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EXHIBIT 2.4
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XERTEX ACQUISITION COMPANY,
XERTEX TECHNOLOGIES, INC.
AND
CENTURION INTERNATIONAL, INC.
DATED AS OF SEPTEMBER 12, 2000
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................................1
1.1 Definitions; Interpretation..........................................1
ARTICLE II THE MERGER................................................................5
2.1 The Merger...........................................................5
2.2 Closing..............................................................5
2.3 Effective Time of the Merger.........................................6
2.4 Effect of the Merger.................................................6
ARTICLE III THE SURVIVING CORPORATION................................................6
3.1 Articles of Incorporation............................................6
3.2 Bylaws...............................................................6
3.3 Board of Directors; Officers.........................................7
ARTICLE IV CONVERSION OF SHARES......................................................7
4.1 Merger Consideration.................................................7
4.2 Payment. (a)........................................................8
4.3 No Further Rights....................................................9
4.4 Closing of the Company's Transfer Books..............................9
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................9
5.1 Existence; Qualification; Subsidiaries...............................9
5.2 Enforceability; Shares...............................................9
5.3 Capitalization......................................................10
5.4 Financial Statements................................................10
5.5 Absence of Certain Changes..........................................10
5.6 Litigation..........................................................11
5.7 Licenses, Compliance with Law, Other Agreements, Etc................12
5.8 Third-Party Approvals...............................................12
5.9 No Undisclosed Liabilities..........................................12
5.10 Tangible Assets.....................................................12
5.11 Inventory...........................................................12
5.12 Owned Real Property.................................................13
5.13 Real Property Leases................................................13
5.14 Agreements..........................................................13
5.15 Intellectual Property...............................................14
5.16 Employees...........................................................15
5.17 Employee Benefits...................................................15
5.18 Environment, Health and Safety......................................15
5.19 Powers of Attorney..................................................16
5.20 Guaranties..........................................................17
5.21 Transactions With Affiliates........................................17
5.22 Taxes...............................................................17
5.23 Insurance...........................................................17
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5.24 Product Warranty; Product Liability.................................18
5.25 Brokers.............................................................18
5.26 No Adverse Change Since Current Balance Sheet.......................18
5.27 Disclosure..........................................................18
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PARENT...............18
6.1 Authorization and Enforceability....................................18
6.2 Government Approvals................................................19
6.3 Issuance of Parent Shares...........................................19
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE PARENT............................19
7.1 Existence; Qualification; Subsidiaries..............................19
7.2 No Conflicts With Material Agreements...............................19
7.3 Capitalization......................................................19
7.4 Financial Statements................................................20
7.5 Absence of Certain Changes..........................................20
7.6 Litigation..........................................................21
7.7 No Undisclosed Liabilities..........................................21
ARTICLE VIII COVENANTS OF THE COMPANY PRIOR TO CLOSING..............................21
8.1 Restrictions........................................................21
8.2 Notice of Breach....................................................23
8.3 Access..............................................................23
8.4 Authorization from Others...........................................23
8.5 Consummation of Agreement...........................................23
8.6 Supplements to Schedules............................................23
8.7 Voting Agreement....................................................24
ARTICLE IX COVENANTS OF THE PURCHASER AND THE PARENT................................24
9.1 Notice of Breach....................................................24
9.2 Authorization from Others...........................................24
9.3 Consummation of Agreement...........................................24
9.4 Supplements to Schedules............................................24
ARTICLE X CONDITIONS PRECEDENT......................................................25
10.1 Conditions Precedent to Purchaser's and Parent's Obligations........25
10.2 Conditions Precedent to the Company's Obligations...................26
ARTICLE XI TERMINATION..............................................................27
11.1 Termination.........................................................27
11.2 Effect of Termination...............................................27
ARTICLE XII SURVIVAL AND INDEMNIFICATION............................................27
12.1 Survival............................................................27
12.2 Indemnification.....................................................27
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ARTICLE XIII GENERAL PROVISIONS.....................................................28
13.1 Successors and Assigns..............................................28
13.2 Entire Agreement....................................................28
13.3 Notices.............................................................28
13.4 Amendment and Waiver................................................29
13.5 Counterparts........................................................29
13.6 Headings............................................................29
13.7 Specific Performance................................................29
13.8 Remedies Cumulative.................................................30
13.9 Governing Law.......................................................30
13.10 Dispute Resolution..................................................30
13.11 No Third Party Beneficiaries........................................31
13.12 Severability........................................................32
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as of
September 12, 2000 among Xertex Acquisition Company, a Colorado corporation (the
"PURCHASER"), Xertex Technologies, Inc., a Colorado corporation (the "Company")
and Centurion International, Inc. (the "Parent").
The Purchaser, Parent and the Company desire that the
Purchaser merge with and into the Company (the "MERGER") with the Company
surviving the Merger.
In consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS; INTERPRETATION.
(a) For purposes of this Agreement, the following terms have
the indicated meanings:
"AFFILIATE" of a person means any other person that directly,
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with such person.
"CLOSING" has the meaning set forth in Section 2.2.
"CLOSING DATE" has the meaning set forth in Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the recitals hereof.
"CONFIDENTIAL INFORMATION" means any information concerning
the Company's business other than information that (i) was already known to the
Person having a duty to keep confidential such information on a nonconfidential
basis prior to the time of disclosure, (ii) is or becomes generally available to
the public through no act or omission of such Person or (iii) becomes available
to such Person on a nonconfidential basis from a source other than any party
hereto (or any agent or representative thereof) if such source was not under a
prohibition against disclosing the information to such Person.
"CONSTITUENT CORPORATIONS" has the meaning set forth in
Section 2.4.
"CURRENT BALANCE SHEET" means the unaudited balance sheet of
the Company dated July 31, 2000.
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"EARNOUT CONSIDERATION" means 27,076 Parent Shares in the
aggregate which shall be issued to certain stockholders of the Company if
required pursuant to Schedule 1 hereof.
"EFFECTIVE TIME" has the meaning set forth in Section 2.3.
"ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all federal,
state, local and foreign statutes regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or by products, asbestos,
polychlorinated biphenyls, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FINANCIAL STATEMENTS" means the Current Balance Sheet and the
unaudited balance sheet of the Company dated June 30, 2000 and the related
unaudited statement of income (or profit and loss statement) for the applicable
periods then ended, all of which are attached as Exhibit A hereto.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time, consistently applied.
"GOVERNMENTAL AGENCY" means any federal, state, local, foreign
or other governmental agency, instrumentality, commission, authority, board or
body.
"HOLDBACK AMOUNT" means $75,000 and 21,661 Parent Shares to be
credited against the Total Consideration to be held and retained at the Closing
by the Purchaser for purposes of indemnification under Section 12.2.
"HOLDBACK PERIOD" means the period beginning on the Closing
Date and ending on the first anniversary thereof.
"INCLUDES" and "INCLUDING" mean includes and including,
without limitation.
"INTELLECTUAL PROPERTY" means all patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); all trademarks, service marks, trade dress,
trade names, corporate names and domain names and all goodwill associated
therewith; all copyrights; all registrations, applications and renewals for any
of the foregoing; all product formulations, trade secrets, confidential
information, ideas, know-how, production processes and techniques, research
information, drawings, specifications, designs, plans, improvements, technical
and computer data, documentation and software,
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financial, business and marketing plans, customer and supplier lists and related
information and all other proprietary rights; and all copies and tangible
embodiments of the foregoing.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" or "KNOW" when used with respect to the Company or
the Parent, as the case may be, means the knowledge of the senior management of
the Company or the Parent, as the case may be, or any other management personnel
in the Company or the Parent, as the case may be, that has had significant
involvement in the business and affairs of the Company or the Parent, as the
case may be.
"LIABILITY" means any liability or obligation (whether
absolute or contingent, liquidated or unliquidated or due or to become due).
"LIEN" means any lien, mortgage, pledge, security interest,
restriction, charge or other encumbrance.
"MATERIAL ADVERSE CHANGE" means any material adverse change in
the business, condition (financial or otherwise), results of operations,
prospects or customer, distributor or supplier relations of the Company.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on
(i) the business, condition (financial or otherwise), results of operations,
prospects or customer, distributor or supplier relations of the Company or (ii)
the transactions contemplated hereby or by the Related Documents.
"MERGER CONSIDERATION" has the meaning set forth in Section
4.1(a).
"OPTION AGREEMENTS" means the agreements to be entered into
prior to the Closing among the Company, the Parent and certain optionholders of
the Company providing for the rollover of options to purchase Shares into
options to purchase Parent Shares.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with past practice (including with respect to quantity,
quality and frequency).
"PARENT" has the meaning set forth in the recitals hereto.
