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EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
BY AND AMONG
REYNARD MOTORSPORT, INC.
(AS BUYER)
AND
XXX XXXXX
AND
XXXX XXXXX
(AS SELLERS)
DATED
MARCH 31, 1999
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TABLE OF CONTENTS
1. SALE AND TRANSFER OF SHARES; CLOSING.........................................................................1
1.1. Shares..................................................................................................1
1.2. Purchase Price..........................................................................................1
1.3. Closing.................................................................................................2
1.4. Closing Obligations.....................................................................................2
2. REPRESENTATIONS AND WARRANTIES OF SELLERS....................................................................3
2.1. Organization and Good Standing..........................................................................3
2.2. Authority; No Conflict..................................................................................3
2.3. Capitalization..........................................................................................4
2.4. Financial Statements....................................................................................5
2.5. Books and Records.......................................................................................5
2.6. Title to Properties; Encumbrances.......................................................................5
2.7. Accounts Receivable.....................................................................................6
2.8. Inventory...............................................................................................6
2.9. No Undisclosed Liabilities..............................................................................6
2.10. Taxes................................................................................................7
2.11. No Material Adverse Change...........................................................................7
2.12. Employee Benefits....................................................................................7
2.13. Compliance With Legal Requirements; Governmental Authorizations......................................7
2.14. Legal Proceedings; Orders............................................................................8
2.15. Absence of Certain Changes and Events................................................................9
2.16. Contracts; No Defaults..............................................................................10
2.17. Insurance...........................................................................................12
2.18. Environmental Matters...............................................................................14
2.19. Employees...........................................................................................15
2.20. Labor Relations; Compliance.........................................................................15
2.21. Intellectual Property...............................................................................16
2.22. Certain Payments....................................................................................17
2.23. Disclosure..........................................................................................17
2.24. Relationships With Related Persons..................................................................18
2.25. Brokers or Finders..................................................................................18
3. REPRESENTATIONS AND WARRANTIES OF BUYER.....................................................................18
3.1. Organization and Good Standing.........................................................................18
3.2. Authority; No Conflict.................................................................................18
3.3. Brokers or Finders.....................................................................................19
4. COVENANTS OF SELLERS PRIOR TO CLOSING DATE..................................................................19
4.1. Access and Investigation...............................................................................19
4.2. Operation of the Businesses of the Company.............................................................20
4.3. Negative Covenant......................................................................................20
4.4. Required Approvals.....................................................................................20
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4.5. Notification...........................................................................................20
4.6. Payment of Indebtedness by Related Persons.............................................................21
4.7. No Negotiation.........................................................................................21
4.8. Section 338(h)(10) Election............................................................................20
5. COVENANTS OF BUYER PRIOR TO CLOSING DATE....................................................................22
5.1. Approvals of Governmental Bodies.......................................................................22
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.........................................................22
6.1. Accuracy of Representations............................................................................22
6.2. Sellers' Performance...................................................................................22
6.3. Consents...............................................................................................23
6.4. Additional Documents...................................................................................23
6.5. No Proceedings.........................................................................................23
6.6. No Claim Regarding Stock Ownership or Sale Proceeds....................................................23
6.7. No Prohibition.........................................................................................23
7. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE........................................................24
7.1. Accuracy of Representations............................................................................24
7.2. Buyer's Performance....................................................................................24
7.3. Consents...............................................................................................24
7.4. Additional Documents...................................................................................24
7.5. No Injunction..........................................................................................25
8. TERMINATION.................................................................................................25
8.1. Termination Events.....................................................................................25
8.2. Effect of Termination..................................................................................25
9. INDEMNIFICATION; REMEDIES...................................................................................26
9.1. Survival; Right to Indemnification Not Affected by Knowledge...........................................26
9.2. Indemnification and Payment of Damages by Sellers......................................................26
9.3. Indemnification and Payment of Damages by Buyer........................................................27
9.4. Time Limitations.......................................................................................27
9.5. Limitations on Amount--Sellers.........................................................................27
9.6. Limitations on Amount--Buyer...........................................................................27
9.7. Right of Set-Off.......................................................................................28
9.8. Procedure for Indemnification--Third Party Claims......................................................28
9.9. Procedure for Indemnification--Other Claims............................................................29
10. GENERAL PROVISIONS..........................................................................................29
10.1. Expenses............................................................................................29
10.2. Public Announcements................................................................................30
10.3. Confidentiality.....................................................................................30
10.4. Notices.............................................................................................30
10.5. Jurisdiction; Service of Process....................................................................31
10.6. Further Assurances..................................................................................31
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10.7. Waiver..............................................................................................31
10.8. Entire Agreement and Modification...................................................................32
10.9. Assignments, Successors, and No Third-Party Rights..................................................32
10.10. Severability........................................................................................32
10.11. Section Headings, Construction......................................................................32
10.12. Time of Essence.....................................................................................33
10.13. Governing Law.......................................................................................33
10.14. Counterparts........................................................................................33
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of March 31,
1999, by REYNARD MOTORSPORT, INC., a Delaware corporation ("Buyer"), XXX XXXXX,
an individual resident in Indiana ("Xxxxx"), and XXXX XXXXX, an individual
resident in Indiana ("Xxxxx" and, collectively with Xxxxx, "Sellers"). Sellers
own all of the issued and outstanding shares of capital stock of Xxxxx & Xxxxx,
Inc., an Indiana corporation (the "Company"). The Company is a party to, and has
certain obligations under, this Agreement.
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the "Shares") of capital stock of the Company,
for the consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. SALE AND TRANSFER OF SHARES; CLOSING.
1.1. SHARES.
Subject to the terms and conditions of this Agreement, at the Closing,
Sellers will sell and transfer the Shares to Buyer, and Buyer will purchase the
Shares from Sellers, effective March 1, 1999.
1.2. PURCHASE PRICE.
The aggregate purchase price (the "Purchase Price") for the Shares will
be the issuance of 319,836 shares of common stock of Buyer (the "RMI Common
Stock") and $4,400,000 in cash, payable on or before May 15, 1999. The Purchase
Price shall be allocated equally between the Sellers. As additional purchase
price, Buyer shall reimburse Sellers for the interest expense actually paid by
Sellers on funds borrowed by Sellers to pay the federal taxes on the gain
represented by the issuance of the RMI Common Stock from the date of such
borrowings until twelve (12) months from the Closing. Sellers shall provide
documentation to Buyer on such interest costs and Buyer shall remit to Sellers
the funds necessary to pay such interest on a timely basis.
If Buyer has not completed an IPO within twelve (12) months of the
Closing, Sellers shall have the right to cause Buyer to redeem all, but not part
of of the RMI Common Stock (an aggregate of 319,836 shares) at an aggregate
Redemption purchase price of $6,000,000 ($18.76 per share). This Redemption
option shall be exercised by Sellers, if at all, at any time from and after
twelve (12) months following the Closing for a period of 30 days. Sellers shall
provide written notice to Buyer of their exercise of this Redemption option not
more than 30 days prior to the date on which the Redemption option may first be
exercised and not less than 5 days prior to
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the date on which the Redemption option shall lapse. Within thirty (30) days of
receipt by Buyer of notice by the Sellers exercising this Redemption option,
Buyer shall consummate the Redemption and pay to Sellers the Redemption purchase
price in cash or other immediately available funds.
If Buyer consummates an IPO within twelve (12) months of the Closing,
Buyer hereby grants to Sellers a guaranteed value of $6,000,000 with respect to
the RMI Common Stock (an aggregate of 319,836 shares) (the "Guaranteed Value").
