SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 27, 1996
NOVA TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 33-42880 11-2674603
(State or Other (Commission File No.) (IRS Employer
jurisdiction of Identification Number
incorporation)
89 Cabot Court, Unit L, Hauppauge, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 434-8811
Item 2. Acquisition or Disposition of Assets
On June 14, 1996, Nova Technologies, Inc. ("Registrant"),
through its wholly-owned subsidiary Vivax Medical Corp. ("Vivax"),
acquired all the outstanding capital stock of Comed Systems, Inc.,
a distributor of medical equipment, for an aggregate purchase price
of $3,000,000. $1,500,000 of the purchase price was paid in shares
of common stock of Registrant and the remaining $1,500,000
consisted of two promissory notes of Vivax. One promissory note is
payable in one year, and the second promissory note is payable over
a period of three years, with the amount of the installments of
principal being dependent on the future results of operations of
the acquired business. Payment of the promissory notes is secured
by separate security agreements of Vivax and Nova covering,
respectively, inventory and equipment of Vivax, and certain
technology of Nova.
The transactions were effected pursuant to a Stock
Purchase Agreement dated as of May 31, 1996 among Registrant,
Vivax, and Douglas Drew and Donna Drew, as sellers (the "Sellers").
The $3,000,000 purchase price was agreed to through arms length's
negotiations between the Sellers and Nova.
Registrant has effected a merger of Comed into Vivax and
intends to continue to operate, through Vivax, the medical
distribution business formerly conducted by Comed.
Douglas Drew, one of the Sellers, is to act as chief
marketing officer of Nova and has entered into a three-year
Employment Agreement with Nova providing for Mr. Drew to render
such services to Nova and its subsidiaries, including Vivax. In
connection with the Registrant's acquisition of the stock of Comed,
Mr. Drew also entered into a non-competition agreement with Nova.
Comed's business has been conducted, and Vivax's business
will be conducted, in an office building located at 19 Batchelder
Road, Seabrook, New Hampshire which is leased to Comed (now Vivax)
by a Trust, the settlers of which are the Sellers, for a term of
three years with monthly rental payments of $3,250.
Item 5. Other Events
On June 18, 1996, Paul DiMatteo resigned his position as
President and Chief Executive Officer of Registrant. Mr. DiMatteo
has entered into an Employment Agreement with the Registrant for a
period of three years providing for him to serve as Director of
Research and Development for the Registrant. On the same day, the
appointment of Stephen Fisher, formerly a Senior Vice President of
Registrant, as President and Chief Executive Officer of Registrant
became effective. On June 14, 1996, the appointment of Douglas
Drew as a Director of Registrant became effective, filling a
vacancy created by the expansion of the Board of Directors of
Registrant to eight directors.
Item 7. Financial Statements, Pro-Forma Financial Information and
Exhibits
(a) The financial statements of Comed required to be
filed for the periods specified in Rule 3-05(b) of Regulation S-X
are not included at this time as they are not available.
Registrant will file the required financial statements as an
amendment to this form as soon as practicable but no later than 75
days after June 14, 1996.
(b) Pro-forma financial statements of Registrant
required to be filed to give effect to the acquisition of Comed in
accordance with the requirements of Article 11 of Regulation S-X
are not included at this time as they are not available.
Registrant will file the required financial statements as an
amendment to this form as soon as practicable but no later than 75
days after June 14, 1996.
(c) Exhibits:
(i) Stock Purchase Agreement dated as of May
31, 1996 among Registrant, Vivax and Sellers.
(ii) Employment Agreement dated as of June 14,
1996 between Douglas Drew and Nova.
(iii) Non-Competition Agreement dated as of June
14, 1996 between Douglas Drew and Nova.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
Dated: June 27, 1996 NOVA TECHNOLOGIES, INC.
(Registrant)
By: /s/ Stephen Fisher
Stephen Fisher
President
EXHIBIT 7(c)(i)
STOCK PURCHASE AGREEMENT dated
May 31, 1996 (the "Agreement")
among NOVA TECHNOLOGIES, INC.,
a Delaware corporation
("Nova"), Vivax Medical Corp.,
a Delaware corporation and a
wholly owned subsidiary of Nova
("Buyer"), DOUGLAS DREW ("D.
Drew") and DONNA L. DREW ("D.L.
Drew" and, together with D.
Drew, collectively, the
"Sellers", and individually a
"Seller")
Sellers are the owners of all the issued and outstanding
capital stock (the "Shares") of Comed Systems, Inc., a New
Hampshire corporation ("Comed").
Sellers desire to sell and Buyer desires to purchase the
Shares.
NOW, THEREFORE, in consideration of the premises and of
the mutual promises and covenants contained herein, the parties,
intending to be legally bound, hereby represent, warrant and agree
as follows:
I. PURCHASE AND SALE
1.1 Transaction. Subject to the terms and conditions
herein set forth, and on the basis of the representations and
warranties herein set forth, at the Closing (as hereinafter
defined), each Seller agrees to sell to Buyer, and Buyer agrees to
purchase from the Sellers, the number of Shares set forth in
Schedule 1.1 hereof, free and clear of all liens, pledges,
encumbrances, charges and claims thereon. Certificates evidencing
the Shares to be delivered to Buyer as hereinafter provided shall
be either duly endorsed in blank or accompanied by appropriate
stock powers endorsed in blank (the "Transfer Instruments"). Such
certificates shall also be accompanied by evidence reasonably
satisfactory to Buyer of Sellers' payment of any applicable
transfer taxes.
1.2 Disclosure Schedule. Simultaneously with the
execution of this Agreement, Sellers shall deliver a schedule (the
"Disclosure Schedule") relating to Comed including, but not limited
to: (i) copies of all leases, vehicle titles, permits and other
material agreements or contracts; (ii) insurance contracts and
benefit plans, if any; and (iii) each of the other matters required
to be set forth in the Disclosure Schedule as described elsewhere
in this Agreement. The Disclosure Schedule shall be deemed to be
part of this Agreement.
II. PURCHASE PRICE
2.1 Purchase Price; Payment. The purchase price to be
paid by Buyer for the Shares being purchased hereunder shall
consist of:
(a) 600,000 shares of common stock, $.01 par value, of
Nova (the "Nova Shares") that, on the basis of a price per share of
$2.50, have a value of one million five hundred thousand dollars
($1,500,000);
(b) $750,000 represented by Buyer's promissory note,
substantially in the form of Exhibit 2.1(b) hereto, payable three
hundred sixty-five (365) days from the date of Closing and bearing
interest at the rate of 8% per annum (the "Initial Note"). The
Initial Note shall be guaranteed by Comed, and such guaranty shall
be secured pursuant to the terms of (i) a Security Agreement from
Comed to Sellers, in substantially the form of Exhibit 2.1(d)
hereof and (ii) a Security Agreement from Nova to Sellers, in
substantially the form of Exhibit 2.1(e) hereof (collectively, the
"Security Agreements").
(c) $750,000, represented by Buyer's promissory note,
substantially in the form of Exhibit 2.1(c) hereto, bearing
interest at the rate of 8% per annum and payable on January 1,
2001, but subject to prepayment in quarter-annual installments of
principal on the 60th day following the end of each calendar
quarter (but in the case of the calendar quarter ending December
31, on the 110th day following the end of such quarter), commencing
with the calendar quarter ending December 31, 1997, in an amount
equal to the lesser of (i) $37,500 or (ii) twenty-five per cent
(25%) of Comed's Operating Income (as hereinafter defined) during
each immediately prior calendar quarter (the "Term Note"). The Term
Note shall be guaranteed by Comed, and such guaranty shall be
secured pursuant to the terms of the Security Agreements.
2.2 Determination of Actual Operating Income.
(a) The term "Operating Income" shall mean the net
income, after adjustment for federal, state and local income taxes,
of Comed for the appropriate period (initially, commencing on
October 1, 1997, and ending on December 31, 1997, and thereafter
each of the next successive fifteen (15) quarter-annual periods,
each a "Contingent Release Period"), initially as determined by
Buyer but, on an annual basis, subject to adjustment on the basis
of the annual audit of Nova's consolidated financial statements
conducted by Nova's regularly retained independent auditors
("Buyer's Auditors") in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis,
adjusted as follows:
(i) the effect of inter-company transactions
shall be eliminated;
(ii) interest expense and interest income
shall be eliminated; and
(iii) any extraordinary gain or losses as
determined by GAAP shall be excluded.
(b) Nova agrees to use its best efforts to cause
Nova's Auditors to review Nova's determination of
Operating Income for each fiscal year of Nova and prepare
a written report containing such review, to be delivered
no later than eighty (80) days after the close of each
fiscal year of Buyer. Copies of the report of Nova's
Auditors setting forth the computation of Operating
Income shall be binding on both Nova and Sellers, and
shall be submitted to each of Nova and Sellers. Within
fifteen (15) days after receipt of such report, Nova or
Sellers (as appropriate) shall pay to the other an amount
equal to the difference (if any) in the amount of
Operating Income reflected in Nova's Auditors' Report,
and in Nova's initial determination of Operating Income
for the prior fiscal year.
III. CLOSING; TERMINATION
3.1 Closing. The closing of the purchase and sale of
the Shares and other transactions contemplated hereby (the
"Closing") shall be held on June , 1996 or as soon as practicable
thereafter (the "Closing Date") after all conditions precedent to
the obligations of Buyer and Sellers have been satisfied (or waived
in writing) and at a time mutually agreeable to Buyer and Sellers.
The Closing shall be at the offices of Buyer's counsel in New York,
New York or such other place as may be mutually agreed upon by the
parties.
3.2 Sellers' Closing Deliveries. At the Closing,
Sellers shall deliver to Buyer and Nova (duly executed by Sellers
where appropriate):
(a) certificates evidencing the Shares and the Transfer
Instruments, with signatures thereon guaranteed as to authenticity
by either a commercial bank or a member firm of The New York Stock
Exchange, Inc.;
(b) a certificate, dated as of the Closing Date, to be
executed by each Seller, to the effect that the representations and
warranties of Sellers contained in this Agreement are true and
correct in all material respects at and as of the Closing Date and
that each Seller has complied with or performed all terms,
covenants and conditions to be complied with or performed by such
Seller on or prior to the Closing Date;
(c) an opinion of Sellers' counsel, Casassa and Ryan, in
form and substance reasonably satisfactory to Buyer and Nova,
substantially in the form of Exhibit 3.2(c) attached hereto;
(d) a non-competition agreement, substantially in the
form of Exhibit 3.2(d) hereto, dated as of the Closing Date between
D. Drew and Nova ("Non-Competition Agreement");
(e) an employment agreement, substantially in the form
of Exhibit 3.2(e) hereto, dated as of the Closing Date between D.
Drew and Nova ("Employment Agreement"); and
(f) such other documents as may be reasonably requested
by Buyer or Nova from Sellers as necessary for the implementation
and consummation of this Agreement and the other transactions
contemplated hereby.
3.3 Buyer's Closing Deliveries. At the Closing, Buyer
shall deliver to Sellers (duly executed by Buyer or Nova where
appropriate):
(a) certificates evidencing the Nova Shares;
(b) the Initial Note payable to Sellers;
(c) the Term Note payable to Sellers, including the
guaranty of Comed;
(d) the Security Agreements, together with
appropriate Uniform Commercial Code financing statements relating
to the collateral described therein;
(e) a certificate of each of Nova and Buyer, dated
as of the Closing Date, executed by the Chairman or the President
or a Vice President of Nova or Buyer, as the case may be, to the
effect that the representations and warranties of Nova and Buyer
contained in this Agreement are true and correct in all material
respects and that Buyer has complied with or performed all terms,
covenants and conditions to be complied with or performed by Buyer
on or prior to the Closing Date;
(f) a certificate dated as of the Closing Date,
executed by the Secretary of each of Nova and Buyer, certifying as
to the certificate of incorporation, by-laws, the incumbency of
Nova's or Buyer's officers and copies of directors' resolutions of
Nova or Buyer, as the case may be, approving and authorizing the
execution and delivery of this Agreement, and consummation of the
transactions contemplated hereby;
(g) an opinion of Nova's and Buyer's counsel, Parker
Duryee Rosoff & Haft, in form and substance reasonably satisfactory
to Sellers, substantially in the form of Exhibit 3.3(g) attached
hereto;
(h) the Non-Competition Agreement
(i) the Employment Agreement; and
(j) such other documents as may be reasonably
requested by either Seller from Buyer as necessary for the
implementation and consummation of this Agreement and the other
transactions contemplated hereby.