"PARENT CURRENT BALANCE SHEET" means the unaudited balance
sheet of the Parent dated June 30, 2000.
"PARENT FINANCIAL STATEMENTS" means the Parent Current Balance
Sheet and the audited balance sheet of the Parent dated December 31, 1999 and
the related unaudited and audited, as applicable, statements of income (or
profit and loss statement) and cash flow for the applicable periods then ended.
"PARENT MATERIAL ADVERSE CHANGE" means any material adverse
change in the business, condition (financial or otherwise), results of
operations, prospects or customer, distributor or supplier relations of the
Parent and its Subsidiaries, taken as a whole.
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"PARENT MATERIAL ADVERSE EFFECT" means any material adverse
effect on (i) the business, condition (financial or otherwise), results of
operations, prospects or customer, distributor or supplier relations of the
Parent and its Subsidiaries, taken as a whole or (ii) the transactions
contemplated hereby or by the Related Documents.
"PARENT SHARES" has the meaning set forth in Section 4.1(a).
"PERMITTED LIENS" means (i) liens for taxes not yet due and
taxes for which adequate provision is made in the Current Balance Sheet, (ii)
purchase money security interests in supplies and equipment, (iii) precautionary
liens filed by lessors with respect to leased equipment and (iv) encumbrances
which are not substantial in amount, do not materially detract from the value of
the property subject thereto and do not materially impair the use of the
property subject thereto or the operation of the Company's business.
"PERSON" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or other entity.
"PLAN" means any employee benefit plan (as defined in Section
3(3) of ERISA), and any other material employee benefit plan, program or
arrangement maintained, sponsored, or contributed to by the Company or with
respect to which the Company has any material liability.
"REGISTRATION RIGHTS AGREEMENT" means the Amended and Restated
Registration Rights Agreement dated as of September 6, 2000 and among Parent and
the other parties signatory thereto.
"RELATED DOCUMENTS" means all documents and instruments to be
executed by or which have been executed by the Company in connection with the
transactions contemplated hereby.
"RELEASE" shall have the meaning set forth in CERCLA.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDER REPRESENTATIVE" means Xxx Xxxxx.
"SHARES" means all of the outstanding shares of common stock
of the Company, without par value.
"STOCKHOLDERS AGREEMENT" means the Amended and Restated
Stockholders Agreement dated as of September 6, 2000 by and among Parent and the
other parties signatory thereto.
"SUBSIDIARY" means any corporation, partnership, association
or other business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by the
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Company or (ii) if a partnership, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by the Company. For
purposes hereof, the Company shall be deemed to have a majority ownership
interest in a partnership, association or other business entity if the Company,
directly or indirectly, is allocated a majority of partnership, association or
other business entity gains or losses, or is or controls the managing director
or general partner of such partnership, association or other business entity.
"SURVIVING CORPORATION" has the meaning set forth in Section
2.1.
"TAX RETURNS" means all returns (including information
returns), declarations, reports, estimates and statements, regarding Taxes,
required to be filed under any United States federal, state or local law or any
foreign law, including any schedules thereto or amendments thereof.
"TAXES" means all taxes, charges, fees, levies or other
assessments, including all net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, estimated, severance, stamp, occupation, property or other
taxes, customs duties, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any Governmental Agency.
"TOTAL CONSIDERATION" means $750,000 plus 216,607 Parent
Shares.
"VOTING AGREEMENT" means the agreement to be entered into
contemporaneous with the execution hereof among the Purchaser, Xxx Xxxxx, Xxxx
Xxxxxx, Storm Products, Negler Family LLP and X.X. Xxxxxxx, Xx., providing that
the parties to such agreement who are shareholders of the Company shall vote in
favor of the transactions contemplated hereby.
(b) The words "HEREIN", "HEREOF" and "HEREUNDER" refer to this
Agreement as a whole and not to any particular article, section or other
subdivision of this Agreement.
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 2.3), the Purchaser shall
be merged with and into the Company and the separate existence of the Purchaser
shall thereupon cease, and the Company shall continue as the surviving
corporation in the Merger (the "SURVIVING CORPORATION") under the laws of the
State of Colorado under the name Xertex Technologies, Inc.
2.2 CLOSING. Unless this Agreement shall have been terminated
pursuant to Article XI, and subject to the satisfaction or waiver of the
conditions set forth in Article X, the closing of the Merger will take place at
10:00 a.m. on the third business day following satisfaction of the conditions
set forth in Article X (other than those to be satisfied at or as of the
Closing) at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, unless another date, time or place is agreed to by the parties
hereto (the "CLOSING DATE").
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2.3 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective upon the filing of a Articles of Merger with the Secretary of State of
Colorado in accordance with the provisions of the Colorado Business Corporation
Act ("CBCA"), or at such other time as the Purchaser and the Company shall agree
should be specified in the Articles of Merger, which filing shall be made as
soon as practicable on the Closing Date. When used in this Agreement, the term
"Effective Time" shall mean the time at which such certificate is accepted for
filing by the Secretary of State of Colorado or such time as otherwise specified
in the Articles of Merger.
2.4 EFFECT OF THE MERGER. The Merger shall, from and after the
Effective Time, have all the effects provided by the CBCA. If at any time after
the Effective Time the Surviving Corporation shall consider or be advised that
any further deeds, conveyances, assignments or assurances in law or any other
acts are necessary, desirable or proper to vest, perfect or confirm, of record
or otherwise, in the Surviving Corporation, the title to any property or rights
of Purchaser or the Company (the "CONSTITUENT CORPORATIONS") to be vested in the
Surviving Corporation, by reason of, or as a result of, the Merger, or otherwise
to carry out the purposes of this Agreement, the Constituent Corporations agree
that the Surviving Corporation and its proper officers and directors shall
execute and deliver all such deeds, conveyances, assignments and assurances in
law and do all things necessary, desirable or proper to vest, perfect or confirm
title to such property or rights in the Surviving Corporation and otherwise to
carry out the purposes of this Agreement, and that the proper officers and
directors of the Surviving Corporation are fully authorized in the name of each
of the Constituent Corporations or otherwise to take any and all such action.
ARTICLE III
THE SURVIVING CORPORATION
3.1 ARTICLES OF INCORPORATION. The Articles of Incorporation
of the Purchaser as in effect immediately prior to the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation after the Effective
Time until thereafter changed or amended as provided therein or by applicable
law.
3.2 BYLAWS. The Bylaws of the Purchaser as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable law.
3.3 BOARD OF DIRECTORS; OFFICERS. The directors of the
Purchaser immediately prior to the Effective Time shall be the directors of the
Surviving Corporation and the officers of the Purchaser immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, in each case,
until the earlier of their respective resignations or the time that their
respective successors are duly elected or appointed and qualified.
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ARTICLE IV
CONVERSION OF SHARES
4.1 MERGER CONSIDERATION. As of the Effective Time, by virtue
of the Merger and without any action on the part of the Purchaser, Parent or any
stockholder of the Company, each issued and outstanding Share shall be converted
into and represent the right to receive the amount of consideration determined
by dividing the aggregate cash value of the Total Consideration by the total
number of Shares on a fully diluted basis (the "MERGER CONSIDERATION"). Subject
to the limitations set forth in Section 4.1(b) below, each holder shall have the
right to elect in the letter of transmittal submitted by such holder the
percentage of the Merger Consideration which such holder will receive in cash
and the percentage of the Merger Consideration which such holder will receive in
shares of common stock, par value $0.01 per share, of the Parent (the "PARENT
SHARES"), such Parent Shares to be valued at $13.85 per Parent Share. Based on
information provided by the Company, the parties believe that the Merger
Consideration is 0.04792 Parent Shares and $0.1659 per Share.
(b) In the event that the holders in the aggregate elect to
receive an amount in cash and a number of Parent Shares which differs from
$750,000 and 216,607 Parent Shares, then the Surviving Corporation shall
reapportion (using its reasonable efforts to maintain each holder's allocation
between cash and Parent Shares as close as practicable to such holder's election
in the letter of transmittal) the amount in cash and number of Parent Shares to
be received by each holder such that the aggregate amount in cash equals
$750,000 and the aggregate number of Parent Shares equals 216,607.
(c) Any holder that receives part of its Merger Consideration
in Parent Shares shall be eligible to receive its pro rata share of any Earnout
Consideration (to the extent earned) based on the percentage of Parent Shares it
received as Merger Consideration out of the total of 216,607 Parent Shares. In
no event shall a holder that receives the full amount of its Merger
Consideration in cash be entitled to any Earnout Consideration.
(d) Fractional Parent Share amounts shall be rounded to the
nearest Parent Share.