At the date which is one (1) year following the effective date of the IPO, Buyer
shall determine the Market Value, as defined below, for the shares of RMI Common
Stock. If the aggregate Market Value for the RMI Common Stock (an aggregate of
319,836 shares) is less than the Guaranteed Value, Buyer shall pay to Sellers
the difference between the aggregate Market Value and the Guaranteed Value. Such
payment, if required, shall be made to Sellers, in cash or other immediately
available funds, within 30 days following the final date used for computing the
Market Value.
For purposes of this Section, "Market Value" shall mean the average of
the closing sales price for shares of RMI Common Stock on the New York Stock
Exchange for the five (5) business days immediately preceding the date on which
such Market Value determination is made. If Buyer's shares of Common Stock are
not traded on the New York Stock Exchange, "Market Value" shall mean the average
of the closing bid and ask prices for Buyer's Common Stock on the NASDAQ Stock
Market or other primary exchange on which Buyer's Common Stock is traded for the
five (5) business days immediately preceding the date on which such Market Value
determination is made. If Buyer's Common Stock is not traded on an exchange, the
"Market Value" shall be determined pursuant to an independent appraisal, as
mutually agreed by the parties.
1.3. CLOSING.
The purchase and sale (the "Closing") provided for in this Agreement
will take place at the offices of Buyer's counsel at 00 Xxxx Xxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxx, Xxxx 00000, at 10:00 a.m. (local time) on May 15, 1999, or at
such other time and place as the parties may agree (the "Closing Date"). Subject
to the provisions of Section 8, failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place determined
pursuant to this Section 1.3 will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
1.4. CLOSING OBLIGATIONS.
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers);
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(ii) releases in the form of Exhibit 1.4(a)(ii) executed by Sellers
(collectively, "Sellers' Releases");
(iii) employment agreements in the form of Exhibit 1.4(a)(iii),
executed by Sellers (collectively, "Employment Agreements");
(iv) a certificate executed by Sellers representing and warranting
to Buyer that each of Sellers' representations and warranties
in this Agreement was accurate in all respects as of the date
of this Agreement and is accurate in all respects as of the
Closing Date as if made on the Closing Date (giving full
effect to any supplements to the Disclosure Letter that were
delivered by Sellers to Buyer prior to the Closing Date in
accordance with Section 4.5); and
(b) Buyer will deliver to Sellers:
(i) Certificates representing an aggregate of 319,836 shares of
RMI Common Stock in the names and amounts set forth in
Schedule 1.2;
(ii) a certificate executed by Buyer to the effect that, except as
otherwise stated in such certificate, each of Buyer's
representations and warranties in this Agreement was accurate
in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on
the Closing Date; and
(iii) the Employment Agreements, executed by Buyer on behalf of
Xxxxx & Xxxxx, Inc.
2. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers represent and warrant to Buyer as follows:
2.1. ORGANIZATION AND GOOD STANDING.
The Company is a corporation duly organized, validly existing, and in
good standing under the laws of its jurisdiction of incorporation, with
full corporate power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under
material agreements to which it is a party or by which its assets are
subject. The Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification.
2.2. AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
each of the Sellers and the Company, enforceable against each Seller
and the Company in accordance with
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its terms. Each Seller has the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and to
perform their obligations under this Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of the transactions contemplated hereby
will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any
provision of the organizational documents of the Company, or
(B) any resolution adopted by the board of directors or the
stockholders of the Company;
(ii) contravene, conflict with, or result in a violation of, or
give any governmental body or other person the right to
challenge any of the transactions contemplated hereby or to
exercise any remedy or obtain any relief under, any legal
requirement or any order to which the Company or any of the
assets owned or used by it may be subject;
(iii) cause Buyer or the Company to become subject to, or to become
liable for the payment of, any tax;
(iv) contravene, conflict with, or result in a violation or breach
of any provision of, or give any person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or
modify, any contract to which the Company is a party; or
(v) result in the imposition or creation of any encumbrance upon
or with respect to any of the assets owned or used by the
Company.
No Seller or the Company is or will be required to give any
notice to or obtain any consent from any person in connection
with the execution and delivery of this Agreement or the
consummation or performance of any of the transactions
contemplated hereby.
(c) Sellers are acquiring the RMI Common Stock for their own account and
not with a view to their distribution within the meaning of Section
2(11) of the Securities Act of 1933, as amended (the "Securities Act").
Each Seller is an "accredited investor" as such term is defined in Rule
501(a) under the Securities Act.
2.3. CAPITALIZATION.
The authorized equity securities of the Company consist of 100 shares
of common stock, par value $1.00 per share, of which 100 shares are issued and
outstanding and constitute the Shares. Sellers are and will be on the Closing
Date the record and beneficial owners and holders of the Shares, free and clear
of all encumbrances. Xxxxx owns 50 of the Shares and Xxxxx owns 50 of the
Shares. No legend or other reference to any purported encumbrance appears upon
any certificate representing equity securities of the Company. All of the
outstanding equity securities
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of the Company have been duly authorized and validly issued and are fully paid
and nonassessable. There are no agreements relating to the issuance, sale, or
transfer of any equity securities or other securities of the Company. None of
the outstanding equity securities or other securities of the Company was issued
in violation of the Securities Act or any other legal requirement. The Company
does not own, or have any agreements to acquire, any equity securities or other
securities of any person or any direct or indirect equity or ownership interest
in any other business.
2.4. FINANCIAL STATEMENTS.
Sellers have delivered to Buyer:
(a) unaudited balance sheets of the Company as at December 31 in each of
the years 1994 through 1997, and the related unaudited statements of
income, changes in stockholders' equity, and cash flow for each of the
fiscal years then ended,
(b) a balance sheet of the Company as at December 31, 1998 (including the
notes thereto, the "Balance Sheet"), and the related consolidated
statements of income, changes in stockholders' equity, and cash flow
for the fiscal year then ended.
Such financial statements and notes fairly present the financial
condition and the results of operations, changes in stockholders' equity, and
cash flow of the Company as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with generally
accepted accounting principles ("GAAP"). The financial statements referred to in
this Section 2.4 reflect the consistent application of such accounting
principles throughout the periods involved. No financial statements of any
person other than the Company are required by GAAP to be included in the
consolidated financial statements of the Company.
2.5. BOOKS AND RECORDS.
The books of account, minute books, stock record books, and other
records of the Company, all of which have been made available to Buyer, are
complete and correct and have been maintained in accordance with sound business
practices. The minute books of the Company contain accurate and complete records
of all meetings held of, and corporate action taken by, the stockholders, the
Boards of Directors, and committees of the Board of Directors of the Company,
and no meeting of any such stockholders, Board of Directors, or committee has
been held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those book and records will be in the
possession of the Company.
2.6. TITLE TO PROPERTIES; ENCUMBRANCES.
The Company owns (with good and marketable title in the case of real
property, subject only to the matters permitted by the following sentence) all
the properties and assets (whether real, personal, or mixed and whether tangible
or intangible) that it purports to own, including all of the properties and
assets reflected in the Balance Sheet (except for assets held under capitalized
leases and personal property sold since the date of the Balance Sheet, as the
case may be, in the ordinary course of business), and all of the properties and
assets purchased or otherwise
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acquired by the Company since the date of the Balance Sheet (except for personal
property acquired and sold since the date of the Balance Sheet in the ordinary
course of business and consistent with past practice). All material properties
and assets reflected in the Balance Sheet are free and clear of all encumbrances
except, with respect to all such properties and assets, (a) security interests
shown on the Balance Sheet as securing specified liabilities or obligations,
with respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, and (b) security interests incurred in
connection with the purchase of property or assets after the date of the Balance
Sheet (such security interests being limited to the property or assets so
acquired), with respect to which no default (or event that, with notice or lapse
of time or both, would constitute a default) exists.