IV. REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller jointly and severally represents and warrants
to Buyer and Nova as follows, with the knowledge (as hereinafter
defined) and understanding that each of Buyer and Nova is relying
materially upon such representations and warranties:
4.1 Organization and Standing. Comed is a corporation
duly organized, validly existing and in good standing under the
laws of the State of New hampshire. Comed has all requisite
corporate power to carry on its business as it is now being
conducted and is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions set forth
in Schedule 4.1 of the Disclosure Schedule, which jurisdictions are
the only ones in which the properties owned, leased or operated by
Comed or the nature of the business conducted by Comed makes such
qualification necessary, except where the failure to qualify
(individually or in the aggregate) will not have any material
adverse effect on the business, properties, financial condition,
operations or prospects of Comed. The copies of the certificate of
incorporation and by-laws of Comed, as amended to date and
delivered to Buyer, are true and complete copies of these documents
as now in effect. The minute books of Comed are accurate in all
material respects.
4.2 Capitalization. The authorized capital stock of
Comed (which consists only of shares of common stock), the number
of shares of capital stock which are issued and outstanding and the
par value and record and beneficial holders thereof are as set
forth on Schedule 1.1. All of such shares of capital stock are
duly authorized, validly issued and outstanding, fully paid and
nonassessable. There are no subscriptions, options, warrants,
rights or calls or other commitments or agreements to which Comed
or either Seller is a party or by which any of them is bound,
calling for the issuance, transfer, sale or other disposition of
any class of securities of Comed. There are no outstanding
securities of Comed convertible or exchangeable, actually or
contingently, into shares of Common Stock or any other capital
stock of Comed.
4.3 Subsidiaries. Comed does not own any capital stock
in any other corporation or similar business entity nor is Comed a
partner in any partnership or joint venture.
4.4 Authority: Effect. Each Seller has the capacity to
enter into this Agreement and carry out his or her obligations
hereunder. This Agreement constitutes, and all other agreements
contemplated hereby, when executed and delivered by each Seller in
accordance herewith, will constitute the valid and binding
obligations of each Seller, enforceable in accordance with their
respective terms. The delivery of the Shares to Buyer at the
Closing, pursuant to the provisions of this Agreement, will
transfer good and marketable title thereto, free and clear of all
liens, charges, encumbrances and claims.
4.5 Properties. Comed, by operation of law, is the
successor to the now dissolved Florida corporation of the same name
which prior to March 28, 1996 carried out the business of Comed,
and owns all assets formerly owned by the Florida corporation other
than for those items sold in the ordinary course of business of
Comed. As used in the balance of this Article IV, the term "Comed"
includes such predecessor corporation. Comed has a valid leasehold
interest in all material properties of which it is the lessee and
each such lease is valid, binding and enforceable against Comed,
and, to the knowledge of Sellers, the other parties thereto in
accordance with its terms. Neither Comed nor to the knowledge of
Sellers, the other parties thereto are in default in the
performance of any material provision thereunder. Neither the
whole nor any material portion of the assets of Comed is subject to
any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the knowledge of
Sellers, has any such condemnation, expropriation or taking been
proposed. Except as set forth in Disclosure Schedule, none of the
material assets of Comed is subject to any restriction which would
prevent continuation of the use currently made thereof or
materially adversely affect the value thereof.
4.6 Contracts Listed; No Default. All contracts,
agreements, licenses, leases, easements, permits, rights of way,
commitments, and understandings, written or oral (individually, a
"Contract" and collectively, the "Contracts"), connected with or
relating in any respect to the present or proposed future
operations of Comed are listed and described in the Disclosure
Schedule other than those contracts which (i) do not involve
aggregate payments or receipts in excess of $10,000 and (ii) cannot
be cancelled on 30 days or less notice without penalty or premium
or any continuing obligation or liability. Comed is the holder of,
or party to, or beneficiary of, all the Contracts. The Contracts
are each valid, binding and enforceable by Comed against the other
parties thereto in accordance with their respective terms. Except
as otherwise set forth in the Disclosure Schedule, the Contracts do
not provide for any material change in the rentals, fees or other
amounts from the amounts presently being paid or received by Comed
thereunder. Except as set forth in the Disclosure Schedule, Comed
is not in default or breach of any material provision of the
Contracts. Comed's operation of its business has been, is, and
will, between the date hereof and the Closing Date, continue to be,
consistent with the terms and conditions of the Contracts. The
Disclosure Schedule identifies all contracts between Comed and each
Seller or between Comed and any affiliate of each Seller (as the
term "affiliate" is defined in Rule 405, promulgated under the
Securities Act of 1933, as amended). True, correct and complete
copies of all the Contracts were previously delivered to Buyer
along with the Disclosure Schedule.
4.7 Litigation. There is no claim, action, proceeding,
or investigation pending or, to each Seller's knowledge, threatened
against or affecting Comed or its properties, assets or business
before or by any court, arbitrator or governmental agency or
authority where a result adverse to Comed would have a material
adverse effect on the business, properties, financial condition,
operations or prospects of Comed. There is no strike or unresolved
labor dispute relating to Comed's employees which, in either
Sellers' reasonable judgment, could have any material adverse
effect on the business, properties, financial condition, operations
or prospects of Comed. There are no decrees, injunctions or orders
of any court, governmental department, agency or arbitration
outstanding against Comed or its properties, assets or business.
4.8 Taxes. For purposes of this Agreement, (A) "Tax"
(and, with correlative meaning, Taxes") shall mean any federal,
state, local or foreign, income, alternative or add-on minimum,
business, employment, franchise, occupancy, payroll, property,
sales, transfer, use, withholding or other tax, levy, impost, fee,
imposition, assessment or similar charge together with any related
addition to tax, interest, penalty or fine thereon; and (B)
"Returns" shall mean all returns (including, without limitation,
information returns and other material information) reports and
forms relating to Taxes.
Except as set forth on the Disclosure Schedule, Comed has
duly filed all Returns required to be filed by it. All such
Returns were, when filed, and to each Seller's knowledge are,
accurate and complete in all material respects and were prepared in
conformity with applicable laws and regulations. Comed has paid or
will pay in full or has adequately reserved against (with
disclosure of such reserves in the Disclosure Schedule) all Taxes
otherwise assessed against it through the Closing Date except for
assessments being challenged in good faith and adequately reserved
against, as set forth in the Disclosure Schedule.
Comed is not a party to any pending action or proceeding
by any governmental authority for the assessment of any Tax, and no
claim for assessment or collection of any Tax has been asserted
against Comed that has not been paid. There are no Tax liens upon
the assets or properties of Comed (other than the lien of personal
property taxes not yet due and payable). To the knowledge of each
Seller, there is no valid basis for any assessment, deficiency,
notice, 30-day letter or similar intention to assess any Tax to be
issued to Comed by any governmental authority. No property of
Comed is property which Comed is or will be required to treat as
owned by another person pursuant to the safe harbor leasing
provisions (now repealed) of the Internal Revenue Code of 1986, as
amended (the "Code").
4.9 Compliance with Laws and Regulations.
(a) The business, operations, property and assets of
Comed and, to the knowledge of Sellers, the business of any sub-tenant
or licensee which is occupying or has occupied any space on
Comed's facilities and the activities of which could result in any
liability to Comed conform with and have been conducted and
operated in material compliance with all, and are not in violation
of any, applicable federal, state and local laws, rules and
regulations.
(b) To each Seller's knowledge, there are no products now
being sold or distributed by Comed (excluding from the scope of
this representation all products of Buyer distributed by Comed)
which at the date hereof would require any approval of any
governmental body, whether federal, state, local or foreign, prior
to distribution of such products, for which such approval has not
been obtained.
(c) To each Seller's knowledge, all products now being
distributed by Comed and all products included in the inventories
of Comed on the date hereof (excluding from the scope of this
representation all products of Buyer distributed by Comed) meet, in
all material respects, the applicable legal requirements of all
jurisdictions in which such products are now being, or are
presently proposed to be, manufactured or distributed.
4.10 Environmental Matters. To each Seller's knowledge,
Comed is and at all times has been in compliance in all material
respects with all applicable requirements of Environmental Laws (as
defined below) in connection with the ownership, operation and
conditions of the business of Comed. To the knowledge of each
Seller, there are no PCBs, underground storage tanks (as defined by
Environmental Laws), asbestos materials or asbestos containing
materials in any real property leased, owned or operated by Comed.
Comed has not released, transported or arranged for the disposal of
any hazardous substance at any facility, location or site except in
material compliance with all applicable laws. To the knowledge of
each Seller, no conditions exist or have occurred as a result of
which or in connection with which Comed could be held liable for
damages, response or remedial costs, fines, penalties, sanctions or
equitable relief under any Environmental Laws, except for such
damages, costs, fines, penalties, sanctions or relief which, alone
or in the aggregate, would not have a material adverse effect on
the business properties, financial condition, operations or
prospects of Comed. As used in this Section, "Environmental Laws"
means any federal, state or local statute, regulation, ordinance,
permit, order, judgment, decree or decision relating to health,
safety or the environment. "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, active disposal or passive disposal
(including the abandonment or discarding of barrels, containers or
other closed receptacles containing any hazardous substances).
"Hazardous substance" means (a) any "hazardous substance" as
defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, ("CERCLA") and any
implementing regulations, (b) any hazardous or toxic substance,
waste or material within the meaning of any other federal, state or
local statute, regulation, ordinance or decision, (c) any
pollutant, contaminant or special waste regulated by any
Environmental Laws, or (d) petroleum, crude oil or any fraction
thereof.
4.11 Insurance. Comed has in force insurance policies,
or renewals thereof, as identified and described in the Disclosure
Schedule, reasonably adequate to cover its business, operations and
properties against loss, damage and liability and will maintain
such insurance up to and including the Closing Date. Comed has not
received notice from any insurer or agent of such insurer that
substantial capital improvements or other expenditures will have to
be made in order to continue such insurance and, so far as known to
each Seller, no such improvements or expenditures are required. To
each Seller's knowledge, there is no material liability under any
insurance policy in the nature of a retroactive rate adjustment or
loss sharing or similar arrangement.
4.12 No Breaches. The making and performance of this
Agreement and the other agreements contemplated hereby will not (i)
conflict with or violate the certificate of incorporation or the
by-laws of Comed, (ii) violate any laws, ordinances, rules, or
regulations, or any order, writ, injunction or decree to which
Comed is a party or by which Comed or any of its material assets,
businesses, or operations may be bound or affected or (iii) result
in any breach or termination of, or constitute a default under, or
constitute an event which, with notice or lapse of time, or both,
would become a default under, or result in the creation of any
encumbrance upon any material asset of Comed under, or create any
rights of termination, cancellation or acceleration in any person
under, any Contract.
4.13 Disclosure Schedule Complete. Sellers shall
promptly supplement the Disclosure Schedule if events occur prior
to the Closing that would have been required to be disclosed had
they existed at the time of their execution of this Agreement. The
Disclosure Schedule, if and as supplemented prior to the Closing,
will contain a true, correct and complete list and description of
all items required to be set forth therein. An item appearing on
the Disclosure Schedule, if and as supplemented, will only be
deemed disclosed in connection with the specific representation or
representations to which it is explicitly referenced. The
Disclosure Schedule is expressly incorporated herein by reference.
