SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO 13D-2(A)
(Amendment No. )
MARCUM NATURAL GAS SERVICES, INC.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
566323101
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(CUSIP Number)
Kenneth I. Schaner
Swidler & Berlin, Chartered
3000 K Street, N.W., Suite 300
Washington, D.C. 20007
(202) 424-7500
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 23, 1998
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-(b)(3) or (4), check the following
box [ ].
NOTE. Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1 (a) for other parties to whom
copies are to be sent.<PAGE>
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SCHEDULE 13D/A
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CUSIP No. 566323101 Page 1 of 6 Pages
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1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(ENTITIES ONLY) Eagle Research Corporation
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
West Virginia
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NUMBER OF 7. SOLE VOTING POWER
SHARES 2,464,677
BENEFICIALLY
OWNED BY --------------------------------------------------------
EACH 8. SHARED VOTING POWER 0
REPORTING --------------------------------------------------------
PERSON 9. SOLE DISPOSITIVE POWER 2,464,677
WITH --------------------------------------------------------
10. SHARED DISPOSITIVE POWER 0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,464,677
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 19.99%
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14. TYPE OF REPORTING PERSON* CO
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ITEM 1. SECURITY AND ISSUER
This statement relates to the shares of Common Stock, par value $.01 per
share (the "Common Stock"), of Marcum Natural Gas Services, Inc. (the
"Issuer"), a corporation organized under the laws of the State of Delaware
with its principal executive offices at 1675 Broadway, Suite 2150, Denver,
Colorado 80202.
ITEM 2. IDENTITY AND BACKGROUND
(a) This statement is filed by Eagle Research Corporation, a West
Virginia corporation ("Eagle").
(b) The business address of Eagle is 105 Erskine Lane, Scott Depot,
West Virginia 25560.
(c) The principal business of Eagle is the design, manufacture and
sale of electronic meter correcting and reading equipment and the design of
related software applications. The directors of Eagle are Andrew Watson and
James N. Butch. The executive officers of Eagle are as follows: James N.
Butch -- President, Harry I. Skilton -- Vice President, Greg Shumate -- Vice
President, Becky Godfrey -- Assistant Secretary, C. Kelsey Brown -- Assistant
Secretary. Eagle is a wholly owned subsidiary of American Meter Company, a
Delaware corporation ("American Meter"). The entity that ultimately controls
Eagle is Ruhrgas Aktiengesellschaft, a German corporation ("Ruhrgas"). The
executive board of Ruhrgas consists of the following persons: Friedrich Spath
(Chairman), Dr.-Ing. Burckhard Bergmann (Vice-Chairman), Rolf Beyer, Dr.
Friedrich Janssen, Achim Middelschulte, Dr. Michael Pfingsten, and Dipl.
Volkswirt Siegbert Strecker (Deputy Member). The authorized officers of
Ruhrgas consists of the following persons: Dr. Wolf-Rainer Bentzien -- Vice
President, Dr. Lutz Eckert -- Vice President, Dipl. -Volkswirt Bernd Hohmann --
Vice President, Josef Niehues -- Vice President, and Hans Carl-Heinrich
Theuerkauf -- Vice President.
(d) During the past five years, neither Eagle, nor to the best of
Eagle's knowledge, American Meter or Ruhrgas or any of the executive officers
or directors of Eagle or Ruhrgas, has been convicted in a criminal proceeding
in the past five years (excluding traffic violations or similar misdemeanors).
(e) During the past five years, neither Eagle, nor to the best of
Eagle's knowledge, American Meter or Ruhrgas or any of the executive officers
or directors of Eagle or Ruhrgas, was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
such person was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
(f) The directors and executive officers of Eagle are citizens of the
United States. The members of the executive board of Ruhrgas are citizens of
Germany.
Page 2 of 6<PAGE>
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to that certain Asset Purchase Agreement (the "Agreement") dated
as of March 23, 1998, by and among Eagle, American Meter, Metretek,
Incorporated, a Florida corporation and a wholly owned subsidiary of the
Issuer ("Metretek"), and the Issuer, on the closing date (the "Closing
Date"), Eagle will sell to Metretek, all of Eagle's right, title and interest
in certain assets used by Eagle in its business of developing, manufacturing
and selling electronic meter correcting and reading equipment for a total
purchase price of $4,500,000 paid as follows: (i) $1,300,000 shall be paid by
certified or bank cashier's check or by wire transfer of immediately available
funds; (ii) in payment of $2,000,000 of the purchase price, Metretek shall
cause Issuer to issue and deliver to Eagle a certificate representing
1,758,242 shares of Common Stock; and (iii) in payment of $1,200,000 of the
purchase price, Metretek shall execute and deliver to Eagle an unsecured,
subordinated, convertible promissory note ("Convertible Note").
ITEM 4. PURPOSE OF TRANSACTION
Eagle is acquiring the shares of Common Stock for investment purposes.
As part of the Agreement, Eagle will receive the Convertible Note which shall
(a) bear interest on the unpaid principal balance at a fixed rate per annum
equal to 7.5% payable quarterly in arrears, (b) shall be due and payable four
years from the Closing Date in a single payment of unpaid principal together
with accrued and unpaid interest, (c) may be prepaid in whole or in part from
time to time by Issuer without penalty or premium, (d) shall be subject to
acceleration by Eagle in the event Issuer's debt-to-equity ratio exceeds the
amount set forth in the Convertible Note, and (e) be convertible into
unregistered shares of Common Stock at the rate of $1.421875 of principal per
share (the "Convertible Shares"); provided, however, that in no event shall
the aggregate number of shares of Common Stock to be issued by Issuer to Eagle
under the Agreement and the Convertible Note exceed 19.99% of the aggregate
number of shares of Common Stock of Issuer outstanding on the date preceding
the Closing Date.
In addition, pursuant to the Agreement, Issuer has agreed to appoint
Harry I. Skilton, President and Chief Executive Officer of American Meter, to
the Issuer's Board of Directors at the first Issuer Board of Directors meeting
held after the Closing Date, to serve as a director for a term expiring at the
2000 annual meeting of stockholders.
From time to time, Eagle, American Meter and Ruhrgas will evaluate its
position and may determine to acquire additional shares of Common Stock of the
Issuer (subject to the availability of shares at prices deemed favorable and
the availability of financing) or dispose of share of Common Stock of the
Issuer, at any time and from time to time, as permitted by the federal
securities laws.
Other than as set forth above, Eagle, and to the knowledge of Eagle,
American Meter and Ruhrgas, have no plans or proposals which relate to or
would result in any of the actions specified in clauses (a) through (j) of
Item 4 of Schedule 13D.
Page 3 of 6<PAGE>
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The aggregate number of shares of Common Stock beneficially owned
by Ruhrgas is 2,464,677 shares, constituting 19.99% of Marcum's Common Stock
issued and outstanding common stock (based on 12,329,552 shares of Common
Stock outstanding as reported in Section 4.8 of the Agreement, not including
the 2,464,677 shares of Common Stock that are the subject of this Schedule 13-D
which will be issued on the Closing Date).
Ruhrgas does not have a right to acquire any additional shares.
(b) Ruhrgas has the sole power to vote, to direct the vote of, and to
dispose and to direct the disposition of, 2,464,677 shares of Common Stock.
(c) No transaction in the Common Shares of the Issuer was effected
during the past sixty days by Ruhrgas.
(d) No other person is known to have the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the sale of,
such securities.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Pursuant to the Agreement, Eagle was granted piggyback registration
rights if Issuer, at any time after the Closing Date proposes to register any
of its shares of Common Stock under the Securities Act of 1933, as amended,
for its own account or for the account of any of its stockholders (except with
respect to registration statements filed on Form S-4 (for acquisitions) or
Form S-8 (for employee plans or any successor or similar forms or other
unsuitable forms); provided, that if such registration is in connection with
Page 4 of 6<PAGE>
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an underwritten public offering of Common Stock of the Issuer, the number of
shares of Common Stock requested to be included in the registration may be
reduced if determined by the managing underwriter, pro rata with other
stockholders, if any, participating in the public offering. In addition,
Eagle is entitled to demand registration of its shares of Common Stock if at
any time during the period commencing two (2) years after the Closing Date and
ending the earlier of (i) eight years after the Closing Date, or (ii) 90 days
after Eagle's beneficial ownership of the shares of Common Stock issued
pursuant to the Agreement (including upon conversion of the Convertible Note)
constitutes less than 10% of the then outstanding shares of Common Stock of
Issuer; provided that at the time of the request, at least a majority of the
total shares of Common Stock issued pursuant to the Agreement (including upon
conversion of the Convertible Note) are still held of record by Eagle.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Asset Purchase Agreement dated as of March 23, 1998, by and among Eagle
Research Corporation, American Meter Company, Metretek, Incorporated, and
Marcum Natural Gas Services, Inc.
2. Form of Convertible Subordinated Promissory Note.
Page 5 of 6<PAGE>
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 31, 1998
EAGLE RESEARCH CORPORATION
By: /s/ Andrew Watson
Name: Andrew Watson
Title: Chairman of the Board
Page 6 of 6
EXECUTION
COPY
ASSET PURCHASE AGREEMENT
By And Among
EAGLE RESEARCH CORPORATION
AMERICAN METER COMPANY
And
METRETEK, INCORPORATED
MARCUM NATURAL GAS SERVICES, INC.
DATED: March 23, 1998
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TABLE OF CONTENTS
Section 1. Sale and Purchase of the Assets
Section 1.1 Sale and Purchase
Section 1.2 Excluded Assets
Section 1.3 Liabilities
Section 2. Purchase Price and Payment
Section 2.1 Purchase Price
Section 2.2 Post-Closing Adjustment For Purchase Price For Inventory.
Section 2.3 Convertible Note
Section 2.4 Convertible Note Adjustment
Section 2.5 Issued Shares
Section 2.6 Allocation of Purchase Price 7
Section 3. Representations and Warranties of Seller and American Meter
Section 3.1 Organization
Section 3.2 Subsidiaries
Section 3.3 Power and Authority
Section 3.4 Enforceability
Section 3.5 No Conflicts
Section 3.6 Defaults
Section 3.7 Consents
Section 3.8 Litigation
Section 3.9 Ability to Dispose of the Assets
Section 3.10 Brokers' Fees 9
Section 3.11 Financial Statements 9
Section 3.12 Absence of Undisclosed Liabilities
Section 3.13 No Material Adverse Change
Section 3.14 Taxes 11
Section 3.15 Title to and Condition of Assets
Section 3.16 Personal Property Leases 12
Section 3.17 Inventory 12
Section 3.18 Intellectual Property
Section 3.19 Relationships with Suppliers and Customers
Section 3.20 Labor and Employment Matters
Section 3.21 Employee Benefit Plans
Section 3.22 Insurance
Section 3.23 Contracts 15
Section 3.24 Licenses
Section 3.25 Product Liability Claims. 16
Section 3.26 Product Warranties 16
Section 3.27 Compliance with Laws 16
Section 3.28 No Loss of Rights or Legal Obstacles
Section 3.29 Transactions with Affiliates
Section 3.30 Absence of Certain Commercial Practices 17
Section 3.31 Securities Representations As To The Shares 17
Section 3.32 Full Disclosure
Section 4. Representations and Warranties of Purchaser and Marcum
Section 4.1 Organization
Section 4.2 Power and Authority 19
Section 4.3 Enforceability 19
Section 4.4 No Conflicts 19
Section 4.5 Consents 19
Section 4.6 Litigation
Section 4.7 Shares
Section 4.8 Capitalization of Marcum 19
Section 4.9 Securities Law Reports 19
Section 4.10 Financial Statements 20
Section 4.11 Absence of Adverse Change 20
Section 4.12 No Brokers 20
Section 5. Pre-Closing Covenants
Section 5.1 Conduct of Business of Seller
Section 5.2 Access 21
Section 5.3 Risk of Loss 21
Section 5.4 Bulk Sales
Section 5.5 Consummation of Transactions
Section 5.6 Public Announcements 21
Section 5.7 Notification of Certain Matters 22
Section 5.8 Taxes 22
Section 5.9 No Shopping
Section 5.10 Employee Matters 22
Section 5.11 Assumed Warranty Obligations 24
Section 5.12 Repayment of Indebtedness and Release of Liens 24
Section 5.13 Financial Statements 24
Section 5.14 Board Seat
Section 5.15 Pantheon Software License Agreement 24
Section 5.16 Non-Competition Agreement 24
Section 5.17 Amendment of Marcum Rights Agreement 24
Section 6. Conditions Precedent to Purchaser's and Marcum's Closing
Obligations 25
Section 6.1 Accuracy of Representations and Warranties 25
Section 6.2 Performance of Covenants 25
Section 6.3 No Litigation 25
Section 6.4 Deliveries at Closing 25
Section 6.5 Consents 25
Section 6.6 Condition of Assets 25
Section 6.7 Non-Competition Agreement 25
Section 6.8 License Agreement 25
Section 7. Conditions Precedent to Seller's and American Meter's
Obligations 25
Section 7.1 Accuracy of Representations and Warranties 26
Section 7.2 Performance of Covenants 26
Section 7.3 No Litigation 26
Section 7.4 Deliveries at Closing 26
Section 7.5 License Agreement 26
Section 8. The Closing 26
Section 8.1 Date and Place 26
Section 8.2 Deliveries by Seller and American Meter 26
Section 8.3 Deliveries by Purchaser 27
Section 8.4 Effectiveness of Closing 28
Section 9. Survival and Indemnification 28
Section 9.1 Survival 28
Section 9.2 Indemnification by the Seller and American Meter 28
Section 9.3 Indemnification by Purchaser and Marcum 29
Section 9.4 Claims for Indemnification 29
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Section 9.5 Limitation on Liability 30
Section 9.6 Non-Exclusive Indemnification 30
Section 9.7 Effect of Knowledge 30
Section 9.8 Contribution 30
Section 10. Post-Closing and Other Covenants 30
Section 10.1 Further Assurances 30
Section 10.2 Seller's Financial Statements 31
Section 10.3 Preservation of Files and Records 31
Section 10.4 Mutual Cooperation 32
Section 10.5 Solicitation and Hiring 32
Section 10.6 Registration Rights 32
Section 10.7 Seller's Right of First Refusal to Acquire Purchaser 35
Section 10.8 Transition of Assets and Business 35
Section 10.9 American Meter Licenses 36
Section 11. Termination and Confidentiality. 36
Section 11.1 Events of Termination 36
Section 11.2 Effect of Termination 36
Section 11.3 Confidentiality 36
Section 12. General Provisions 36
Section 12.1 Governing Law 36
Section 12.2 Expenses 37
Section 12.3 Assignment 37
Section 12.4 Amendments 37
Section 12.5 Notices 37
Section 12.6 Waiver 38
Section 12.7 Severability 39
Section 12.8 Headings
Section 12.9 Successors and Assigns 39
Section 12.10 Pronouns, etc 39
Section 12.11 No Third Party Beneficiaries 39
Section 12.12 Schedules and Exhibits 39
Section 12.13 Specific Performance; Cumulative Remedies 39
Section 12.14 Counterparts 39
Section 12.15 Entire Agreement 39
Schedules
1.1(a) Equipment
1.1(b) Inventory
1.1(c) Intellectual Property
1.1(g) Assigned Contracts
1.2 Excluded Assets
2.5 Allocation of Purchase Price
3.1 Foreign Qualification
3.13 Affiliated Transactions
3.15 Liens on Assets
3.16 Personal Property Leases
3.18 Intellectual Property
3.19 Customers and Suppliers
3.20 Employment Agreements
3.23 Contracts
3.26 Product Warranties
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Exhibits
A. Convertible Note
B. Software Licensing Agreement
C. Non-Competition Agreement
D. Bill of Sale
E. Seller's Legal Opinion
F. Purchaser's Legal Opinion
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 23rd day of March, 1998, by and among EAGLE RESEARCH CORPORATION, a
West Virginia corporation ("Seller"), AMERICAN METER COMPANY, a Delaware
corporation ("American Meter"), METRETEK, INCORPORATED, a Florida corporation
("Purchaser"), and MARCUM NATURAL GAS SERVICES, INC., a Delaware corporation
("Marcum").