2.7. ACCOUNTS RECEIVABLE.
All accounts receivable of the Company that are reflected on the
Balance Sheet or on the accounting records of the Company as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Balance Sheet or on the
accounting records of the Company as of the Closing Date (which reserves are
adequate and calculated consistent with past practice and, in the case of the
reserve as of the Closing Date, will not represent a greater percentage of the
Accounts Receivable as of the Closing Date than the reserve reflected in the
Balance Sheet represented of the Accounts Receivable reflected therein and will
not represent a material adverse change in the composition of such Accounts
Receivable in terms of aging). Subject to such reserves, each of the Accounts
Receivable either has been or will be collected in full, without any set-off,
within ninety days after the day on which it first becomes due and payable.
There is no contest, claim, or right of set-off, other than returns in the
ordinary course of business, under any agreement with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
2.8. INVENTORY.
All inventory of the Company, whether or not reflected in the Balance
Sheet, consists of a quality and quantity usable and salable in the ordinary
course of business, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net realizable
value in the Balance Sheet or on the accounting records of the Company as of the
Closing Date, as the case may be. All inventories not written off have been
priced at the lower of cost or net realizable value on a first in, first out
basis.
2.9. NO UNDISCLOSED LIABILITIES.
The Company has no liabilities or obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent, or otherwise) except
for liabilities or obligations reflected or reserved against in the Balance
Sheet and current liabilities incurred in the ordinary course of business since
the date thereof.
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2.10. TAXES.
(a) The Company has filed or caused to be filed (on a timely basis since
1995) all tax returns that are or were required to be filed by or with
respect to it, either separately or as a member of a group of
corporations, pursuant to applicable legal requirements. The Company
has paid, or made provision for the payment of, all taxes that have or
may have become due pursuant to those tax returns or otherwise, or
pursuant to any assessment received by Sellers or the Company, except
such taxes, if any, that are being contested in good faith and as to
which adequate reserves (determined in accordance with GAAP) have been
provided in the Balance Sheet.
(b) All deficiencies proposed as a result of any tax audit have been paid,
reserved against, settled, or, are being contested in good faith by
appropriate proceedings. No Seller or the Company has given or been
requested to give waivers or extensions (or is or would be subject to a
waiver or extension given by any other person) of any statute of
limitations relating to the payment of taxes of the Company or for
which the Company may be liable.
(c) The charges, accruals, and reserves with respect to taxes on the books
of the Company are adequate (determined in accordance with GAAP) and
are at least equal to that the Company's liability for taxes. There
exists no proposed tax assessment against the Company. No consent to
the application of Section 341(f)(2) of the Internal Revenue Code has
been filed with respect to any property or assets held, acquired, or to
be acquired by the Company. All taxes that the Company is or was
required by legal requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to
the proper governmental body or other person.
(d) All tax returns filed by the Company are true, correct, and complete.
There is no tax sharing agreement that will require any payment by the
Company after the date of this Agreement.
2.11. NO MATERIAL ADVERSE CHANGE.
Since the date of the Balance Sheet, there has not been any material
adverse change in the business, operations, properties, prospects, assets, or
condition of the Company, and no event has occurred or circumstance exists that
may result in such a material adverse change.
2.12. EMPLOYEE BENEFITS.
The Company has no pension or profit sharing plans other than a 401-K
Profit Sharing Plan which does not require any Company contributions.
2.13. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
The following representations are qualified to the extent that they are
limited not to have a Material Adverse Effect on the Company. As used herein,
the term "Material Adverse Effect" means an effect which would be materially
adverse to the assets, properties, business, affairs,
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operations, condition (financial or otherwise) or prospects of the Company (or
buyer, as the context may dictate) that results or is reasonably likely to
result in expenses, fees, losses, liabilities, claims, actions, or other damages
in excess of $100,000.
(a) The Company is, and at all times since January 1, 1995 has been, in
full compliance with each federal, state, local, municipal, foreign,
international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, regulation,
statute or treaty ("Legal Requirement") that is or was applicable to it
or to the conduct or operation of its business or the ownership or use
of any of its assets.
(b) No event has occurred or circumstance exists that (with or without
notice or lapse of time) (A) may constitute or result in a violation by
the Company of, or a failure on the part of the Company to comply with,
any Legal Requirement, or (B) may give rise to any obligation on the
part of the Company to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature.
(c) The Company has not received, at any time since January 1, 1995, any
notice or other communication (whether oral or written) from any
governmental body or any other person regarding (A) any actual,
alleged, possible, or potential violation of, or failure to comply
with, any Legal Requirement, or (B) any actual, alleged, possible, or
potential obligation on the part of the Company to undertake, or to
bear all or any portion of the cost of, any remedial action of any
nature.
(d) Schedule 2.13 contains a complete and accurate list of each approval,
consent, license, permit, waiver or other authorization issued,
granted, given or otherwise made available by or under the authority of
any governmental body or pursuant to any Legal Requirement
("Governmental Authorization") that is held by the Company or that
otherwise relates to the business of, or to any of the assets owned or
used by, the Company. Each Governmental Authorization listed or
required to be listed on Schedule 2.13 is valid and in full force and
effect and the Company is in full compliance with all such Governmental
Authorizations.
2.14. LEGAL PROCEEDINGS; ORDERS.
(a) There is no pending legal proceeding:
(i) that has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any of
the assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any
of the transactions contemplated hereby.
To the knowledge of Sellers and the Company, (1) no such legal
proceeding has been threatened, and (2) no event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such legal proceeding.
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(b) There is no award, decision, injunction, order, ruling, subpoena or
verdict entered, issued, made or rendered by any court, administrative
agency or other governmental body or by any arbitrator ("Order") to
which the Company, or any of the assets owned or used by the Company,
is subject.
(c) Neither Seller is subject to any Order that relates to the business of,
or any of the assets owned or used by, the Company.
(d) To the knowledge of Sellers and the Company, no officer, director,
agent, or employee of the Company is subject to any Order that
prohibits such officer, director, agent, or employee from engaging in
or continuing any conduct, activity, or practice relating to the
business of the Company.
(e) The Company is, and at all times since January 1, 1995 has been, in
full compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been
subject.
(f) No event has occurred or circumstance exists that may constitute or
result in (with or without notice or lapse of time) a violation of or
failure to comply with any term or requirement of any Order to which
the Company, or any of the assets owned or used by the Company, is
subject.
(g) The Company has not received, at any time since January 1, 1995, any
notice or other communication (whether oral or written) from any
governmental body or any other person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any
term or requirement of any Order to which the Company, or any of the
assets owned or used by the Company, is or has been subject.