Notwithstanding the foregoing, any such supplement to the
Disclosure Schedule following the date hereof shall not in any way
affect Buyer's right not to consummate the transactions
contemplated hereby as set forth in Article VIII hereof.
4.14 Employees. The Disclosure Schedule lists
(individually or by grouping and number in the case of certain
production line employees) the employees of Comed (which for the
purposes hereof shall include independent contractors and agents)
and their monthly compensation (as well as a brief description of
all benefits and other perquisites payable to employees). Except
as set forth in the Disclosure Schedule, none of such employees is
represented by any labor union or collective bargaining unit and,
to each Seller's knowledge, no discussions are taking place with
respect to such representation. No employee is employed pursuant
to an employment contract except as listed in the Disclosure
Schedule.
4.15 Financial Statements. The Disclosure Schedule
contains an audited balance sheet of Comed (the "Balance Sheet") as
at February 29, 1996 (the "Balance Sheet Date") [and as at February
29, 1996] and related audited statements of income and cash flow
for the nine months ended February 29, 1996 and the year ended May
31, 1995 (collectively the "Financial Statements"). The Financial
Statements present fairly the financial position and results of
operations of Comed as of the dates and for the years and periods
indicated, prepared in accordance with GAAP on a consistent basis,
except as disclosed therein. During the years and periods to which
the statements of income relate, the business of Comed was
conducted in substantially the same manner as it is currently
conducted. Except as set forth in the Disclosure Schedule, (i)
there is no basis for any assertion against Comed as of the Balance
Sheet Date of any material debt, liability or obligation of any
nature not fully reflected or reserved against in the Financial
Statements; (ii) there are no assets of Comed, the value of which
is materially overstated in the Financial Statements; (iii) the
value at which inventories are carried reflects the customary
inventory valuation policy consistently applied by Comed of stating
inventory on a last-in-first-out basis in accordance with GAAP; and
(iv) the fixed assets shown on the Financial Statements are carried
at actual cost less depreciation computed on a basis consistent
with prior years.
4.16 Absence of Certain Changes or Events. Except as set
forth in the Disclosure Schedule, since the Balance Sheet Date
there has not been:
(a) any material adverse change in the business,
properties, financial condition, operations or prospects of Comed;
(b) any material damage, destruction or loss of any
properties of Comed, whether or not covered by insurance;
(c) any material change in the manner in which the
business of Comed has been conducted;
(d) any material change in the treatment and protection
of trade secrets or other confidential information of Comed;
(e) any material change in Comed's business or Comed's
contractual relationship with any customer or supplier which might
reasonably be expected to materially and adversely affect the
business, properties, financial condition, operations or prospects
of Comed;
(f) any occurrence not included in paragraphs (a) through
(e) of this Section 4.15 which has resulted, or which either Seller
has reason to believe, in his or her reasonable judgment, might be
expected to result, in a material adverse change in the business,
properties, financial condition, operations or prospects of Comed.
4.17 Governmental Licenses, Permits, Etc. To each
Seller's knowledge, Comed has all governmental licenses, permits,
authorizations and approvals for the conduct of Comed's business as
currently conducted (collectively, "Licenses and Permits"). The
Disclosure Schedule includes a list of all Licenses and Permits.
All Licenses and Permits are in full force and effect, and no
proceedings for the suspension or cancellation of any thereof is
pending or to each Seller's knowledge, threatened.
4.18 Employee Benefit Plans; ERISA. (a) Except as set
forth in the Disclosure Schedule, at the date hereof Comed does not
maintain or contribute to any employee benefit plans, programs,
arrangements and practices (such plans, programs, arrangement and
practices of Comed being hereinafter collectively referred to as
the "Company Plans"), including employee benefit plans within the
meaning set forth in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, and all regulations promulgated
thereunder, as in effect from time to time ("ERISA"), or any
written employment contracts providing for an annual base salary in
excess of $50,000 and having a term in excess of one (1) year,
which contracts are not immediately terminable without penalty or
further liability, or other similar arrangements for the provision
of benefits (excluding any "Multiemployer Plan" within the meaning
of Section 3(37) of ERISA or a "Multiple Employer Plan" within the
meaning of Section 413(c) of the Code, and all regulations
promulgated thereunder, as in effect from time to time. The
Disclosure Schedule lists all Multiemployer Plans and Multiple
Employer Plans which Comed maintains or to which it makes
contributions. Comed has no obligation to create any additional
such plan or to amend any such plan so as to increase benefits
thereunder, except as required under the terms of the Comed Plans,
under existing collective bargaining agreements or to comply with
applicable law.
(b) Except as set forth in the Comed Disclosure Schedule, (i)
there have been no prohibited transactions within the meaning of
Section 406 and 407 of ERISA or Section 4975 of the Code with
respect to any of the Comed Plans that could result in penalties,
taxes or liabilities which, singly or in the aggregate, could have
a material adverse effect on the business, operations, properties,
financial condition, operations or prospects of Comed, (ii) except
for premiums due, there is no outstanding liability in excess of
$10,000, whether measured alone or in the aggregate, under Title IV
or ERISA with respect to any of the Comed Plans, (iii) neither the
Pension Benefit Guaranty Corporation nor any plan administrator has
instituted proceedings to terminate any of the Comed Plans subject
to Title IV of ERISA other than in a "standard termination"
described in Section 4041(b) of ERISA, (iv) none of the Comed Plans
has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each
of the Comed Plans, if any, ended prior to the date of this
Agreement, (v) the current present value of all projected benefit
obligations under each of the Comed Plans which is subject to Title
IV of ERISA did not, as of its latest valuation date, exceed the
then current value of the assets of such plan allocable to such
benefit liabilities by more than the amount, if any, disclosed in
the Financial Statements as of February 29, 1996 (based upon
reasonable actuarial assumptions currently utilized for such of the
Comed Plans), (vi) each of the Comed Plans has been operated and
administered in all material respects in accordance with applicable
laws during the period of time covered by the applicable statute of
limitations, (vii) each of the Comed Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified
and such determination has not been modified, revoked or limited by
failure to satisfy any condition thereof or by a subsequent
amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to maintain
the "qualified" status of such Comed Plans, and the period for
making any such necessary retroactive amendments has not expired,
(viii) with respect to Multiemployer Plans, Comed has not made or
suffered a "complete withdrawal" or a "partial withdrawal," as such
terms are respectively defined in Sections 4203, 4204 and 4205 of
ERISA and, to the knowledge of each Seller, no event has occurred
or is expected to occur which presents a material risk of a
complete or partial withdrawal under said Sections 4203, 4204 and
4205, (ix) there are no pending or, to the knowledge of each
Seller, threatened or anticipated claims involving any of the Comed
Plans other than claims for benefits in the ordinary course, and
(x) Comed has no current liability in excess of $10,000, whether
measured alone or in the aggregate, for plan termination or
withdrawal (complete or partial) under Title IV of ERISA based on
any plan to which any entity that would be deemed one (1) employer
with Comed under Section 4001 of ERISA or Section 414 of the Code
contributed during the period of time covered by the applicable
statute of limitations (the "Comed Controlled Group Plans").
Sellers do not anticipate that any such liability will be asserted
against Comed. None of the Comed Controlled Group Plans has an
"accumulated funding deficiency" (as defined in Section 302 of
ERISA and 412 of the Code), and no Comed Controlled Group Plan has
an outstanding funding waiver which could result in the imposition
of liens, excise taxes or liability against Comed in excess of
$10,000 whether measured alone or in the aggregate.
4.19 Brokers. Neither Seller has made any agreement or
taken any action with any person which would cause any person to be
entitled to any agent's, broker's or finder's fee or commission in
connection with the transactions contemplated by this Agreement.
4.20 Real Property. The Disclosure Schedule sets forth
a brief description of all real properties which are leased to
Comed, including all material structures located thereon. Comed
does not own any real properties. The real property leases
described in the Disclosure Schedule that relate to the leased
properties described therein are in full force and effect, all
amounts payable thereunder have been paid and no party thereto is
in material breach of any provision thereof. Except as set forth
in the Disclosure Schedule, none of such leases could reasonably be
expected to result in a material liability for restoration of
premises. All uses of such leased property by Comed conform, in
all material respects, to all applicable building, zoning and
environmental ordinances, laws, and regulations and, in the case of
leased property, to all terms of the leases relating thereto.
4.21 Intellectual Property. The Disclosure Schedule
lists all patents, trade names, assumed names, trademarks, service
marks, trade dress and proprietary names, copyrights (including any
registration and pending applications for any such registration for
any of them) and all other intellectual property of Comed that is
used or useful in its business (collectively, the "Intellectual
Property"). Other than as disclosed in the Disclosure Schedule, no
person has a right to receive a royalty with respect to any of the
Intellectual Property listed in the Disclosure Schedule. Other
than as disclosed in the Disclosure Schedule, Comed does not have
any licenses granted by or to it or other agreements to which it is
a party, relating in whole or in part to any Intellectual Property,
whether owned by it or otherwise. No other Intellectual Property
is required to permit the conduct of Comed's business as now
conducted or presently proposed to be conducted. Except as set
forth in the Disclosure Schedule, Comed has good and marketable
title to the Intellectual Property, free and clear of any
encumbrance. All of the patents, trademarks, trademark
registrations, trade names and copyrights listed in the Disclosure
Schedule that are owned by Comed are valid and in full force and
effect. Comed is not infringing upon, or otherwise violating, the
rights of any third party with respect to any Intellectual
Property. No proceedings have been instituted against or claims
received by Comed, nor to each Seller's knowledge are any
proceedings threatened alleging any such violation, nor does either
Seller know of any valid basis for any such proceeding or claim.
To each Seller's knowledge, there is no infringement or other
adverse claim against any of the Intellectual Property owned or
used by Comed.
4.22 Warranties. The Disclosure Schedule sets forth a
statement of those express warranties and guaranties, if any, made
by Comed to third parties with respect to any products sold or
leased, or services rendered by Comed. No material claim for any
breach of product or service warranty to any customer of Comed has
been made against Comed nor has any product of Comed, at any time,
been subject to any voluntary or governmental recall nor does
either Seller know of any presently existing circumstances that
would constitute a valid basis therefor.
4.23 Customers and Suppliers. Except as set forth in the
Disclosure Schedule, neither Seller knows, nor has any reasonable
basis to believe that, either as a result of the transactions
contemplated hereby or for any other reason, any present material
customer or supplier of Comed (excluding, from the scope of this
representation, Buyer) will not continue to conduct business with
Comed after the Closing Date in substantially the same manner as it
has conducted business with Comed in the past.
4.24 Inventories. Except as otherwise disclosed in the
Disclosure Schedule, the inventories reflected on the Balance
Sheet, or thereafter acquired by Comed, and to be owned by Comed at
the Closing, consist in the aggregate in all material respects of
items of a quality and quantity usable or salable in the usual and
ordinary course of business of Comed at an aggregate value at least
equal to the value at which such items are carried on Comed's
books.
4.25 Condition of Assets. Except as set forth in the
Disclosure Schedule, the equipment, fixtures and other personal
property of Comed are and on the Closing Date will be in good
operating condition and repair (ordinary wear and tear excepted).
4.26 Governmental Approvals. To each Seller's knowledge,
no authorization, license, permit, franchise, approval, order or
consent of, and no registration, declaration or filing by Comed or
either Seller with, any governmental authority, domestic or
foreign, federal, state or local, is required in connection with
each Seller's execution, delivery and performance of this Agreement
or the other agreements contemplated hereby.
4.27 Medicare Reimbursement Claims. To each Seller's
knowledge, no basis or series of facts exist that would support a
claim (and no claims have been asserted) for return or recoupment
of amounts paid to Comed by Medicare or any other governmental
agency or any insurance carrier in excess of $25,000 in the
aggregate for all such claims for return or recoupment of amounts
paid.