W I T N E S S E T H:
WHEREAS, Seller is, among other things, engaged in the business of
developing, manufacturing and selling electronic meter correcting and reading
equipment, excluding those business activities conducted by Seller (i) that
the parties agree are associated with the design, construction and sale of
remote terminal units (the "RTU Business") (it being agreed that the Business
shall include, and the RTU Business shall not include, high-low pressure
monitors developed, manufactured and sold by Seller), and (ii) in the system
installation business (collectively, such activities of Seller, taking into
account the aforementioned excluded business activities, are hereinafter
referred to as the "Business"); and
WHEREAS, Seller desires to sell and Purchaser desires to purchase certain
assets of Seller used in the Business, upon the terms and subject to the
conditions set forth herein; and
WHEREAS, the parties hereto desire to enter into certain other covenants
among themselves as an inducement to and in connection with the execution,
delivery and performance of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
Section 1. Sale and Purchase of the Assets
Section 1.1 Sale and Purchase. At the Closing (as defined below),
upon the terms and subject to the conditions set forth in this Agreement,
Seller shall sell, assign, transfer, convey and deliver to Purchaser, and
Purchaser shall purchase and acquire from Seller, all of Seller's right, title
and interest in and to all the assets of Seller of every kind, character and
description, whether now owned or hereafter acquired by Seller prior to the
Closing Date, whether tangible or intangible, and wherever located, which are
owned, used or held for use in connection with, generated by, derived from or
attributable to, or otherwise related to, the Business (excluding the Excluded
Assets, as defined in Section 1.2 hereof) (all of which are collectively
referred to herein as the "Assets"), including, but not limited to, the
following:<PAGE>
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(a) all equipment, machinery, vehicles, office furniture,
fixtures, tools, dies, spare parts, appliances, computer hardware, equipment
and supplies, and other similar tangible personal property, including, without
limitation, the personal property and equipment set forth on Schedule 1.1(a)
hereto;
(b) all inventories, including, without limitation, raw
materials, work in process, finished goods, inventories held by customers on a
consignment basis, stocks, supplies, materials and manufactured and purchased
parts, including, without limitation, the items of inventory set forth on
Schedule 1.1(b) hereto;
(c) all patents, trademarks, trade names, trade dress, logos,
service marks and copyrights, all applications, registrations, extensions,
reissues and continuations thereof, all licenses and sublicenses with respect
thereto, all rights thereunder, and all remedies against infringement thereof,
including, without limitation, those items set forth on Schedule 3.18 hereto
(including trademarks, trade names, trade dress and logos directly related to
the Assets and used by Seller in the Business that are owned by American
Meter), other than the name "Eagle" and all trademarks, trade names, trade
dress and logos associated with such name;
(d) all technologies, materials, formulations, data bases, trade
secrets, secret processes, know how, inventions and other intellectual
property and intangible property of every kind and nature;
(e) all computer software (including documentation and related
object and source codes), other than that pertaining to "Pantheon," as such
term is defined in the License Agreement (which is defined in Section 5.15
hereof);
(f) all rights and interests under orders, bids, quotations and
similar arrangements relating to the purchase or sale of Seller's goods and
services, and all deposits by customers, to the extent not fulfilled prior to
the Closing Date;
(g) all rights and interests under licenses, contracts,
agreements, leases and commitments, including without limitation, contracts
providing for the lease of equipment, machinery, office equipment, furniture
and vehicles, sales representative agreements, distributor agreements,
consignment agreements and other similar agreements, whether as principal or
agent or distribution, to the extent (i) transferable to Purchaser, (ii)
assumed in the sole discretion by Purchaser, and (iii) set forth on Schedule
1.1(g) hereof ("Assigned Contracts");
(h) all franchises, approvals, permits, licenses,
qualifications, authorizations, orders, registrations, certificates,
variances, and similar rights obtained from or issued by any Governmental
Authority (as defined in Section 3.5 below), and all pending applications
therefor, that are transferable to Purchaser;
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(i) all rights and interests of Seller under all warranties,
guarantees and covenants not to compete for the benefit of the Business or the
Assets;
(j) all data, documents, forms, correspondence, lists, plats,
architectural plans, drawings, specifications, creative materials, advertising
and promotional literature and materials, studies, reports, and other printed,
written, machine readable, electronic or computer-generated materials, and
such financial information as reasonably necessary for Purchaser to operate
the Business, to the extent they relate to the Assets or the Business; and
(k) the Business as a going concern and all goodwill associated
therewith.
Section 1.2 Excluded Assets. Notwithstanding any provision in
Section 1.1 or elsewhere herein to the contrary, the Assets shall not include
any of the following:
(a) those Assets disposed of in the ordinary course of business
as permitted by this Agreement;
(b) the corporate franchise of Seller and the records of all
matters pertaining to its corporate existence including minute books, stock
transfer books, tax returns, tax identifications, books of account and other
records pertaining to Seller's corporate organization;
(c) the Purchase Price (as defined below) and all other rights
accruing to Seller under this Agreement;
(d) the rights to all of Seller's claims for any federal, state,
local or foreign tax refunds or adjustments;
(e) Seller's Employee Plans (as defined in Section 3.21 hereof);
(f) any leases of real or, except as set forth on Schedule
1.1(g), personal property by Seller as lessee;
(g) any rights and interests of Seller under contracts,
agreements and commitments that are not set forth on Schedule 1.1(g);
(h) the accounts receivable of Seller;
(i) cash and cash equivalent items;
(j) insurance policies, surety bonds, prepaid insurance
premiums, insurance claims and refunds and adjustments on insurance policies
and claims;
(k) net operating losses generated by Seller and all rights
pertaining thereto;
(l) assets, properties and rights set forth on Schedule 1.2; and
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(m) assets, properties and rights not used by Seller principally
in connection with the Business and not necessary for Purchaser to conduct the
Business, including, but not limited to, the Pantheon business and assets,
properties and rights related thereto, which are set forth on Schedule 1.2.
Section 1.3 Liabilities.
(a) Notwithstanding any other provision herein to the contrary,
Purchaser is not assuming and shall have no obligation to pay, perform or
discharge any liabilities, debts, accounts payable or other obligations of
Seller of any kind or nature whatsoever, whether known or unknown, fixed or
contingent, whenever arising or accruing, other than the Assumed Liabilities
(as defined in Section 1.3(b) below).
(b) From and after the Closing Date, Purchaser shall assume and
perform the Assumed Liabilities. As used herein, the term "Assumed
Liabilities" means only the following:
(i) One-half of the "Post-Closing Transitional Employee
Costs" (as defined in Section 5.10(g) hereof);
(ii) the Assumed Warranty Obligations (as defined in
Section 5.11 hereof); and
(iii) the Assumed Contracts set forth on Schedule 1.1(g)
hereto.
(c) Notwithstanding the foregoing, except for the Assumed
Liabilities expressly and specifically set forth above, for purposes of
amplification and not of limitation, Purchaser shall not assume and shall have
no obligation to pay or perform any of the following debts, liabilities or
obligations of Seller:
(i) any tax, fee or charge pertaining to the Assets
accruing on or prior to the Closing Date, including but not limited to
income, sales, use, transfer or other tax, whether imposed on Seller or
Purchaser, accruing due to the transactions contemplated hereby;
(ii) any trade or accounts payable of Seller;
(iii) any liabilities or obligations of Seller for (A)
wages, salaries, bonuses, commissions, vacation pay, sick pay, holiday pay,
severance or termination pay, (B) employee benefits, including without
limitation pension plans, bonus plans, profit-sharing plans, life, health or
disability insurance programs, 401(K) plans and other Employee Plans (as
defined in Section 3.21 hereof), (C) FICA, payroll or other payroll taxes, or
(D) any other liability or obligation pertaining to employees, consultants,
independent contractors and other persons or entities who provide services to
Seller;
(iv) Pre-Closing Transitional Employee Costs (as defined in
Section 5.10(g) hereof), other than as specified in Section 5.10(g);
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(v) any real property lease of Seller;
(vi) any contract, agreement, lease or commitment not
specifically set forth on Schedule 1.1(g) hereto;
(vii) any environmental liability of Seller;
(viii) any debts, liabilities or obligations of Seller
arising under any guarantee, bond, debt, loan or credit agreement, promissory
note, mortgage, security agreement, pledge or other similar agreement or
instrument;
(ix) any obligation or liability of Seller to indemnify any
person or entity (including but not limited to any officer, director or
stockholder) for any expense, loss, damage, judgment, fine, cost, amount paid
in settlement, legal fees or otherwise, whether such indemnity is pursuant to
any statute, charter document, bylaws, agreement or otherwise);
(x) any liability or obligation relating to any financial
indebtedness of Seller;
(xi) any debt, liability or obligation incurred by Seller
under this Agreement, or any cost or expense incurred in connection herewith
or the transactions contemplated hereby; or
(xii) any other debt, liability or obligation of Seller or
related to the Assets or the Business, whether fixed, contingent or otherwise,
whether or not arising in the ordinary course of business, that accrues on or
prior to the Closing Date.
Section 2. Purchase Price and Payment
Section 2.1 Purchase Price. As full payment and consideration for
the sale and transfer of the Assets by Seller to Purchaser, upon the terms and
subject to the conditions set forth herein, Purchaser shall assume and
thereafter perform the Assumed Liabilities of Seller set forth in Section
1.3(b) hereof and shall pay to Seller a total purchase price of $4,500,000,
plus or minus the "Inventory Adjusting Payment" (as defined in Section 2.2
hereof) and the "Convertible Note Adjustment" (as defined in Section 2.4
hereof) (the "Purchase Price") as follows:
(a) At the Closing, Purchaser shall pay to Seller the amount of
$1,300,000 (the "Cash Portion") by certified or bank cashier's check or by
wire transfer of immediately available funds to an account designated by
Seller;
(b) At the Closing, in payment of $2,000,000 of the Purchase
Price, Marcum shall issue and deliver to Seller a certificate representing
1,758,242 shares (the "Issued Shares") of Common Stock, par value $.01 per
share, of Marcum (the "Common Stock");
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(c) At the Closing, in payment of $1,200,000 of the Purchase
Price, Purchaser and Marcum shall execute and deliver to Seller at the Closing
an unsecured, subordinated, convertible promissory note, substantially in the
form attached hereto as Exhibit A (the "Convertible Note");
(d) On the date specified in Section 2.2 hereof, the Inventory
Adjusting Payment shall be paid as specified in Section 2.2 hereof; and
(e) As specified in Section 2.4 hereof, the Convertible Note
Adjustment, if any, shall be made.
Section 2.2 Post-Closing Adjustment For Purchase Price For Inventory.
(a) Within 60 days after the Closing Date, Seller, with the
assistance of any relevant former employees of Seller who have been hired by
Purchaser, shall prepare and deliver to Purchaser a statement (the "Closing
Inventory Statement") setting forth the amount and value of the "Inventory"
(as defined below) of the Business as of the Closing Date (the "Closing
Inventory Amount"), computed in accordance with provisions of this Agreement.
For purposes of this Agreement, the term "Inventory" shall mean the value at
the close of business on the date of determination thereof of all inventory,
including raw materials, work in process and finished goods, used in the
Business, net of reserves for obsolescence. For purposes of this Agreement,
the parties agree that the Inventory as of December 31, 1997 was $1,683,772,
less reserves of $173,483 (the "1997 Inventory Amount"). The computation of
the Closing Inventory Amount shall be made on a basis consistent with the
method of computation for the 1997 Inventory Amount. Solely for purposes of
computing the amount, if any, of the Inventory Adjusting Payment (as defined
below in this Section 2.2), Purchaser hereby agrees that the amount and method
of determining the reserves for obsolescence used by Seller in calculating the
1997 Inventory Amount, and all parties hereto agree that the same reserve
amount will be used to calculate the Closing Inventory Amount.
(b) If Purchaser does not deliver to Seller written notice of
any objections to the Closing Inventory Amount as proposed by Seller within 30
days after Purchaser's receipt of the Closing Inventory Statement, then the
Closing Inventory Amount set forth in the Closing Inventory Statement shall be
deemed conclusive and binding on the parties hereto. If Purchaser does so
deliver written notice of any objections in reasonable detail to the Closing
Inventory Amount, then Purchaser and Seller shall use their best efforts to
resolve the matters in dispute among themselves and agree upon the Closing
Inventory Amount. If Purchaser and Seller do not agree in writing on the
Closing Inventory Amount within 30 days after Seller's receipt of Purchaser's
notice of objections to Seller's determination of the Closing Inventory
Amount, then Purchaser and Seller and shall submit the issues and the amount
in dispute (the "Disputed Amount") to an accounting firm mutually acceptable
to Purchaser and Seller (the "Accountants") for final resolution and
determination of the Closing Inventory Amount. Each party shall furnish to
the Accountants such work papers and other documents relating to the disputed
issues as the Accountants may reasonably request and as are available to the
parties, and shall be afforded the opportunity to present to the Accountants
any material relating to the determination and to discuss the determination
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with Accountants. The determination made by the Accountants as set forth in a
writing delivered to each party within 60 days after being engaged shall be
made in accordance with the provisions of this Agreement and shall be
conclusive and binding upon the parties hereto. Seller shall bear that
portion of the fees and expenses of the Accountants that is equal to the
portion of the Disputed Amount determined to have been correctly disputed by
Purchaser, and Purchaser shall bear the remainder of such fees and expenses.
(c) Seller shall make the work papers and back-up materials used
in preparing the Closing Inventory Statement available to Purchaser and its
accountants and representatives at reasonable times and upon reasonable notice
at any time during the review by the Purchaser of the Closing Inventory Amount
and the resolution by the parties of any objections thereof.
(d) Within 30 days after final determination of the Closing
Inventory Amount pursuant to Section 2.2, an adjusting payment (the "Inventory
Adjusting Payment") shall be made by Seller to Purchaser or by Purchaser to
Seller as follows: (i) if the 1997 Inventory Amount exceeds the Closing
Inventory Amount, then Seller shall make an Inventory Adjusting Payment to
Purchaser in the amount of the difference; and (ii) if the Closing Inventory
Amount exceeds the 1997 Inventory Amount, then Purchaser shall make an
Inventory Adjusting Payment to Seller in the amount of the difference. The
Inventory Adjusting Payment shall be paid in immediately available funds by
wire transfer to an account designated by the payee.
Section 2.3 Convertible Note. The Convertible Note (a) shall bear
interest on the unpaid principal balance at a fixed rate per annum equal to
7.5% payable quarterly in arrears, (b) shall be due and payable four years
from the Closing Date in a single payment of unpaid principal together with
accrued and unpaid interest, (c) may be prepaid in whole at any time or in
part from time to time without penalty or premium, (d) shall be subject to
certain debt covenants of Marcum set forth in the Convertible Note, and (e)
shall be convertible into unregistered shares of Common Stock at the rate of
$1.421875 of principal per share (the "Convertible Shares"); provided,
however, that in no event shall the aggregate number of Issued Shares and
Convertible Shares (collectively, the "Shares") to be issued by Marcum to
Purchaser hereunder exceed 19.99% of the aggregate number of Shares of Marcum
outstanding on the date preceding the Closing Date (the "Share Cap"). The
amount of any principal balance on the Convertible Note, together with any
accrued and unpaid interest thereon, as a result of the Share Cap, if
applicable, shall be paid in cash upon the maturity date of the Convertible
Note or if sooner upon either prepayment or conversion, as the case may be, of
the Convertible Note.
Section 2.4 Convertible Note Adjustment.
(a) The amount of the Convertible Note is based upon the
assumption that average annualized gross sales ("Average Sales") for the
period from July 1, 1998 through December 31, 1999 (the "Sales Adjustment
Period") of products formerly manufactured and sold by Seller (the "Products")
will be at least $4,500,000. For purposes of this Section 2.4, "Average
Sales" shall mean the aggregate gross sales (net of returns and allowances) of
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the Products by Purchaser and its affiliates during the during the Sales
Adjustment Period, multiplied by a fraction, the numerator of which is 12 and
the denominator of which is 18. For purposes of this Section 2.4, the term
"Products" shall include products sold by Purchaser and its affiliates, the
design of which is directly derived from the Products.
(b) Purchaser shall provide Seller with a quarterly report of
gross sales of Products during the Adjustment Period within 45 days after the
end of each quarter. The last such report shall be accompanied by a
certificate from Purchaser's Chief Financial Officer certifying the accuracy
of the final aggregate amount. Seller shall have the right to audit any
report in the amount of Average Sales at any time with reasonable notice to
Purchaser.
(c) If Average Sales are less than $4,500,000, then the
principal amount of the Convertible Note shall be reduced dollar-for-dollar by
the amount of any such deficiency; provided, however, that the amount of any
such reduction in the principal amount of the Convertible Note shall not
exceed $600,000 (the amount of such reduction referred to herein as the
"Convertible Note Adjustment").