(e) Each issued and outstanding share of common stock of the
Purchaser shall continue to represent one fully paid and nonassessable share of
common stock of the Surviving Corporation.
(f) Each option to purchase Shares that has not been exercised
prior to the Closing shall be canceled and rolled over into a cash payment of
$0.1659 and an option to receive 0.04792 Parent Shares.
4.2 PAYMENT. (a) At the Closing on the Closing Date and prior
to the Effective Time, the Purchaser shall set aside the Total Consideration,
including the Holdback Amount, which shall be retained by Parent at the Closing.
The Total Consideration shall be held and disbursed in accordance with the terms
of this Section 4.2.
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(b) As soon as practicable after the Effective Time, the
Surviving Corporation shall send a (i) notice, (ii) letter of transmittal, (iii)
copy of the Stockholders Agreement, and (iv) copy of the Registration Rights
Agreement to each holder of certificates formerly representing Shares. Such
notice and letter of transmittal shall advise such holder of the effectiveness
of the Merger and the procedure for surrendering to the Surviving Corporation
such certificates for exchange into the Merger Consideration for each Share so
represented and that delivery shall be effected, and risk of loss of the Shares
shall pass only upon proper delivery to the Surviving Corporation of the
certificates for the Shares, a duly executed letter of transmittal and any other
required documents of transfer, a duly executed copy of the Stockholders
Agreement and a duly executed copy of the Registration Rights Agreement. Each
holder of certificates theretofore evidencing Shares, upon surrender thereof to
the Surviving Corporation together with such letter of transmittal (duly
executed) and any other required documents of transfer, a duly executed copy of
the Stockholders Agreement and a duly executed copy of the Registration Rights
Agreement, shall be entitled to receive in exchange therefor the Merger
Consideration with respect to each such Share. Upon such surrender, the
Surviving Corporation shall promptly deliver the Merger Consideration to each
holder (less such holder's pro rata share of the Holdback Amount or any amount
required to be withheld under applicable law) in accordance with the
instructions set forth in the related letter of transmittal, and the
certificates so surrendered shall promptly be canceled. Until surrendered,
certificates formerly evidencing Shares shall be deemed for all purposes to
evidence only the right to receive the Merger Consideration per Share. No
interest shall accrue or be paid on any cash payable upon the surrender of
certificates which immediately prior to the Effective Time represented
outstanding Shares.
(c) If the Merger Consideration is to be delivered to a Person
other than the Person in whose name the certificates surrendered in exchange
therefor are registered, it shall be a condition to the payment of such Merger
Consideration that the certificates so surrendered shall be properly endorsed or
accompanied by appropriate stock powers and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the Person requesting
such transfer pay to the Surviving Corporation any transfer or other taxes
payable by reason of the foregoing or establish to the satisfaction of the
Surviving Corporation that such taxes have been paid or are not required to be
paid.
(d) Unless required otherwise by applicable law, any portion
of the aggregate Merger Consideration which remains undistributed to holders of
Shares five years after the Effective Time shall be delivered to the Parent and
any holders of Shares who have not theretofore complied with the provisions of
this Article IV shall thereafter look only to Surviving Corporation for payment
of any Merger Consideration to which they are entitled pursuant to this Article
IV. Neither the Purchaser nor the Surviving Corporation shall be liable to any
holder of Shares for any cash held by the Purchaser or Surviving Corporation for
payment pursuant to this Article IV delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(e) In the event that a holder does not receive any Parent
Shares, it shall not be deemed a party to the Stockholders Agreement or the
Registration Rights Agreement, notwithstanding that it executed a copy of each
to receive its portion of the Total Consideration.
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4.3 NO FURTHER RIGHTS. From and after the Effective Time,
holders of certificates theretofore evidencing Shares shall cease to have any
rights as stockholders of the Company, except as provided herein or by law.
4.4 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
Shares shall be made thereafter. If after the Effective Time, and after the
period during which the Surviving Corporation shall hold any Merger
Consideration, certificates for Shares are presented to the Purchaser or the
Surviving Corporation, they shall be canceled and exchanged for Merger
Consideration for each Share as provided in Section 4.2.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as
follows:
5.1 EXISTENCE; QUALIFICATION; SUBSIDIARIES. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado and has full corporate power and authority to conduct
its business and own and operate its properties as now conducted, owned and
operated. The copies of the Articles of Incorporation and Bylaws of the Company
and all amendments thereto previously delivered to the Purchaser are true,
correct and complete copies of such documents. Except as set forth on Schedule
5.1, the Company is not required to be licensed or qualified as a foreign
corporation in any jurisdiction, and the Company is so licensed or qualified and
is in good standing in each jurisdiction set forth on Schedule 5.1. The Company
has no Subsidiaries and owns no capital stock or other securities of, and has
not made any other investment in, any other entity.
5.2 ENFORCEABILITY; SHARES. The execution and delivery of, and
performance under, this Agreement and the Related Documents by the Company will
not violate any provisions of any material agreements to which it is a party.
This Agreement and each of the Related Documents constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except to the extent limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
related to the enforcement of creditor's rights generally and (ii) general
principles of equity.
(b) The Shares were validly issued, fully paid and
nonassessable and constitute all of the capital stock of the Company. The
transactions contemplated hereby are not subject to any right of first refusal
or other similar right in favor of any Person which has not been waived.
5.3 CAPITALIZATION. The authorized capital stock of the
Company consists of 10,000,000 Shares, of which 3,638,625 are issued and
outstanding. Except as set forth on Schedule 5.3, there are no existing options,
convertible securities, warrants, calls, pledges, transfer restrictions (except
restrictions imposed by federal and state securities laws), liens, rights of
first offer, rights of first refusal, antidilution provisions or commitments of
any character relating to any issued or unissued shares of capital stock of the
Company.
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5.4 FINANCIAL STATEMENTS. The Financial Statements (together
with the notes thereto, as applicable), (i) are true, correct and complete in
all material respects, (ii) are in accordance with the books and records of the
Company and (iii) fairly present the financial condition and results of
operations of the Company as of the dates and for the periods indicated, in
accordance with GAAP except that the Financial Statements do not contain an
auditors' opinion and do not contain footnotes and are subject to normal
year-end audit adjustments which in the aggregate are not expected to be
material.
5.5 ABSENCE OF CERTAIN CHANGES.
(a) Except as set forth on Schedule 5.5, since December 31,
1999, the Company has not:
(i) incurred any Liabilities other than current
Liabilities incurred, or obligations under contracts entered into, in
the Ordinary Course of Business and for individual amounts not
greater than $25,000;
(ii) paid, discharged or satisfied any claim, Lien or
Liability, other than any claim, Lien or Liability (A) reflected or
reserved against on the Current Balance Sheet and paid, discharged or
satisfied in the Ordinary Course of Business since the date of the
Current Balance Sheet or (B) incurred and paid, discharged or
satisfied since the date of the Current Balance Sheet, in each case
in the Ordinary Course of Business;
(iii) sold, leased, assigned or otherwise transferred any
of its assets, tangible or intangible (other than sales of inventory
in the Ordinary Course of Business and for a fair consideration and
use of supplies in the Ordinary Course of Business);
(iv) permitted any of its assets, tangible or intangible,
to become subject to any Lien (other than any Permitted Lien);
(v) written off as uncollectible any accounts receivable
other than in the Ordinary Course of Business and for amounts not
greater than $10,000;
(vi) terminated or amended other than in the Ordinary
Course of Business, suffered the termination or amendment of, failed
to perform in all material respects all of its obligations or
suffered or permitted any material default to exist under, any
material agreement, license or permit;
(vii) suffered any damage, destruction or loss of tangible
property (whether or not covered by insurance) which in the aggregate
exceeds $25,000;
(viii) made any loan (including any intercompany advance)
to any other Person (other than advances to employees in the Ordinary
Course of Business which do not exceed $1,000 individually or $5,000
in the aggregate);
(ix) canceled, waived or released any debt, claim or right
in an amount exceeding $10,000 or otherwise of substantial value;
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15
(x) paid any amount to or entered into any agreement,
arrangement or transaction with any Affiliate (including its
officers, directors and employees) outside the Ordinary Course of
Business;
(xi) declared, set aside, or paid any dividend or
distribution with respect to its capital stock or redeemed, purchased
or otherwise acquired any of its capital stock;
(xii) other than in the Ordinary Course of Business,
granted any increase in the compensation of any officer or employee
or made any other change in employment terms of any officer or
employee;
(xiii) made any change in any method of accounting or
accounting practice;
(xiv) suffered or caused any other occurrence, event or
transaction which could reasonably be expected to have a Material
Adverse Effect; or
(xv) agreed, in writing or otherwise, to any of the
foregoing.