4.28 No Omissions or Untrue Statements. To each Seller's
knowledge, no representation or warranty made by Seller in this
Agreement (including the exhibits hereto) or in any schedule,
certificate, or other instrument furnished or to be furnished by or
on behalf of each Seller to Buyer pursuant hereto, or in connection
with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained
herein or therein not misleading.
V. REPRESENTATIONS AND WARRANTIES OF BUYER AND NOVA
Each of Buyer and Nova represents and warrants, as
appropriate, to each Seller as follows, with the knowledge and
understanding that each Seller is relying materially on such
representations and warranties:
5.1 Organization and Standing of Nova and Buyer. Each
of Nova and Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Each
of Nova and Buyer has all requisite corporate power to carry on its
business as it is now being conducted, and each of Nova and its
subsidiaries is duly qualified to do business as a foreign
corporation and in good standing in each jurisdiction where such
qualification is necessary under applicable law except where the
failure to qualify (individually or in the aggregate) does not have
any material adverse effect on the business of Nova and its
subsidiaries considered as one enterprise. The copies of the
certificate of incorporation and by-laws of Nova and Buyer
(certified by the Secretary of Nova or Buyer, as the case may be),
as amended to date, delivered to Seller, are true and complete
copies of those documents as now in effect.
5.2 Buyer's Authority. This Agreement, the Shares, the
Initial Note, the Term Note, the Non-Competition Agreement, the
Employment Agreement and the transactions contemplated hereby have
been duly authorized by all necessary action of the directors of
Nova and Buyer. This Agreement constitutes, and all other
agreements and documents contemplated hereby will constitute, when
executed and delivered by Nova or Buyer (as the case may be) in
accordance with the terms of this Agreement, the valid and binding
obligations of Nova or Buyer (as the case may be), enforceable in
accordance with their respective terms.
5.3 No Breaches. The making and performance of this
Agreement by Nova and Buyer will not (i) conflict with the
certificate of incorporation or the bylaws of Buyer or Nova, (ii)
violate any laws, ordinances, rules, or regulations, or any order,
writ, injunction, or decree to which Buyer or Nova is a party or by
which Buyer or Nova or any of their material assets, businesses, or
operations may be bound or affected or (iii) result in any breach
or termination of, or constitute a default under, or constitute an
event which, with notice or lapse of time, or both, would become a
default under, or result in the creation of any encumbrance upon
any material asset of Buyer or Nova under, or create any rights of
termination, cancellation, or acceleration in any person under, any
material agreement, arrangement, or commitment to which Buyer or
Nova is a party or by which Buyer or Nova or any of its material
assets may be bound.
5.4 Governmental Approval; Consents. No authorization,
license, permit, franchise, approval, order or consent of, and no
registration, declaration or filing by Nova or Buyer with any
governmental authority, domestic or foreign, federal, state or
local, is required in connection with Buyer's execution, delivery
and performance of this Agreement or the other agreements
contemplated hereby except, subsequent to the Closing, for Nova's
periodic and other reporting requirements under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the
filings of the UCC financing statements referred to in Section
3.3(d). No consents of any other parties are required to be
received by or on the part of Nova or Buyer to enable Nova or Buyer
to enter into and carry out this Agreement.
5.5 Litigation. Except as set forth in Nova's SEC
Reports (as hereinafter defined), there is no claim, action,
proceeding or investigation pending or, to Nova's or Buyer's
knowledge, threatened against or affecting Nova or Buyer, or any of
its subsidiaries before or by any court, arbitrator or governmental
agency or authority where a result adverse to Nova or its
subsidiaries would have a material adverse effect on the business,
properties, financial condition, operations or prospects of Nova
and its subsidiaries considered as one enterprise. There is no
strike or unresolved labor dispute relating to Nova or its
subsidiaries which, in Nova's reasonable judgment, could have any
material adverse effect on the business, properties, financial
condition, operations or prospects of Nova and its subsidiaries
considered as one enterprise. To Nova's knowledge, no union
organization effort with respect to any of Nova's employees is at
present underway. There are no decrees, injunctions or orders of
any court, governmental department, agency or arbitration
outstanding against Nova or Buyer.
5.6 Compliance with Laws and Regulations. The business,
properties and assets of Nova and each of its subsidiaries (and, to
the actual knowledge of Nova, the business of any sub-tenant or
licensee which is occupying or has occupied any space on any
premises of Nova and the activities of which could result in any
material liability to Nova or Buyer) conform with and have been
conducted and operated in compliance with all, and are not in
violation of any, applicable federal, state and local laws, rules
and regulations.
5.7 Valid Issuance. Each of the Initial Note and the
Term Note, upon issuance in accordance with the terms of this
Agreement, shall constitute a valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, subject to
general principles of equity and bankruptcy or other laws relating
to or affecting the rights of creditors generally. The Nova
Shares, upon issuance in accordance with the terms of this
Agreement, shall constitute duly authorized, validly issued, fully
paid and non-assessable shares of common stock of Nova.
5.8 Brokers. Neither Nova nor Buyer has made any
agreement or taken any action with any person which would cause any
person to be entitled to any agent's, broker's or finder's fee or
commission in connection with the transactions contemplated by this
Agreement.
5.9 Nova's SEC Reports. Nova has previously delivered,
or prior to the Closing will deliver, to Seller true and complete
copies, including exhibits and, as applicable, amendments thereto,
of (i) its Prospectus dated May , 1996; and (ii) its Annual
Reports on Form 10-K, its Quarterly Reports on Form 10-Q; and
Reports on Form 8-K or related filings under the Securities Act of
1933, as amended, or the Exchange Act made by Nova with the
Securities and Exchange Commission (the "SEC") since January 1,
1994 (collectively, "Buyer's SEC Reports"). Nova's SEC Reports do
not contain any untrue statement of a material fact, or fail to
state any material fact required to be stated therein or necessary
to make the statements made therein not materially misleading.
5.10 Adverse Developments. Except as expressly provided
or set forth in, or required by, this Agreement, or as set forth in
Nova's SEC Reports, since December 31, 1995 there have been no
materially adverse changes in the assets, properties, financial
condition, operations or prospects of Nova and its subsidiaries
considered as one enterprise, and no event has occurred other than
in the ordinary and usual course of business or as set forth in
Nova's SEC Reports which could be reasonably expected to have a
materially adverse effect upon Nova and its subsidiaries considered
as one enterprise, and Nova does not know of any development or
threatened development of a nature that will, or which could be
reasonably expected to, have a materially adverse effect upon Nova
and its subsidiaries considered as one enterprise.
5.11 No Omissions or Untrue Statements. To Nova's and
Buyer's knowledge, no representation or warranty made by Nova or
Buyer in this Agreement (including the exhibits hereto) or in any
schedule, certificate, or other instrument furnished or to be
furnished by Buyer to Sellers pursuant hereto, or in connection
with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained
herein or therein not misleading.
VI. CONDUCT OF BUSINESS PENDING CLOSING
Each of Seller and Buyer covenant that between the date
hereof and the Closing:
6.1 Access to Buyer. Each Seller shall cause Comed to
give to Nova and Buyer and to Nova's and Buyer's counsel,
accountants and other representatives reasonable access, during
normal business hours throughout the period prior to the Closing
Date, to all of Comed's properties, books, contracts, commitments
(the "Access Period"), technical and accounting records and to
records pertaining to customers, employees, suppliers and other
persons having business relations with Comed and shall furnish Nova
and Buyer during the Access Period with all information concerning
Comed that Buyer may reasonably request. Each Seller shall cause
Comed to permit Nova and Buyer and their representatives, agents,
employees and independent contractors, reasonable access throughout
the Access Period to the properties of Comed in order to conduct
engineering, environmental and other inspections at Buyer's expense
to determine that Comed is operating its business in material
compliance with all federal, state and local statutes, rules and
regulations, and all building, fire and zoning laws or regulations
and that Comed's assets are in the condition and of the capacities
represented and warranted in this Agreement; provided, however,
that in every instance, Buyer shall make arrangements in advance in
order to avoid interruption and to minimize interference with the
normal operations of Comed. Any such investigation or inspection by
Nova or Buyer shall not be deemed a waiver of, or otherwise limit,
the representations, warranties and covenants of Sellers contained
herein. Each Seller shall cause Comed to remove, cure, correct,
and repair prior to the Closing any material deficiencies in or to
its assets and properties and any violations under applicable
statutes, rules, regulations, or building, fire or zoning laws or
regulations.
6.2 Conduct of Business. During the period from the
date hereof to the Closing Date, each Seller shall cause the
business of Comed to be operated solely in the usual and ordinary
course and in compliance with the terms of this Agreement. Without
limiting the generality of the foregoing:
(a) Each Seller will cause Comed to use its best
efforts to preserve its business and its organization so as to (i)
keep available the services of the present employees and agents of
Comed; (ii) complete or maintain all of the Contracts in full force
and effect in accordance with their existing terms, unimpaired by
litigation; (iii) maintain the integrity of all confidential
information regarding Comed; (iv) maintain in full force and effect
the insurance policies (or policies providing substantially the
same coverage, copies of which shall be made available to Buyer);
and (v) preserve the goodwill of, and the contractual relationship
with, suppliers, customers and others having relations with Comed;
(b) Each Seller shall cause Comed to use its best
efforts to keep in a normal state of repair and operating
efficiency all its tangible personal property, leased property and
leasehold improvements, and shall replace any such property that is
necessary to its operations that cannot be repaired;
(c) Each Seller shall cause Comed to continue to
collect accounts receivable and pay accounts payable in accordance
with present practice or as otherwise agreed upon by Buyer and
Sellers; provided, however,that Comed may have up to sixty (60)
days to pay accounts payable;
(d) Each Seller shall cause Comed to maintain its
consumable materials and supplies and the like at historically
customary levels; and
(e) Each Seller will cause Comed to not sell or
transfer any assets or property relating to its business except for
sales of inventory in the usual and ordinary course and except for
cash applied in payment of liabilities in the usual and ordinary
course or make any distribution, whether by dividend or otherwise,
to any of its shareholders or employees except for compensation to
employees in the usual and ordinary course.
6.3 Consents and Notices. Each Seller shall, on or
prior to the Closing Date, at its expense obtain all governmental
and third-party consents and approvals, or give all notices, which
are necessary to authorize and validate the sale of the Shares to
Buyer.
6.4 Exclusivity to Buyer. Each Seller and his or her
representatives, or agents, as appropriate, shall not, from the
date hereof until the Closing, hold discussions with any person
other than Nova and Buyer concerning any of (i) the sale of the
Shares, (ii) the sale, lease or other disposition of the assets or
business of Comed and (iii) any merger, consolidation,
reorganization or other business contribution involving Comed or
its business and assets exclusive of the transaction contemplated
by this Agreement (collectively, "Disposition Transactions"),
solicit, negotiate or entertain any inquiries, proposals or offers
for any Disposition Transaction with any person other than Buyer,
or disclose, outside of the usual and ordinary course of business
of Comed, any information concerning Comed to any person other than
Nova and Buyer.
VII. CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of each Seller to consummate the Closing
is subject to the following conditions:
7.1 Compliance by Buyer. Buyer shall have performed and
complied with all agreements and conditions required by this
Agreement to be performed or complied with by Buyer prior to or on
the Closing Date.
7.2 Accuracy of Nova's and Buyer's Representations.
Nova's and Buyer's representations and warranties contained in this
Agreement (including the exhibits hereto) or any schedule,
certificate, or other instrument delivered pursuant to the
provisions hereof or in connection with the transactions
contemplated hereby shall be true in all material respects at and
as of the Closing Date (except for such changes permitted by this
Agreement) and shall be deemed to be made again as of the Closing
Date.
7.3 Litigation. No litigation seeking to enjoin,
condition or burden the transactions contemplated by this Agreement
or to obtain damages on account hereof shall be pending or to each
Seller's knowledge be threatened.