2.15. ABSENCE OF CERTAIN CHANGES AND EVENTS.
Since the date of the Balance Sheet, the Company has conducted its
business only in the ordinary course of business and there has not been any:
(a) change in the Company's authorized or issued capital stock; grant of
any stock option or right to purchase shares of capital stock of the
Company; issuance of any security convertible into such capital stock;
grant of any registration rights; purchase, redemption, retirement, or
other acquisition by the Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution
or payment in respect of shares of capital stock;
(b) amendment to the organizational documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries, or other
compensation to any stockholder, director, officer, or (except in the
ordinary course of business) employee or entry into any employment,
severance, or similar agreement with any director, officer, or
employee;
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(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any
employees of the Company;
(e) damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or
prospects of the Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination of (i)
any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any agreement or
transaction involving a total remaining commitment by or to the Company
of at least $10,000;
(g) sale (other than sales of inventory in the ordinary course of
business), lease, or other disposition of any asset or property of the
Company or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of the Company, including
the sale, lease, or other disposition of any of the Company's
intellectual property assets;
(h) cancellation or waiver of any claims or rights with a value to the
Company in excess of $10,000;
(i) material change in the accounting methods used by the Company; or
(j) agreement, whether oral or written, by the Company to do any of the
foregoing.
2.16. CONTRACTS; NO DEFAULTS.
(a) Sellers have delivered to Buyer true and complete copies of:
(i) each agreement that involves performance of services or
delivery of goods or materials by the Company of an amount or
value in excess of $10,000;
(ii) each agreement that involves performance of services or
delivery of goods or materials to the Company of an amount or
value in excess of $10,000;
(iii) each agreement that was not entered into in the ordinary
course of business and that involves expenditures or receipts
of the Company in excess of $5,000;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other
agreement affecting the ownership of, leasing of, title to,
use of, or any leasehold or other interest in, any real or
personal property (except personal property leases and
installment and conditional sales agreements having a value
per item or aggregate payments of less than $5,000 and with
terms of less than one year);
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(v) each licensing agreement or other agreement with respect to
patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former
employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Company's
intellectual property assets;
(vi) each collective bargaining agreement and other agreements to
or with any labor union or other employee representative of a
group of employees;
(vii) each joint venture, partnership, and other agreements (however
named) involving a sharing of profits, losses, costs, or
liabilities by the Company with any other person;
(viii) each agreement containing covenants that in any way purport to
restrict the business activity of the Company or any affiliate
of the Company or limit the freedom of the Company or any
affiliate of the Company to engage in any line of business or
to compete with any person;
(ix) each agreement providing for payments to or by any person
based on sales, purchases, or profits, other than direct
payments for goods;
(x) each power of attorney that is currently effective and
outstanding;
(xi) each agreement entered into other than in the ordinary course
of business that contains or provides for an express
undertaking by the Company to be responsible for consequential
damages;
(xii) each agreement for capital expenditures in excess of $5,000;
(xiii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended
by the Company other than in the ordinary course of business;
and
(xiv) each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
(b) Neither Seller has or may acquire any rights under, and neither Seller
has or may become subject to any obligation or liability under, any
agreement that relates to the business of, or any of the assets owned
or used by the Company, other than the lease of the Company's main
facilities, which is leased from an affiliated entity.
(c) To the knowledge of Sellers and the Company, no officer, director,
agent, employee, consultant, or contractor of the Company is bound by
any agreement that purports to limit the ability of such officer,
director, agent, employee, consultant, or contractor to (A) engage in
or continue any conduct, activity, or practice relating to the business
of the Company, or (B) assign to the Company or to any other person any
rights to any invention, improvement, or discovery.
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(d) Each agreement delivered or required to be delivered to Seller pursuant
to Section 2.16(a) is in full force and effect and is valid and
enforceable in accordance with its terms.
(e) The Company is, and at all times since January 1, 1997 has been, in
full compliance with all applicable terms and requirements of each
agreement under which it has or had any obligation or liability or by
which it or any of the assets owned or used it is or was bound.
(f) Each other person that has or had any obligation or liability under any
agreement under which the Company has or had any rights is, and at all
times since January 1, 1997 has been, in full compliance with all
applicable terms and requirements of such agreement.
(g) No event has occurred or circumstance exists that (with or without
notice or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give the Company or other person the right
to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
agreement.
(h) The Company has not given to or received from any other person, at any
time since January 1, 1997, any notice or other communication (whether
oral or written) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any agreement, other than the
potential claim by KPMG and the dispute with Xxxxxx Xxxxxxx, both of
which have been disclosed to Buyer.
(i) There are no renegotiations of, attempts to renegotiate, or outstanding
rights to renegotiate any material amounts paid or payable to the
Company under current or completed agreements with any person and, to
the knowledge of Sellers and the Company, no such person has made
written demand for such renegotiation.
(j) The agreements relating to the sale, design, manufacture, or provision
of products or services by the Company have been entered into in the
ordinary course of business and have been entered into without the
commission of any act alone or in concert with any other person, or any
consideration having been paid or promised, that is or would be in
violation of any Legal Requirement.
2.17. INSURANCE.
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of insurance to which
the Company is a party or under which the Company, or any
director of the Company, is or has been covered at any time
within the five (5) years preceding the date of this
Agreement;
(ii) true and complete copies of all pending applications for
policies of insurance; and
(iii) any statement by the auditor of the Company's financial
statements with regard to the adequacy of its coverage or of
the reserves for claims.
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(b) Sellers have provided to Buyer a summary, by year, for the current
policy year and each of the five (5) preceding policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance policy
for an amount in excess of $50,000, which sets forth:
A. the name of the claimant;
B. a description of the policy by insurer, type of
insurance, and period of coverage; and
C. the amount and a brief description of the claim; and
(iii) a statement describing the loss experience for all claims that
were self-insured, including the number and aggregate cost of
such claims.
(c) All policies to which the Company is a party or that provide coverage
to either Seller, the Company, or any director or officer of the
Company:
(i) are valid, outstanding, and enforceable;
(ii) are issued by an insurer that is financially sound and
reputable;
(iii) taken together, provide adequate insurance coverage for the
assets and the operations of the Company for all risks to
which the Company is normally exposed;
(iv) are sufficient for compliance with all Legal Requirements and
agreements to which the Company is a party or by which it is
bound;
(v) will continue in full force and effect following the
consummation of the transactions contemplated hereby; and
(vi) do not provide for any retrospective premium adjustment or
other experienced-based liability on the part of the Company.
(d) No Seller or the Company has received (A) any refusal of coverage or
any notice that a defense will be afforded with reservation of rights,
or (B) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder.
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(e) The Company has paid all premiums due, and has otherwise performed all
of its obligations, under each policy to which it is a party or that
provides coverage to it or any director.
(f) The Company has given notice to the insurer of all claims that may be
insured thereby.
2.18. ENVIRONMENTAL MATTERS.
To the best knowledge of the Company, except to the extent that any
inaccuracies in any of the following representations and warranties set forth in
this Section 2.18 would not be reasonably expected to have a Material Adverse
Effect on the Company:
(a) The Company is, and at all times has been, in compliance in all
material respects with all federal, state, local and foreign laws, statutes,
codes, rules, regulations, orders, injunctions, decrees, judgments, common law,
legal doctrine, plans, demand letters, agreements with any Governmental
Authorities and all other requirements relating to the pollution or the
protection of health, safety or the environment, including without limitation
the release, discharge or emission of any pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes into the environment
(including, without limitation ambient air, surface water, ground water, land
surface, or subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous materials, substances or wastes ("Environmental Laws") resulting from
the operation of the Company's business or the ownership of the Company's
properties or assets.
(b) The Company has not received any notices, demand letters,
complaints or requests for information from, and no action, suit, hearing,
investigation or other proceeding is pending or, to the best knowledge of the
Company, threatened by or before any governmental or regulatory authority or
third party regarding any violation of or any liability under any Environmental
Law. The Company is not subject to any judicial, executive, legislative,
regulatory or administrative order, ruling or decree arising under or relating
to any Environmental Law.