(b) Since December 31, 1999 there has been no Material Adverse
Change.
5.6 LITIGATION. Set forth on SCHEDULE 5.6 is a list and
description of all claims, suits, proceedings or investigations pending or, to
the knowledge of the Company, threatened against or affecting the Company, any
officer or director thereof or the Company's business. Except as set forth on
SCHEDULE 5.6, no such claim, suit, proceeding or investigation, could have a
Material Adverse Effect or a material adverse effect on the ability of any
officer or director to participate in the affairs of the Company, and the
Company has no knowledge of any basis for any such claim, suit, proceeding or
investigation.
5.7 LICENSES, COMPLIANCE WITH LAW, OTHER AGREEMENTS, ETC. The
Company has all material franchises, permits, licenses and other rights to allow
it to conduct its business and is not in violation in any material respects of
any order or decree of any court, or of any law, order or regulation of any
governmental authority, or of the provisions of any material contract or
agreement to which it is a party or by which it is bound, and neither this
Agreement nor the Related Documents nor the transactions contemplated hereby or
thereby will result in any such violation. Except as set forth on SCHEDULE 5.7,
the Company's business has been conducted in all material respects in compliance
with all federal, state and local laws, ordinances, rules and regulations except
where such violations, defaults or noncompliance would not have a Material
Adverse Effect.
5.8 THIRD-PARTY APPROVALS. Assuming the accuracy of the
representations and warranties of the Purchaser contained in this Agreement,
except as listed in SCHEDULE 5.8, the Company is not required to obtain any
order, consent, approval or authorization of, or to make any declaration or
filing with, any Governmental Agency or other third party (including under any
state securities or "blue sky" laws) in connection with the execution and
delivery of this Agreement or the Related Documents, or the consummation of the
transactions contemplated hereby or thereby to occur on the Closing Date.
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5.9 NO UNDISCLOSED LIABILITIES. Except as set forth on
SCHEDULE 5.9, the Company has no Liabilities except (i) as and to the extent of
the amounts reflected or reserved against on the Current Balance Sheet
(excluding the footnotes thereto) and (ii) liabilities and obligations incurred
in the Ordinary Course of Business since the date thereof.
5.10 TANGIBLE ASSETS. Except as set forth on SCHEDULE 5.10,
the Company owns or leases all tangible assets used or reasonably necessary in
connection with the conduct of its business. Except as set forth on SCHEDULE
5.10, all material tangible assets are free from any Liens (other than Permitted
Liens), are free from any material defects, have been maintained in accordance
with normal industry practice and any regulatory standard or procedure to which
such assets are subject, are in good operating condition and repair (subject to
normal wear and tear) and are suitable for the purposes for which such assets
are used or proposed to be used.
5.11 INVENTORY. All supply and finished product inventory of
the Company, whether reflected on the Current Balance Sheet or otherwise,
consist of a quality and quantity usable or salable in the Ordinary Course of
Business, subject to normal rates of defect or obsolescence not inconsistent
with the Company's historical experience.
5.12 OWNED REAL PROPERTY. The Company does not own any real
property.
5.13 REAL PROPERTY LEASES. Set forth on SCHEDULE 5.13 is a
list of all agreements pursuant to which real property is leased to the Company
(a copy of each of which has been delivered to the Purchaser). Except as set
forth on SCHEDULE 5.13, there exists no material event of default (nor any event
which with notice or lapse of time would constitute a material event of default)
with respect to the Company under any such agreement and, to the Company's
knowledge, with respect to any other party thereto. Except as set forth on
SCHEDULE 5.13, all such agreements are in full force and effect and enforceable
against the lessor in accordance with their terms.
5.14 AGREEMENTS.
(a) Set forth on SCHEDULE 5.14(A) is a list of each agreement,
arrangement or understanding to which the Company is a party (a complete and
correct copy or, if oral, a description of each of which has been delivered to
the Purchaser):
(i) for the lease of personal property from or to third
parties providing for annual lease payments to any single lessor or
from any single lessee in excess of $10,000;
(ii) for the purchase, distribution or sale of supplies,
products or other personal property or for the furnishing or receipt
of information or services, in each case calling for performance over
a period of more than one year or involving more than $25,000;
(iii) concerning any partnership or joint venture;
(iv) under which it has created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee) indebtedness
(including capitalized lease
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obligations) involving more than $10,000 or pursuant to which a Lien
is or may be imposed on any of its assets, tangible or intangible;
(v) concerning confidentiality or noncompetition;
(vi) with any director, officer or employee (including any
involving employment or severance);
(vii) the consequences of a default or termination of
which could have a Material Adverse Effect;
(viii) otherwise involving more than $25,000 or not
entered into in the Ordinary Course of Business; and
(ix) otherwise material to the Company's business.
(b) Except as set forth on SCHEDULE 5.14(b) the Company is not
in material default, to the knowledge of the Company there is no basis for any
valid claim of material default, and no event has occurred which, with notice or
lapse of time, would constitute a default, under any agreement, arrangement or
understanding set forth on SCHEDULE 5.14(a) and, except as set forth on SCHEDULE
5.14(b), to the knowledge of the Company, no other Person is in default under
any such agreement. No defaults set forth on SCHEDULE 5.14(b), either
individually or in the aggregate, could have a Material Adverse Effect.
5.15 INTELLECTUAL PROPERTY.
(a) Set forth on SCHEDULE 5.15(a) is a list of all (i)
patented and registered Intellectual Property and pending patent applications
and applications for the registration of Intellectual Property, in each case
owned by the Company; (ii) trade or corporate names used by the Company; (iii)
material unregistered trademarks and copyrights owned or used by the Company;
and (iv) licenses and other rights granted by the Company to any third party or
by any third party to the Company, in each case with respect to Intellectual
Property (other than computer software licenses entered into in the ordinary
course of business).
(b) Except as set forth on SCHEDULE 5.15(b), (i) the Company
owns or has a valid license to use all other Intellectual Property necessary for
the operation of its business as currently conducted or proposed to be
conducted, free and clear of any Liens or adverse claims; (ii) no claim by any
third party contesting the validity, enforceability, ownership or use of any of
the Intellectual Property owned or used by the Company has been made to the
Company, is currently outstanding or to the Company's knowledge is threatened,
and to the Company's knowledge there are no grounds for the same; (iii) the loss
or expiration of any individual Intellectual Property right or related group of
Intellectual Property rights owned or used by the Company would not have a
Material Adverse Effect, and no such loss or expiration is threatened, pending
or to the Company's knowledge reasonably foreseeable; (iv) the Company has not
received any notice of, and the Company is not aware of any facts which indicate
a likelihood of, any infringement or misappropriation by, or conflict with, any
third party with respect to the Intellectual Property owned or used by the
Company; (v) to the knowledge of the Company, the Company has not infringed,
misappropriated or otherwise conflicted with any Intellectual
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18
Property or other proprietary right of any third party, and the Company is not
aware of any infringement, misappropriation or conflict which will occur as a
result of the continued operation of the Company's business as currently
conducted or proposed to be conducted and (vi) the Company has taken all
necessary action to maintain and protect the Intellectual Property owned or used
by it and which is material to its business and the Company will continue to
maintain and protect such Intellectual Property so as not to affect adversely
the validity or enforceability of such Intellectual Property.
5.16 EMPLOYEES.
(a) Except as set forth on SCHEDULE 5.16, since December 31,
1999, no key employees and no group of employees has terminated, or to the
knowledge of the Company plans to terminate, employment with the Company. The
Company is not a party to or bound by any collective bargaining agreement, nor
has it experienced any strike, material grievance, material claim of unfair
labor practice or other collective bargaining dispute. To the knowledge of the
Company there is no organizational effort being made or threatened by or on
behalf of any labor union with respect to its employees. The Company has not
committed any unfair labor practice or materially violated any federal, state or
local law or regulation regulating employers or the terms and conditions of its
employees' employment, including laws regulating employee wages and hours,
employment discrimination, employee civil rights, equal employment opportunity
and employment of foreign nationals. Set forth on Schedule 5.16 is a list and
summary description of all agreements between the Company and any employee
thereof.
