condition (financial or otherwise) of Premier or might impair Premier's ability
to perform any or all of its obligations under this Agreement, nor is it subject
to any order, judgment or decree that may have such an effect.
7.5 NO CONFLICT. The execution, delivery and performance by Premier of
this Agreement, the issuance, delivery and payment of the Note, and the
consummation of the transactions provided for in this Agreement do not and will
not (i) violate any provision of law applicable to Premier, the Articles of
Incorporation or Bylaws of Premier, or any order, judgment or decree of any
court or other agency of government binding on Premier, (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any contractual obligation of Premier, or (iii) require any
approval of stockholders or any approval or consent of any person under any
contractual obligation of Premier other than approvals or consents which have
been obtained.
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7.6 FINDERS. Premier has not made, nor will it make, any commitment to
pay any finder's or brokerage fee or commission on account of the execution of
this Agreement or the consummation of the transactions contemplated by this
Agreement.
7.7 ACCURACY OF INFORMATION FURNISHED. No representation, warranty or
statement made, or information provided, by Premier in this Agreement, the
Annual Report, the Quarterly Report or the Registration Statement, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements or facts contained
therein, in light of the circumstances under which they were made, not
misleading.
8. CONFIDENTIALITY AGREEMENT.
8.1 Each party hereto acknowledges that it has received, had access to,
and will continue to have access to certain information, trade secrets, customer
lists, other customer information, technical data or know-how relating to the
products, developments, services, processes, methods, designs or business
practices of the other parties hereto ("CONFIDENTIAL INFORMATION").
8.2 No party shall at any time, either during the term of Xxxx.Xxxx or
thereafter, directly or indirectly: (i) use for its own benefit (other than
benefits accruing pursuant to this Agreement) or for the benefit of others, or
(ii) disseminate or disclose to any person or entity, any such Confidential
Information, whether acquired in the performance of services in connection with
this Agreement or in any other capacity; provided, however, that the foregoing
covenant not to disclose Confidential Information shall not apply to any
information which has become publicly available without a breach of this
Agreement, or the disclosure of which is required by applicable law or legal
process.
9. RECONCILIATION OF ACCOUNTS RECEIVABLE AND ASSUMED LIABILITIES.
For purposes hereof, the term "PAID RECEIVABLES" shall refer to those of
RSS's accounts receivable transferred to Xxxx.Xxxx hereunder which have been
collected since the Closing Date. On or before the earliest of: (1) January 31,
1998; (2) the date the RSS Board of Managers requests the members of RSS to make
an additional capital contribution to RSS; or (3) such earlier date as the
parties may mutually agree, the parties shall perform an accounting, in which
they shall compare the amounts of the Assumed Liabilities to the aggregate
amount of the Paid Receivables. On or before January 31, 1999, RSS shall pay to
Xxxx.Xxxx an amount equal to the sum of: (a) the amount, if any, by which the
Assumed Liabilities exceeds the aggregate amount of the Paid Receivables, plus
(b) $49,000 (representing the reimbursement of RSS's pro rata portion of amounts
advanced by Premier and used by RSS).
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10. INDEMNITY.
10.1 RSS'S AND MEMBERS' INDEMNITY. Subject to the limitations set forth in
SECTIONS 10.3 AND 10.5 below, RSS and the Members agree to, jointly and
severally, indemnify and hold harmless Premier and Xxxx.Xxxx against, and to
reimburse Premier and Xxxx.Xxxx for, any actual damage, loss, cost or expense
(including attorneys' fees and costs of investigation incurred in defending
against and/or settling such damage, loss, costs or expense or claim therefor
and any amounts paid in settlement thereof) reasonably incurred by Premier or
Xxxx.Xxxx (i) in respect of any misrepresentation, breach of warranty, or
failure to perform or violation of any agreement or covenant on the part of RSS
under this Agreement (including, without limitation, its obligations under
SECTION 9 above), and (ii) in respect of any liability, obligation or claim
relating to or resulting from the operations, assets or business of RSS prior to
or after the Closing.
10.2 PREMIER'S INDEMNITY. Subject to the limitations set forth in SECTIONS
10.3 AND 10.6 below, Premier agrees to indemnify and hold harmless RSS and
Xxxx.Xxxx against, and to reimburse RSS and Xxxx.Xxxx for, any actual damage,
loss, cost or expense (including attorneys' fees and costs of investigation
incurred in defending against and/or settling such damage, loss, cost or expense
or claim therefor and any amounts paid in settlement thereof) reasonably
incurred by RSS or Xxxx.Xxxx in respect of any misrepresentation, breach of
warranty, or failure to perform or violation of any agreement or covenant on the
part of Premier under this Agreement.