(c) The Company has timely obtained, currently holds and is in
compliance in all material respects with the provisions of all licenses,
permits, authorizations and approvals required in connection with the operation
of its business and the ownership, leasing or use of its properties under all
Environmental Laws.
(d) The Company is not aware of any event, condition, circumstance,
activity, practice, action or plan which is reasonably likely to prevent
continued compliance with the foregoing for which would give rise to any
liability under any Environmental Law, based or resulting from the Company's
manufacturing, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge or release into the
environment of any Hazardous Substance.
(e) No Hazardous Substance has been used, stored, placed, treated,
transported, manufactured, generated, process, distributed, handled, placed,
deposited, spilled, discharged or disposed of on or under any property of the
Company, and there is no underground or above-
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ground storage tank located on or under, or any asbestos located on, any real
property or structure owned or leased by the Company.
(f) For purposes of this Section 3.13, the term "Hazardous Substance"
means and includes (i) any substance heretofore or hereafter designated as
"hazardous" or "toxic" under the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251, et seq., the Clean Air Act, 42 U.S.C. Section 7401, et seq., or
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
42 U.S.C. Section 9601, et seq., or the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801 et seq., all as amended and in the regulations
promulgated thereunder or pursuant thereto; (ii) any "solid waste," "hazardous
waste," or "infectious waste," as such terms are defined in any other
Environmental Law at such time; (iii) asbestos, urea-formaldehyde,
polychlorinated biphenyls ("PCBs"), methylene chloride, trichloroethylene, 1,2 -
transichloreoethylne, dioxins, dibenzofurans, nuclear fuel or material, chemical
waste, radioactive material, explosives, known carcinogens, petroleum products
and by-products, and other dangerous, toxic or hazardous pollutants,
contaminants, chemicals, materials or substances listed or identified in, or
regulated by, any Environmental Law; (iv) any substances listed in the United
States Department of Transportation Table (49 C.F.R. 172,101 and amendments
thereto) or by the Environmental Protection Agency (or any successor agency) as
hazardous substances (40 C.F.R. 302 and amendments thereto); and (v) any
additional substances or materials which at such time are classified or
considered to be hazardous or toxic under any Environmental Law.
(g) The Company has no knowledge of any facts or circumstances which
could adversely affect or render significantly more costly in the future the
Company's compliance with existing Environmental Laws.
2.19. EMPLOYEES.
No employee or director of the Company is a party to, or is otherwise
bound by, any agreement or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such employee or
director and any other person ("Proprietary Rights Agreement") that in any way
adversely affects or will affect (i) the performance of his duties as an
employee or director of the Company, or (ii) the ability of the Company to
conduct its business, including any Proprietary Rights Agreement with Sellers or
the Company by any such employee or director. To Sellers' Knowledge, no
director, officer, or other key employee of the Company intends to terminate his
employment with the Company.
2.20. LABOR RELATIONS; COMPLIANCE.
Since January 1, 1997, the Company has not been and is not a party to
any collective bargaining or other labor agreement. Since January 1, 1998, there
has not been, there is not presently pending or existing, and to Sellers'
knowledge there is not threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any legal proceeding against or
affecting the Company relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor Relations Board,
the Equal Employment
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Opportunity Commission, or any comparable governmental body, organizational
activity, or other labor or employment dispute against or affecting the Company
or its premises, or (c) any application for certification of a collective
bargaining agent. To Sellers' knowledge, no event has occurred or circumstance
exists that could provide the basis for any work stoppage or other labor
dispute. There is no lockout of any employees by the Company, and no such action
is contemplated by the Company. The Company has complied in all respects with
all Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. The Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
2.21. INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets--The term "Intellectual Property Assets"
includes:
(i) the Company's name, all fictional business names, trading
names, registered and unregistered trademarks, service marks,
and applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished works;
(iv) all rights in mask works; and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively,
"Trade Secrets"); owned, used, or licensed by the Company as
licensee or licensor.
(b) Agreements--Schedule 2.21(b) contains a complete and accurate list and
summary description, including any royalties paid or received by the
Company, of all agreements relating to the Intellectual Property Assets
to which the Company is a party or by which it is bound, except for any
license implied by the sale of a product and perpetual, paid-up
licenses for commonly available software programs with a value of less
than $10,000 under which the Company is the licensee. There are no
outstanding and, to Sellers' knowledge, no threatened disputes or
disagreements with respect to any such agreement.
(c) Know-How Necessary for the Business
The Intellectual Property Assets are all those necessary for the
operation of the Company's business as it is currently conducted. The
Company is the owner of all right, title, and interest in and to each
of the Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, equities, and other adverse
claims, and has the right to use without payment to a third party all
of the Intellectual Property Assets.
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(d) Patents
(i) Schedule 2.21(d) contains a complete and accurate list and
summary description of all Patents. The Company is the owner
of all right, title, and interest in and to each of the
Patents, free and clear of all liens, security interests,
charges, encumbrances, entities, and other adverse claims.
(ii) All of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing,
examination, and maintenance fees and proofs of working or
use), and are valid and enforceable.
(iii) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding. To Sellers'
knowledge, there is no potentially interfering patent or
patent application of any third party.
(iv) No Patent is infringed or, to Sellers' knowledge, has been
challenged or threatened in any way. None of the products
manufactured and sold, nor any process or know-how used, by
the Company infringes or is alleged to infringe any patent or
other proprietary right of any other person.
(v) All products made, used, or sold under the Patents have been
marked with the proper patent notice.
2.22. CERTAIN PAYMENTS.
Since January 1, 1997, neither the Company nor any director, officer,
agent, or employee of the Company, or to Sellers' knowledge any other person
associated with or acting for or on behalf of the Company, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Company or any affiliate of the Company, or
(iv) in violation of any Legal Requirement, or (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Company.
2.23. DISCLOSURE.
(a) No representation or warranty of Sellers in this Agreement omits to
state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not
misleading.
(b) No notice given pursuant to this Agreement will contain any untrue
statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances
in which they were made, not misleading.
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(c) There is no fact known to either Seller that has specific application
to either Seller or the Company (other than general economic or
industry conditions) and that materially adversely affects or, as far
as either Seller can reasonably foresee, materially threatens, the
assets, business, prospects, financial condition, or results of
operations of the Company that has not been set forth in this
Agreement.
2.24. RELATIONSHIPS WITH RELATED PERSONS.
Except as set forth in Schedule 2.24, no Seller has, or since January
1, 1998 has had, any interest in any property (whether real, personal, or mixed
and whether tangible or intangible), used in or pertaining to the Company'
business. No Seller is, or since January 1, 1998 has owned (of record or as a
beneficial owner) an equity interest or any other financial or profit interest
in, a person that has (i) had business dealings or a material financial interest
in any transaction with the Company other than business dealings or transactions
conducted in the ordinary course of business with the Company at substantially
prevailing market prices and on substantially prevailing market terms, or (ii)
engaged in competition with the Company with respect to any line of the products
or services of the Company (a "Competing Business") in any market presently
served by the Company except for less than one percent of the outstanding
capital stock of any Competing Business that is publicly traded on any
recognized exchange or in the over-the-counter market. No Seller or any
affiliate of Sellers or of the Company is a party to any agreement with, or has
any claim or right against, the Company.