(d) In the event that Seller has converted into Convertible
Shares a portion of the Convertible Note in excess of the difference between
$1,300,000 and the Convertible Note Adjustment (the "Excess Conversion
Amount"), then within 30 days after the determination of the Excess Conversion
Amount, Seller shall pay the Excess Conversion Amount to Purchaser in
immediately available funds by wire transfer to an account designated by
Purchaser. The obligation of Seller to pay the Excess Conversion Amount to
Purchaser is joint and several with American Meter and shall survive the
Closing until satisfied in full notwithstanding any provision of Section 9.1
hereof to the contrary.
Section 2.5 Issued Shares. The Shares shall be issued by Marcum in
transactions exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and applicable state securities
laws and shall constitute "restricted securities" as such term is defined in
Rule 144 promulgated under the Securities Act. Seller shall have certain
registration rights with respect to the Shares as set forth in Section 10.7
hereof.
Section 2.6 Allocation of Purchase Price. The Purchase Price set
forth in Section 2.1 hereof shall be allocated among the Assets for all
purposes (including financial reporting and tax purposes) as set forth on
Schedule 2.6 hereto. Seller and Purchaser each hereby covenants and agrees
that it will not take a position on any income tax return, before any
governmental agency charged with the collection of any income tax, or in any
judicial proceeding that is in any way inconsistent with the terms of this
Section 2.6.
Section 3. Representations and Warranties of Seller and American Meter.
Each of Seller and American Meter hereby jointly and severally represents
and warrants to and for the benefit of Purchaser and Marcum as follows:<PAGE>
<PAGE>
Section 3.1 Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of West
Virginia. American Meter is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Seller is duly
qualified or licensed to do business and is in good standing as a foreign
corporation in each state and other jurisdiction in which the ownership, lease
or operation of the Assets or the conduct of the Business requires such
qualification or licensing. Schedule 3.1 hereto sets forth an accurate and
complete list of each state in which Seller is licensed or qualified to do
business as a foreign corporation.
Section 3.2 Subsidiaries. Seller has no direct or indirect
subsidiaries and does not own, hold or control, directly or indirectly, any
shares of capital stock or any equity, ownership, management or voting
interest in any corporation, general or limited partnership, limited liability
company, joint venture, business trust or other business entity or association
(collectively, "Entities").
Section 3.3 Power and Authority. Seller has all requisite right,
power and authority, corporate or otherwise, to conduct its business and
affairs (including the Business) as presently conducted and as proposed to be
conducted, to own, lease and operate its assets and properties (including the
Assets), and to execute, deliver, and perform its obligations under, this
Agreement and the other agreements and instruments to be executed and
delivered by it hereunder (the "Related Seller Agreements"). The execution
and delivery by it of this Agreement and the Related Seller Agreements and the
performance by it of its obligations hereunder and thereunder have been duly
and validly authorized by all requisite action, corporate or otherwise, of it.
Section 3.4 Enforceability. This Agreement has been duly and
validly executed and delivered on behalf of it and does, and the Related
Seller Agreements when duly and validly executed by it shall, constitute
legal, valid and binding obligations of it, enforceable against it in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, receivership, reorganization,
moratorium and other similar laws now or hereafter in effect relating to or
affecting creditors' rights and remedies generally, and by general principles
of equity, whether applied by a court of law or in equity.
Section 3.5 No Conflicts. The execution and delivery by it of this
Agreement and the Related Seller Agreements and the performance by it of the
transactions and obligations contemplated hereby and thereby do not and will
not, directly or indirectly, (a) violate, conflict with, or constitute a
breach of or a default (or an event that, after the giving of notice or the
lapse or time or both, would constitute a default) under, any provision of (i)
its certificate or articles of incorporation, bylaws or other charter or
organizational documents, (ii) any agreement among its shareholders or between
it and its shareholders, (iii) any contract, obligation, note, security
agreement, mortgage, bond, indenture, lease, loan agreement, debt instrument
or other instrument, commitment or agreement to which any of the Assets are or
may be bound, or (iv) any license, franchise, approval, certificate, permit
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<PAGE>
or authorization held by it or applicable to the Assets; (b) violate any
applicable federal, state, local or foreign law, statute, rule, regulation or
ordinance, or any order, injunction, writ, judgment, decree or ruling of any
court, arbitrator or governmental, quasi-governmental, administrative or
regulatory body, agency or authority ("Governmental Authority"); (c) result in
the creation or imposition of any mortgage, lien, pledge, security interest,
conditional sales rights under any applicable bulk sales or bulk transfer law
or other title retention agreement, or any other restriction, encumbrance or
claim of any kind or description on or against any of the Assets; or (d)
constitute an event which would permit any individual, Entity or Governmental
Authority (collectively, "Person") to terminate or modify any Assigned
Contract.
Section 3.6 Defaults. It is not presently in breach or violation of
or default under or conflict with any item set forth in Section 3.5(a) or (b);
and no event or condition has occurred which, after the giving of notice or
the lapse of time or both, could be reasonably expected to result in any such
breach, violation, default or conflict.
Section 3.7 Consents. No consent, authorization, permit or approval
of, notice or report to, or filing or registration with, or waiver
(collectively, "Consents") by, any Person is necessary for it to execute and
deliver this Agreement and the Related Seller Agreements and to perform its
obligations hereunder and thereunder, except for Consents the lack of which,
either individually or in the aggregate, shall have no material adverse effect
on the Assets or the Business or on its ability to consummate the transactions
contemplated by this Agreement or the Related Seller Agreements.
Section 3.8 Litigation. There are no actions, suits, claims,
investigations, arbitrations, hearings or other proceedings (whether civil,
criminal, administrative, investigative or informal) (collectively,
"Proceedings") pending or, to the best knowledge of it, threatened by, before
or involving any court, arbitrator or Governmental Authority (i) against it or
affecting the Business or the Assets, (ii) in which any Person has sought or
is reasonably likely to seek to restrain or prohibit, or to obtain damages or
other relief in connection with, this Agreement or the Related Seller
Agreements or the transactions contemplated hereby or thereby, or (iii) which,
if determined adversely to it, would be reasonably likely to have a material
adverse effect on the Business or the Assets or its ability to perform its
obligations hereunder or to consummate the transactions contemplated hereby.
Neither the Business nor any of the Assets are subject to any outstanding
judgment, order, writ, injunction, decree or ruling of any court, arbitrator
or Governmental Authority. Seller is not presently engaged in any legal
action to recover moneys due from damages caused by, or to enforce its rights
against, any third party relating to the Assets of the Business.
Section 3.9 Ability to Dispose of the Assets. Seller is the sole
legal owner of the Assets and has the sole dispositive power with respect to
the Assets.
Section 3.10 Brokers' Fees. No broker, finder, investment broker or
similar agent is or shall be entitled to receive any fee, commission or other
remuneration or compensation relating to the transactions contemplated by this
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Agreement or the Related Seller Agreements based on any action taken by or on
behalf of it.
Section 3.11 Financial Statements. Seller has furnished (or, with
respect to the 1997 financial statements, will furnish prior to the Closing)
to Purchaser true and complete copies of Seller's audited balance sheets as of
December 31, 1996 and 1997, and the related statements of operations and cash
flows for the fiscal years then ended (together with the report thereon of
Arthur Anderson, independent certified public accountants, as to the 1997
financial statements, and Arnett & Foster, P.L.L.C., independent certified
public accountants, as to the 1996 financial statements, and in each case
together with the notes thereto). All such Financial Statements (together
with all related schedules and notes) (i) present fairly the financial
condition, results of operations and cash flows of Seller as of the respective
dates thereof and for the respective periods covered thereby; (ii) have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods indicated and with prior periods
(except for changes specifically noted therein); (iii) have been prepared in
accordance and consistent with the books and records of Seller; and (iv)
reflect appropriate reserves for all taxes and other liabilities or
obligations of any nature, whether accrued, absolute, fixed, contingent or
otherwise and whether due or to become due, and all reasonably anticipated
losses related to the Business.
Section 3.12 Absence of Undisclosed Liabilities. As of the date
hereof, except as set forth in the audited balance sheet of Seller as of
December 31, 1997 and the related notes thereto ("1997 Balance Sheet"), Seller
does not have any material debt, liability, guarantee or other obligation
related to the Assets or the Business, except for those that (i) are not
required by generally accepted accounting principles to be included in the
1997 Balance Sheet, and (ii) have been incurred after the date of the 1997
Balance Sheet in the ordinary course of business and are usual and normal in
amount, both individually and in the aggregate. To the best knowledge of
Seller and American Meter, no circumstance or event has occurred prior to the
Closing that could be reasonably expected to give rise to any additional
material debts, liabilities or obligations pertaining to the Business after
the Closing.
Section 3.13 No Material Adverse Change.
(a) Since December 31, 1997, (i) the Business has been conducted
only in its historic, ordinary course; (ii) there has been no material adverse
change in (x) the Assets or (y) the liabilities, operations, affairs,
condition (financial or otherwise) or prospects of the Business; and (iii)
there has been no damage, destruction, loss, occurrence or event (whether or
not insured against) which, either individually or in the aggregate, has had,
or might reasonably be expected to have, a material adverse effect on the (x)
Assets or (y) liabilities, operations, affairs, condition (financial or
otherwise) or prospects of the Business.
(b) Without limiting the generality of the foregoing, since
December 31, 1997, there has not been any:
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(i) Sale, assignment, transfer, lease or other disposition
of any Assets, except of inventory and equipment to customers in the ordinary
course of business for fair consideration;
(ii) Mortgage, pledge, security interest, lien, claim or
other encumbrance or restriction granted by Seller, or otherwise created or
imposed, on or against any Asset or the Business;
(iii) Capital expenditure (or series of related capital
expenditures) by Seller relating to the Business exceeding $25,000;
(iv) Material destruction, damage to or loss (whether or
not insured against) of any Assets;
(v) Entering into any agreement, contract, lease or license
(or series of related instruments) relating to the Assets or the Business,
which either involves more than $25,000 or is outside the ordinary course of
business;
(vi) Modification, amendment, cancellation or termination
of any contract, agreement, lease or license relating to the Assets or the
Business to which Seller is a party, except in the ordinary course of
business;
(vii) Commencement or notice or threat of commencement of
any Proceeding against or affecting the Business or the Assets;
(viii) Amendment to Seller's articles of incorporation or
bylaws;
(ix) Capital investment in, loan to or acquisition of the
securities or assets of, any other Person (other than in the ordinary course
of business);
(x) Grant of any license or sublicense of any Assets or any
rights under or with respect to any Intellectual Property;
(xi) Any transaction between Seller and any of its
officers, directors, employees or affiliates, other than in the ordinary
course of business and usual in amount and as disclosed on Schedule 3.13
hereto;
(xii) Waiver, cancellation, compromise or release of any
material right or claim of Seller relating to the Assets or the Business, or
forgiveness or cancellation of any material debt or claim relating to the
Assets or the Business;
(xiii) Failure to maintain levels of inventory in the
Business consistent with past ordinary practices, or alteration of the
inventory practices maintained by Seller during the previous twelve months
relating to the Business;
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(xiv) Other events or conditions of any character that,
individually or in the aggregate, (A) have or might reasonably have a material
adverse effect on (i) the Assets, or (ii) the operations, liabilities,
condition (financial or otherwise) or prospects of the Business, or (B) cause
or might reasonably be expected to cause Seller to be in breach of any of its
representations, warranties or covenants hereunder; or
(xv) Any agreement, commitment, arrangement or
understanding by Seller to do any of the actions described in the preceding
clauses (i) through (xiv).
Section 3.14 Taxes.
(a) Within the times (or if later all penalties and interest
related thereto having been paid in full) and in the manner prescribed, Seller
has accurately prepared in good faith and properly filed all federal, state,
local and foreign tax returns, reports and forms required by law, rule,
regulation or otherwise to be filed relating to the Business and has paid all
taxes, assessments and penalties due and payable, and Seller has furnished to
Purchaser true and complete copies of all such tax returns, reports and forms
so filed since December 31, 1994. All tax returns, reports and forms filed
by Seller accurately set forth all items (to the extent required to be
included or reflected in such returns) relevant to its future tax liabilities,
including the tax bases of the Assets. Seller has fully paid or has made
adequate provision in the 1997 Balance Sheet for all federal, state, local and
foreign taxes relating to the Business for the period ending on the date of
the 1997 Balance Sheet and for all subsequent periods. Seller has timely
collected, withheld and paid or, if not yet due, will pay when due, all taxes
required to be withheld by any federal, state, local or foreign taxing
authority relating to the Business and complied with all information reporting
requirements related thereto.
(b) There are no disputes pending or overtly threatened by any
taxing authority as to taxes of any nature payable by Seller. No examinations
or audits of the federal, state, local or foreign tax returns of Seller
relating to the Business are currently in progress or, to the best knowledge
of Seller and American Meter, threatened or proposed. No deficiency or
adjustment for any tax has been claimed, proposed or assessed against Seller
relating to the Business by any taxing authority that remains unpaid.
(c) As used in this Section 3.14, the term "tax" includes all
federal, state, local or foreign income, franchise, profits, gross receipts,
value added, net worth, real property, personal property, sales, transfer,
use, service, ad valorem, stamp, environmental, windfall profits, employment,
social security, Medicare, disability, workers' compensation, unemployment
compensation, occupation severance, purchaser premiums, excise, withholding,
payroll and other taxes, charges, fees, levies, tariffs, duties and other
assessments of any kind or nature, imposed by the laws and regulations of any
governmental jurisdiction (federal, state, local or foreign) or by any taxing
authority (federal, state, local or foreign) and all interest, fines and
penalties related thereto.
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Section 3.15 Title to and Condition of Assets. The Assets<PAGE>
constitute all of the assets, rights and interests of every kind and
description that are used by Seller in the Business (other than assets of
Seller or American Meter that are not principally used in the Business and not
necessary to conduct the Business as set forth on Schedule 1.2 hereof) and
will permit Purchaser to operate the Business in compliance with all legal
requirements substantially as conducted by Seller. All tangible Assets are
physically located at 105 Erskine Lane, Scott Depot, West Virginia. Seller
has and will transfer to Purchaser at Closing good, valid, marketable and
exclusive title to and rightful and peaceful possession of all of the Assets,
free and clear of any and all mortgages, liens, security interests, pledges,
charges, encumbrances, equities, rights of first refusal, options to purchase,
equitable interest, deeds of trust, claims, easements, rights-of-way,
covenants, conditions or restrictions of any kind or nature whatsoever
("Liens"), except for (i) those disclosed in the 1997 Balance Sheet; (ii)
liens for current taxes not yet due and payable; and (iii) Liens disclosed on
Schedule 3.15 hereto which will be removed and released at or prior to the
Closing. Seller is in rightful possession of all personal property leased to
it from others and utilized in the Business. All tangible personal property
of Seller included in the Assets is generally in good operating condition and
repair (ordinary wear and tear excepted), has been utilized or serviced only
in a manner that would not void or limit the coverage of any warranty thereon,
has been properly maintained and are adequate and suitable for its intended
purposes.
Section 3.16 Personal Property Leases. Schedule 3.16 hereto sets
forth each lease of personal property under which Seller is either a lessee or
lessor of certain of the Assets. Each such lease is in full force and effect
and is a valid and binding obligation of Seller and of each of the parties
thereto. Seller is not, and Seller does not have any knowledge that any other
party is, in default with respect to any material term or condition of any
such lease, and no event has occurred which through the passage of time or the
giving of notice, or both, would constitute a default thereunder or would
cause the acceleration of any obligation of any party thereto or the creation
of a lien or encumbrance upon any Asset.
Section 3.17 Inventory. All of Seller's inventory of raw
materials, work in process and finished goods, parts and supplies (including
inventory on consignment) relating to the Business consists of items of a
quantity and quality usable and saleable in the ordinary course of business by
Seller (net of any reserve reflected in the 1997 Balance Sheet), except for
obsolete, defective, damaged and slow-moving items and items below standard
quality, all of which have been written down on the books of Seller to net
realizable market value or have been provided for by adequate reserves in the
1997 Balance Sheet. All inventories of finished goods consist of items that
have been manufactured in accordance with, and which meet, applicable industry
standards. All inventories are correctly marked. The inventories shown on
the 1997 Balance Sheet are based on quantities determined by physical count or
measurement and are valued at the lesser of cost (determined on a first-in,
first-out basis) or market value and on a basis consistent with that of prior
years and are adjusted for excess and obsolescence.