10.3 DURATION OF INDEMNITIES. The indemnities set forth in SECTION 10.1
and SECTION 10.2, and any other liability that any party may have for any breach
of a representation, warranty or covenant in this Agreement, shall survive the
Closing and shall remain in effect until the later of January 31, 1998 or the
date RSS makes the payment required under SECTION 9 above, at which time they
shall expire (provided that if RSS does not make the payment required under
SECTION 9 by January 31, 1999, Premier's indemnity obligations and other
liabilities hereunder shall nonetheless terminate on January 31, 1999).
Notwithstanding the foregoing, the respective indemnitors shall continue to be
bound by the indemnification provisions of SECTIONS 10.1 AND 10.2 after such
date with respect to any claim which has been asserted hereunder prior to such
date and which is pending or unresolved at the end of such periods.
10.4 NOTIFICATION AND PARTICIPATION. RSS, the Members, Premier and
Xxxx.Xxxx shall each notify the others of any liabilities, claims, litigation or
proceeding that reasonably appears to involve matters covered by the indemnities
set forth in SECTION 10.1 AND 10.2 promptly upon its discovery or notification
thereof, whether before or after the Closing, provided, however, that the
failure to give such notification shall not terminate or otherwise affect the
parties' respective obligations to indemnify
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each other hereunder, unless, and only to the extent that, such failure
results in actual prejudice to the indemnifying party.
10.5 LIMITATIONS ON INDEMNITIES BY RSS AND MEMBERS. In addition to the
limitations set forth in SECTION 10.3 above, the obligations of RSS and the
Members under SECTION 10.1 or otherwise for any breach of this Agreement shall
be limited as follows:
(a) In the event Premier is entitled to indemnity hereunder or
otherwise to damages for breach of this Agreement, the amount to which
Premier is entitled (the "LOSS") shall be liquidated and paid as follows:
(i) The amount of Shares issued to RSS shall be reduced by
an amount (expressed in Shares) equal to the amount of the Loss
divided by the per share price used in SECTION 2.1 for purposes of
calculating the number of Shares to be delivered to RSS hereunder.
RSS shall transfer and assign to Premier the number of Shares so
calculated. Subject to SECTION 10.5(b) below, so long as RSS remains
obligated to indemnify Premier hereunder, Premier shall have (and is
hereby granted) a security interest in the Shares (including any
shares which may become issuable under SECTION 2.2 hereof)as
collateral for performance of such indemnification obligations. At
any time after a default in the performance of such indemnification
obligations, Premier shall be entitled to all rights and remedies of a
secured party under the California Uniform Commercial Code, with
respect to the Shares so pledged.
(ii) If the remedy provided under SECTION 10.5(b)(i) above
is insufficient to make Premier whole for the full amount of the Loss,
then all of the Shares shall, pursuant to SECTION 10.5(b)(i) above, be
transferred to Premier, and in addition the number of additional
Shares to which RSS is entitled under SECTION 2.2 hereof (the
"ADDITIONAL SHARES") shall be reduced by an amount (expressed in
Shares) equal to: (1) the amount of the Loss which is not reimbursed
under SECTION 10.5(b)(i), divided by (2) the per share price used in
calculating the number of Additional Shares issuable under
SECTION 2.2. RSS shall transfer and assign to Premier the number of
Shares so calculated. This SECTION 10.5(b)(ii) shall be operative only
to the extent RSS becomes entitled to the additional Shares under
SECTION 2.2. Subject to SECTION 10.5(b) below, the security interest
granted under SECTION 10.5(b)(i) shall extend to any Shares issued or
issuable under SECTION 2.2.
(iii) If the remedies provided under SECTIONS 10.5(b)(i) AND
(b)(ii) above are insufficient to make Premier whole for the full
amount of the Loss, then
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all of the Shares and Additional Shares shall, pursuant to SECTIONS
10.5(b)(i) AND (b)(ii) above, be transferred to Premier, and in
addition RSS's "Percentage Interest" in Xxxx.Xxxx (as such term is
defined in the Operating Agreement) shall be reduced by 1% for each
$43,137 by which the Loss exceeds $1,200,000 (being the value of the
Shares so transferred to Premier). In the event that RSS becomes
entitled to Additional Shares under SECTION 2.2, and the remedy set
forth in SECTION 10.5(b)(ii) is implemented, then for purposes of this
SECTION 10.5(b)(iii) the reference to $1,200,000 in the foregoing
sentence shall read, instead, "$1,500,000."
(iv) If the remedies provided under SECTIONS 10.5(b)(i) TO
10.5(b)(iii) above are insufficient to make Premier whole for the full
amount of the Loss, then the Members shall indemnify Premier for any
Loss for which Premier has not been reimbursed under such Sections, up
to the maximum amount set forth in SECTION 10.5(c) below.