2.25. BROKERS OR FINDERS.
Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement, except for fees
incurred with KPMG, which shall be the sole responsibility of Sellers. The
parties agree that the Company shall be responsible for the payment of $18,000
to KPMG for KPMG's evaluation of the Company, but shall not be responsible for
any further payments.
3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Sellers as follows:
3.1. ORGANIZATION AND GOOD STANDING.
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware.
3.2. AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Employment Agreements, and other
documents and agreements contemplated hereby (collectively, the
"Buyer's Closing Documents"), the Buyer's Closing Documents will
constitute the legal, valid, and binding obligations of Buyer,
enforceable against Buyer in
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accordance with their respective terms. Buyer has the absolute and
unrestricted right, power, and authority to execute and deliver this
Agreement and the Buyer's Closing Documents and to perform its
obligations under this Agreement and the Buyer's Closing Documents.
(b) Except as set forth in Schedule 3.2, neither the execution and delivery
of this Agreement by Buyer nor the consummation or performance of any
of the transactions contemplated hereby by Buyer will give any person
the right to prevent, delay, or otherwise interfere with any of the
transactions contemplated hereby pursuant to:
(i) any provision of Buyer's organizational documents;
(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be subject;
or
(iv) any agreement to which Buyer is a party or by which Buyer may
be bound.
Buyer is not and will not be required to obtain any consent from any
person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the transactions contemplated hereby.
3.3. BROKERS OR FINDERS.
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Sellers harmless from any such payment alleged to be due by
or through Buyer as a result of the action of Buyer or its officers or agents.
4. COVENANTS OF SELLERS PRIOR TO CLOSING DATE.
4.1. ACCESS AND INVESTIGATION.
Between the date of this Agreement and the Closing Date, Sellers will,
and will cause the Company and its representatives to, (a) afford Buyer and its
representatives (collectively, "Buyer's Advisors") full and free access to the
Company's personnel, properties (including subsurface testing), contracts, books
and records, and other documents and data, (b) furnish Buyer and Buyer's
Advisors with copies of all such contracts, books and records, and other
existing documents and data as Buyer may reasonably request, and (c) furnish
Buyer and Buyer's Advisors with such additional financial, operating, and other
data and information as Buyer may reasonably request.
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4.2. OPERATION OF THE BUSINESSES OF THE COMPANY.
Between the date of this Agreement and the Closing Date, Sellers will,
and will cause the Company to:
(a) conduct its business only in the ordinary course of business;
(b) use their best efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the
relations and good will with suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships
with the Company;
(c) confer with Buyer concerning operational matters of a material nature;
and
(d) otherwise report periodically to Buyer concerning the status of the
business, operations, and finances of the Company.
4.3. NEGATIVE COVENANT.
Except as otherwise expressly permitted by this Agreement, between the
date of this Agreement and the Closing Date, Sellers will not, and will cause
the Company not to, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their or its control, as a
result of which any of the changes or events listed in Section 2.11 is likely to
occur. It is specifically agreed that the Company may distribute to the Sellers
an amount of cash not in excess of $500,000 to pay their share of taxes related
to the Company's 1997, 1998 and through March 1, 1999 activities. In addition,
the Company may distribute to Sellers an amount equal to one-half of their
increased tax liability resulting from the effect of the recharacterization of
gain from capital gain to ordinary income as a result of the section 338(h)(10)
Election.
4.4. REQUIRED APPROVALS.
As promptly as practicable after the date of this Agreement, Sellers
will, and will cause the Company to, make all filings required by Legal
Requirements to be made by them in order to consummate the transactions
contemplated hereby. Between the date of this Agreement and the Closing Date,
Sellers will, and will cause the Company to, (a) cooperate with Buyer with
respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the transactions contemplated hereby,
and (b) cooperate with Buyer in obtaining all consents.
4.5. NOTIFICATION.
Between the date of this Agreement and the Closing Date, each Seller
will promptly notify Buyer in writing if such Seller or the Company becomes
aware of any fact or condition that causes or constitutes a breach of any of
Sellers' representations and warranties as of the date of this Agreement, or if
such Seller or the Company becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would (except as expressly
contemplated by
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this Agreement) cause or constitute a breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition.
4.6. PAYMENT OF INDEBTEDNESS BY RELATED PERSONS.
Except as expressly provided in this Agreement, Sellers will cause all
indebtedness owed to the Company by either Seller or any affiliate of either
Seller to be paid in full prior to Closing.
4.7. NO NEGOTIATION.
Until such time, if any, as this Agreement is terminated pursuant to
Section 8, Sellers will not, and will cause the Company and each of its
representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the ordinary course
of business) of the Company, or any of the capital stock of the Company, or any
merger, consolidation, business combination, or similar transaction involving
the Company.
4.8. SECTION 338(h)(10) ELECTION.
The parties agree that in connection with the sale of shares
contemplated hereby, the parties shall cause an express election pursuant to
Section 338(h)(10) of the Internal Revenue Code (a Section 338 "Election") to be
made, and shall comply with the rules and regulations applicable to such Section
338 Election.
For purposes of executing the election, on or prior to the closing
date, Sellers and Buyer (and/or Xxxxx & Xxxxx, Inc. as necessary) shall jointly
execute four (4) copies of Internal Revenue Services Form 8023 (or any successor
form) and all attachments required to be filed therewith pursuant to the
applicable Treasury Regulations. The forms relating to the Section 338 Election
for federal, state, and local tax purposes hereinafter shall be referred to as
the "Forms." Buyer and the Sellers agree that the form shall be filed with the
appropriate tax authorities not earlier than 60 days before the latest date for
filing thereof. At least 120 days prior to the latest date for filing of such
form, the Sellers shall prepare and submit to the Buyer any necessary
corrections, amendments, or supplements to such form and the attachments
thereto, as executed by the Sellers and the Buyers (and/or Xxxxx & Xxxxx, Inc.,
as necessary) on or before the closing date. The Sellers shall not file any form
or the attachments thereto as corrected, amended, or supplemented unless they
shall have obtained the Buyers' consent thereto, which consent shall not be
unreasonably withheld. On or prior to the thirtieth (30th) day after the Buyer's
receipt of such corrections, amendments or supplements from the Sellers, the
Buyer shall deliver to the Sellers either (A) its consent to such filing or (B)
a written notice specifying in reasonable detail all disputed items and the
basis therefor. If, within thirty (30) days after the Sellers' receipt of the
written notice described in clause (B) above, the Sellers and the Purchasers
have been unable to resolve their differences, any remaining disputed issues
shall be submitted to a nationally recognized independent public accounting firm
in the United States (other than a firm which then serves, has been selected to
serve in the future, or has served within the past three (3) years as,
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the independent auditor for the Sellers or any of their affiliates) selected by
the Sellers, and unreasonably acceptable to the Buyer, to resolve the disputed
issues in a final, binding manner after hearing the views of both parties. In
that event, the Sellers and the Buyer shall execute and consent to the filing of
the corrected, amended, or supplemented Form in the manner determined by such
accounting firm. In no event, however, shall the Forms be filed later than
fifteen (15) days before they are due. The fees and expenses of the accounting
firm shall be shared equally.
For purposes of making a Section 338 Election there shall be set forth
an allocation of the Buyer's "adjusted grossed-up basis" in the Shares (within
the meaning of the Treasury Regulations under Section 338 of the Internal
Revenue Code) to the tangible and intangible assets of Xxxxx & Xxxxx, Inc. as of
the Closing Date (the "Allocation"). The Allocation shall be binding upon the
Buyer and the Sellers for the purposes of allocating the "deemed selling price"
(within the meaning of the Treasury Regulations) among the assets of Xxxxx &
Soctt, Inc. Neither party shall file any tax return, or take a position with a
tax authority, that is inconsistent with the Allocation.