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Section 3.18 Intellectual Property.
(a) Schedule 3.18 sets forth a complete and accurate list and
brief description of all patents, trademarks, trade dress, logos, service
marks, trade names, corporate names, fictitious names and copyrights, and each
application therefor, which are either owned by Seller or which are used by
Seller in the Business and, in each case where Seller is not the owner
thereof, the name of the owner thereof. Except as set forth in Section 3.18,
Seller is the exclusive owner of and possesses adequate and valid licenses and
other rights to use all of the items set forth in Schedule 3.18 hereto and all
trade secrets, licenses, inventions, processes, discoveries, developments,
designs, formulas, know-how, drawings, customer and supplier lists, software,
confidential information and other proprietary information and all other
proprietary rights, intangible assets and intellectual property, and all
copies and tangible embodiments thereof in whatever form or medium necessary
for the operation of the Business as presently conducted (collectively,
"Intellectual Property").
(b) All rights of Seller in and to its Intellectual Property
related to the Business will be transferred to Purchaser at the Closing.
(c) Seller has taken all necessary and desirable action to
maintain and protect each item of Intellectual Property that it owns or uses
in connection with the Business. Seller has not interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Intellectual
Property rights of any third parties, and Seller has never received any
charge, complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or conflict (including any claim that Seller
must license or refrain from using any Intellectual Property rights of any
third party). To the best knowledge of Seller and American Meter, no third
party has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property rights of Seller. No claim,
demand, assertion, action, suit, arbitration, hearing, investigation or
proceeding is pending or, to the best knowledge of Seller, threatened, which
pertains to or challenges the validity, ownership or enforceability of any
right of Seller in respect to of Intellectual Property. To the best knowledge
of Seller and American Meter, the continued operation of the Business as
currently conducted will not interfere with, infringe upon, misappropriate or
otherwise come into conflict with any Intellectual Property rights of any
third parties.
(d) Seller is not a party to any agreement, document,
arrangement or understanding pursuant to which Seller has licensed or granted
any right or interest in, to or under any of its Intellectual Property in
connection with the Business. Seller is not obligated or under any liability
whatsoever to make any payment, by way of fees, royalties or otherwise, to any
owner or licensor of, or other claimant to, any of the Intellectual Property
of the Business. Seller has not disclosed any of its trade secrets or other
proprietary or confidential information of the Business to any Person, except
pursuant to a loan or other agreement obligating the recipient to maintain the
confidentiality thereof. To the best knowledge of Seller and American Meter,
no employee of Seller is subject to any agreement, arrangement or commitment
with any former employer or other person, or is subject to any judgments,<PAGE>
<PAGE>
order, decree or ruling of any court, arbitrator or Governmental Authority
regarding confidential information, or rights or restrictions on competition,
that would otherwise affect such employee's ability to perform his duties to
Seller. Seller has never agreed to indemnify any person for or against any
interference, infringement, misappropriation or other conflict with respect to
any item of its Intellectual Property.
Section 3.19 Relationships with Suppliers and Customers. Schedule
3.19 contains a complete and accurate list of (i) the names, addresses and
dollar amounts of business of each of the 20 largest customers of the
Business, in terms of sales during 1997, and (ii) the name, address and dollar
amounts of business of each of the Seller's 10 largest suppliers during the
1997 fiscal year for the Business. Since December 31, 1997, no supplier or
customer of the Business has canceled any contract or order or has indicated
any intention to terminate or materially alter its existing business
relationship with Seller, whether as a result of the transactions contemplated
hereby or otherwise which cancellation or termination would have a material
advance effect on the Business. Seller is not involved, and Seller has no
knowledge of any facts or circumstances which could result, in any material
claim, dispute or controversy with any of the material suppliers or customers
of the Business.
Section 3.20 Labor and Employment Matters.
(a) Seller is not a party to any contract, collective bargaining
agreement or other agreement with any labor union including any collective
bargaining agreement.
(b) Seller is in compliance in all material respects with all
applicable laws, rules and regulations respecting the employment of, including
but not limited to, fair employment practices, terms and conditions of
employment, and wages and hours. Seller has not engaged in any unfair or
illegal labor practice, and there are no charges or claims of employment
discrimination or unfair labor practices pending, or, to the best knowledge of
Seller and American Meter, threatened against, Seller.
(c) Except as set forth in Schedule 3.20 hereto, Seller is not a
party to, nor is it or any of the Assets bound by, any written or oral,
express or implied, (i) retainer, consulting, severance, termination,
employment or similar contracts or agreements not terminable at will by
Seller; or (ii) pension, profit sharing, deferred compensation, bonus, stock
option, stock purchase or incentive plans or agreements providing for
remuneration or benefits to Seller's employees.
(d) Seller has not entered into any severance, termination or
similar arrangement in respect of any present or former officer, director,
employee or consultant that will result in any obligation, absolute or
contingent, of Purchaser or Seller to make any payment to any present or
former officer, director, employee or consultant following his or her
termination of employment by Seller, other than as agreed to by Purchaser and
as otherwise disclosed by Seller on Schedule 3.20 hereto.
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(e) Seller had made payment in full to all of its employees of all
wages, salaries, commissions, bonuses, benefits and other compensation due to
such employees or otherwise arising under any policy, practice, agreements,
plan, program, statute or law.
(f) Seller, American Meter and their affiliates are in compliance
with their obligations, if any, pursuant to the Workers Adjustment and
Retraining Notification Act of 1988, as amended ("WARN"), and all other
notification obligations arising under any federal, state or local, or foreign
statute, rule or regulation.
Section 3.21 Employee Benefit Plans.
(a) No Purchaser Obligation. Purchaser shall have no obligation
or liability with respect to any "employee benefit plan," as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or any other welfare, bonus, deferred
compensation, retirement, incentive, pension, profit sharing, stock purchase,
stock option, stock appreciation right, severance, or other similar employee
benefit plan, program, policy, arrangement or practice, whether formal or
informal, written or oral (collectively, "Employee Plans"), covering any
current or former employee, officer or director of Seller. Each employee of
Seller shall receive from Seller all benefits to which he is entitled under
each Employee Plan in accordance with the provisions of such plans. In
addition, to the extent that any employee of Seller who was employed prior to
Closing participated in any Employee Plan within the meaning of Section 3(3)
of ERISA which is maintained by an ERISA Affiliate, Purchaser shall have no
obligation or liability with respect to such Employee Plans and any affected
employees shall receive from Seller all benefits to which they are entitled
under such plans, in accordance with the provisions of such plans.
(b) Continuation Rights. Purchaser shall have no obligation or
liability to providing continuation of coverage under any group health plan
maintained by Seller or any other ERISA Affiliate ("Continuation Rights") to
any employees of Seller who were employed prior to Closing.
Section 3.22 Insurance. All insurance policies under which the
Business and the Assets are insured or which provide for bonding and surety
arrangements in connection with the Business are in full force and effect and
have been issued under valid policies for the benefit of Seller by properly
licensed insurance companies. The premiums on such policies have been paid as
they became due and payable, and Seller is not in default with respect to
payment of premiums on any such policy. Seller shall maintain in full force
and effect insurance policies providing protection against losses and risks to
the Assets and Business that are customarily insured against by comparable
businesses until the Closing.
Section 3.23 Contracts.
(a) Each Assigned Contract (i) is in full force and effect and
is a valid and binding obligation of Seller and of the other parties thereto,
enforceable by Seller in accordance with its terms, and (ii) may be
transferred by Seller to Purchaser without penalty and to the best knowledge
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of Seller and American Meter will be enforceable by Purchaser. Neither Seller
nor, to the best knowledge of Seller and American Meter, any other party to an
Assigned Contract is in any material respect in breach of or in default under
any Assigned Contract, nor has any event or circumstance occurred which, with
notice or lapse of time or both, would constitute a material breach or default
of the Assigned Contract. Seller has not received notice and has no reason to
believe that any party to any Assigned Contract intends to cancel or terminate
any Assigned Contract or to exercise or not exercise any option thereunder.
(b) Schedule 3.23 hereto sets forth a complete and accurate list
of each of the following Contracts to which Seller is a party which apply to
any portion of the Business or the Assets: (i) any distributor's or
manufacturer's representative or agency agreement; (ii) any output or
requirements agreements; (iii) any agreement not entered into in the ordinary
course of business; (iv) any indenture, mortgage, deed of trust, lease or any
agreement that is unusual in nature, duration, or amount (including, without
limitation, any agreement requiring the performance by Company of any
obligation for a period of time extending beyond one year from the Closing
Date involving total consideration of more than $10,000); (v) any contract
with any Government Authority; (vi) any Contract for the lease of personal
property to or from any person providing for lease payments in excess of
$10,000 per annum; (vii) any Contract for the purchase or sale of raw
materials, commodities, supplies, products or other personal property, or for
the furnishing or receipt of services, the performance of which would extend
over a period of more than one (1) year or that involves consideration in
excess of $10,000; (viii) any contract concerning a partnership or joint
venture; (ix) any Contract under which it has created, incurred, assumed,
guaranteed any indebtedness for borrowed money, or any capitalized lease
obligation, or under which it has imposed a Lien on any of the Assets; (x) any
Contract concerning confidentiality or non-competition; (xi) any Contract
involving any director, officer, stockholder or other affiliate of Seller;
(xii) any Contract for the employment of any individual on a full-time,
part-time, consulting, independent contractor or other basis or providing
severance benefits in excess of customary severance benefits as set forth on
Schedule 3.20; (xiii) any profit sharing, deferred compensation, severance,
termination or other plan or arrangement for the benefit of current or former
directors, officers, or employees; (xiv) any Contract under which it has
advanced or loaned any amount to any of its directors, officers or employees;
or (xv) any other Contract material to the Assets or the Business.
Section 3.24 Licenses. All licenses, rights, privileges, franchises,
permits, approvals, consents and other authorizations related to the Assets
reasonably necessary for the lawful conduct of the Business as it is presently
conducted and necessary to own, operate, maintain and use the Assets in the
manner in which they are now being operated, maintained and used, including
all applicable zoning, environmental, health, safety and other permits, have
been timely obtained and are currently in effect, except for any failure to
have such license or permit that has not had a material adverse effect on
Seller's ability to conduct the Business, and Seller has not violated, and is
not in violation of, any such licenses, rights, privileges, permits,
franchises, consents or other authorizations.
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Section 3.25 Product Liability Claims. No Proceeding is pending or,
to the best knowledge of Seller and American Meter, threatened against or
affecting the Business, arising out of any injury to individuals or to
property as a result of the ownership, possession or use of any product
manufactured, sold, leased or delivered by Seller relating to the Business,
and Seller knows of no facts, circumstances, actions or omissions that could
reasonably create the basis for any such Proceeding.
Section 3.26 Product Warranties. Schedule 3.26 sets forth a complete
and accurate description of all warranties and pending warranty and service
obligations of Seller to its customers in the Business with respect to the
products manufactured or sold by Seller within the two year period prior to
the date of this Agreement, including the beginning and ending dates of such
warranty obligations, and a summary of the warranty charges incurred by Seller
during 1996, 1997 and to date in 1998. Schedule 3.26 also contains a complete
and accurate copy of all such written warranties and terms and conditions, and
a list and amount of all products manufactured or sold by Seller during the
past two years. Each product manufactured, sold, leased or delivered by
Seller to any of its customers has been in material conformity with all
applicable contractual commitments and all express and implied warranties.
Neither Seller nor American Meter knows of any reasonable basis for any
present or future Proceeding against it giving rise to any liability, for
replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth on the 1997
Balance Sheet. There is no pending or, to the best knowledge of Seller and
American Meter, threatened Proceeding under such warranties, other than the
claim by Kukdong City Gas Company (the "Korean Claim").
Section 3.27 Compliance with Laws. The Business and the Assets are
and have been in material compliance with all applicable federal, state, local
and foreign laws, statutes, ordinances, rules, regulations, codes, licenses,
permits, orders, judgments, decrees and other legal requirements (including,
without limitation, those applicable to building, health, employment, labor,
product liability, zoning, environmental protection, occupational safety,
storage, disposal, discharge into the environment of hazardous wastes,
environmental protection, conservation, unfair competition, labor practices or
corrupt practices) which affect or are applicable to the Assets and the
Business.
Section 3.28 No Loss of Rights or Legal Obstacles. The execution
and delivery of this Agreement and the Related Seller Agreements by Seller and
American Meter and their performance of the transactions and obligations
contemplated hereby and thereby do not and will not (a) result in any loss of
any material legal right being transferred to Purchaser hereunder or
thereunder; (b) result in any termination, modification or cancellation of any
Assigned Contract; (c) result in the termination, modification, or
cancellation of, give rise to any right of termination, modification, or
cancellation with respect to, give rise to the acceleration of any performance
required under, result in any increase in any payment due or other liability
under, change the performance required under, or otherwise adversely affect
any Assigned Contract, or modify any Assigned Contract, or result in, or
require, the creation or imposition of any material lien, charge, or
encumbrance upon the Assets, or result in the termination or impairment of any
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material permit, license, franchise, or authorization pertaining to the
Assets; or (d) to the best knowledge of Seller or American Meter, adversely
affect the Assets or the Business in any material respect.
Section 3.29 Transactions with Affiliates. Seller is not a party to
any lease, license or other agreement, understanding or arrangement with any
affiliates of Seller that is necessary for Purchaser to continue to conduct
the Business after the Closing, as it is conducted on the date of the
Agreement.
Section 3.30 Absence of Certain Commercial Practices. To the best of
Seller's knowledge, neither Seller nor any officer, director, employee or
agent of Seller (or any Person acting on behalf of any of the foregoing), has
directly or indirectly, in connection with the Business (i) given or agreed to
give any gift or similar benefit or more than nominal value on behalf of
Seller to any customer, supplier, employee or official of any Governmental
Authority (domestic or foreign), to induce the recipient or his employer to do
business, grant favorable treatment or compromise or forego any claim, (ii)
made any significant payment which might be improper under prevailing law
(regardless of the jurisdiction in which such payment was made) to promote or
retain sales or to help, procure or maintain good relations with suppliers,
(iii) engaged in any activity which constitutes a violation of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations
promulgated thereunder, (iv) engaged in any practice violating any law
prohibiting compliance with an unsanctioned foreign boycott, (v) established
or maintained any unrecorded or illegal corporate fund or account or assets,
(vi) made false or fictitious entries on the books or records of Seller, or
(vii) failed to perform its obligations in any material respect under any
Contract with, or violated in any material respect any federal law known to
Seller in its dealings with, the Federal government or any agency or
department thereof, including, but not limited to, any law with respect to
conspiracy to defraud, false claims, conspiracy to defraud the United States,
embezzlement or theft of public money, fraud and false statements, false
demands against the United States, mail fraud, wire fraud, RICO, and truth in
negotiations.
Section 3.31 Securities Representations as to the Shares.
(a) Investment Intent. Seller is acquiring the Shares solely for its
own account, and not as nominee or agent for any other person or entity, for
investment purposes only, and not with a view to any subsequent offering,
resale or distribution of the Shares.
(b) Sophistication and Suitability. Seller has such knowledge and
experience in business and financial matters to be capable of independently
evaluating the merits and risks of an investment in the Shares. Seller has
independently evaluated the risks and merits of acquiring the Shares and has
independently determined that the Shares are a suitable investment for Seller.
Seller has sufficient financial resources to bear the economic risk of a loss
of its entire investment in the Shares.
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(c) Access to Information. Seller and its representatives have made
an independent investigation of Marcum and its assets, properties, business,
liabilities, financial condition, results of operations and prospects, and
have had access to all of the information it considers necessary or
appropriate in order to evaluate the risks and merits of acquiring the Shares,
and have received all information requested to its satisfaction.
(d) No Reliance. In making its investment decision, Seller has not
relied upon any representations made by Marcum with respect to Marcum or the
Shares (except as set forth in the Agreement) of any projections or other
estimates or forecasts of future performance provided by Marcum.
(e) Accredited Investor. Seller is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
(f) No Registration. Seller understands and acknowledges that the
Shares to be acquired by it hereunder have not been registered for offer or
sale to the Seller under the Securities Act or under the securities laws of
any state, but are being offered and sold by Marcum to Seller pursuant to and
in reliance upon exemptions from the registration requirements of such
securities laws, and that Marcum is relying upon the truth and accuracy of the
representations, warranties, covenants and agreements of the Seller set forth
herein in order to determine the availability of such exemptions and the
suitability of the Seller to acquire the Shares.