7.4 Material Adverse Change. Except as set forth in the
Nova's SEC Reports, no material adverse change shall have occurred
subsequent to December 31, 1995 in the assets, properties,
financial condition, operations or prospects of Nova and its
subsidiaries considered as one enterprise nor shall any event have
occurred which could be reasonably expected to have a materially
adverse effect upon Nova and its subsidiaries considered as one
enterprise.
7.5 Documents. All documents and instruments delivered
by Buyer to each Seller at the Closing shall be in form and
substance reasonably satisfactory to the Sellers.
VIII. CONDITIONS TO BUYER'S OBLIGATIONS
Buyer's obligation to consummate the Closing is subject
to the following conditions:
8.1 Compliance by Sellers. Each Seller shall have
performed and complied with all agreements and conditions required
by this Agreement to be performed or complied with by such Seller
prior to or on the Closing Date.
8.2 Accuracy of Sellers' Representations. The
representations and warranties of each Seller contained in this
Agreement (including the exhibits hereto and the Disclosure
Schedule) or any schedule, certificate, or other instrument
delivered pursuant to the provisions hereof or in connection with
the transactions contemplated hereby shall be true in all material
respects at and as of the Closing Date (except for changes
permitted by this Agreement) and shall be deemed to be made again
as of the Closing Date.
8.3 Material Adverse Change. Except as set forth in the
Disclosure Schedule, no material adverse change shall have occurred
subsequent to the Balance Sheet Date in the assets, properties,
financial condition, operations or prospects of Comed nor shall any
event have occurred which could be reasonably expected to have a
materially adverse effect upon Comed.
8.4 Consents and Notices. Sellers shall have obtained
or given, and delivered to Buyer, in form and substance reasonably
satisfactory to Buyer, the consents and notices required by Section
6.4 hereof.
8.5 Litigation. No litigation seeking to enjoin,
condition or burden the transactions contemplated by this Agreement
or to obtain damages on account hereof shall be pending or to
Buyer's knowledge be threatened.
8.6 Compliance with Laws. Buyer shall have received
such additional evidence or assurances it shall have reasonably
requested regarding the operation of the business of Comed being
conducted in material compliance with all applicable environmental
and employee safety laws, rules and regulations, state and federal
(including, without limitation, OSHA), and all approvals required
under applicable law shall have been obtained.
8.7 Accountant's Advice. Buyer shall have received a
report from Richard A. Eisner & Company, LLP ("Eisner"), its
independent auditors, that the Financial Statements can be audited
and reported upon without qualification by Eisner within sixty (60)
days of the Closing Date in accordance with Regulation S-X of the
SEC and, in particular, Rules 1-02 and 3-05 promulgated thereunder.
8.8 Documents. All documents and instruments delivered
by Sellers to Buyer at the Closing shall be in form and substance
reasonably satisfactory to Buyer.
IX. CASUALTIES
9.1 Risk of Loss. The risk of loss by fire, tornado,
hurricane, or for any other reason between the date hereof and the
Closing Date shall be upon Sellers. Sellers shall notify Buyer of
any material casualty loss prior to the Closing and shall furnish
Buyer copies of the insurance policy (if any) applicable to such
loss and a written statement of the insurance carrier (if any) as
to whether and to what extent such loss is covered by such policy.
Within fifteen (15) days of receiving such insurance policy and
written statement of the insurance carrier, Buyer may, upon written
notice to Sellers, terminate this Agreement. If Buyer does not
terminate this Agreement, each Seller shall cause Comed to promptly
restore or replace the damaged facilities using insurance proceeds
with any shortfall to be at Sellers' expense; provided, however,
that Sellers, if the cost of such repair, replacement or
restoration would substantially exceed the proceeds of the
insurance, may elect to terminate this Agreement upon written
notice to Buyer.
X. INDEMNIFICATION
10.1 By Sellers. Subject to Section 10.4 hereof, each
Seller, jointly and severally, shall indemnify, defend, and hold
Buyer harmless from and against any and all losses, costs,
liabilities, damages, and expenses (including legal and other
expenses incident thereto) of every kind, nature, and description,
including any undisclosed liabilities (collectively, "Losses"),
that result from or arise out of (i) the breach of any
representation or warranty of either Seller set forth in this
Agreement (including the exhibits hereto) or in any certificate,
schedule, or other instrument delivered to Buyer pursuant hereto;
or (ii) the breach of any of the covenants of either Seller
contained in or arising out of this Agreement or the transactions
contemplated hereby.
10.2 By Buyer. Subject to Section 10.4 hereof, Buyer
shall indemnify, defend, and hold each Seller harmless from and
against any and all Losses that arise out of (i) the breach of any
representation or warranty of Buyer set forth in this Agreement
(including the exhibits hereto) or in any schedule, certificate, or
other instrument delivered to Seller pursuant hereto; or (ii) the
breach of any of the covenants of Buyer contained in or arising out
of this Agreement or the transactions contemplated hereby.
10.3 Claims Procedure. Should any claim covered by
Sections 10.1 or 10.2 be asserted against a party entitled to
indemnification under this Article (the "Indemnitee"), the
Indemnitee shall promptly notify the party obligated to make
indemnification (the "Indemnitor"), provided, however, that any
delay or failure in notifying the Indemnitor shall not affect the
Indemnitor's liability under this Article if such delay or failure
was not prejudicial to the Indemnitor. The Indemnitor upon receipt
of such notice shall assume the defense thereof with counsel
reasonably satisfactory to the Indemnitee and the Indemnitee shall
extend reasonable cooperation to the Indemnitor in connection with
such defense. No settlement of any such claim shall be made
without the consent of the Indemnitor, such consent not to be
unreasonably withheld, nor shall any such settlement be made by the
Indemnitor which does not provide for the absolute, complete, and
unconditional release of the Indemnitee from such claim. In the
event that the Indemnitor shall fail, within a reasonable time, to
defend a claim, the Indemnitee shall have the right to assume the
defense thereof without prejudice to its rights to indemnification
hereunder.
10.4 Limitations on Liability. Neither any Seller nor
Buyer shall be liable hereunder as a result of any
misrepresentation or breach of such party's representations,
warranties or covenants contained in this Agreement unless and
until the Losses incurred by each, as the case may be, as a result
of such misrepresentations or breaches under this Agreement shall
exceed, on an after-tax basis, in the aggregate, $25,000.
10.5 Right of Set-off. Buyer may set-off against and
apply as a credit on payments due under the Initial Note and the
Term Note any amounts payable by Sellers pursuant to Section 10.1
hereof.
XI. COVENANTS
11.1 Mutual Cooperation. The parties hereto will
cooperate with each other, and will use all reasonable efforts to
cause the fulfillment of the conditions to the parties' obligations
hereunder and to obtain as promptly as possible all consents,
authorizations, orders or approvals from each and every third
party, whether private or governmental, required in connection with
the transactions contemplated by this Agreement.
11.2 Changes in Representations and Warranties of
Sellers. Between the date of this Agreement and the Closing Date,
neither Seller, directly or indirectly, shall enter into any
transaction, take any action, or by inaction permit an event to
occur, which would result in any of his or her representations and
warranties herein contained not being true and correct at and as of
(i) the time immediately following the occurrence of such
transaction or event or (ii) the Closing Date. Each Seller shall
promptly give written notice to Buyer upon becoming aware of (A)
any fact which, if known on the date hereof, would have been
required to be set forth or disclosed pursuant to this Agreement
and (B) any impending or threatened breach in any material respect
of any of their respective representations and warranties contained
in this Agreement and with respect to the latter shall use all
reasonable efforts to remedy same.
11.3 Changes in Representations and Warranties of Nova or
Buyer. Between the date of this Agreement and the Closing Date,
neither Nova nor Buyer shall, directly or indirectly, enter into
any transaction, take any action, or by inaction permit an event to
occur, which would result in any of the representations and
warranties of Buyer herein contained not being true and correct at
and as of (i) the time immediately following the occurrence of such
transaction or event or (ii) the Closing Date. Buyer shall
promptly give written notice to Seller upon becoming aware of (A)
any fact which, if known on the date hereof, would have been
required to be set forth or disclosed pursuant to this Agreement
and (B) any impending or threatened breach in any material respect
of any of Nova's or Buyer's representations and warranties
contained in this Agreement and with respect to the latter shall
use all reasonable efforts to remedy same.
XII. ACQUISITION OF SHARES, INITIAL
AND TERM NOTES AND NOVA SHARES
12.1 Investment Intent. Buyer represents and warrants to
each Seller that the Shares are being acquired for its own account
for investment purposes, with no present intention of assigning any
participation or interest therein.
12.2 Sellers' Investment Intent. Each Seller represents
and warrants to Buyer that the Nova Shares, the Initial Note and
the Term Note are each being acquired for his or her own account
for investment purposes with no present intention of assigning any
participation or interest thereon. Each Seller consents and agrees
that the certificate evidencing the Nova Shares may have endorsed
thereon the following legend, and appropriate "stop transfer"
instructions may be given to Buyer's transfer agent:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY BE SOLD,
TRANSFERRED OR ENCUMBERED ONLY PURSUANT TO (i)
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN
OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS
UNNECESSARY"
XIII. TERMINATION
13.1 Termination Prior to Closing.
(a) If the Closing has not occurred by June 30,
1996, any of the parties hereto may terminate this Agreement at any
time thereafter by giving written notice of termination to the
other parties; provided, however, that no party may terminate this
Agreement if such party has willfully or materially breached any of
the terms and conditions hereof.
(b) Prior to June 30, 1996, either the Sellers or
Buyer may terminate this Agreement following the insolvency or
bankruptcy of the other or of Nova or Comed, or if one of the
conditions to Closing set forth in Article VII or Article VIII
shall become incapable of fulfillment and shall not have been
waived by the party for whose benefit the condition was
established, then either Seller (in the case of a condition
specified in Article VII) or Buyer (in the case of a condition
specified in Article VIII) may terminate this Agreement.
13.2 Consequences of Termination. Upon termination of
this Agreement pursuant to either Section 13.1 or any other express
right of termination provided elsewhere in this Agreement, the
parties shall be relieved of any further obligation to the others;
provided, however, that no termination of this Agreement, pursuant
to Section 13.1 hereof or under any other express right of
termination provided elsewhere in this Agreement, shall operate to
release any party from any liability to any other party incurred
before the date of such termination or from any liability resulting
from any willful misrepresentation made in connection with this
Agreement or willful breach hereof. The provisions of this Section
13.2 shall not be considered as a waiver by Buyer or Sellers of the
remedy of specific performance, it being agreed that Buyer and
Sellers shall have the right to specific performance with respect
to this Agreement.
XIV. MISCELLANEOUS
14.1 Expenses. Each party shall pay its own expenses
incident to the negotiation, preparation, and carrying out of this
Agreement, including all fees and expenses of its counsel and
accountants for all activities of such counsel and accountants
undertaken pursuant to this Agreement, whether or not the
transactions contemplated hereby are consummated.
14.2 Survival of Representations, Warranties and
Covenants. All statements contained in this Agreement (including
the exhibits hereto) or in any schedule, certificate or other
instrument delivered by or on behalf of either Seller or Buyer
pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed representations, warranties and covenants by
Sellers, or by Buyer, as the case may be, hereunder. All
representations, warranties, and covenants made by Sellers, or by
Buyer in this Agreement, or pursuant hereto, shall survive the
Closing for a period of eighteen (18) months; provided, however,
that (i) the representations and warranties with respect to
Sellers' title to the Shares, including those contained in Section
4.2 and 4.3 hereof, and the related indemnities, shall survive the
Closing indefinitely; (ii) all representations and warranties made
by Sellers in Section 4.10 (Environmental Matters) shall survive
the Closing indefinitely; and (iii) all representations and
warranties made by Sellers in Section 4.8 (Taxes) shall survive
until the later of (x) the expiration of the statute of limitations
(including extensions) applicable to any taxable year and (y) sixty
(60) days after the final determination of any Tax liability
(including the final administrative or judicial determination
therefor) relating to such representation, warranty, or covenant
(as the case may be, the applicable "Survival Period"); and
provided, further, that all representations and warranties related
to any claim asserted in writing prior to the expiration of the
applicable Survival Period shall survive until such claim shall be
resolved and payment in respect thereof, if any is owing, shall be
made.