5. COVENANTS OF BUYER PRIOR TO CLOSING DATE.
5.1. APPROVALS OF GOVERNMENTAL BODIES.
As promptly as practicable after the date of this Agreement, Buyer will
make all filings required by Legal Requirements to be made by it to consummate
the transactions contemplated hereby. Between the date of this Agreement and the
Closing Date, Buyer will cooperate with Sellers with respect to all filings that
Sellers are required by Legal Requirements to make in connection with the
transactions contemplated hereby, and (ii) cooperate with Sellers in obtaining
all consents; provided that this Agreement will not require Buyer to dispose of
or make any change in any portion of its business or to incur any other burden
to obtain a Governmental Authorization.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
6.1. ACCURACY OF REPRESENTATIONS.
All of Sellers' representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.
6.2. SELLERS' PERFORMANCE.
(a) All of the covenants and obligations that Sellers are required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and
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each of these covenants and obligations (considered individually), must
have been duly performed and complied with in all material respects.
(b) Each document required to be delivered pursuant to Section 1.4 must
have been delivered.
6.3. CONSENTS.
Each consent required for this transaction, must have been obtained and
must be in full force and effect.
6.4. ADDITIONAL DOCUMENTS.
Each of the following documents must have been delivered to Buyer:
(a) an opinion of Xxxxx Xxxxxxx, Esq., dated the Closing Date, in the form
of Exhibit 6.4(a);
(b) such other documents as Buyer may reasonably request for the purpose of
(i) enabling its counsel to provide the opinion referred to in Section
7.4(a), (ii) evidencing the accuracy of any of Sellers' representations
and warranties, (iii) evidencing the performance by either Seller of,
or the compliance by either Seller with, any covenant or obligation
required to be performed or complied with by such Seller, (iv)
evidencing the satisfaction of any condition referred to in this
Section 6, or (v) otherwise facilitating the consummation or
performance of any of the transactions contemplated hereby.
6.5. NO PROCEEDINGS.
Since the date of this Agreement, there must not have been commenced or
threatened against Buyer, or against any person affiliated with Buyer, any legal
proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the transactions contemplated hereby, or (b) that may
have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the transactions contemplated hereby.
6.6. NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.
There must not have been made or threatened by any person any claim
asserting that such person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, the Company, or (b) is entitled
to all or any portion of the Purchase Price payable for the Shares.
6.7. NO PROHIBITION.
Neither the consummation nor the performance of any of the transactions
contemplated hereby will, directly or indirectly (with or without notice or
lapse of time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement
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or Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise formally proposed by or before any governmental body.
7. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE.
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
7.1. ACCURACY OF REPRESENTATIONS.
All of Buyer's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.
7.2. BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with
in all material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 1.4 and must have issued the
Common Stock required to be delivered by Buyer pursuant to Section 1.2.
7.3. CONSENTS.
Each of the consents required for this transaction must have been
obtained and must be in full force and effect.
7.4. ADDITIONAL DOCUMENTS.
Buyer must have caused the following documents to be delivered to
Sellers:
(a) an opinion of Kegler, Brown, Hill & Xxxxxx Co., L.P.A., dated the
Closing Date, in the form of Exhibit 7.4(a); and
(b) such other documents as Sellers may reasonably request for the purpose
of (i) enabling their counsel to provide the opinion referred to in
Section 6.4(a), (ii) evidencing the accuracy of any representation or
warranty of Buyer, (iii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer, (iv) evidencing the satisfaction
of any condition referred to in this Section 7, or (v) otherwise
facilitating the consummation of any of the transactions contemplated
hereby.
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7.5. NO INJUNCTION.
There must not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the sale of the Shares by Sellers to Buyer, and
(b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
8. TERMINATION.
8.1. TERMINATION EVENTS.
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Buyer or Sellers if a material breach of any provision of
this Agreement has been committed by the other party and such breach
has not been waived;
(b) (i) by Buyer if any of the conditions in Section 6 has not been
satisfied as of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Buyer to
comply with its obligations under this Agreement) and Buyer has not
waived such condition on or before the Closing Date; or (ii) by
Sellers, if any of the conditions in Section 7 has not been satisfied
of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Sellers to comply
with their obligations under this Agreement) and Sellers have not
waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before
May 15, 1999 or such later date as the parties may agree upon.
8.2. EFFECT OF TERMINATION.
Each party's right of termination under Section 8.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the exercise
of a right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 8.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Sections
10.1 and 10.3 will survive; provided, however, that if this Agreement is
terminated by a party because of the breach of the Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
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9. INDEMNIFICATION; REMEDIES.
9.1. SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE.
All representations, warranties, covenants, and obligations in this
Agreement, the certificate delivered pursuant to Section 1.4(a)(iv), and any
other certificate or document delivered pursuant to this Agreement will survive
the Closing. The right to indemnification, payment of damages or other remedy
based on such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations.
9.2. INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS.
Sellers, jointly and severally, will indemnify and hold harmless Buyer,
the Company, and their respective representatives, stockholders, controlling
persons, and affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third- party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Sellers in this
Agreement or any other certificate or document delivered by Sellers
pursuant to this Agreement;
(b) any breach of any representation or warranty made by Sellers in this
Agreement as if such representation or warranty were made on and as of
the Closing Date;
(c) any breach by either Seller of any covenant or obligation of such
Seller in this Agreement;
(d) any claim by any person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged
to have been made by any such person with either Seller or the Company
(or any person acting on their behalf) in connection with any of the
transactions contemplated hereby.
The remedies provided in this Section 9.2 will not be exclusive of or
limit any other remedies that may be available to Buyer or the other Indemnified
Persons.
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9.3. INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER.
Buyer will indemnify and hold harmless Sellers, and will pay to Sellers
the amount of any Damages arising, directly or indirectly, from or in connection
with (a) any breach of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
(b) any breach by Buyer of any covenant or obligation of Buyer in this
Agreement, or (c) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such person with Buyer (or any person acting on its
behalf) in connection with any of the transactions contemplated hereby.
9.4. TIME LIMITATIONS.
If the Closing occurs, Sellers will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, other than those in Sections 2.3, 2.11, 2.13 and 2.19, unless on or before
December 31, 2000 Buyer notifies Sellers of a claim specifying the factual basis
of that claim in reasonable detail to the extent then known by Buyer; a claim
with respect to Section 2.3, 2.11, 2.13 or 2.19, or a claim for indemnification
or reimbursement not based upon any representation or warranty or any covenant
or obligation to be performed and complied with prior to the Closing Date, may
be made at any time. If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, unless on or before December 31, 2000 Sellers notify Buyer of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Sellers.
9.5. LIMITATIONS ON AMOUNT--SELLERS.
Sellers will have no liability (for indemnification or otherwise) with
respect to the matters described in clause (a), clause (b) or, to the extent
relating to any failure to perform or comply prior to the Closing Date, clause
(c) of Section 9.2 until the total of all damages with respect to such matters
exceeds $100,000, and then only for the amount by which such damages exceed
$100,000. However, this Section 9.5 will not apply to any breach of any of
Sellers' representations and warranties of which either Seller had knowledge at
any time prior to the date on which such representation and warranty is made or
any intentional breach by either Seller of any covenant or obligation, and
Sellers will be jointly and severally liable for all Damages with respect to
such breaches. Sellers agree that there are certain questions related to prior
sales tax payments and that the Company has now accrued for such taxes. To the
extent that the Company does pay such taxes, including interest and penalties,
such amounts paid shall reduce the $100,000 basket set forth above, with such
amount to be finally determined within one year of Closing. Notwithstanding the
foregoing, the maximum amount of liability Sellers shall have pursuant to this
Section 9 shall be equal to the Purchase Price.