(g) Restrictions on Resale. Seller understands and acknowledges
that, as a consequence of the restrictions on subsequent transfer imposed by
the exemptions from registration referred to in this Section 3.31 above, the
Shares may not subsequently be offered, sold, assigned, conveyed, pledged,
hypothecated or otherwise transferred by Seller except pursuant to an
effective registration statement registering the sale or transfer of the
Shares under the Securities Act and under applicable state securities laws or
pursuant to an exemption from such registration requirements, and the
certificates representing the Shares shall bear a legend setting forth such
restrictions substantially as follows:
The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state, and
may not be sold, assigned, transferred, or otherwise disposed of unless the
same is registered under such Act and any applicable state securities laws, or
unless an exemption from such registration is available and Seller receives
evidence of such exemption reasonably satisfactory to it (such as an opinion
of counsel).
Section 3.32 Full Disclosure. No representation, warranty or other
statement by Seller in this Agreement, or in any schedule, exhibit,
certificate, financial statement or other instrument or document furnished or
to be furnished to Purchaser, contains or will contain any untrue statement of
a material fact or omits or will omit any material fact necessary in order to
make any of the statements contained herein or therein, when taken as a whole,
not false or misleading in any material respect in light of the circumstances
in which they were made. There is no fact or circumstance known to Seller
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that materially adversely affects, or in the future may be reasonably expected
to (insofar as Seller can now reasonably foresee) materially adversely affect,
(i) the Assets or (ii) the properties, liabilities, business, affairs,
operations, condition (financial or otherwise) or prospects of the Business
that has not been set forth herein or otherwise described to Purchaser.
Section 4. Representations and Warranties of Purchaser and Marcum.
Each of Purchaser and Marcum hereby jointly and severally represents and
warrants to and for the benefit of Seller and American Meter as follows:
Section 4.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
Marcum is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
Section 4.2 Power and Authority. It has all requisite right, power
and authority, corporate or otherwise, to execute, deliver and perform its
obligations under this Agreement and the other agreements and instruments to
be executed and delivered by it hereunder (the "Related Purchaser
Agreements"). The execution and delivery by it of this Agreement and the
Related Purchaser Agreements and performance of its obligations hereunder and
thereunder have been duly and validly authorized by all requisite action,
corporate or otherwise, of it.
Section 4.3 Enforceability. This Agreement has been duly and
validly executed and delivered on behalf of it and does, and the Related
Purchaser Agreements, when duly executed and delivered on behalf of it will,
constitute legal, valid and binding obligations of it, enforceable against it
in accordance with its respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, receivership, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and remedies generally, and by general principles of equity.
Section 4.4 No Conflicts. The execution and delivery by it of this
Agreement and the Related Purchaser Agreements and the performance by it of
the transactions and obligations contemplated hereby and thereby do not and
will not (a) violate, conflict with, contravene or constitute a breach or a
default (or an event that, after the giving of notice or the lapse or time or
both, would constitute a default) under any provision of (i) its certificate
or articles of incorporation, bylaws or other charter or organizational
documents; (ii) any contract, agreement, obligation, understanding,
commitment, note, security agreement, lease, loan agreement, debt instrument
or other instrument or agreement to which it is a party or by which it or any
of its assets is or may become bound; (iii) any license, approval,
certificate, permit or authorization held by it; or (b) violate any applicable
federal, state or local law, statute, rule, regulation or ordinance, or any
order, injunction, writ, judgment, decree or ruling of any court, arbitrator
or Governmental Authority.
Section 4.5 Consents. No Consent by any Person is necessary for it
to execute and deliver this Agreement and the Related Purchaser Agreements and
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Section 4.6 Litigation. There are no Proceedings pending or, to the
best of its knowledge, threatened by or before any court, arbitrator or
Governmental Authority against it (i) in which any Person is seeking or is
reasonably likely to seek to restrain or prohibit, or to obtain damages or
other relief in connection with, this Agreement or the Related Purchaser
Agreements or the transactions contemplated hereby or thereby, (ii) which if
determined adversely to it would be reasonably likely to have a material
adverse effect on its ability to perform its obligations hereunder or to
consummate the transactions contemplated hereby, or (iii) which, if determined
adversely to it, would be reasonably likely to have a material adverse effect
on the assets, business, affairs, financial condition or operations of Marcum.
Section 4.7 Shares. The Shares have been validly authorized and,
when issued as contemplated by this Agreement and the Convertible Note, will
be validly issued, fully paid and non-assessable.
Section 4.8 Capitalization of Marcum. The authorized capital stock
of Marcum consists of 25,000,000 shares of Common Stock, par value $.01 per
share, and 2,500,000 shares of Preferred Stock, par value $.01 per share, of
which, as of January 31, 1998, 12,329,552 shares of Common Stock, options to
purchase 1,585,675 shares of Common Stock, and no shares of Preferred Stock
were issued and outstanding.
Section 4.9 Securities Law Reports. Marcum has delivered to Seller
a complete and accurate copy of each Annual Report on Form 10-KSB, Quarterly
Report on Form 10-QSB, Current Report on Form 8-K and Proxy Statement (the
"SEC Reports") filed with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since January 1, 1996. All SEC Reports were prepared in accordance
with and complied in all material respect with the applicable requirements of
the Securities Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder, and as of the dates they were filed, none of the SEC
Reports (including, without limitation, any financial statements or schedules
included or incorporated by reference therein) contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
or incorporated by reference therein, or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading in any material respects, except to the extent any such
statement or omission was superseded by a later-dated SEC Report.
Section 4.10 Financial Statements. In all material respects, the
consolidated financial statements of Marcum (including any notes thereto)
included in the SEC Reports were prepared in accordance with generally
accepted accounting principles applied on a consistent basis through the
periods covered thereby (except as disclosed in such financial statements),
and fairly present in all material respects the consolidated financial
condition of Marcum as of the dates thereof and the consolidated results of
Marcum's operations and consolidated cash flow for the periods then ended,
subject, in the case of any unaudited interim financial statements, to the
omission of certain notes not ordinarily accompanying such unaudited financial
statements, and to normal year-end adjustments.
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Section 4.11 Absence of Adverse Change. Since December 31, 1997,
there has not been any material adverse change in the assets, business,
affairs, operations, financial condition or operations of Marcum.
Section 4.12 No Brokers. No broker, finder, investment broker or
similar agent is or shall be entitled to receive any fee, commission or other
remuneration or compensation relating to the transactions contemplated by this
Agreement or the Related Purchaser Agreements based on any action taken by or
on behalf of it.
Section 5. Pre-Closing Covenants.
Section 5.1 Conduct of Business of Seller.
(a) From the date of this Agreement through the Closing Date,
Seller shall conduct the Business only in its ordinary course consistent with
past practices, including but not limited to using its best efforts to (i)
preserve intact the Business and its good will, including Seller's
relationships with its suppliers, customers, lenders and others having
business relationships with it, (ii) perform all its obligations in accordance
with their terms, (iii) maintain the Assets in good operating condition, (iv)
keep available the services of its present lessors, lessees, licensors,
licensees, suppliers, customers, employees and agents, and (v) comply with all
applicable laws, rules, regulations and orders.
(b) Without limiting the generality of the foregoing, from the
date of this Agreement until the Closing, Seller shall not, without the prior
written consent of Purchaser:
(i) Take any action referred to in Section 3.13(b) hereof;
(ii) Take any action or omit to take any action which would
breach any covenant or agreement of Seller herein; or
(iii) Take any action which would cause any representation or
warranty of Seller herein to be inaccurate in any material respect.
(c) From the date of this Agreement through the Closing Date, Seller
shall deliver to Purchaser on a no less than monthly basis, accurate, complete
and current copies of financial statements of Seller and any reports with
respect to the operations of the Business prepared by or for Seller. All such
financial statements shall be prepared in accordance with generally accepted
accounting principles considerably applied on a basis consistent with Seller's
1997 financial statements.
Section 5.2 Access. From the date of this Agreement through the
Closing Date, Seller shall provide Purchaser and its officers, directors,
employees and agents and representatives full access during normal business
hours to the Assets and to the employees, agents, properties, books,
contracts, accounts, commitments, records, tax returns and documents of Seller
and shall furnish to Purchaser and its agents and representatives books,
records, contracts, data and information concerning the Assets and the
business and affairs of Seller as Purchaser and its agents and representatives
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may reasonably request. In the event that the transactions contemplated by
this Agreement fail to be consummated, then Purchaser shall promptly return to
Seller all data and information furnished to it and shall keep all such data
and information confidential. No investigation pursuant to this Section 5.2
shall affect any representation or warranty of Seller or any condition to the
Closing obligations of Purchaser.
Section 5.3 Risk of Loss. From the date of this Agreement through
the Closing Date, Seller assumes all risk of loss, whether by reason of theft,
fire, act of God, or other casualty, and Purchaser shall not be obligated to
consummate the transactions contemplated hereby if there is any material loss
of the Assets caused by any casualty, whether through the fault or negligence
of Seller or otherwise.
Section 5.4 Bulk Sales. Seller shall reimburse Purchaser for,
indemnify Purchaser from, and hold Purchaser harmless against, any
liabilities, claims, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees) resulting from or arising out of (i)
Seller's failure to comply with any bulk sales or bulk transfer laws in
respect of the transactions contemplated by this Agreement, or (ii) any action
brought or levy made as a result thereof, other than the Assumed Liabilities.
Section 5.5 Consummation of Transactions. Upon the terms and
subject to the conditions of this Agreement, each of the parties hereto shall
use its reasonable best efforts, and will cooperate with each other, to take,
or cause to be taken, as promptly as practicable, all such actions and to do,
or cause to be done, all other things necessary to carry out its obligations
under this Agreement and under all other agreements contemplated by this
Agreement and to consummate and make effective the transactions contemplated
hereby and thereby, including obtaining all Consents which are necessary in
connection with the transactions contemplated hereby and thereby, provided
that Purchaser shall not be obligated to assume any additional liability of
Seller or pertaining to the Assets other than the Assumed Liabilities.
Section 5.6 Public Announcements. From the date of this Agreement
through the Closing Date or the earlier termination of this Agreement for any
reason, Purchaser and Seller shall consult with each other before issuing any
press releases or otherwise making any public statements or disclosures with
respect to this Agreement or the transactions contemplated hereby (directly or
through affiliates) and shall not issue any such press release or make any
such public statement without the prior consent of the other party, which
consent shall not be unreasonably withheld, except that a party hereto may
make a public statement without such consent to the extent the same shall be
required by applicable law or the rules and regulations of the Nasdaq Stock
Market or any other national securities exchange, market or association on
which the capital stock of that party is listed, traded or quoted, if such
party has used its reasonable best efforts to consult with the other party to
obtain the other party's consent but has not been able to do so in a timely
manner.
Section 5.7 Notification of Certain Matters. From the date of this
Agreement through the Closing Date, Purchaser and Seller each shall give
prompt notice to the other of (a) the occurrence, or failure to occur, of any
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event, fact or circumstance the occurrence or failure of which would be
reasonable likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect, or that breaches
or is reasonably likely to breach any covenant or agreement set forth in this
Agreement, and (b) any material failure on its part to comply with or satisfy
any material covenant, condition or agreement to be complied with or satisfied
by it hereunder.
Section 5.8 Taxes.
(a) Pre-Closing. Seller shall be responsible for the timely
preparation of, for all federal, state, local or foreign income, excise,
withholding, property, sales, use, franchise and other tax returns, reports
and forms of Seller pertaining to the Assets for all taxable periods ending on
or before the Closing Date, and the payment of all amounts due thereunder.
(b) Due to Transactions. Seller shall pay all federal, state and
local sales, use, income, franchise, worker's compensation, unemployment
documentary and other transfer taxes and fees arising out of the transfer of
the Assets in accordance herewith, whether imposed by law on Seller or
Purchaser, and shall pay its portion, prorated as of the Closing Date, of all
federal, state, local and foreign personal property taxes relating to the
Assets. Purchaser shall not be responsible for any business, occupation,
withholding, or similar tax, or any taxes of any kind related to the Assets or
the business being purchased for any period before the Closing Date. Seller
shall indemnify, reimburse and hold Purchaser harmless in respect of any
liability for payment of or failure to pay any such taxes or any filing of or
failure to file any reports required in connection therewith.
Section 5.9 No Shopping. From the date of this Agreement through
the Closing Date, neither Seller, American Meter nor any affiliates thereof
shall, directly or indirectly, through any officer, director, employee, agent
or otherwise, solicit, initiate, or encourage the initiation or submission of
inquiries, proposals or offers from, provide any information to, enter into
any agreement with, or participate in any discussions or negotiations
concerning any direct or indirect acquisition of any interest in Seller or any
of the Assets (other than the sale of inventory and equipment in the ordinary
course of business) by, any Person other than Purchaser. Seller shall
immediately notify Purchaser of, and communicate to Purchaser the terms of,
any such inquiry, proposal or offer that it may receive.
Section 5.10 Employee Matters.
(a) Seller shall pay, perform and discharge, and remain liable
after the Closing, for all obligations to its employees, for compensation and
benefits, including wages, salaries, commissions, bonuses, deferred
compensation, severance, termination, insurance, pensions, profit-sharing,
vacation, sick pay and other compensation or benefits ("Seller Employees
Compensation") to which they are entitled for periods prior to the Closing
Date. Until the Closing Date, Seller shall not, without the prior written
consent of Purchaser, change the compensation or benefits of any of its
employees.<PAGE>
<PAGE>
(b) Purchaser is not assuming and shall have no obligation to
pay any Seller Employees Compensation, whether accruing before, as a result
of, or after the Closing, except (i) one-half of the Post-Closing Transitional
Employee Costs (as defined below), and (ii) the compensation and benefits
employees of Seller who are not Transitional Employees who are employed by
Purchaser for services performed for Purchaser after the Closing. Seller
shall perform, and Purchaser is not assuming and shall have no obligation to
perform, any severance or termination obligations, liabilities and commitments
accruing or arising by agreement, plan or policy of Seller as a result of the
transactions contemplated hereby.
(c) Purchaser may, but shall have no obligation to, offer
employment to any of the current employees of Seller in the Business as
Purchaser may desire. In addition, Purchaser shall have the right, but not
the obligation, to offer employment to and to employ a sufficient number of
current employees of Seller, with American Meter's consent (which shall not be
unreasonably withheld), to enable Purchaser to make Pantheon feasible, to sell
Pantheon and to meet its other obligations under the License Agreements. Any
employee of Seller considered for employment by Purchaser shall be subject to
Purchaser's normal application and screening procedures and to Purchaser's
compensation and benefits policies. No provisions of this Agreement, express
or implied, shall confer on any employee or former employee of Seller any
right to employment or any continued right to employment for any extended
period.
(d) Seller shall be responsible for the maintenance and
distribution of benefits accrued under any Employee Plans maintained by Seller
pursuant to the provisions of such plans. Purchaser shall assume neither any
liability for any such accrued benefits nor any fiduciary or administrative
responsibility to account for or dispose of any such accrued benefits under
any Employee Plans maintained by Seller.
(e) All claims and obligations under, pursuant to or in
connection with any Employee Plans of Seller or arising under any legal
requirement affecting employees of Seller incurred on or before the Closing
Date resulting in or arising from events or occurrences occurring or
commencing on or prior to the Closing Date shall remain the responsibility of
Seller, whether or not such employees are hired by Purchaser after the
Closing. Purchaser will have and assume no obligation or liability under or
in connection with any such plan.
(f) Seller shall provide any and all notifications required by
all applicable federal, state and local laws in connection with the
termination of its employees, including notifications required under WARN, or
any similar state or local law, and any rules and regulations promulgated
under any of the foregoing.
(g) Purchaser and Seller shall establish a mutually acceptable
employee retention plan for certain transitional employees ("Transitional
Employees") of Seller to provide short-term transitional services in
connection with the transactions contemplated hereby. Such Transitional
Employees shall be entitled to severance and termination benefits of Seller as
if they were terminated by Seller on or prior to the Closing Date. All such
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<PAGE>
severance or termination benefits due to such Transitional Employees, and all
other employment costs and expenses of such Transitional Employees accruing
prior to the Closing Date (collectively, the "Pre-Closing Transitional
Employee Costs"), shall be borne solely by Seller. All employment costs and
expenses for such Transitional Employees accruing after the Closing Date, to
the extent that such expenses exceed any severance or termination benefits
payable by Seller under its severance policy, plus all costs and expenses
incurred by Seller under WARN for Transitional Employees terminated on or
after the Closing Date ("Post-Closing Transitional Employee Costs"), shall be
borne equally by Seller and Purchaser; provided, however, that Purchaser's
obligations for all Post-Closing Transitional Employee Costs in the aggregate
shall not exceed $50,000. All other costs incurred by Seller after the
Closing in connection with WARN, except as set forth in the immediately
preceding sentence, shall be borne solely by Seller.