(b) So long as Premier continues to have a security interest in the
Shares and Additional Shares under SECTIONS 10.5(a)(i) AND (a)(ii) above,
Xxxxx & Xxxxxx, LLP, counsel to Premier, shall retain possession of the
certificate representing such Shares and Additional Shares, in order to
perfect the security interest granted to Premier hereunder. The parties
agree to enter into an agreement with Xxxxx & Xxxxxx, LLP, promptly
following the Closing, containing reasonable terms relating to such firm's
duties in its capacity as agent for Premier. Notwithstanding any
provisions of this Agreement to the contrary, in the event the Company
makes a capital call of its members at a time at which the Shares and
Additional Shares remain subject to the security interest described above,
Premier will release from such security interest a sufficient number of
shares to permit RSS to pledge such Shares and Additional Shares as
collateral for a loan to be used to fund its obligations under such capital
call. In addition, on the date RSS pays the amounts required to be paid
under SECTION 9 above (the "SECTION 9 PAYMENT"), Premier shall release its
security interest in the Shares and Additional Shares (but in no event
earlier than July 31, 1997). The release of such security interest shall
not, however, terminate or otherwise affect the indemnity obligations of
RSS and the Members under SECTION 10.1 above, which shall continue until
the expiration of the periods set forth in SECTION 10.3. If RSS becomes
entitled to and thereafter disposes of any Shares or Additional Shares, the
remaining Shares and Additional Shares held by them shall continue to be
subject to the terms of this Agreement, and in satisfying the
indemnification obligations of RSS and the Members, such parties shall then
receive credit under SECTIONS 10.5(a)(i) AND (ii) only to the extent of the
actual amount of Shares or Additional Shares returned to Premier, and
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the formula set forth in SECTION 10.5(a)(iii) shall be correspondingly
adjusted.
(c) The maximum amount for which each of the Members shall be liable
shall not exceed 10% of the amount, determined in accordance with generally
accepted accounting principles, initially recorded on the Premier balance
sheet for its investment in Xxxx.Xxxx.
10.6 LIMITATIONS ON INDEMNITY BY PREMIER. In addition to the limitations
set forth in SECTION 10.3 above, RSS and the Members agree that they shall not
rely upon, and shall have no recourse against Premier for, any representations
or warranties that are not contained in SECTION 7 hereof, and Premier shall not
be deemed to have made to RSS or the Members any representation or warranty
other than as expressly made by Premier in SECTION 7 hereof. Without limiting
the generality of the foregoing, and notwithstanding any express representations
and warranties made by Premier in SECTION 7, Premier makes no representations or
warranty to RSS or the Members with respect to the value of the Shares, any
projections, estimates or budgets heretofore delivered or made available to RSS
with respect to future revenues, expenses or expenditures or results of
operations, or any other information or documents made available to RSS or its
counsel, accountants or advisors with respect to Premier, except as expressly
covered by a representation and warranty contained in SECTION 7 hereof.
11. MISCELLANEOUS.
11.1 BULK SALES. RSS hereby represents and warrants to Premier that it has
complied with the bulk sales provisions of the Uniform Commercial Code, to the
extent that they apply to the transactions contemplated hereby.
11.2 NOTICES. Written notice given in accordance with any provision of
this Agreement shall be hand delivered or sent by prepaid registered or
certified mail with return receipt requested to the respective addresses of the
parties set forth on the signature page hereof (or to such other address as any
party may designate in writing). Any notice delivered by hand is deemed to have
been given upon delivery. Any notice mailed as provided above is deemed to have
been given five (5) days after the date of mailing.
11.3 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all exhibits, schedules and statements delivered pursuant to the terms of
this Agreement, constitutes the entire agreement between the parties hereto and
supersedes any prior agreement and understanding of the parties in connection
herewith. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other
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provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
11.4 FURTHER ASSURANCES. Each of the parties hereto shall, following the
Closing, and without charge to the other, take such additional actions and
execute, deliver and file such additional instruments as may be reasonably
required to give effect to the transactions contemplated hereby.
11.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
11.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
11.7 HEADINGS. The headings of the several Sections herein are inserted
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
11.8 NO ASSIGNMENTS. This Agreement may not be assigned by operation of
law or otherwise without the written consent of the other party hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Joint Venture
Agreement as of the date first written above.
PREMIER: PREMIER LASER SYSTEMS, INC.,
a California corporation
By: /s/ Xxxxxxx Xxxxxx
--------------------------
Xxxxxxx Xxxxxx, President
ADDRESS:
0 Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
RSS: RSS, LLC, a Kansas
limited liability company
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx, President
ADDRESS:
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxx 00000
XXXX.XXXX: XXXX.XXXX, LLC, a California
limited liability company
By: /s/ Xxxxxxx Xxxxxx
--------------------------
Xxxxxxx Xxxxxx, Manager
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx, Manager
MEMBERS:
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Xx. Xxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxxxx
-----------------------------
Xx. Xxxx X. Xxxxxxxx
/s/ Xxxxxxxx Xxx
-----------------------------
Xxxxxxxx Xxx
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