9.6. LIMITATIONS ON AMOUNT--BUYER.
Buyer will have no liability (for indemnification or otherwise) with
respect to the matters described in clause (a) or (b) of Section 9.3 until the
total of all Damages with respect to such
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matters exceeds $50,000, and then only for the amount by which such Damages
exceed $50,000. However, this Section 9.6 will not apply to any breach of any of
Buyer's representations and warranties of which Buyer had knowledge at any time
prior to the date on which such representation and warranty is made or any
intentional breach by Buyer of any covenant or obligation, and Buyer will be
liable for all damages with respect to such breaches.
9.7. RIGHT OF SET-OFF.
Upon notice to Sellers specifying in reasonable detail the basis for
such set-off, Buyer may set off any amount to which it may be entitled under
this Section 9 against amounts otherwise payable for the Redemption purchase
price contemplated by Section 1.2. The exercise of such right of set-off by
Buyer in good faith, whether or not ultimately determined to be justified, will
not constitute an event of default or Buyer's obligations pursuant to Section
1.2 hereof. Neither the exercise of nor the failure to exercise such right of
set-off will constitute an election of remedies or limit Buyer in any manner in
the enforcement of any other remedies that may be available to it.
9.8. PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under Section 9 or 9.3
of notice of the commencement of any proceeding against it, such
indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying
party of the commencement of such claim, but the failure to notify the
indemnifying party will not relieve the indemnifying party of any
liability that it may have to any indemnified party, except to the
extent that the indemnifying party demonstrates that the defense of
such action is prejudiced by the indemnifying party's failure to give
such notice.
(b) If any proceeding referred to in Section 9.8(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such proceeding, the indemnifying party will, unless
the claim involves taxes, be entitled to participate in such proceeding
and, to the extent that it wishes (unless (i) the indemnifying party is
also a party to such proceeding and the indemnified party determines in
good faith that joint representation would be inappropriate, or (ii)
the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such proceeding
and provide indemnification with respect to such proceeding), to assume
the defense of such proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such
proceeding, the indemnifying party will not, as long as it diligently
conducts such defense, be liable to the indemnified party under this
Section 9 for any fees of other counsel or any other expenses with
respect to the defense of such proceeding, in each case subsequently
incurred by the indemnified party in connection with the defense of
such proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims
made in that proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be
effected by the indemnifying party without the indemnified party's
consent unless (A)
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there is no finding or admission of any violation of Legal Requirements
or any violation of the rights of any person and no effect on any other
claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying
party of the commencement of any proceeding and the indemnifying party
does not, within ten days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume
the defense of such proceeding, the indemnifying party will be bound by
any determination made in such proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a proceeding may
adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification
under this Agreement, the indemnified party may, by notice to the
indemnifying party, assume the exclusive right to defend, compromise,
or settle such proceeding, but the indemnifying party will not be bound
by any determination of a proceeding so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of any court
in which a proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this
Agreement with respect to such proceeding or the matters alleged
therein, and agree that process may be served on Sellers with respect
to such a claim anywhere in the world.
9.9. PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
10. GENERAL PROVISIONS.
10.1. EXPENSES.
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the transactions
contemplated hereby, including all fees and expenses of agents, representatives,
counsel, and accountants. Sellers will cause the Company not to incur any
out-of-pocket expenses in connection with this Agreement except for professional
fees not in excess of $10,000. In the event of termination of this Agreement,
the obligation of each party to pay its own expenses will be subject to any
rights of such party arising from a breach of this Agreement by another party.
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10.2. PUBLIC ANNOUNCEMENTS.
Any public announcement or similar publicity with respect to this
Agreement or the transactions contemplated hereby will be issued, if at all, at
such time and in such manner as Buyer determines. Unless consented to by Buyer
in advance or required by Legal Requirements, prior to the Closing Sellers
shall, and shall cause the Company to, keep this Agreement strictly confidential
and may not make any disclosure of this Agreement to any person. Sellers and
Buyer will consult with each other concerning the means by which the Company'
employees, customers, and suppliers and others having dealings with the Company
will be informed of the transactions contemplated hereby, and Buyer will have
the right to be present for any such communication.
10.3. CONFIDENTIALITY.
Between the date of this Agreement and the Closing Date, Buyer and
Sellers will maintain in confidence, and will cause the directors, officers,
employees, agents, and advisors of Buyer and the Company to maintain in
confidence, any written, oral, or other information obtained in confidence from
another party or the Company in connection with this Agreement or the
transactions contemplated hereby, unless (a) such information is already known
to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
transactions contemplated hereby, or (c) the furnishing or use of such
information is required by or necessary or appropriate in connection with
Buyer's contemplated IPO.
If the transactions contemplated hereby are not consummated, each party
will return or destroy as much of such written information as the other party
may reasonably request. Whether or not the Closing takes place, Sellers waive,
and will upon Buyer's request cause the Company to waive, any cause of action,
right, or claim arising out of the access of Buyer or its representatives to any
trade secrets or other confidential information of the Company except for the
intentional competitive misuse by Buyer of such trade secrets or confidential
information.
10.4. NOTICES.
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers: Xxxxx & Xxxxx, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 (facsimile)
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with a copy to: Xxxxx Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 (facsimile)
Buyer: Reynard Motorsport, Inc.
Corporate Office
Reynard Park Xxxxxxxx
Xxxxxxxxx XX00 0XX
Xxxxxx Xxxxxxx
000 00 0000 846808
000 00 0000 846813 (facsimile)
Attention: Xxxx X. Xxxxxxxxx
with a copy to: Kegler, Brown, Hill & Xxxxxx Co., L.P.A.
Attention: Xxxx X. Xxxxxx, Esq.
00 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000
10.5. JURISDICTION; SERVICE OF PROCESS.
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Indiana, County of Xxxxxx, or, if it has
or can acquire jurisdiction, in the United States District Court for the Central
District of Indiana, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
10.6. FURTHER ASSURANCES.
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
10.7. WAIVER.
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right,
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power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
10.8. ENTIRE AGREEMENT AND MODIFICATION.
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including the Letter of Intent between Buyer and
Sellers dated February 11, 1999) and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.
10.9. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement without
the prior consent of the other parties, which will not be unreasonably withheld,
except that Buyer may assign any of its rights under this Agreement to any
subsidiary of Buyer. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
10.10. SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
10.11. SECTION HEADINGS, CONSTRUCTION.
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
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10.12. TIME OF ESSENCE.
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
10.13. GOVERNING LAW.
This Agreement will be governed by the laws of the State of Indiana
without regard to conflicts of laws principles.
10.14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER: COMPANY:
REYNARD MOTORSPORT, INC. XXXXX & XXXXX, INC.
By: _____________________________ By: ____________________________
Xxxx X. Xxxxxxxxx,
Chief Executive Officer Name: __________________________
Title: _________________________
SELLERS:
________________________________
Xxx Xxxxx, Individually
________________________________
Xxxx Xxxxx, Individually
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