Section 5.11 Assumed Warranty Obligations. At the Closing, provided
that Seller's representations and warranties in Section 3.26 hereto are
accurate and complete, Purchaser shall assume the warranty obligations of
Seller (the "Assumed Warranty Obligations") for all equipment and products
sold by Seller within two years prior to the Closing Date with respect to the
Business, other than the Korean Claim. A complete and accurate list of all
such sales (by customer, amount, sale and type of equipment or services) is
set forth on Schedule 3.26 hereto.
Section 5.12 Repayment of Indebtedness and Release of Liens.
Contemporaneously with or prior to the Closing, Seller shall take all action
necessary to cause any Liens on or against the Assets to be released and
terminated as of the Closing Date.
Section 5.13 Financial Statements. Seller shall cause its Financial
Statements as of December 31, 1997, and for the one year period then ended, to
be audited by Arthur Anderson, independent certified public accountants (the
"Auditor"), and shall deliver the Auditor's report to Purchaser prior to the
Closing. Seller shall bear the costs of such audit, provided that Purchaser
shall bear any cost and expense of the audit, or of similar special procedures
incurred by Seller in order to permit Marcum to meet its financial reporting
requirements under the Exchange Act in connection with the transactions
contemplated hereby which are in excess of Seller's normal and routine audit
expense. Seller shall cause the Auditor to reasonably cooperate with
Purchaser and Marcum to complete such audit and special procedures, to sign
and deliver any required consents to Marcum in connection with the Current
Report on Form 8-K to be filed by Marcum with the SEC pursuant to the
requirements of the Exchange Act, and to cooperate in the preparation of pro
forma financial statements required by Form 8-K.
Section 5.14 Board Seat. Marcum agrees to appoint Harry I. Skilton,
President and Chief Executive Officer of American Meter, to be appointed or
elected to the Marcum Board of Directors at the first Marcum Board of
Directors meeting held after the Closing, to serve as a director for a term
expiring at the 2000 annual meeting of stockholders.
Section 5.15 Pantheon Software License Agreement. At the Closing,
Seller and Purchaser shall execute and deliver to each other a License<PAGE>
<PAGE>
Agreement, substantively in the form of Exhibit B hereto (the "License
Agreement"), pertaining to the license by Seller to Purchaser after the
Closing of the Pantheon software, and as to the development, manufacture and
sale by Purchaser to Seller of certain electronic components and related
equipment pertaining to electronic temperature and pressure correction to be
embedded within certain new rotary and turbine meters of American Meter.
Section 5.16 Non-Competition Agreement. At the Closing, Seller and
American Meter shall execute and deliver to Purchaser and Marcum a five year
Non-Competition Agreement, in substantially the form of Exhibit C hereto (the
"Non-Competition Agreement").
Section 5.17 Amendment of Marcum Rights Agreement. Marcum will amend
that certain Rights Agreement, dated as of December 2, 1991, by and between
Marcum and American Securities Transfer & Trust, Inc., as rights agent, which
currently provides for the distribution of certain rights after a Person has
acquired or obtained the right to obtain beneficial ownership of 15% or more
of the outstanding Shares of Common Stock of Marcum, to provide an exception
for American Meter, Eagle and their affiliates, so long as their aggregate
beneficial ownership (as defined in the Rights Agreement) does not exceed 25%
of more of the outstanding shares of Common Stock of Marcum.
Section 6. Conditions Precedent to Purchaser's and Marcum's Closing
Obligations.
The obligations of Purchaser to purchase the Assets, to pay the Purchase
Price and to assume the Assumed Liabilities and of Purchaser and Marcum to
take the other actions contemplated hereby to be taken by Purchaser and
Marcum, respectively, at or prior to the Closing are subject to the
satisfaction (unless waived in writing by Purchaser), at or prior to the
Closing, of each of the following conditions:
Section 6.1 Accuracy of Representations and Warranties. Each and
every representation and warranty made by Seller and American Meter in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Closing Date with the same effect as if made or given on the Closing Date.
Section 6.2 Performance of Covenants. Seller and American Meter
shall have performed, satisfied and complied with all covenants, agreements,
obligations and conditions under this Agreement which are to be performed,
satisfied or complied with by Seller and American Meter, respectively, at or
prior to the Closing.
Section 6.3 No Litigation. No Proceeding shall be pending or overtly
threatened by or before any court, arbitrator or Governmental Authority (a)
which seeks the restraint, prohibition or the obtaining of damages or other
relief in connection with this Agreement or the consummation of the
transactions contemplated hereby, (b) which questions the legitimacy, validity
or enforceability of this Agreement or the transactions contemplated hereby or
(c) which, if successful, would have a material adverse effect on the Assets
or the Business or would materially and adversely affect the ability of Seller
or American Meter to consummate the transactions contemplated hereby or of
Purchaser after the Closing to operate the Business substantially as currently
<PAGE>
<PAGE>
operated.
Section 6.4 Deliveries at Closing. Seller and American Meter shall
have delivered to Purchaser at the Closing the Assets and each of the
certificates, instruments, documents and agreements required to be delivered
to Purchaser and Marcum hereunder.
Section 6.5 Consents. All Consents of any Person necessary to permit
the consummation of the transactions hereby shall have been duly obtained,
made or taken prior to the Closing.
Section 6.6 Condition of Assets. Neither the Assets nor the
Business shall have been adversely effected in any material respect by, or
sustained any material loss, whether or not insured, which has not been
remedied to Purchaser's reasonable satisfaction as a result of, fire,
accident, storm, or other casualty, or labor or civil disputes, or act of God
or public enemy.
Section 6.7 Non-Competition Agreement. Seller and American Meter
shall have executed and delivered to Purchaser and Marcum the Non-Competition
Agreement.
Section 6.8 License Agreement. Seller and American Meter shall have
executed and delivered to Purchaser and Marcum the License Agreement.
Section 7. Conditions Precedent to Seller's and American Meter's
Obligations.
The obligations of Seller to sell and deliver the Assets to Purchaser and
of Seller and American Meter to perform their other obligations contemplated
hereby to be taken at or prior to the Closing are subject to the satisfaction
(unless waived in writing by Seller), at or prior to the Closing, of each of
the following conditions:
Section 7.1 Accuracy of Representations and Warranties. Each of the
representations and warranties made by Purchaser and Marcum in this Agreement
shall be true and correct as of the date of this Agreement and as of the
Closing Date with the same effect as if made or given on the Closing Date.
Section 7.2 Performance of Covenants. Purchaser and Marcum shall
have performed, satisfied and complied with all of the covenants, agreements,
obligations and conditions under this Agreement which are to be performed,
satisfied or complied with by Purchaser and Marcum respectively, at or prior
to the Closing.
Section 7.3 No Litigation. No Proceeding shall be pending or overtly
threatened by or before any court, arbitrator or Governmental Agency (a) which
seeks the restraint, prohibition or the obtaining of damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby, (b) which questions the legitimacy, validity or
enforceability of this Agreement or the transactions contemplated hereby, or
(c) which, if successful, would materially and adversely affect the ability of
<PAGE>
<PAGE>
Purchaser and American Meter to consummate the transactions contemplated
hereby.
Section 7.4 Deliveries at Closing. Purchaser and Marcum shall have
delivered to Seller and American Meter at the Closing the Purchase Price and
each of the other certificates, instruments, documents and agreement required
to be delivered to Seller hereunder.
Section 7.5 License Agreement. Purchaser shall have executed and
delivered to Seller and American Meter the License Agreement.
Section 8. The Closing.
Section 8.1 Date and Place. Provided all conditions to the Closing
have been satisfied, the consummation of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Metretek, Incorporated, 300
North Drive, Melbourne, Florida, at 10:00 a.m. local time, on a date no more
than 30 days after the date hereof, as determined by Purchaser, or at such
other time, date or place as the parties shall mutually agree (the "Closing
Date").
Section 8.2 Deliveries by Seller and American Meter. At the Closing,
Seller and American Meter shall deliver or cause to be delivered to Purchaser
and Marcum, in form reasonably acceptable to Purchaser's counsel:
(a) Full, actual and unimpeded possession and enjoyment of the
Assets and the Business;
(b) Assignments and assumptions of all Assigned Contracts being
assumed by and assigned to Purchaser, duly executed by Seller, along with all
Consents required to permit such assignment and assumption;
(c) One or more duly executed bills of sale warranting good and
marketable title in and to the Assets, in the form of Exhibit D hereto, and
such other instruments of sale, conveyance, assignment and transfer as may be
reasonably requested by Purchaser, in order to vest in Purchaser all of
Seller's right, title and interest in and to all of the other Assets, free and
clear of any and all Liens;
(d) Any assignments required to transfer all right, title and
interest in the Intellectual Property to Purchaser;
(e) All Consents necessary to permit the consummation of the
transactions contemplated by this Agreement;
(f) All releases of all Liens encumbering any of the Assets;
(g) True and complete copies of corporate resolutions, certified
as of the Closing Date by the Secretary of Seller and of American Meter as
having been duly adopted by the Board of Directors and, if necessary,
shareholders of Seller and American Meter, respectively, authorizing Seller's
and American Meter's execution and delivery of this Agreement and the Related
Seller Agreements and their consummation of the transactions contemplated<PAGE>
<PAGE>
hereby and thereby;
(h) Certificates duly executed by the President or Chief
Executive Officer of Seller and of American Meter, dated as of the Closing
Date, certifying that, to the best of their knowledge and belief after due
inquiry, (i) each of Seller and American Meter, respectively, has fully
performed, satisfied and complied with all agreements, obligations, covenants
and conditions required by this Agreement to be performed, satisfied or
complied with by it at or prior to the Closing, and (ii) all of the
representations and warranties of Seller and American Meter, respectively, set
forth in Section 3 of this Agreement are true and correct as of the Closing
Date;
(i) An opinion of counsel for Seller and American Meter, dated
as of the Closing Date, substantially in the form attached hereto as Exhibit
E;
(j) The License Agreement, duly executed by Seller and American
Meter;
(k) The Non-Competition Agreement, duly executed by Seller and
American Meter; and
(l) All other items required to be delivered by Seller or
American Meter pursuant to any provision of this Agreement.
Section 8.3 Deliveries by Purchaser. At the Closing, Purchaser and
Marcum shall deliver to Seller and American Meter, in form reasonably
acceptable to Seller's counsel:
(a) The Cash Portion of the Purchase Price as set forth in
Section 2.1 hereof, by cashier's or certified bank check or wire transfer of
immediately available funds to an account designated by Seller and American
Meter;
(b) One or more certificates representing the Initial Shares,
duly registered on the books of Marcum in the name of Purchaser;
(c) The Convertible Note, duly executed by Purchaser;
(d) True and complete copies of corporate resolutions, certified
as of the Closing Date by the Secretary of Purchaser and of Marcum as having
been duly adopted by the Board of Directors of Purchaser and of Marcum,
respectively, authorizing Purchaser's and Marcum's execution and delivery of
this Agreement and the Related Purchaser Agreements and their consummation of
the transactions contemplated hereby and thereby;
(e) Certificates duly executed by the President or Chief Executive
Officer of Purchaser and of Marcum, dated as of the Closing Date, certifying
that, to the best of their knowledge and belief after due inquiry, (i) each of
Purchaser and Marcum has fully performed, satisfied and complied with all
agreements, obligations, covenants and conditions required by this Agreement
to be performed, satisfied or complied with by Purchaser and Marcum,<PAGE>
<PAGE>
respectively, at or prior to the Closing, and (ii) all of the representations
and warranties of Purchaser and Marcum, respectively, set forth in Section 4
of this Agreement are true and correct as of the Closing Date;
(f) An opinion of counsel for the Purchaser and Marcum, dated as
of the Closing Date, substantially in the form attached hereto as Exhibit F;
and
(g) All other items required to be delivered by Purchaser or
Marcum pursuant to any provision of this Agreement.
Section 8.4 Effectiveness of Closing. No action to be taken or
delivery to be made at the Closing shall be effective until all of the actions
to be taken and deliveries to be made at the Closing are complete.
Section 9. Survival and Indemnification
Section 9.1 Survival. The indemnification obligations and the
representations, warranties, covenants and agreements set forth in this
Agreement shall survive the Closing and shall continue in full force and
effect until they expire on the second anniversary of the Closing Date (or
such later date as expressly provided herein), regardless of any investigation
made by any party hereto, except as to any Claims (as defined in Section 9.4)
relating to fraud or matters on which claims shall expire only upon expiration
of the applicable statute of limitations. No Claim pursuant to this Section 9
shall be asserted by any party hereto after the expiration of the applicable
survival period or statute of limitations, as the case may be, except for
Claims made in writing prior to such expiration or actions (whether instituted
before or after such expiration) based on any Claim made in writing prior to
such expiration. The covenants and agreements of the parties hereto set forth
in this Agreement shall survive the Closing and shall continue in full force
and effect thereafter, subject to any termination thereof expressly set forth
herein.
Section 9.2 Indemnification by the Seller and American Meter.
During the period specified in Section 9.1, Seller and American Meter shall
jointly and severally indemnify, defend and hold harmless Purchaser and
Marcum, their affiliates, successors and assigns, and the officers, directors,
shareholders, partners, employees, agents and representatives of any of them,
from and against any and all claims, actions, suits, proceedings demands,
losses (including diminutions in value), expenses, obligations, taxes,
liabilities, damages, recoveries and deficiencies (including, without
limitation, interest, fines, penalties, costs of investigation, reasonable
attorneys', accountants' and other professionals' fees and expenses and
amounts paid in settlement) (collectively, "Damages") arising out of, based
upon or resulting from (i) any breach or violation of, inaccuracy or
misrepresentation in, or failure by the Seller or American Meter to perform,
any representations, warranties, covenants, agreements or other obligations of
Seller or American Meter made in this Agreement or in any schedule,
certificate, exhibit or other document or instrument furnished or to be
furnished by Seller or American Meter to Purchaser or Marcum pursuant to this
Agreement, (ii) any act or omission of Seller or American Meter with respect
<PAGE>
<PAGE>
to, or any event or circumstance related to, the ownership, lease or operation
of the Assets or the conduct of the Business, which act, omission, event or
circumstance occurred, existed or accrued existed prior to or at the time of
the Closing, without regard to whether a claim with respect to such matter is
asserted before or after the Closing, (iii) any debt, liability or obligation
of Seller, American Meter or the Business not included in the Assumed
Liabilities, (iv) any failure by Seller or American Meter to completely and
timely comply with all applicable provisions of (A) any applicable bulk sale
or bulk transfer law of any jurisdiction, (B) WARN or similar state or local
laws, (C) the fraudulent transfer or fraudulent conveyance laws of any
jurisdiction, (v) any product liability claims relating to products made or
sold or services performed by Seller or American Meter prior to the Closing
Date (except to the extent included in the Assumed Liabilities), or (vi) any
violation of any environmental law, rule, regulation or order by Seller or
American Meter prior to the Closing Date.
Section 9.3 Indemnification by Purchaser and Marcum. During the
period specified in Section 9.1, Purchaser and Marcum shall jointly and
severally indemnify, defend and hold harmless Seller and American Meter, their
affiliates, successors and assigns, and the officers, directors, shareholders,
partners, employees, agents and representatives of any of them, from and
against any and all Damages arising out of, based upon or resulting from any
breach or violation of, inaccuracy or misrepresentation in, or failure by
Purchaser or Marcum to perform, any of the representations, warranties,
covenants, agreements or other obligations of the Purchaser or Marcum made in
this Agreement or in any schedule, certificate, exhibit or other document or
instrument furnished or to be furnished by Purchaser or Marcum to Seller or
American Meter pursuant to this Agreement.
Section 9.4 Claims for Indemnification.
(a) Whenever any party hereunder believes it has suffered or
incurred or is likely to suffer or incur any Damages, or any action or
proceeding is commenced or threatened or claim is made that could result in
Damages, which is reasonably likely to give rise to a claim ("Claim") for
indemnification under this Agreement, the party seeking indemnification
("Indemnified Party") shall, upon obtaining knowledge thereof, promptly notify
in writing the party against whom indemnification is sought ("Indemnifying
Party") of the Claim and, when known, the facts constituting the basis for
such Claim and the amount and nature of the Damages or an estimate thereof.