14.3 Confirmatory Instruments; Appointment of Buyer as
Attorney-in-Fact. Each Seller shall take all such action and
execute all such instruments and documents as Buyer may reasonably
require in order to better assure, confirm and vest in Comed the
use, title and ownership (and each Seller shall warrant, confirm
and defend such use, title and ownership) of any and all assets
(exclusive of those since disposed of in the ordinary course of
business) that were formerly used or owned by the now dissolved
Florida corporation of the same name as Comed. Each Seller hereby
irrevocably appoints Buyer his or her agent and attorney-in-fact,
in the name and place of such Seller, to execute any and all such
instruments and documents as may be required in order to give
effect to such Seller's undertakings set forth in the preceding
sentence.
14.4 Further Assurances. Each Seller and Buyer will
comply with any and all requirements imposed by applicable federal
law or state law which are necessary to authorize and validate the
sale, transfer and assignment of the Shares to Buyer and otherwise
to effectuate the purposes of this Agreement.
14.5 Nondisclosure. Sellers will not at any time after
the date of this Agreement divulge, furnish to or make accessible
to anyone any knowledge or information with respect to confidential
or secret processes, inventions, discoveries, improvements,
formulae, plans, material, devices or ideas or know-how, whether
patentable or not, with respect to any confidential or secret
aspects of Comed (including, without limitation, customer lists,
supplier lists and pricing arrangements with customers or
suppliers) ("confidential information"); provided, however, that
such undertaking shall lapse if the Closing does not take place. In
the event that the transactions contemplated hereby are not
consummated, Buyer will not utilize (except for purposes of this
Agreement), divulge, furnish to or make accessible to anyone any
confidential information and copies of all such information in
Buyer's possession shall be returned by Buyer to Sellers.
Any information, which (i) at or prior to the time of
disclosure by Buyer or either Seller was generally available to the
public through no breach of this covenant, (ii) was available to
the public on a nonconfidential basis prior to its disclosure by
Buyer or either Seller or (iii) was made available to the public
from a third party provided that such third party did not obtain or
disseminate such information in breach of any legal obligation of
Buyer or either Seller, shall not be deemed confidential
information for purposes hereof, and the undertakings in this
covenant with respect to confidential information shall not apply
thereto.
14.6 Succession and Assignments; Third Party
Beneficiaries. This Agreement may not be assigned (either
voluntarily or involuntarily) by any party hereto without the
express written consent of the other parties. Any attempted
assignment in violation of this Section shall be void and
ineffective for all purposes. In the event of an assignment
permitted by this Section, this Agreement shall be binding upon the
heirs, successors and assigns of the parties hereto. Except as
expressly set forth in this Section, there shall be no third party
beneficiaries of this Agreement.
14.7 Notices. All notices, requests, demands, or other
communications with respect to this Agreement shall be in writing
and shall be personally delivered by a overnight courier service,
charges prepaid, by postage prepaid mail or by facsimile
transmissions to the following addresses (or such other addresses
as the parties may specify from time to time in accordance with
this Section).
(a) To Sellers:
Douglas Drew and Donna L. Drew
62 Kensington Road
Hampton Falls, NH 03844
With a copy to:
Casassa and Ryan
459 Lafayette Road
Hampton, New Hampshire 03842-2242
Attn: John J. Ryan, Esq.
(b) To Nova or Buyer:
Nova Technologies, Inc.
89 Cabot Court, Unit L
Hauppauge, NY 11788
Attn: President
With a copy to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Attn: Ira I. Roxland, Esq.
Any such notice shall, when sent in accordance with the preceding
sentence, be deemed to have been given and received on the earliest
of (i) the day delivered to such address or sent by facsimile
transmission, (ii) the fifth business day following the date
deposited with the United States Postal Service, or (iii)
twenty-four hours after shipment by such courier service.
14.8 Construction. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of New
York without giving effect to the principles of conflicts of law
thereof.
14.9 Additional Defined Term. The term "knowledge" as
used in this Agreement with respect to a party's awareness of the
presence or absence of a fact, event or condition shall mean (a)
actual knowledge plus, if different, (b) the knowledge that would
be obtained if such party conducted himself or herself faithfully
and exercised a sound discretion in the management of his or her
own affairs.
14.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which shall together constitute one and the
same Agreement.
14.11 No Implied Waiver; Remedies. No failure or delay
on the part of the parties hereto to exercise any right, power, or
privilege hereunder or under any instrument executed pursuant
hereto shall operate as a waiver nor shall any single or partial
exercise of any right, power, or privilege preclude any other or
further exercise thereof or the exercise of any other right, power,
or privilege. All rights, powers, and privileges granted herein
shall be in addition to all other rights and remedies to which the
parties may be entitled at law or in equity.
14.12 Entire Agreement. This Agreement, including the
Exhibits and Schedules and Annexes attached hereto, sets forth the
entire understandings of the parties with respect to the subject
matter hereof, and it incorporates and merges any and all previous
communications, understandings, oral or written, and cannot be
amended or changed except in writing signed by the parties.
14.13 Headings. The headings of the Sections of this
Agreement, where employed, are for the convenience of reference
only and do not form a part hereof and in no way modify, interpret
or construe the meanings of the parties.
14.14 Severability. To the extent that any provision of
this Agreement shall be invalid or unenforceable, it shall be
considered deleted hereof and the remainder of such provision and
of this Agreement shall be unaffected and shall continue in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
NOVA TECHNOLOGIES, INC.
By:
Name:
Title: President
DOUGLAS DREW
DONNA L. DREW
VIVAX MEDICAL CORP.
By:
Name:
Title:
TABLE OF CONTENTS
I. PURCHASE AND SALE. . . . . . . . . . . . . . . . . . . . . 1
1.1 Transaction . . . . . . . . . . . . . . . . . . . . . 1
1.2 Disclosure Schedule . . . . . . . . . . . . . . . . . 2
II. PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . 2
2.1 Purchase Price; Payment . . . . . . . . . . . . . . . 2
2.2 Determination of Actual Operating Income. . . . . . . 3
III. CLOSING; TERMINATION . . . . . . . . . . . . . . . . . . 4
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Sellers' Closing Deliveries . . . . . . . . . . . . . 5
3.3 Buyer's Closing Deliveries. . . . . . . . . . . . . . 6
IV. REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . 7
4.1 Organization and Standing . . . . . . . . . . . . . . 7
4.2 Capitalization. . . . . . . . . . . . . . . . . . . . 8
4.3 Subsidiaries. . . . . . . . . . . . . . . . . . . . . 8
4.4 Authority . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Properties. . . . . . . . . . . . . . . . . . . . . . 8
4.6 Contracts Listed; No Default. . . . . . . . . . . . . 9
4.7 Litigation. . . . . . . . . . . . . . . . . . . . . . 10
4.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9 Compliance with Laws and Regulations. . . . . . . . . 11
4.10 Environmental Matters . . . . . . . . . . . . . . . . 12
4.11 Insurance . . . . . . . . . . . . . . . . . . . . . . 13
4.12 No Breaches . . . . . . . . . . . . . . . . . . . . . 14
4.13 Disclosure Schedule Complete. . . . . . . . . . . . . 14
4.14 Employees . . . . . . . . . . . . . . . . . . . . . . 14
4.15 Financial Statements. . . . . . . . . . . . . . . . . 15
4.16 Absence of Certain Changes or Events. . . . . . . . . 16
4.17 Governmental Licenses, Permits, Etc . . . . . . . . . 16
4.18 Employee Benefit Plans; ERISA.. . . . . . . . . . . . 17
4.19 Brokers . . . . . . . . . . . . . . . . . . . . . . . 19
4.20 Real Property . . . . . . . . . . . . . . . . . . . . 19
4.21 Intellectual Property . . . . . . . . . . . . . . . . 20
4.22 Warranties. . . . . . . . . . . . . . . . . . . . . . 21
4.23 Customers and Suppliers . . . . . . . . . . . . . . . 21
4.24 Inventories . . . . . . . . . . . . . . . . . . . . . 21
4.25 Condition of Assets. . . . . . . . . . . . . . . . . 21
4.26 Governmental Approvals. . . . . . . . . . . . . . . . 21
4.27 Medicare Reimbursement Claims . . . . . . . . . . . . 22
4.28 No Omissions or Untrue Statements . . . . . . . . . . 22
V. REPRESENTATIONS AND WARRANTIES OF BUYER AND NOVA . . . . . 22
5.1 Organization and Standing of Nova and Buyer . . . . . 22
5.2 Buyer's Authority . . . . . . . . . . . . . . . . . . 23
5.3 No Breaches . . . . . . . . . . . . . . . . . . . . . 23
5.4 Governmental Approval; Consents . . . . . . . . . . . 24
5.5 Litigation. . . . . . . . . . . . . . . . . . . . . . 24
5.6 Compliance with Laws and Regulations. . . . . . . . . 25
5.7 Valid Issuance. . . . . . . . . . . . . . . . . . . . 25
5.8 Brokers . . . . . . . . . . . . . . . . . . . . . . . 25
5.9 Nova's SEC Reports. . . . . . . . . . . . . . . . . . 25
5.10 Adverse Developments. . . . . . . . . . . . . . . . . 26
5.11 No Omissions or Untrue Statements . . . . . . . . . . 26
VI. CONDUCT OF BUSINESS PENDING CLOSING . . . . . . . . . . . 26
6.1 Access to Buyer . . . . . . . . . . . . . . . . . . . 27
6.2 Conduct of Business . . . . . . . . . . . . . . . . . 27
6.3 Consents and Notices. . . . . . . . . . . . . . . . . 29
6.4 Exclusivity to Buyer. . . . . . . . . . . . . . . . . 29
VII. CONDITIONS TO SELLERS' OBLIGATIONS . . . . . . . . . . . 29
7.1 Compliance by Buyer . . . . . . . . . . . . . . . . . 29
7.2 Accuracy of Nova's and Buyer's Representations. . . . 29
7.3 Litigation. . . . . . . . . . . . . . . . . . . . . . 30
7.4 Material Adverse Change . . . . . . . . . . . . . . . 30
7.5 Documents . . . . . . . . . . . . . . . . . . . . . . 30
VIII. CONDITIONS TO BUYER'S OBLIGATIONS . . . . . . . . . . . 30
8.1 Compliance by Sellers . . . . . . . . . . . . . . . . 30
8.2 Accuracy of Sellers' Representations. . . . . . . . . 31
8.3 Material Adverse Change . . . . . . . . . . . . . . . 31
8.4 Consents and Notices. . . . . . . . . . . . . . . . . 31
8.5 Litigation. . . . . . . . . . . . . . . . . . . . . . 31
8.6 Compliance with Laws. . . . . . . . . . . . . . . . . 31
8.7 Accountant's Advice . . . . . . . . . . . . . . . . . 32
8.8 Documents . . . . . . . . . . . . . . . . . . . . . . 32
IX. CASUALTIES. . . . . . . . . . . . . . . . . . . . . . . . 32
9.1 Risk of Loss. . . . . . . . . . . . . . . . . . . . . 32
X. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . 32
10.1 By Sellers. . . . . . . . . . . . . . . . . . . . . . 32
10.2 By Buyer. . . . . . . . . . . . . . . . . . . . . . . 33
10.3 Claims Procedure. . . . . . . . . . . . . . . . . . . 33
10.4 Limitations on Liability. . . . . . . . . . . . . . . 34
10.5 Right of Set-off. . . . . . . . . . . . . . . . . . . 34
XI. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 34
11.1 Mutual Cooperation. . . . . . . . . . . . . . . . . . 34
11.2 Changes in Representations and
Warranties of Sellers . . . . . . . . . . . . . . . . 34
11.3 Changes in Representations and
Warranties of Nova or Buyer . . . . . . . . . . . . . 35
XII. ACQUISITION OF SHARES, INITIAL
AND TERM NOTES AND NOVA SHARES . . . . . . . . . . . . . . 35
12.1 Investment Intent . . . . . . . . . . . . . . . . . . 35
12.2 Sellers' Investment Intent. . . . . . . . . . . . . . 36
XIII. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 36
13.1 Termination Prior to Closing. . . . . . . . . . . . . 36
13.2 Consequences of Termination . . . . . . . . . . . . . 37
XIV. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 37
14.1 Expenses . . . . . . . . . . . . . . . . . . . . . . 37
14.2 Survival of Representations,
Warranties and Covenants . . . . . . . . . . . . . . 37
14.3 Confirmatory Instruments; Appointment
of Buyer as Attorney-in-Fact . . . . . . . . . . . . 38
14.4 Further Assurances.. . . . . . . . . . . . . . . . . 39
14.5 Nondisclosure. . . . . . . . . . . . . . . . . . . . 39
14.6 Succession and Assignments;
Third Party Beneficiaries. . . . . . . . . . . . . . 40
14.7 Notices. . . . . . . . . . . . . . . . . . . . . . . 40
14.8 Construction . . . . . . . . . . . . . . . . . . . . 42
14.9 Additional Defined Term. . . . . . . . . . . . . . . 42
14.10 Counterparts . . . . . . . . . . . . . . . . . . . . 42
14.11 No Implied Waiver; Remedies. . . . . . . . . . . . . 42
14.12 Entire Agreement . . . . . . . . . . . . . . . . . . 42
14.13 Headings . . . . . . . . . . . . . . . . . . . . . . 43
14.14 Severability . . . . . . . . . . . . . . . . . . . . 43
EXHIBIT 7(c)(ii)
EMPLOYMENT AGREEMENT, dated as
of June 14, 1996, by and betwe-
en NOVA TECHNOLOGIES, INC., a
Delaware corporation ("Nova"),
and DOUGLAS DREW (the "Employ-
ee").