5.17 EMPLOYEE BENEFITS. Set forth on SCHEDULE 5.17 is a list
of all Plans. The Company has no obligation to contribute to and no liability or
potential liability (including actual or potential withdrawal liability) with
respect to any "defined benefit plan" (as such term is defined in Section 3(35)
of ERISA), or any "multiemployer plan" (as such term is defined in Section 3(37)
of ERISA). Each Plan that is intended to be qualified under Section 401(a) of
the Code has received a determination from the IRS that such plan is so
qualified, and nothing has occurred from the date of such determination that
could adversely affect the qualified status of such Plan. Each of the Plans and
all related trusts, insurance contracts and funds have been maintained, funded
and administered in material compliance with their terms and with the applicable
provisions of ERISA, the Code, and any other applicable laws. The Company does
not have any liability with respect to any "employee benefit plan" (as defined
in Section 3(3) of ERISA) solely by reason of being treated as a single employer
under Section 414 of the Code with any other trade, business or entity. With
respect to each Plan, the Company has provided the Purchaser with true, complete
and correct copies of (to the extent applicable): (i) all documents pursuant to
which the Plan is maintained, funded and administered (including the plan and
trust documents, any amendments thereto, the summary plan descriptions, and any
insurance contracts or service provider agreements); (ii) the 3 most recent
annual reports (IRS Form 5500 series) filed with the IRS (with applicable
attachments); and (iii) the most recent determination letter received from the
IRS.
5.18 ENVIRONMENT, HEALTH AND SAFETY.
(a) The Company has complied and is in compliance with all
Environmental and Safety Requirements that are applicable to the Company's
business.
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19
(b) Without limiting the generality of the foregoing, the
Company has obtained and complied with, and is in compliance in all material
respects with, all permits, licenses and other authorizations that may be
required pursuant to Environmental and Safety Requirements for the occupation of
its facilities and the operation of its business. A list of all such permits,
licenses and other authorizations is set forth on SCHEDULE 5.18.
(c) The Company has not received any written or oral notice,
report or other information regarding any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations, relating to the Company
or its facilities and arising under Environmental and Safety Requirements.
(d) Except as set forth on SCHEDULE 5.18, none of the
following exists at any property or facility operated by the Company:
(1) Underground storage tanks or surface impoundments;
(2) Asbestos-containing material in any form or condition,
or
(3) Materials or equipment containing polychlorinated
biphenyls.
(e) The Company has not treated, stored, disposed of, arranged
for or permitted the disposal of, transported, handled, or released any
substance, including without limitation any hazardous substance, or owned or
operated any facility or property, and no such facility or property is
contaminated with any such substance, so as to give rise to liabilities of the
Company for response costs, natural resource damages or attorneys fees pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), as amended, or similar state Environmental and Safety
Requirements.
(f) The Company has not, either expressly or by operation of
law, assumed or undertaken any liability, including without limitation any
obligation for corrective or remedial action, of any other person relating to
Environmental and Safety Requirements.
(g) Without limiting the foregoing, to the knowledge of the
Company no facts, events or conditions relating to the past or present
facilities, properties or operations of the Company will prevent, hinder or
limit continued compliance with Environmental and Safety Requirements, give rise
to any investigatory, remedial or corrective obligations pursuant to
Environmental and Safety Requirements, or give rise to any other liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental and Safety Requirements, including without limitation any relating
to onsite or offsite releases or threatened releases of hazardous materials,
substances or wastes, personal injury, property damage or natural resource
damage.
(h) The Company has provided to the Purchaser true and correct
copies of all environmental audit or assessment reports or other material
environmental documents relating to
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20
the past or current operations and facilities of the Company which are in their
possession or under their reasonable control.
5.19 POWERS OF ATTORNEY. Except as set forth on SCHEDULE 5.19,
there are no outstanding powers of attorney executed on behalf of the Company.
5.20 GUARANTIES. Except as set forth on SCHEDULE 5.20 and in
connection with the collection of bank deposits and instruments in the Ordinary
Course of Business, the Company is not a guarantor and is not otherwise liable
for any Liability (including indebtedness) of any other Person.
5.21 TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 5.21, the Company has not entered into any agreement, arrangement or
transaction with any Affiliate within the past twelve months, and none of the
Affiliates owns any property or right, tangible or intangible, which is used in
the Company's business.
5.22 TAXES. Except as set forth on SCHEDULE 5.22, the Company
prepared and filed all Tax Returns required to be filed by it, which Tax Returns
are true, correct and complete. The Company paid or made provision for the
payment of all Taxes that are due or claimed to be due from it by any authority.
There are no liens for Taxes upon any assets, tangible or intangible, of the
Company. The reserves for Taxes reflected on the Current Balance Sheet are
sufficient for payment of all unpaid Taxes (whether or not currently disputed)
incurred with respect to the periods ended on the date thereof and for all
periods ended prior to such date. Except as set forth on SCHEDULE 5.22, there
are no pending claims, disputes or questions relating to, or claims for, Taxes
of the Company. The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party. No director or officer
(or employee responsible for Tax matters) of the Company expects any authority
to assess any additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax liability of the Company
either (i) claimed or raised by any authority in writing or (ii) as to which any
of the directors and officers (and employees responsible for Tax matters) of the
Company have knowledge based upon personal contact with any agent of such
authority. The Company has delivered to the Purchaser correct and complete
copies of all federal income Tax Returns for the years 1997, 1998 and 1999,
examination reports, and statements of deficiencies assessed against or agreed
to by the Company since January 1, 1996. The Company has not waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. The Company has not filed a consent
under Code Section 341(f) concerning collapsible corporations. The Company has
not made any payments, is not obligated to make any payments, and is not a party
to any agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G. The Company is not
a party to any Tax allocation or sharing agreement, has not been a member of an
affiliated group filing a consolidated federal income Tax Return and has no
Liability for the Taxes of any Person under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
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21
5.23 INSURANCE. Set forth on SCHEDULE 5.23 is a list and
summary description of all policies (including scope, duration and amount of
coverage) of fire, liability, product liability, worker's compensation and other
forms of insurance (excluding employee benefit insurance covered by Section 5.17
above) currently in effect with respect to the Company, its business and assets.
All such policies are in full force and effect and enforceable in accordance
with their terms. The coverage provided by such policies is of such types and in
such amounts as are customary for corporations of similar size engaged in
similar lines of business.
5.24 PRODUCT WARRANTY; PRODUCT LIABILITY. Except as set forth
on SCHEDULE 5.24, to the Company's knowledge there is no existing liability,
claim or obligation arising from or alleged to arise from any actual or alleged
injury to persons or property as a result of the ownership, possession or use of
any product sold by the Company.
5.25 BROKERS. The Company is not obligated to pay, and has not
retained any broker or finder or other person who is entitled to, any broker's
or finder's fee or any other commission or financial advisory fee in connection
with the transactions contemplated hereby or by the Related Documents.
5.26 NO ADVERSE CHANGE SINCE CURRENT BALANCE SHEET. Measured
as of the date hereof and as of the Closing Date, the total assets of the
Company minus the total liabilities of the Company shall equal or exceed the
total assets of the Company minus the total liabilities of the Company as
reflected in the Current Balance Sheet.
5.27 DISCLOSURE. Neither this Agreement nor any Related
Document, nor any statement made by the Company in connection herewith or
therewith, or the transactions contemplated hereby or thereby contains any
untrue statement of any material fact or omits to state any material fact
necessary in order to make the statements contained herein or therein complete
and not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PARENT
The Purchaser and the Parent represent and warrant to the
Company as follows:
6.1 AUTHORIZATION AND ENFORCEABILITY. Each of the Purchaser
and Parent has taken all action necessary to permit each of them to execute,
deliver and perform their respective obligations under this Agreement and the
Related Documents. This Agreement and each of the Related Documents, when duly
executed and delivered by each of the Purchaser and Parent, will constitute a
valid and binding obligation of each of them, enforceable against each of them
in accordance with its terms.
6.2 GOVERNMENT APPROVALS. Neither the Purchaser nor Parent is
required to obtain any order, consent, approval or authorization of, or to make
any declaration or filing with, any Governmental Agency in connection with the
execution and delivery of this Agreement and the other documents and instruments
to be executed by either of them pursuant hereto or the consummation of the
transactions contemplated hereby and thereby.
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6.3 ISSUANCE OF PARENT SHARES. The Parent Shares have been
duly authorized and when issued and delivered in accordance with this Agreement,
will be validly issued and outstanding. The Parent Shares will be fully paid and
nonassessable.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE PARENT
The Parent hereby represents and warrants to the Company as
follows:
7.1 EXISTENCE; QUALIFICATION; SUBSIDIARIES. The Parent is a
corporation duly organized and validly existing under the laws of the State of
Nebraska and has full corporate power and authority to conduct its business and
own and operate its properties as now conducted, owned and operated. The copies
of the Articles of Incorporation and Bylaws of the Company and all amendments
thereto previously delivered to the Purchaser are true, correct and complete
copies of such documents.
7.2 NO CONFLICTS WITH MATERIAL AGREEMENTS. The execution and
delivery of, and performance under, this Agreement and the Related Documents by
the Parent will not violate any provisions of any material agreements to which
it is a party.