The Indemnified Party's failure to timely notify Indemnifying Party of any
Claim or potential Claim shall not relieve the Indemnifying Party of any
liability hereunder unless and only to the extent that such failure causes
Indemnifying Party to lose the right to assert any substantive rights or
defenses or to the extent that the Indemnifying Party is actually prejudiced
in its rights or obligations.
(b) The Indemnified Party shall give the Indemnifying Party a
reasonable opportunity to participate in and to assume the defense of any such
Claim at the Indemnifying Party's own expense and with counsel of the
Indemnifying Party's own selection reasonably satisfactory to the Indemnified
Party provided, however, that Indemnified Party shall at all times also have
the right but not the obligation, to fully participate in the defense of the
<PAGE>
<PAGE>
Claim and to employ its own counsel at its own expense. Notwithstanding the
foregoing, if the Indemnified Party reasonably determines that: (i) legal
defenses may be available to the Indemnified Party that are different from or
in addition to those available to the Indemnifying Party, (ii) a conflict or
potential conflict of interest exists between the Indemnified Party and the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to direct the defense of such Claim on behalf of the Indemnified Party),
or (iii) the Indemnifying Party has not in fact employed legal counsel to
assume the defense of such Claim within a reasonable time after receiving
notice of the Claim, then the reasonable fees, disbursements and other charges
of counsel from one separate firm selected by the Indemnified Party (and
reasonably acceptable to the Indemnified Party) shall be reimbursed by the
Indemnified Party promptly as they are incurred.
(c) No party hereto shall compromise, settle or consent to the
entry of any judgment with respect to any Claim without the prior written
consent of the other interested party or parties (which consent shall not be
unreasonably withheld or delayed) unless such compromise, settlement or
consent includes an unconditional release of all other interested parties
hereto from any and all liabilities on any Claims that are the subject matter
thereof.
(d) Each party hereto shall cooperate in every reasonable way
with the party assuming responsibility for the defense and disposition of any
such Claim, including making available to the defending party all books,
records, and other material reasonably required by the defending party for its
use in defending the Claim.
Section 9.5 Limitation on Liability.
(a) Notwithstanding the foregoing, the Indemnifying Party shall
not be required to indemnify the Indemnified Party hereunder unless and until
the aggregate amount of all Damages exceeds $25,000.00, and then only to the
extent of such excess.
(b) Neither party shall seek or be entitled to consequential
damages or damages for lost profits in any Claim for indemnification under
this Section 9 nor shall it accept payment of any award or judgment against
the other party to the extent that such award or judgment includes
consequential damages or damages for lost profits.
Section 9.6 Non-Exclusive Indemnification. The foregoing
indemnification provisions are in addition to, and not in derogation of, or
statutory, equitable or common law remedies any party hereto may have for any
breach of representation, warranty, covenant or agreement.
Section 9.7 Effect of Knowledge. No disclosure to and no
investigation by or on behalf of any party hereto shall be deemed to affect
its reliance on the representations, warranties, covenants and agreements
contained herein or to waive its rights to indemnification as provided herein
for the breach or violation of or inaccuracy or failure to perform or comply
with any representation, warranty, covenant or agreement of any other party
hereto. <PAGE>
<PAGE>
Section 9.8 Contribution. If the indemnification provided for in
this Section 9 is for any reason unavailable or insufficient to indemnify the
Indemnified Party in respect of any Damages, then the Indemnifying Party shall
in lieu of indemnifying the Indemnified Party contribute to the total damages
to which the Indemnified Party may be subject in such proportion that shall be
appropriate to reflect the relative fault of the Indemnifying Party, on the
one hand, and the Indemnified Party, on the other hand, in connection with any
actions or omissions which resulted in such Damages as well as any other
relevant equitable considerations.
Section 10. Post-Closing and Other Covenants.
Section 10.1 Further Assurances. At the Closing, Seller, through its
officers, directors, employees and agents, shall put Purchaser into full,
actual and unimpaired ownership, possession, enjoyment and control of the
Assets. At any time and from time to time after the Closing, Seller shall, at
the sole expense of Purchaser, execute, acknowledge and deliver any further
deeds, assignments, conveyances, consents, permits and other assurances,
documents and instruments of transfer reasonably requested by Purchaser, and
take any and all further actions consistent with the terms of this Agreement,
that may be reasonably requested by Purchaser for the purpose of more
effectively and fully assigning, transferring, granting and conveying to and
vesting in Purchaser all of Seller's right, title and interest in and to, or
reducing to possession, any or all of the Assets. If requested by Purchaser,
Seller shall, solely at Purchaser's expense (unless required due to a breach
of any representation, guaranty or covenant hereof by Seller), prosecute or
otherwise enforce in its own name for the benefit of Purchaser any claims,
rights or benefits that are transferred to Purchaser by this Agreement and
require prosecution and enforcement in Seller's name. In addition, Seller
shall provide all assistance reasonably requested by Purchaser to install the
environmental testing chambers of Seller in Purchaser's offices in Melbourne,
Florida, including, but not limited to, assisting Purchaser in the disassembly
of such chambers at Seller's offices, assisting Seller in the transportation
of such chambers to Purchaser's offices, and assisting Purchaser in the
assembly and testing of operability at Purchaser's offices to obtain
operability comparable to the operability of the chambers at Seller's
premises.
Section 10.2 Seller's Financial Statements. Seller and American
Meter shall cause the Auditor to comply with the provisions of Section 5.13
hereof after the Closing and shall cooperate and take all reasonable efforts,
and use its best efforts to cause the Auditor to cooperate and use its
reasonable efforts, to assist Marcum in complying with the financial reporting
requirements of Form 8-K and the SEC with respect to the transactions
contemplated hereby (including the preparation of historical financial
statements and pro forma financial statements related to the Business) and in
any future filings by Marcum under the Securities Act and the Exchange Act
that include or incorporate Seller's historical financial statements, and to
provide any consents required in such Form 8-K and in any such future filings
by Marcum that require the Auditor to furnish its consent in order for Marcum
to fulfill its financial reporting requirements.
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<PAGE>
Section 10.3 Preservation of Files and Records.
(a) By Purchaser. For a period of five (5) years after the
Closing Date, Purchaser shall preserve all files and records relating to the
Business and the Assets that are in existence as of the Closing Date and that
are less than 5 years old as of the Closing Date, and shall allow Seller
access to such files and records and the right to make copies and extracts
therefrom at any time during normal business hours, and shall not dispose of
any thereof, provided that at any time after the Closing, Purchaser may give
Seller written notice of its intention to dispose of any part thereof,
specifying the items to be disposed of in reasonable detail. Seller may,
within a period of 60 days after receipt of any such notice, notify Purchaser
of Seller's desire to retain one or more of such items to be disposed of.
Purchaser shall, upon receipt of such notice from Seller, deliver to Seller at
Seller's expense, the items specified in Purchaser's notice to Seller which
Seller has elected to retain.
(b) By Seller. For a period of five (5) years after the
Closing Date, Seller shall preserve all files and records relating to the
Business and the Assets that are in existence as of the Closing Date and that
are less than five (5) years old as of the Closing Date, and shall allow
Purchaser access to such files and records and the right to make copies and
extracts therefrom at any time during normal business hours, and shall not
dispose of any thereof, provided that at any time after the Closing, Purchaser
may give Seller written notice of its intention to dispose of any part
thereof, specifying the items to be disposed of in reasonable detail.
Purchaser may, within a period of 60 days after receipt of any such notice,
notify Seller of Purchaser's desire to retain one or more of such items to be
disposed of. Purchaser shall, upon receipt of such notice from Seller,
deliver to Purchaser at Purchaser's expense, the items specified in
Purchaser's notice to Seller which Purchaser has elected to retain.
Section 10.4 Mutual Cooperation.
(a) Preparation of Reports, Etc. Each of Purchaser and Seller
shall cooperate and cause its respective employees and agents to cooperate
with each other in the preparation of financial and other reports and
statements relating to the Business and the Assets for periods ending on or
prior to the Closing.
(b) Taxes and Other Matters. In connection with the
preparation of any tax returns, any audit or other examination by any taxing
or other Governmental Authority, or any Proceeding or other matters including
but not limited to, environmental and other matters relating to the
transactions contemplated by this Agreement, each party will provide the other
with the opportunity to make copies of any records or information which may be
relevant to such return, audit or examination, Proceeding or determination.
Each party shall make its employees available on a mutually convenient and
reasonable basis to provide additional information and explanation of any
material provided hereunder.
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<PAGE>
(c) Cooperation in Litigation. In the event that, after the
Closing Date, Seller or Purchaser shall reasonably require the participation
of officers and employees by each other to aid in the defense or prosecution
of litigation or claims, and so long as there exists no unwaived conflict of
interest between the parties, each of Seller and Purchaser shall make such
officers and employees reasonably available to participate in such defense or
prosecution provided that, except as required pursuant to the provisions
herein, the party requiring the participation of such officers and employees
shall pay all reasonable out-of-pocket costs, charges and expenses arising
from such participation.
Section 10.5 Solicitation and Hiring.
(a) Covenant by Seller and American Meter. For a period of five
(5) years after the Closing Date, Seller and American Meter and their
affiliates shall not, directly or indirectly, as a stockholder, investor,
partner, director, officer, employee or otherwise (i) solicit or attempt to
induce any Restricted Marcum Employee to terminate his employment with Marcum
or Purchaser, or (ii) hire or attempt to hire any Restricted Marcum Employee.
For purposes of this Agreement, a "Restricted Marcum Employee" shall mean any
person who (i) was an employee of Purchaser or Marcum on the Closing Date or
(ii) was an employee of Seller or American Meter on the Closing Date who
received an employment offer from Purchaser within 60 business days following
the Closing Date and accepted such offer.
(b) Covenant by Purchaser and Marcum. For a period of five (5)
years after the Closing Date, Purchaser and Marcum and their affiliates shall
not, directly or indirectly, as a stockholder, investor, partner, director,
officer, employee or otherwise (i) solicit or attempt to induce any Restricted
Seller Employee to terminate his employment with Seller or American Meter, or
(ii) hire or attempt to hire any Restricted Seller Employee. For purposes of
this Agreement, a "Restricted Seller Employee" shall mean any person who was
an employee of Seller or American Meter on the Closing Date who did not
receive an employment offer from Purchaser within 60 business days following
the Closing Date and accept such offer.
Section 10.6 Registration Rights.
(a) Piggy-Back Registration.
(i) Right to Piggy-Back. If at any time after the Closing
Date, Marcum proposes to register any of its shares of Common Stock under the
Securities Act for its own account or for the account of any of its
stockholders (except with respect to registration statements filed on Form S-4
(for acquisitions) or Form S-8 (for employee plans) or any successor or
similar forms or other unsuitable forms), Marcum shall promptly give written
notice of such proposed filing to Seller and offer Seller the opportunity to
register such number of Shares as it may request in writing. Upon the written
request of Seller received by Marcum within fifteen (15) days after the giving
of the notice by Marcum, Marcum shall use its best efforts to cause the Shares
that the Purchaser requests to be so registered to be included in such
registration. <PAGE>
<PAGE>
(ii) Underwriting Procedures. If any registration pursuant
to this Section 10.6(a) shall be, in whole or in part, in connection with an
underwritten public offering of Common Stock of the Company, then Marcum shall
not be required to include any Shares in the registration unless Purchaser
accepts the terms and conditions of the underwriting as agreed upon between
Marcum and the underwriters. If the managing underwriter determines and
advises Marcum in writing (which shall promptly notify Seller) that the
inclusion in the underwriting of all or any of the Shares proposed to be
included by Seller would be reasonably likely to jeopardize the successful
marketing of the securities proposed to be registered for the underwriting by
Marcum or materially adversely affect the price, time or distribution of the
public offering, then Marcum shall only be required to include the number of
the Shares that the managing underwriter determines in its sole discretion,
will not materially adversely affect the public offering, and, if any such
reduction is so determined by the managing underwriter to be appropriate in
accordance with the standards set forth above, then the number of Shares
requested to be included in the underwriting shall be reduced, pro rata with
other stockholders, if any, participating in the public offering, to the
number determined to be appropriate by the managing underwriter (which may
include a reduction to zero).
(iii) No Marcum Obligation. Neither the giving of a notice
by Marcum nor any request by Purchaser under this Section 10.6(a) shall, in
any way, obligate Marcum to file any registration statement at any time or
within any specific time period after receipt of Seller's written request and,
notwithstanding the filing of any registration statement, Marcum may, at any
time before the effective date thereof, elect to delay or terminate the entire
registration process for any reason or no reason and without the consent of
Purchaser, without any further obligation to Seller in respect of such
registration statement.
(b) Demand Right. If at any time during the period commencing
two (2) years after the Closing Date and ending the earlier of (i) eight years
after the Closing Date, or (ii) 90 days after Seller's beneficial ownership of
the Shares issued pursuant to this Agreement (including upon conversion of the
Convertible Note) constitutes less than 10% of the then outstanding shares of
Common Stock of Marcum, Marcum shall receive a written request ("Demand
Request") from Seller for the registration of all or any portion of the Shares
it receives in connection with this Agreement (the "Registration Shares"),
provided, that at the time of the Demand Request, at least a majority of the
total Shares issued pursuant to this Agreement (including upon conversion of
the Convertible Note) are still held of record by Seller, then Marcum, upon
the terms and subject to the conditions set forth in this Section 10.6, shall
use it best efforts to cause all Registration Shares to be registered in an
appropriate registration statement of the SEC as shall be selected by Marcum,
provided that if Marcum is eligible to use Form S-3 (or any successor form
thereto) for such registration, then such registration statement shall be used
unless such form is inappropriate or Marcum desires to use a different form.
If Seller intends for the public offering covered by its Demand Request to
occur by means of an underwriting, it shall so advise Marcum as a part of its
Demand Request, and the managing underwriter of such underwritten public
offering shall be selected by Seller and shall be reasonably acceptable to
Marcum. Marcum shall be obligated to register Shares under this Section<PAGE>
<PAGE>
10.6(b) after receipt of a Demand Request on one occasion only. Marcum shall
be entitled to include in any registration statement filed pursuant to this
Section 10.6(b) additional shares of Common Stock for its own account and for
the account of its other security holders. If the managing underwriter
advises Marcum in writing that the inclusion of any or all such additional
shares of Common Stock would materially adversely affect the marketing of the
public offering of the Shares, then Marcum shall not be entitled to include
such additional shares of Common Stock in any such registration statement to
the extent the managing underwriter advises. Notwithstanding the provisions
of this Section 10.6(b), Marcum shall have the right to delay or suspend the
filing of a registration statement for up to 90 days from the time the filing
thereof would otherwise be required under the Section 10.6(b) if, in the good
faith determination of Marcum's board of directors, such registration would be
seriously detrimental to Marcum and its stockholders or would materially
adversely affect the business, affairs, properties, financial condition,
results of operations or prospects of Marcum or any pending or proposed
acquisition, merger, reorganization, recapitalization or other transaction or
public offering of Marcum's securities, or would require premature disclosure
thereof not in the best interests of Marcum; provided, however, that Marcum
shall not be entitled to exercise this right more than once.
(c) Information. It shall be condition precedent to the
obligation of Marcum hereunder to register the Shares under this Section 10.6
that Seller furnish to Marcum and the managing underwriters such information
regarding itself, the intended method of disposition of such securities and
such other information as Marcum or the managing underwriter shall from time
to time reasonably request and that shall be reasonably required to effect the
registration of the Shares.
(d) Expenses. Seller shall pay all underwriting and brokerage
fees, discounts and commissions related to the sale of the Shares in a public
offering registered pursuant to the provisions of this Section 10.6, together
with the fees and expenses of any separate counsel, accountants and other
advisors retained by Seller in connection with the offering. All other fees,
costs and expenses incurred in connection with any registration of public
offering including, but not limited to, all federal and state registration,
qualification, filing fees, printed and document distribution costs and
expenses, fees and disbursements of its counsel, accountants and other
experts, Nasdaq additional listing fees, transfer fees, exchange fees, fees of
transfer agents and registrants shall be borne as follows: (i) if pursuant to
a demand registration under Section 10.6(b), Marcum shall bear the first
$10,000 of such costs, fees and expenses, and Seller shall bear the
difference, and Marcum also shall bear its proportionate share of any such
costs, fees and expenses to the extent it includes additional shares of Common
Stock in such registration, and (ii) if pursuant to a piggy-back registration
under Section 10.6(a), by Marcum, but Seller shall bear its proportionate
share of any such costs, fees and expenses to the extent Shares of Seller are
included in the registration.