Nova desires to engage Employee to perform services for
Nova, and any present or future subsidiary or affiliate of Nova
(collectively, with Nova, the "Nova Companies"), and Employee
desires to perform such services, on the terms and conditions set
forth below:
NOW, THEREFORE, the parties agree as follows:
1. Employment; Term.
Nova will employ Employee in its business, and
Employee will work for Nova, for a term of three (3) years,
commencing as of June 14, 1996 and ending on June 13, 1999, unless
sooner terminated in accordance with Section 9 hereof. Such
period, including any extensions or renewals thereof, is referred
to herein as the "Employment Period".
2. Duties.
2.1 During the Employment Period, Employee shall
serve as Chief Marketing and Sales Officer of Nova and shall also
serve as the President and Chief Operating Officer of Comed
Systems, Inc., Nova's wholly-owned subsidiary ("Comed"), and shall
perform duties on behalf of Nova and Comed consisting of marketing,
sales, product development and managerial responsibilities and, if
so requested by Nova's Chief Executive Officer, on behalf of any
one or more of the other Nova Companies.
2.2 Employee shall discharge his duties primarily
from Nova's facility in Seabrook, New Hampshire. Employee shall
also engage in such travel in furtherance of the business of the
Nova Companies, as shall be reasonably requested by Nova.
3. Devotion of Time.
3.1 During the Employment Period, Employee shall:
(a) expend all of his working time for Nova; (b) devote his best
efforts, energy and skill to the services of Nova and the promotion
of its interests; and (c) not take part in activities known by
Employee to be detrimental to the best interests of Nova or any of
the Nova Companies.
4. Compensation.
4.1 In consideration for the services to be per-
formed by Employee during the Employment Period hereunder, Nova
shall compensate Employee at a base salary of $112,800 per annum.
Such salary shall be subject to annual review, and possible
increases, based on Nova's and the Employee's performance.
4.2 Employee shall receive such additional bonuses,
if any, during the Employment Period as shall be determined from
time to time by Nova's Board of Directors in its sole discretion
based on such factors as the Board selects including the level of
operating profitability of Nova.
5. Reimbursement of Expenses; Additional Benefits.
5.1 Nova shall pay directly, or reimburse Employee
for, all reasonable and necessary expenses and disbursements
incurred by him for and on behalf of Nova and/or the Nova Companies
in the performance of his duties under this Agreement. For such
purposes, Employee shall submit to Nova itemized written reports of
such expenses (including bills and receipts) in accordance with
Nova's policies, and shall obtain prior approval of an officer of
Nova for each expense in excess of $500.
5.2 Employee shall be entitled to paid vacations
during the Employment Period in accordance with the then prevalent
practices of Nova for its senior managerial employees.
5.3 During the Employment Period, Employee shall be
entitled to participate in, and to receive benefits under, such
employee benefit plans of Nova (including, without limitation,
group life insurance and group medical insurance plans) as may
exist from time to time for Nova's senior managerial employees, if
he meets the eligibility requirements thereof.
5.4 Employee shall be entitled to receive a car
allowance in the amount of $600 per month.
6. Representations and Warranties of Employee.
Employee represents and warrants to Nova that (a)
Employee is under no contractual or other restriction or obligation
which is inconsistent with the execution of this Agreement, the
performance of his duties hereunder, or the other rights of Nova
hereunder and (b) Employee is under no mental or physical disabili-
ty that would hinder his performance of duties under this Agree-
ment.
7. Non-Competition and Secrecy.
7.1 No Competing Employment. For so long as
Employee is employed by Nova and continuing for two (2) years after
(i) the termination of such employment (except if such termination
shall be effectuated by Nova prior to the expiration of the
Employment Period for reasons other than "cause" (as hereinafter
defined)), or (ii) Employee's resignation therefrom (such period
being referred to hereinafter as the "Restricted Period"), or (iii)
Employee elects not to accept an extension of the Employment Period
(beyond the date specified in Section 1 hereof) when Nova has so
offered to extend such Employment Period, Employee shall not,
directly or indirectly, own an interest in, manage, operate, join,
control, lend money, or render financial or other assistance to or
participate in or be connected with, as an officer, employee,
partner, stockholder, consultant or otherwise, any individual,
partnership, firm, corporation or other business organization or
entity that competes within the United States with Nova and/or any
of the Nova Companies; provided, however, that nothing in this
Section 7.1 shall prohibit Employee from making a non-controlling
and passive investment in a corporation whose shares are publicly
traded.
7.2 No Interference. During the Restricted Period,
Employee shall not, whether for his own account or for the account
of any other individual, partnership, firm, corporation or other
business organization (other than Nova), intentionally solicit,
endeavor to entice away from Nova and/or any of the Nova Companies,
or otherwise interfere with the relationship of Nova and/or any of
the Nova Companies with, any person who is employed by or otherwise
engaged to perform services for Nova and/or any of the Nova
Companies or any person or entity who is, or was within the then
most recent 12 month period, a customer or client of Nova and/or
any of the Nova Companies.
<PAGE>
7.3 Secrecy.
7.3.1 Employee recognizes that the services
to be performed by him hereunder are special, unique and extraor-
dinary in that, by reason of his employment hereunder, he may
acquire confidential information and trade secrets concerning the
operation of Nova and/or any of the Nova Companies, the use or
disclosure of which could cause Nova and/or any of the Nova
Companies substantial loss and damages which could not be readily
calculated and for which no remedy at law would be adequate.
Accordingly, Employee covenants and agrees with Nova that he will
not at any time, except in performance of Employee's obligations to
Nova and/or any of the Nova Companies hereunder or with the prior
written consent of Nova pursuant to authority granted by a
resolution of Nova's Board of Directors (the "Nova Board"),
directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his
association with Nova and/or any of the Nova Companies. The term
"confidential information" includes, without limitation, informa-
tion not previously disclosed to the public or to the trade by
management of Nova and/or any of the Nova Companies, as applicable,
with respect to the products, facilities, applications and methods,
trade secrets and other intellectual property, systems, procedures,
manuals, confidential reports, product price lists, customer lists,
technical information, financial information (including the
revenues, costs or profits associated with any of its or their
products), business plans, prospects or opportunities but shall
exclude any information already in the public domain. Notwith-
standing anything to the contrary herein contained, Employee's
obligation to maintain the secrecy and confidentiality of the
confidential information under this Section 7 shall not apply to
any such Confidential Information which is disclosed through any
means other than as a result of any act by Employee constituting a
breach of this Agreement or which is required to be disclosed under
applicable law.
7.4 Exclusive Property. Employee confirms that all
confidential information is and shall remain the exclusive property
of Nova. All business records, papers and documents kept or made
by Employee relating to the business of Nova shall be and remain
the property of Nova.
7.5 Injunctive Relief. Without intending to limit
the remedies available to Nova, Employee acknowledges that a breach
of any of the covenants contained in this Section 7 may result in
material irreparable injury to Nova and/or any of the Nova
Companies for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries precisely
and that, in the event of such a breach or threat thereof, Nova
shall be entitled to obtain a temporary restraining order and/or a
preliminary injunction restraining Employee from engaging in
activities prohibited by this Section 7 or such other relief as may
be requires to specifically enforce any of the covenants in this
Section 7.
7.6 Extension of Restricted Period. In addition to
the remedies Nova may seek and obtain pursuant to Section 7.5, the
Restricted Period shall be extended by any and all periods during
which Employee shall be found by a court possessing personal
jurisdiction over him to have been in violation of the covenants
contained in this Section 7.
8. Patents.
8.1 Employee agrees that any interest in patents,
patent applications, inventions, copyrights, developments, and
processes (collectively, "Inventions"), during the period he is
employed by Nova, which Employee hereafter may develop or own
relating to the fields in which Nova or any of the Nova Companies
may then be engaged shall belong to Nova. Employee shall execute
all such assignments and other documents and take all such other
action as Nova may reasonably request in order to vest in Nova all
his right, title and interest in and to each such Invention, free
and clear of all liens, charges and encumbrances.
9. Early Termination.
9.1 Employee's employment hereunder shall auto-
matically be terminated upon the death of Employee or Employee's
leaving the employ of Nova and, in addition, may be terminated, at
the sole discretion of Nova, as follows:
(a) upon five (5) days prior written
notice by Nova to Employee, in the event of
Employee's disability as set forth in Section
9.2 below;
(b) upon five (5) days prior written
notice by Nova to Employee, in the event that
Nova terminates Employee's employment hereun-
der for cause as set forth in Section 9.3
below; or
(c) upon ten (10) days prior written
notice by Nova to Employee in the event that
Nova terminates Employee's employment hereun-
der without cause.
9.2 Employee shall be deemed disabled hereunder, if
in the opinion of Nova's chief executive officer, as confirmed by
competent medical advice, he shall become physically or mentally
unable or otherwise unable to perform his duties for Nova hereunder
and such incapacity shall have continued for any period of two (2)
consecutive months or any period of three (3) months within any
twelve (12) month period.
9.3 For purposes hereof, "cause" shall mean
termination of Employee's employment with Nova by Nova's chief
executive officer, in his reasonable discretion, because of: (a)
any act or omission which constitutes a material breach by Employee
of his obligations or agreements under this Agreement, or the
failure or refusal of Employee to satisfactorily perform any duties
reasonably required by Nova hereunder, or refusal to follow lawful
instructions of the Nova Board, (b) Employee being charged by an
appropriate official with the commission of a felony, or a
misdemeanor involving fraud, dishonesty or deceit, or the perpetra-
tion by Employee of a serious dishonest or fraudulent act, which
act is against the interest of Nova or any of the Nova Companies,
or (c) any other act or omission by Employee which, in the good
faith opinion of the Nova Board, is injurious in any significant
respect to the financial condition or business reputation of Nova
or any of the Nova Companies which resulted from Employee's willful
misconduct or gross negligence.