7.3 CAPITALIZATION. The authorized capital stock of the Parent
consists of 160,000 shares of Series A Convertible Preferred Stock, par value
$0.01 per share, of which 160,000 shares are issued and outstanding, 90,000
shares of Series B Redeemable Preferred Stock, par value $0.01 per share, of
which 87,500 shares are issued and outstanding, 1,500,000 shares of Series C
Convertible Preferred Stock, par value $0.01 per share, of which 1,444,043
shares are issued and outstanding, and 13,500,000 shares of common stock, par
value $0.01 per share, of which 8,197,450 shares are issued and outstanding.
Except as set forth on SCHEDULE 7.3, there are no existing options, convertible
securities, warrants, calls, pledges, transfer restrictions (except restrictions
imposed by federal and state securities laws), liens, rights of first offer,
rights of first refusal, antidilution provisions or commitments of any character
relating to any issued or unissued shares of capital stock of the Company.
7.4 FINANCIAL STATEMENTS. The Parent Financial Statements
(together with the notes thereto, as applicable), (i) are true, correct and
complete in all material respects, (ii) are in accordance with the books and
records of the Company and (iii) fairly present the financial condition and
results of operations of the Company as of the dates and for the periods
indicated, in accordance with GAAP except that the Parent Current Balance Sheet
and related financial statements do not contain an auditors' opinion and do not
contain footnotes and are subject to normal year-end audit adjustments which in
the aggregate are not expected to be material.
7.5 ABSENCE OF CERTAIN CHANGES.
(a) Except as set forth on SCHEDULE 7.5, since December 31,
1999, the Company has not:
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(i) incurred any Liabilities other than current
Liabilities incurred, or obligations under contracts entered into, in
the Ordinary Course of Business and for individual amounts not
greater than $250,000;
(ii) sold, leased, assigned or otherwise transferred any
of its assets, tangible or intangible in excess of $250,000 in the
aggregate (other than sales of inventory in the Ordinary Course of
Business and for a fair consideration and use of supplies in the
Ordinary Course of Business);
(iii) terminated or amended other than in the Ordinary
Course of Business, suffered the termination or amendment of, failed
to perform in all material respects all of its obligations or
suffered or permitted any material default to exist under, any
material agreement, license or permit;
(iv) suffered any damage, destruction or loss of tangible
property (whether or not covered by insurance) which in the aggregate
exceeds $250,000;
(v) made any loan to any other Person (other than advances
to Subsidiaries of the Parent or to employees in the Ordinary Course
of Business);
(vi) canceled, waived or released any debt, claim or right
in an amount exceeding $100,000 or otherwise of substantial value;
(vii) declared, set aside, or paid any dividend or
distribution with respect to its capital stock or redeemed, purchased
or otherwise acquired any of its capital stock;
(viii) made any material change in any method of
accounting or accounting practice;
(ix) suffered or caused any other occurrence, event or
transaction which could reasonably be expected to have a Parent
Material Adverse Effect; or
(x) agreed, in writing or otherwise, to any of the
foregoing.
(b) Since December 31, 1999 there has been no Parent Material
Adverse Change.
7.6 LITIGATION. Set forth on SCHEDULE 7.6 is a list and
description of all claims, suits, proceedings or investigations pending or, to
the knowledge of the Parent, threatened against or affecting the Parent, any
officer or director thereof or the Parent's business. Except as set forth on
SCHEDULE 7.6, no such claim, suit, proceeding or investigation, could have a
Parent Material Adverse Effect or a material adverse effect on the ability of
any officer or director to participate in the affairs of the Parent, and the
Parent has no knowledge of any basis for any such claim, suit, proceeding or
investigation.
7.7 NO UNDISCLOSED LIABILITIES. The Parent has no Liabilities
except (i) as and to the extent of the amounts reflected or reserved against on
the Parent Current Balance
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Sheet (excluding the footnotes thereto), (ii) liabilities and obligations
incurred in the Ordinary Course of Business since the date thereof and (iii)
liabilities and obligations which individually and in the aggregate could not be
reasonably expected to have a Parent Material Adverse Effect.
ARTICLE VIII
COVENANTS OF THE COMPANY PRIOR TO CLOSING
The Company covenants and agrees with the Purchaser and Parent
as follows throughout the period from the date hereof through and including the
Closing:
8.1 RESTRICTIONS. Except as expressly contemplated by this
Agreement, the Company shall conduct its business and operations only in the
Ordinary Course of Business and, furthermore, without limiting the generality of
the foregoing, except as expressly contemplated by this Agreement (except with
the prior written consent of the Purchaser), the Company shall not:
(a) Issue or agree to issue any capital stock or right, option
or convertible security representing the right to acquire capital stock other
than stock issued upon exercise of an option;
(b) Redeem, purchase, repurchase or retire any of the capital
stock of the Company, or declare or pay any dividends (including stock
dividends), or make any other payments or distributions upon any of the capital
stock of the Company;
(c) Repay any indebtedness or any other obligation other than
in accordance with the terms of any such obligation and in no event prior to the
time at which any such payment is due, other than in the Ordinary Course of
Business
(d) Sell, lease, license, transfer or otherwise dispose of or
fail to maintain any material assets, including, without limitation, rights to
patents, trademarks, know-how, intellectual property or other intangible assets
or cancel any debts or claims, except in the Ordinary Course Of Business;
(e) Enter into, amend, modify or terminate any material
contract, agreement, Plan or collective bargaining agreement to which the
Company is a party, except for (i) the purchase of raw materials and the sale of
inventory in the Ordinary Course of Business, (ii) contracts entered into in the
Ordinary Course of Business which involve aggregate commitments under $25,000
and which, in the case of any single contract, involves a commitment under
$25,000 and (iii) contracts and commitments in respect of capital commitments
and expenditures made within the limitations of clause (n) below;
(f) Make any change in the Articles of Incorporation or Bylaws
of the Company;
(g) Make any change in the authorized or issued and
outstanding capital stock of the Company, including any changes involving
treasury shares;
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(h) Grant any options, warrants, rights or any similar
securities or instruments or contractual arrangements to purchase directly or
indirectly any securities of the Company;
(i) Enter into any transaction in which any officer or
director of the Company or any record or beneficial holder of any securities of
the Company has any interest, directly or indirectly;
(j) Effect any merger or consolidation of the Company whether
or not it is the survivor thereof or effect any reorganization or
recapitalization of the Company;
(k) Effect any acquisition by the Company of any interest or
participation in any entity of any kind, whether represented by shares or
otherwise, or effect the formation of a subsidiary or purchase or otherwise
invest in or hold securities, non-operating real estate or other non-operating
assets, except direct obligations of the United States of America, or
certificates of deposit or equivalent securities issued by financial
institutions;
(l) Mortgage, pledge or grant a security interest in or Lien
or encumbrance on any of its assets or property, real or personal, tangible or
intangible, now owned or hereafter acquired except (i) Liens in existence at the
date hereof which have been expressly disclosed to the Purchaser; and (ii)
Permitted Liens;
(m) Make any investment in, or make any loan, advance or
credit to any person, including, without limitation, officers, stockholders or
directors of the Company, other than credits to customers in the Ordinary Course
of Business and travel advances to officers, directors and employees of the
Company made in the Ordinary Course of Business in amounts consistent with past
practices;
(n) Assume endorse, guarantee or otherwise become liable for
or upon the obligation of any person (other than endorsements for deposit in the
Ordinary Course of Business);
(o) Institute, settle or dismiss any litigation, claim or
other proceeding before any court or governmental agency involving an amount in
excess of $25,000 on an individual basis; and
(p) Make further capital commitments or expenditures in excess
of amounts budgeted therefor, which amounts shall have been disclosed to the
Purchaser.
8.2 NOTICE OF BREACH. To the extent the Company obtains
knowledge that any of the representations or warranties contained in Article V
hereof would be incorrect in any respect or that the Company is in breach of any
of the covenants contained in this Article VIII, the Company shall notify the
Purchaser and the Parent in writing promptly of such fact.
8.3 ACCESS. The Company will, upon reasonable notice, permit
the Purchaser, its counsel, auditors, environmental consultants, appraisers and
other advisers and representatives to review, inspect and copy all financial and
business records and documents of the Company in its custody, care or control
and to have access to the business and personnel of the Company throughout all
regular business hours.
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8.4 AUTHORIZATION FROM OTHERS. The Company shall use its best
efforts and due diligence to obtain all authorizations, consents and approvals
of third persons and governmental authorities that may be required to permit the
consummation by the Company of the transactions contemplated by this Agreement.
8.5 CONSUMMATION OF AGREEMENT. The Company shall use all
commercially reasonable efforts to satisfy all conditions to the Closing that
are within their control to the end that the transactions contemplated by this
Agreement shall be fully carried out.
8.6 SUPPLEMENTS TO SCHEDULES. From time to time prior to the
Closing Date, the Company will promptly supplement or amend any schedules
delivered by the Company pursuant to this Agreement (a) if any matter hereafter
arises which, if existing or occurring at the date of this Agreement, would have
been required to be set forth or described in such supplemental or amended
schedule or (b) if it becomes necessary to correct any information in any
schedule or in this Agreement which has become inaccurate. Any such supplement
or amendment shall not modify this Agreement or any schedule in a manner that
affects the Purchaser's and the Parent's rights with respect to any
misrepresentation or breach of warranty that exists or existed under this
Agreement which rights shall be preserved for all purposes, including, without
limitation, determination of the satisfaction of conditions to Closing set forth
in Article X hereof.
8.7 VOTING AGREEMENT. The Company shall use its best efforts
to assure that the Voting Agreement remains in full force and effect.
ARTICLE IX
COVENANTS OF THE PURCHASER AND THE PARENT
The Purchaser and the Parent covenant and agree with the
Company as follows throughout the period from the date hereof through and
including the Closing:
9.1 NOTICE OF BREACH. To the extent the Purchaser or Parent
obtains knowledge that any of the representations or warranties contained in
Articles VI or VII hereof would be incorrect in any respect or that the
Purchaser or Parent is in breach of any of the covenants contained in this
Article IX, the Purchaser or Parent shall notify the Company in writing promptly
of such fact.
9.2 AUTHORIZATION FROM OTHERS. The Purchaser and Parent shall
use their best efforts and due diligence to obtain all authorizations, consents
and approvals of third persons and governmental authorities that may be required
to permit the consummation by the Purchaser and the Parent of the transactions
contemplated by this Agreement.
9.3 CONSUMMATION OF AGREEMENT. The Purchaser and the Parent
shall use all commercially reasonable efforts to satisfy all conditions to the
Closing that are within their control to the end that the transactions
contemplated by this Agreement shall be fully carried out.
9.4 SUPPLEMENTS TO SCHEDULES. From time to time prior to the
Closing Date, the Purchaser and the Parent will promptly supplement or amend any
schedules delivered by
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either of them pursuant to this Agreement (a) if any matter hereafter arises
which, if existing or occurring at the date of this Agreement, would have been
required to be set forth or described in such supplemental or amended schedule
or (b) if it becomes necessary to correct any information in any schedule or in
this Agreement which has become inaccurate. Any such supplement or amendment
shall not modify this Agreement or any schedule in a manner that affects the
Company's rights with respect to any misrepresentation or breach of warranty
that exists or existed under this Agreement which rights shall be preserved for
all purposes, including, without limitation, determination of the satisfaction
of conditions to Closing set forth in Article X hereof.
ARTICLE X
CONDITIONS PRECEDENT
10.1 CONDITIONS PRECEDENT TO PURCHASER'S AND PARENT'S
OBLIGATIONS. The obligations of the Purchaser and Parent to consummate the
transactions contemplated hereby are subject to satisfaction (or written waiver)
at or prior to the Closing of the following conditions:
(a) The representations and warranties of the Company
contained herein and in any writing delivered pursuant hereto shall be true and
correct in all material respects when made and at and as of the time of the
Closing;
(b) No action, suit, investigation or proceeding shall be
pending or threatened before any court or Governmental Agency to restrain,
prohibit, collect damages as a result of or otherwise challenge this Agreement
or any Related Document or any transaction contemplated hereby or thereby;
(c) All acts or covenants required hereunder to be performed
by the Company prior to the Closing shall have been performed in all material
respects by it;
(d) The Company shall have made all filings and received all
consents, approvals, permits and authorizations set forth on SCHEDULE 5.8, all
of which shall be in form and substance reasonably satisfactory to the
Purchaser;
(e) No Material Adverse Change shall have occurred between
December 31, 1999 and the Closing Date;
(f) No stockholder of the Company shall have asserted any
dissenter's rights under the CBCA;
(g) The Purchaser shall have received the written opinion of
Xxxxxxxx, Xxxxx & Xxxxxxx, counsel for the Company, in the form of EXHIBIT B
hereto;
(h) The board of directors and stockholders of the Company
shall have approved the transactions contemplated hereby;
(i) All options to acquire any Shares shall have been
exercised or the holders thereof shall have agreed to rollover such options;
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(j) The Company shall have obtained waivers of preemptive
rights from all of the Company's shareholders as to all prior transactions;
(k) Xxx Xxxxx shall have entered into an employment agreement
with the Parent; and
(l) The Company shall have delivered to the Purchaser:
(i) certificates of a duly authorized officer of the
Company dated as of the Closing Date stating that the conditions set
forth in clauses (b) through (f) have been satisfied; and
(ii) such other documents relating to the transactions
contemplated hereby as the Purchaser may reasonably request.
10.2 CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. The
obligations of the Company hereunder are subject to satisfaction (or written
waiver) at or prior to the Closing of the following conditions:
(a) The representations and warranties of the Purchaser and
Parent contained herein and in any writing delivered pursuant hereto shall be
true and correct in all material respects when made and at and as of the
Closing;
(b) No action, suit, investigation or proceeding shall be
pending or threatened before any court or Governmental Agency to restrain,
prohibit, collect damages as a result of or otherwise challenge this Agreement
or any Related Document or any transaction contemplated hereby or thereby;
(c) All acts or covenants required hereunder to be performed
by the Purchaser and Parent at or prior to the Closing shall have been performed
in all material respects by each of them;
(d) No Parent Material Adverse Change shall have occurred
between December 31, 1999 and the Closing Date;
(e) The Surviving Corporation shall have set aside the Total
Consideration (less the Holdback Amount) for disbursement to the stockholders of
the Company; and
(f) The Parent shall have delivered to the Company:
(i) certificates of a duly authorized officer of the
Parent dated as of the Closing Date stating that the conditions set
forth in clauses (a) through (d) have been satisfied; and
(ii) such other documents relating to the transactions
contemplated hereby as the Company may reasonably request.
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ARTICLE XI
TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by written consent of the Purchaser, Parent and the
Company;
(b) by the Purchaser, Parent or the Company if there has been
a material misrepresentation or breach on the part of the Purchaser or Parent in
the case of the Company or the Company in the case of the Purchaser and Parent
in the representations and warranties set forth in this Agreement, or if events
have occurred which have made it impossible to satisfy a condition precedent to
the terminating party's obligations to consummate the transactions contemplated
hereby, unless such terminating party's willful breach of this Agreement has
caused the condition to be unsatisfied; or
(c) by the Purchaser, Parent or the Company if the Closing has
not occurred on or prior to October 31, 2000; provided, that a party may not
terminate this Agreement pursuant to this Section 11(c) if such party's willful
breach of this Agreement has prevented the consummation of the transactions
contemplated hereby at or prior to such time.
11.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by the Purchaser, Parent or the Company as provided above, this
Agreement will forthwith become void and there will be no liability on the part
of any party hereto to any other party hereto or its shareholders or directors
or officers in respect thereof other than the obligations of the parties
pursuant to Sections 13.9 and 13.10 except that nothing herein will relieve any
party from liability resulting from any breach of this Agreement prior to such
termination.
ARTICLE XII
SURVIVAL AND INDEMNIFICATION
12.1 SURVIVAL. Notwithstanding any examination made by or on
behalf of any party hereto, the knowledge of any party or the acceptance by any
party of any certificate or opinion, each representation and warranty contained
herein, and in writing delivered pursuant hereto, shall survive the Closing and
shall be fully effective and enforceable until March 31, 2002.
12.2 INDEMNIFICATION. The individuals and entities that were
shareholders of the Company immediately prior to the Effective Time shall
indemnify the Purchaser, the Parent, and each of their respective officers,
directors, employees, agents and representatives against any damages, claims,
losses, liabilities and expenses (including reasonable counsel fees and
expenses) which may be suffered or incurred by any of them as a result of a
breach of any representation, warranty or covenant made by the Company in this
Agreement. During the Holdback Period and for so long as there is any remaining
Holdback Amount, the Purchaser and the Parent shall only have recourse to the
Holdback Amount in the event of a claim under this Section 12.2. After the
expiration of the Holdback Period or in the event that there is no
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remaining Holdback Amount, the Purchaser and the Parent shall have recourse to
the individuals and entities that were shareholders of the Company immediately
prior to the Effective Time. Notwithstanding the foregoing, in no event shall
the aggregate indemnification obligations of the shareholders of the Company to
the Purchaser and the Parent hereunder exceed fifty percent of the value of the
Total Consideration.