9.4 (a) In the event that Employee's employment
under this Agreement shall be terminated due to Employee's death or
disability or shall be terminated by Nova pursuant to Section
9.1(c), then Nova shall pay to Employee or his designees, as the
case may be, continuing base salary for a period of one (1) year at
the rate set forth in Section 4.1 hereof.
(b) In the event that Employee's employment
under this Agreement shall be terminated by Employee, or by Nova
for cause, then Nova shall not be obligated to make any severance
payments whatsoever to Employee hereunder.
9.5 Regardless of the reason for termination of
Employee's employment under this Agreement, Employee shall be
entitled to the compensation set forth in Section 4.1 hereof which
shall have accrued but be unpaid at the effective time of termina-
tion.
9.6 The covenants, agreements, representations,
and warranties contained in or made pursuant to this Agreement
(including, specifically, the covenants set forth in Sections 7 and
8) shall survive Employee's termination of employment, irrespective
of any investigation made by or on behalf of any party.
10. Assignment.
This Agreement, as it relates to the employment of
the Employee, is a personal contract and the rights, interests and
obligations of the Employee hereunder may not be sold, transferred,
assigned, pledged or hypothecated. Except as otherwise herein
expressly provided, this Agreement shall be binding upon and inure
to the benefit of Employee and his personal representatives and
shall inure to the benefit of and be binding upon Nova and its
successors and assigns, including without limitation, any corpora-
tion or other entity into which Nova is merged or which acquires
all of the outstanding shares of Nova's capital stock, or all or
substantially all of the assets of Nova.
11. Notices.
Any notice required or permitted to be given
pursuant to this Agreement shall be deemed given three (3) business
days after such notice is mailed by certified mail, return receipt
requested, or delivered against receipt to the party to whom it is
to be given, addressed as follows:
(a) if to Employee or the estate of Employee:
Douglas Drew
62 Kensington Road
Hampton Falls, NH 03844
and
(b) if to Nova:
Nova Technologies, Inc.
89 Cabot Court, Unit L
Hauppauge, NY 11788
Attn: Chairman
with a copy to
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Attn: Ira I. Roxland, Esq.
or to such other address as any such party shall designate by
written notice to the other party.
<PAGE>
12. Governing Law.
This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of
New York, without giving effect to the principles of conflict of
laws thereof.
13. Waiver.
The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach. The failure of a party to insist
upon strict adherence to any provision of this Agreement on one or
more occasions shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to
that provision or any other provision of this Agreement. Any
waiver must be in writing.
14. Severability.
If any provision of this Agreement, or the
application of such provision to any person or circumstance, is
declared by any arbitration panel or court of competent jurisdic-
tion to be invalid or unenforceable:
14.1 Such invalidity or unenforceability shall not
affect the remaining provisions of this Agreement or the applica-
tion of such provisions to persons or circumstances other than
those to which it is held invalid or unenforceable;
14.2 If such invalidity or unenforceability is due
to the court's determination that the provision's scope is
excessively broad or restrictive under applicable law then in
effect, the parties hereby jointly request that such provision be
construed by modifying its scope so as to be enforceable to the
fullest extent compatible with applicable law then in effect; and
14.3 If any provision is held to be invalid or
unenforceable with respect to a particular circumstance, such
provision shall nevertheless remain in full force and effect in all
other circumstances, subject to the other provisions of this
Section 14.3.
15. Entire Agreement.
15.1 This Agreement, constitutes the entire agree-
ment and understanding between the parties with respect to the
employment of the Employee and there are no representations,
warranties or commitments except as set forth herein. This
Agreement together with the Exhibits referred to herein supersedes
all prior and contemporaneous agreements, understandings, negotia-
tions and discussions, whether written or oral, of the parties
hereto relating to the transactions contemplated by this Agreement.
15.2 This Agreement does not create, and shall not
be construed as creating, any rights enforceable by any person not
a party to this Agreement, except as provided in Section 10 hereof.
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as of the day and year first above written.
NOVA TECHNOLOGIES, INC.
By:
Name:
Title:
Douglas Drew
EXHIBIT 7(c)(iii)
NON-COMPETITION AGREEMENT,
dated as of June 14, 1996, by
and among NOVA TECHNOLOGIES,
INC., a Delaware corporation
("Nova"), VIVAX MEDICAL CORP.
("Vivax"), a Delaware
corporation and a wholly owned
subsidiary of Nova, and DOUGLAS
DREW ("Drew").
Drew, Vivax and Nova anticipate consummation of a
purchase by Vivax from Drew and Drew's spouse, Donna L. Drew, of
all of the outstanding capital stock (the "Purchase") of Comed
Systems, Inc., a New Hampshire corporation ("Comed"). As a
consequence of the Purchase, Comed will become a wholly-owned
subsidiary of Vivax and Nova.
Drew, as a principal shareholder and chief executive and
operating officer of Comed, has knowledge of the business strategy,
trade secrets and other proprietary information of Comed, the use
of which in competition against Nova, and any present or future
subsidiary or affiliate of Nova (collectively, with Nova, the "Nova
Companies"), could result in irreparable damage to Nova and the
Nova Companies.
Drew, as a principal shareholder of Comed, will benefit
from the Purchase.
The execution of this Agreement is a condition precedent
to the consummation of the Purchase.
NOW, THEREFORE, the parties agree as follows:
1. NON-COMPETITION AND SECRECY
1.1 No Competing Employment. For a period of two
years commencing on the date Drew is no longer an employee of Nova,
Comed or any other Nova Company (such period being referred to
hereinafter as the "Restricted Period"), Drew shall not, directly
or indirectly, own an interest in, manage, operate, join, control,
lend money, or render financial or other assistance to or partici-
pate in or be connected with, as an officer, employee, partner,
stockholder, consultant or otherwise, any individual, partnership,
firm, corporation or other business organization or entity that
competes within the United States with Nova and/or any of the Nova
Companies; provided, however, that nothing in this Section 1.1
shall prohibit Drew from making a non-controlling and passive
investment in a corporation whose shares are publicly traded.
1.2 No Interference. During the Restricted Period,
Drew shall not, whether for his own account or for the account of
any other individual, partnership, firm, corporation or other
business organization (other than Nova), intentionally solicit,
endeavor to entice away from Nova and/or any of the Nova Companies,
or otherwise interfere with the relationship of Nova and/or any of
the Nova Companies with, any person who is employed by or otherwise
engaged to perform services for Nova and/or any of the Nova
Companies or any person or entity who is, or was within the then
most recent 12 month period, a customer or client of Nova and/or
any of the Nova Companies.
1.3 Secrecy.
1.3.1 Drew recognizes that, by reason of
his prior employment by Comed, he may have acquired confidential
information and trade secrets concerning the operation of Comed,
the use or disclosure of which could cause Comed substantial loss
and damages which could not be readily calculated and for which no
reedy at law would be adequate. Accordingly, Drew covenants and
agrees with Nova that he will not at any time, except with the
prior written consent of Nova pursuant to authority granted by a
resolution of Nova's Board of Directors, directly or indirectly,
disclose any secret or confidential information that he may learn
or has learned by reason of his prior association with Comed. The
term "confidential information" includes, without limitation,
information not previously disclosed to the public or to the trade
by management of Comed and/or any of the Nova Companies, as
applicable, with respect to the products, facilities, applications
and methods, trade secrets and other intellectual property,
systems, procedures, manuals, confidential reports, product price
lists, customer lists, technical information, financial information
(including the revenues, costs or profits associated with any of
its or their products), business plans, prospects or opportunities
but shall exclude any information already in the public domain.
Notwithstanding anything to the contrary herein contained, Drew's
obligation to maintain the secrecy and confidentiality of the
confidential information under this Section 1 shall not apply to
any such confidential information which is disclosed through any
means other than as a result of any act by Drew constituting a
breach of this Agreement or which is required to be disclosed under
applicable law.
1.4 Exclusive Property. Drew confirms that all
confidential information is and shall remain the exclusive property
of Comed.
1.5 Injunctive Relief. Without intending to limit
the remedies available to Nova, Drew acknowledges that a breach of
any of the covenants contained in this Section 1 may result in
material irreparable injury to Nova, Comed and/or any of the Nova
Companies for which there is no adequate reedy at law, that it will
not be possible to measure damages for such injuries precisely and
that, in the event of such a breach or threat thereof, Nova shall
be entitled to obtain a temporary restraining order and/or a
preliminary injunction restraining Drew from engaging in activities
prohibited by this Section 1 or such other relief as may be
requires to specifically enforce any of the covenants in this
Section 1.
1.6 Extension of Restricted Period. In addition to
the remedies Nova may seek and obtain pursuant to Section 1.5, the
Restricted Period shall be extended by any and all periods during
which Drew shall be found by a court possessing personal jurisdic-
tion over him to have been in violation of the covenants contained
in this Section 1.
2. ASSIGNMENT
Except as otherwise herein expressly provided, this
Agreement shall be binding upon and inure to the benefit of Drew
and his personal representatives and shall inure to the benefit of
and be binding upon Nova and its successors and assigns, including
without limitation, any corporation or other entity into which Nova
is merged or which acquires all of the outstanding shares of Nova's
capital stock, or all or substantially all of the assets of Nova.
3. NOTICES
Any notice required or permitted to be given
pursuant to this Agreement shall be deemed given three (3) business
days after such notice is mailed by certified mail, return receipt
requested, or delivered against receipt to the party to whom it is
to be given, addressed as follows:
(a) if to Drew:
Mr. Douglas Drew
62 Kensington Road
Hampton Falls, NH 03844
with a copy to:
Casassa and Ryan
459 Lafayette Road
Hampton, New Hampshire 03842-2242
Attn: John J. Ryan, Esq.
(b) if to Nova:
Nova Technologies, Inc.
89 Cabot Court, Unit L
Hauppauge, NY 11788
Attn: Chairman
with a copy to
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Attn: Ira I. Roxland, Esq.
or to such other address as any such party shall designate by
written notice to the other party.
4. GOVERNING LAW
This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of
New York, without giving effect to the principles of conflict of
laws thereof.
5. WAIVER
The waiver of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach. The failure of a party to insist upon strict
adherence to any provision of this Agreement on one or more
occasions shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that
provision or any other provision of this Agreement. Any waiver
must be in writing.
6. SEVERABILITY
If any provision of this Agreement, or the
application of such provision to any person or circumstance, is
declared by any arbitration panel or court of competent jurisdic-
tion to be invalid or unenforceable:
6.1 Such invalidity or unenforceability shall not
affect the remaining provisions of this Agreement or the applica-
tion of such provisions to persons or circumstances other than
those to which it is held invalid or unenforceable;
6.2 If such invalidity or unenforceability is due
to the court's determination that the provision's scope is exces-
sively broad or restrictive under applicable law then in effect,
the parties hereby jointly request that such provision be construed
by modifying its scope so as to be enforceable to the fullest
extent compatible with applicable law then in effect; and
6.3 If any provision is held to be invalid or
unenforceable with respect to a particular circumstance, such
provision shall nevertheless remain in full force and effect in all
other circumstances, subject to the other provisions of this
Section 6.3.
7. ENTIRE AGREEMENT
7.1 This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject
matter hereof and there are no representations, warranties or
commitments except as set forth herein. This Agreement supersedes
all prior and contemporaneous agreements, understandings, negotia-
tions and discussions, whether written or oral, of the parties
hereto relating to the transactions contemplated by this Agreement.
7.2 This Agreement does not create, and shall not
be construed as creating, any rights enforceable by any person not
a party to this Agreement, except as provided in Section 2 hereof.
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as of the day and year first above written.
NOVA TECHNOLOGIES, INC.
By:
Name:
Title:
Douglas Drew