ARTICLE XIII
GENERAL PROVISIONS
13.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors and
assigns. Except as otherwise specifically provided herein, this Agreement shall
not be assignable by any party without the prior written consent of the other
parties hereto.
13.2 ENTIRE AGREEMENT. This Agreement and the other writings
referred to herein or delivered pursuant hereto constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior arrangements or understandings.
13.3 NOTICES. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be (i)
delivered in person, (ii) transmitted by telecopy, (iii) sent by first-class
registered or certified mail, postage prepaid, or (iv) sent by reputable
overnight courier service, fees prepaid, to the recipient at the address or
telecopy number set forth below, or such other address or telecopy number as may
hereafter be designated in writing by such recipient. Notices shall be deemed
given upon personal delivery, seven days following deposit in the mail as set
forth above, upon acknowledgment by the receiving telecopier or one day
following deposit with an overnight courier service.
(a) If to the Company:
Xertex Technologies, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xx. Xxx Xxxxx
with a copy to:
Xxxxxxxx, Xxxxx & Xxxxxxx
0000 00xx Xxxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
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(b) If to the Purchaser or the Parent:
c/o Centurion International, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xx. Xxxx Xxxx
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxx Xxxxx, Esq.
13.4 AMENDMENT AND WAIVER. No amendment of any provision of
this Agreement shall be effective, unless the same shall be in writing and
signed by the Purchaser and the Company. No waiver granted by a party hereto
shall operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. No failure by any party to take any action against any breach of
this Agreement or default by any other party shall constitute a waiver of such
party's right to enforce any provision hereof or to take any such action.
13.5 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one agreement.
13.6 HEADINGS. The headings of the various sections of this
Agreement have been inserted for reference only and shall not be deemed to be a
part of this Agreement.
13.7 SPECIFIC PERFORMANCE. The Company acknowledges that money
damages would not be a sufficient remedy for any breach by it of this Agreement
and agrees that the Purchaser shall be entitled to specific performance and
injunctive relief as remedies for any such breach.
13.8 REMEDIES CUMULATIVE. Except as otherwise provided herein,
the remedies provided herein shall be cumulative and shall not preclude the
assertion by any party hereto of any other rights or the seeking of any other
remedies against any other party hereto.
13.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF
DELAWARE WITHOUT GIVING EFFECT TO THE LAWS OF CONFLICT OR CHOICE OF LAWS OF THE
STATE OF DELAWARE OR OF ANY OTHER JURISDICTION THAT WOULD RESULT IN THE
APPLICATION OF ANY LAWS OTHER THAN THOSE OF THE STATE OF DELAWARE.
13.10 DISPUTE RESOLUTION
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(a) If any dispute, claim or difference arises out of this
Agreement, the Related Documents or the transactions contemplated hereby, or as
to the rights and liabilities of the parties hereunder or as to the breach or
invalidity hereof, or in connection with the construction of this Agreement
including any dispute, claim or difference as to whether an issue is arbitrable
(each such event being hereinafter called a "DISPUTE"), the parties will settle
such Dispute by arbitration in accordance with the Commercial Arbitration rules
of the American Arbitration Association in effect as of the date of commencement
of the arbitration. Such arbitration shall be subject to appeal to a court of
the State of Delaware unless both parties agree that the decision of the
arbitrator shall be binding.
(b) Any party may demand that any Dispute be submitted to
arbitration. The demand for arbitration shall be in writing, shall be served on
the other party in the manner prescribed in this Agreement for the giving of
notices, and shall set forth a short statement of the factual basis for the
claim, specifying the matter or matters to be arbitrated and shall state whether
the demanding party elects to make the arbitration binding without the right of
appeal. If the demanding party elects binding arbitration, the adverse party
shall, within ten days after notice of the demand for arbitration, notify the
demanding party, whether or not it agrees to binding arbitration without the
right of appeal.
(c) The arbitration will be held in the City of Lincoln,
Nebraska unless the parties mutually agree to have the arbitration held
elsewhere, and judgment upon the award made therein may be entered by any court
having jurisdiction thereof; provided, further, that nothing contained in this
Section 13.10 will be construed to limit or preclude a party from bringing any
action in any court of competent jurisdiction in the United States for
injunctive or other provisional relief to compel another party hereto to comply
with its obligations under this Agreement or any other agreement between or
among the parties during the pendency of the arbitration proceedings.
(d) The arbitration shall be conducted by an arbitrator
appointed by the American Arbitration Association (the "ARBITRATOR") who shall
conduct such evidentiary or other hearings as the Arbitrator deems necessary or
appropriate and thereafter shall make a final determination applying the
internal laws of the State of Delaware as soon as practicable after the
conclusion of the hearings. Any arbitration pursuant hereto shall be conducted
by the Arbitrator as the parties may mutually agree or if the parties do not so
agree under the guidance of the Federal Rules of Civil Procedure and the Federal
Rules of Evidence, but the Arbitrator shall not be required to comply strictly
with such rules in conducting any such arbitration.
(e) Each party shall bear its own fees and expenses incurred
in connection with the arbitration and the fees and expenses of the Arbitrator
incurred in connection with the arbitration. The Arbitrator shall have the right
to allocate expenses between the parties as part of its award.
(f) The Arbitrator shall have the authority to award any
remedy or relief that a Court of the State of Delaware could order or grant,
including without limitation, specific performance of any obligation under this
Agreement, the awarding of punitive damages, the issuance of an injunction, or
the imposition of sanctions for abuse or frustration of the arbitration process.
The decision and award of the Arbitrator shall be in writing and counterpart
copies
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thereof shall be delivered to each party. In the event that the arbitration is
not binding on the parties in that it is subject to appeal, the arbitrator shall
render an opinion setting forth its findings of fact and conclusions of law. The
decision and award of the Arbitrator shall be binding on all parties, subject to
any appeal to a Court of the State of Delaware if the parties do not timely
elect to make the arbitration binding without the right of appeal. In rendering
such decision and award, the Arbitrator shall not add to, subtract from or
otherwise modify the provisions of this Agreement. Any party to the arbitration
may seek to have the ruling of the Arbitrator entered in any court having
jurisdiction thereof.
(g) Each party agrees that it will not file suit, motion,
petition or otherwise commence any legal action or proceeding for any matter
which is required to be submitted to arbitration as contemplated herein except
in connection with the enforcement of an award rendered by the Arbitrator and
except to seek the issuance of an injunction or temporary restraining order
pending a final determination by the Arbitrator. Upon the entry of any order
dismissing or staying any action or proceeding filed contrary to the preceding
sentence, the party which filed such action or proceeding shall promptly pay to
the other party the reasonable attorney's fees, costs and expenses incurred by
such other party prior to the entry of such order.
(h) All aspects of the arbitration shall be considered
confidential and shall not be disseminated by any party with the exception of
the ability and opportunity to prosecute its claim or assert its defense to any
such claim. The Arbitrator shall be required to issue prescriptive orders as may
be required to enforce and maintain this covenant of confidentiality during the
course of the arbitration and after the conclusion of same so that the result
and underlying data, information, materials and other evidence are forever
withheld from public dissemination with the exception of its subpoena by a court
of competence jurisdiction in an unrelated proceeding brought by a third party.
13.11 NO THIRD PARTY BENEFICIARIES. Except as specifically set
forth or referred to herein, nothing herein is intended or shall be construed to
confer upon any person or entity other than the parties hereto and their
successors or assigns, any rights or remedies under or by reason of this
Agreement.
13.12 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
* * * * *
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34
XERTEX ACQUISITION COMPANY
By: /s/ Xxx Xxxxx
------------------------------
Name: Xxx Xxxxx
Title: President
XERTEX TECHNOLOGIES, INC.
By: /s/ Xxx Xxxxx
------------------------------
Name: Xxx Xxxxx
Title: President
CENTURION INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxx
------------------------------
Name: Xxxx X. Xxxx
Title: President
35
Schedule 1
Earnout Consideration
In the event that the Surviving Corporation achieves revenue
of at least $8,453,000 in the fiscal year ended December 31, 2001, then, after
such determination pursuant to an audit conducted by the accountants of the
Surviving Corporation, the Parent shall pay to the shareholders of the Company
who received a portion of the Merger Consideration in Parent Shares their pro
rata portion (based on their respective percentages of Parent Shares received as
Merger Consideration) of the Earnout Consideration. In the event of any
disagreement between the Surviving Corporation and the Shareholder
Representative regarding the calculation of revenue for purposes of this
Schedule 1, the Surviving Corporation and the Shareholder Representative shall
use their commercially reasonable efforts to come to agreement on such
calculation. If the parties fail to come to an agreement within 20 days, then
the matter shall be submitted to arbitration pursuant to the terms of Section
13.10.