(e) Indemnification. If any of the Shares are included in a
registration, to the extent permitted by law, Seller and American Meter shall
indemnify and hold harmless Marcum, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
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<PAGE>
control Marcum within the meaning of Section 15 of Securities Act or Section
20 of the Exchange Act, any underwriter, and any controlling person of any
such underwriter, from and against any and all losses, claims, liabilities,
damages and expenses (including any investigative, legal, accounting and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim (the "Damages")
asserted to which any of the foregoing persons may become subject under the
Securities Act, the Exchange Act, or other federal or state law, common law or
otherwise, insofar as such Damages arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, any preliminary prospectus or final prospectus, or any
amendments or supplements thereto, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation or alleged violation by
Marcum of the Securities Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Securities Act, the Exchange Act
or any state securities law (collectively, a "Violation"), to the extent that
such Violation occurs in reliance upon and in conformity with written
information furnished to Marcum by American Meter or Seller expressly for use
in connection with such registration; and Seller or American Meter shall pay,
as incurred, any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this Section 10.6 in connection with
the investigation or defense of any such Damages.
Section 10.7 Seller's Right of First Refusal to Acquire Purchaser.
(a) Proposed Transaction. From and after the Closing Date, if
Marcum intends or proposes to sell all or substantially all of the assets or
capital stock of Purchaser to a Person other than Marcum or an affiliate of
Marcum ("Proposed Purchaser"), or to consummate the merger, consolidation or
combination into a Proposed Purchaser in which transaction Purchaser is not
the survivor (a "Proposed Transaction"), Marcum (or its permitted transferee,
if an affiliate) shall first deliver to Seller a notice of such Proposed
Transaction ("Notice of Proposed Marcum Sale") which shall include a copy or
summary of the Proposed Transaction and the terms and conditions thereof in
reasonable detail, including, without limitation, the proposed purchase price
(or the basis of determining the purchase price) ("Purchase Price) and the
terms and conditions of payment.
(b) Exercise. Seller shall have the prior right and option
("Right of First Refusal") to consummate the Proposed Transaction in the place
of the Proposed Purchaser upon the terms set forth in the Notice of Proposed
Sale, or on such other terms and conditions, no less favorable to Purchaser
and Marcum, from Purchaser and Marcum's perspective as determined in their
sole discretion, as the terms in the Notice of Proposed Sale. Seller shall
exercise its Right of First Refusal by giving written notice of such exercise
("Notice of Exercise") to Purchaser on or before the thirtieth (30th) day
after Purchaser shall have received the Notice of Proposed Sale.
(c) Closing Upon Exercise of Right of First Refusal. The
Closing of the Proposed Transaction with Purchaser upon Seller's exercise of
its Right of First Refusal shall take place at the principal place of business
of Purchaser on a date 60 business days after the date Purchaser receives the
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<PAGE>
Notice of Exercise, unless the Seller and Purchaser unanimously agree on a
different place or time.
(d) Non-Exercise of Rights of First Refusal. If Seller does not
exercise its Right of First Refusal, then Purchaser shall have the right, for
a period ending on the 150th day after the delivery of Notice of Offer, to
consummate the Proposed Transaction with the Proposed Purchaser, at
substantially the same Purchase Price and otherwise upon substantially the
same terms and conditions described in the Notice of Offer.
(e) Termination of Covenant. The Right of First Refusal shall
expire five years from the Closing Date.
Section 10.8 Transition of Assets and Business. For a period of 60
days after the Closing Date, (a) Seller shall, at its expense, maintain the
Assets at its existing facility, and Purchaser shall have the right to remove
the Assets any time during such 60-day period; and (b) Purchaser shall have
the right to operate the Business at Seller's facility, provided that
Purchaser shall promptly reimburse Seller for all out-of-pocket costs of such
operation upon notice from Seller. Seller shall be entitled to be reimbursed
only for the additional incremental costs it bears from such operation, it
being agreed that Seller shall not be entitled to be reimbursed for its rent
or any costs associated with administration, management information systems,
accounting and human resources.
Section 10.9 American Meter Licenses . For good and valuable
consideration paid to American Meter in connection with the transactions
contemplated hereby, from and after the Closing Date, American Meter (and any
affiliates owning the same) shall license to Purchaser and its affiliates
forever on a royalty-free basis, the right to use the technology specified in
U.S. Patent No. 5,656,784 and in the U.S. patent applications entitled
"Printed Circuit Board Coating & Method" and "Pulse Conditioning Circuit", and
to further develop and incorporate such technology into Purchaser's products
and services.
Section 11. Termination and Confidentiality.
Section 11.1 Events of Termination. This Agreement may be terminated
at any time prior to the Closing as follows:
(a) By mutual written agreement of Seller and Purchaser;
(b) By Seller or Purchaser by giving written notice to the
other, if the non-terminating party materially breaches any of its
representations, warranties, covenants or agreements hereunder;
(c) By any party hereto by giving written notice to the other
parties hereto if the Closing Date has not occurred on or before April 30,
1998, unless such party's intentional failure to fulfill any obligation
hereunder has been the cause of, or has resulted in, the failure of the
Closing to occur on or before such date; or
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<PAGE>
(d) By Purchaser or Seller if any court or Governmental
Authority of competent jurisdiction shall have issued an order, judgment,
decree, ruling or taken other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby.
Section 11.2 Effect of Termination. If any party terminates this
Agreement in accordance with Section 11.1, then all rights and obligations of
the parties shall cease, except for the obligations set forth in Sections 11.3
and 12.2 which shall survive such termination; provided, however, that any
termination of this Agreement shall not affect the rights of either Seller or
Purchaser against the other for breach of any representation, warranty,
covenant or agreement set forth in this Agreement.
Section 11.3 Confidentiality. Notwithstanding the provisions of this
Section 11, if for any reason the transactions contemplated by this Agreement
are not consummated, each of the parties hereto shall keep confidential any
information obtained from any other party (except information publicly
available or in such party's domain prior to the date hereof, and except as
required by court order) and shall promptly return to the other parties all
schedules, documents, instruments, work papers or other written information,
without retaining copies thereof, previously furnished by it as a result of
this Agreement or in connection herewith.
Section 12. General Provisions.
Section 12.1 Governing Law. This Agreement shall in all respects be
governed by and construed and enforced in accordance with the internal
substantive laws of the State of Florida, without giving effect to any
principle or rule of conflict or choice of laws. Any action suit, or other
proceeding seeking to enforce any right, remedy, obligation, duty, covenant or
provision of, or arising out of, this Agreement shall be brought and entered
against any party hereto exclusively in any federal or state court of the
State of Florida or of the United States located in the State of Florida.
Each party hereto irrevocably submits to the personal jurisdiction of any such
court and irrevocably waives, to the fullest extent of the law, any objection
that it may now or hereafter have to the laying of venue in any such court and
any claim that such action, suit or proceeding has been brought in an
inconvenient form.
Section 12.2 Expenses. Except as expressly provided in Section 5.10 or
Section 10.7 hereof, each of the parties to this Agreement agrees to pay its
own costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including the fees and expenses of its
counsel, accounting and other advisers and agents.
Section 12.3 Assignment. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by any party hereto without the prior
written consent of all other parties hereto, provided that Purchaser may, upon
prior notice to Seller but without the consent of Seller, assign or delegate
its rights and/or obligations, under this Agreement to any of its affiliates,
in which case such assignee shall be substituted for Purchaser hereunder as
though the assignee were the original party to this Agreement, and Purchaser
shall be released from all obligations under this Agreement.<PAGE>
<PAGE>
Section 12.4 Amendments. This Agreement may not be supplemental,
amended or modified in any manner in whole or in part except by a writing
signed by all parties to this Agreement that specifically states that it
amends this Agreement.
Section 12.5 Notices. Any and all notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given hereunder if delivered personally,
of if sent by facsimile transmission (upon receipt of confirmation of
delivery), on the next business day if sent or by overnight courier service,
or three business days after being sent by first class (registered/certified)
mail, postage prepaid, return receipt requested, to the parties at the
following addresses:
If to Purchaser or Marcum:
Metretek, Incorporated
300 North Drive
Melbourne, Florida 32934
Attn: Ronald M. McKee
Telephone: 407-259-9700
Facsimile: 407-259-2900
Marcum Natural Gas Services, Inc.
1675 Broadway, Suite 2150
Denver, Colorado 80202
Attn: W. Phillip Marcum
Telephone: 303-592-5555
Facsimile: 303-592-5556
With a copy to:
Kegler, Brown, Hill & Ritter Co., L.P.A.
65 East State Street, Suite 1800
Columbus, Ohio 43215
Attn: Paul R. Hess, Esq.
Telephone: 614-462-5400
Facsimile: 614-464-2634
If to Seller or American Meter:
Eagle Research Corp.
105 Erskine Lane
Scott Depot, West Virginia 25560
Attn: Harry I. Skilton
Telephone: (304) 757-3300
Facsimile: (304) 757-0381
<PAGE>
<PAGE>
American Meter Company
300 Walsh Road, Building One
Horsham, Pennsylvania 19044-2234
Attn: Harry I. Skilton
Telephone: 215-830-1800
Facsimile: 215-830-1893
With a copy to:
Swidler & Berlin, Chtd.
3000 K Street, N.W., Suite 300
Washington, D.C. 20007-5116
Attn: Kenneth I. Schaner, Esq.
Telephone: (202) 424-7518
Facsimile: (202) 424-7643
Any party may change its designated address by giving written notice
thereof to all other parties hereto in the manner provided in this Section
12.5. Any party hereto may send any notice, request, demand, or other
communication to the intended recipient at the address above by using any
other means (such as telecopy, telex, expedited courier, messenger, ordinary
mail or electronic mail), but no such notice, demand, request or other
communication shall be deemed had been given until it is actually received by
the recipient.
Section 12.6 Waiver. The obligations of any party hereto may be
waived only with the written consent of the party giving the waiver. Any
waiver by any party of a breach of any provision of this Agreement shall not
operate or be construed to be a waiver of any other breach of that provision
or of any breach of any other provision of this Agreement. 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 continuing waiver or deprive
that party of the right thereafter to insist upon strict adherence to that
provision or any other provision of this Agreement.
Section 12.7 Severability. If any provision of this Agreement is
invalid, illegal or unenforceable in any situation, the balance of this
Agreement shall remain in effect, and such illegality, invalidity or
unenforceability shall not affect the legality, validity or enforceability of
that provision in any other situation or legality, validity or enforceability
of any other provision of this Agreement.
Section 12.8 Headings. The headings used in this Agreement are
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
Section 12.9 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 12.10 Pronouns, etc. The number and gender of each pronoun
used in this Agreement and the term "person" or "persons" or the like shall be
construed to mean both the number and gender of the individual, corporation,
limited liability company, partnership, firm, trust, agency and other entity
<PAGE>
<PAGE>
as the context, circumstance or its antecedent may require. The terms
"herein," "hereof," "hereby," "hereto" and the like refer to this Agreement as
a whole.
Section 12.11 No Third Party Beneficiaries. Except as expressly
provided in this Agreement, this Agreement does not confer or create, is not
intended by the parties hereto to confer or create, and shall not be construed
to as conferring or creating, upon any person or entity other than the parties
hereto and their successors and permitted assigns any rights, remedies or
causes of action under or by reason of this Agreement.
Section 12.12 Schedules and Exhibits. The schedules and exhibits
attached to this Agreement are incorporated into and made a part of this
Agreement as if they were fully set forth herein.
Section 12.13 Specific Performance; Cumulative Remedies. The parties
hereto acknowledge and agree that the transactions contemplated by this
Agreement are unique in that remedies at law for any breach or threatened
breach of this Agreement would be an inadequate remedy for any loss, and that
any defense in any action for specific performance that a remedy at law would
be adequate is hereby specifically waived. Accordingly, in the event of any
actual or threatened breach to any of the terms of this Agreement, the
non-breaching party shall have the right of specific performance and
injunctive relief giving effect to its rights under this Agreement, in
addition to any and all other rights and remedies, at law or in equity, and
all such rights and remedies are cumulative.
Section 12.14 Counterparts. This Agreement may be executed in one or
more counterparts, including counterparts executed by less than all parties
hereto, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
Section 12.15 Entire Agreement. This Agreement and the Related
Seller Agreement constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior arrangements, agreements and understandings, whether oral or written,
among the parties hereto in connection with the subject matter of this
Agreement and the Related Seller Agreements.
(The next page is the Signature Page)
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
EAGLE RESEARCH CORPORATION
By: /s/ Harry I. Skilton
Its: Vice President
AMERICAN METER COMPANY
By: /s/ Harry I. Skilton
Its: President and CEO
METRETEK INCORPORATED
By: /s/ W. Phillip Newman
Its:
MARCUM NATURAL GAS SERVICES, INC.
By: /s/ W. Phillip Newman
Its:
CONVERTIBLE, SUBORDINATED PROMISSORY NOTE
$ 1,200,000.00 Melbourne, Florida March , 1998
FOR VALUE RECEIVED, the undersigned, Metretek, Incorporated, a Florida
corporation (the "Purchaser"), and Marcum Natural Gas Services, Inc., a
Delaware corporation ("Marcum" and, collectively with Purchaser, the "Maker"),
hereby promises to pay to the order of Eagle Research Corporation, a West
Virginia corporation (the "Payee"), and assigns, at its principal office
located Scott Depot, West Virginia or at such other place as the Payee or
other holder hereof (the "Holder") may from time to time designate in writing,
in lawful money of the United States of America, the principal sum of One
Million Two Hundred Thousand and No/100 Dollars ($1,200,000.00), subject to
reduction as provided in Section 8 hereof, together with interest on the
unpaid balance of such principal sum at the rate provided in Section 2 hereof.
1. Repayment of Principal. The principal sum of this Note shall be
due and payable on March , 2002, in a single installment in an amount equal
to the entire principal sum of this Note then outstanding.
2. Interest. This Note shall bear interest on the unpaid principal
sum from the date hereof at the rate per annum equal to seven and one-half
percent (7.50%) Interest on this Note shall be computed on the basis of the
actual number of days elapsed (including the first day but excluding the last
day) during which the unpaid principal sum is outstanding, divided by a year
of 365 or 366 days, as the case may be. Accrued, unpaid interest on the
outstanding principal sum of this Note shall be due and payable quarterly in
arrears on the first day of each July, October, January and March, commencing
July 1, 1998, and at the maturity of this Note (however such maturity shall
occur). All payments shall be applied first to accrued, unpaid interest and
the balance, if any, applied to the outstanding principal sum of this Note.
All past due principal of and interest on this Note shall bear interest from
the due date thereof (whether by acceleration or otherwise) until paid at the
rate per annum equal to ten and one-half percent (10.5%), provided that in no
event shall such interest rate exceed the maximum interest rate permitted by
law.
3. Prepayment. The Maker shall have the right to prepay the
outstanding principal sum of this Note, in whole at any time or in part from
time to time, without premium or penalty, subject only to the provisions of
Section 4(a) hereof.
4. Conversion. This Note is convertible into shares of common stock,
par value $.01 per share ("Common Shares"), of Marcum upon the terms and
subject to the conditions set forth in this Section 4.
(a) Conversion Option. At the option of the Holder, upon the
terms and subject to the conditions set forth in this Section 4, this Note may
be converted into Common Shares (i) at any time on or after the date hereof,
in increments of no less than $250,000, or (ii) for a period of thirty (30)
days commencing on the date the Maker gives notice to the Holder ("Prepayment
Notice") of its intention to prepay all or a portion (in excess of $100,000)
of the outstanding principal sum of this Note (the "Prepayment Payment"), in
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<PAGE>
increments no less than the lesser of the Prepayment Amount or $250,000. In
the event and to the extent the Holder converts all or a portion of the
Prepayment Amount and Marcum delivers the Common Shares into which such
portion was converted, then Maker's obligation to make that portion of the
Prepayment Amount shall be deemed to be fulfilled by delivery to Holder of the
Common Shares into which such portion was converted.
(b) Conversion Rate. This Note may be converted into Common
Shares at the initial conversion rate of one Common Share for each $1.421875
of the principal sum of this Note, subject to adjustment as described below.
(c) Conversion Procedure. In order to convert this Note into
Common Shares, the Holder must (i) complete, sign and deliver to Marcum the
Conversion Notice attached to this Note as Exhibit A, (ii) surrender this Note
to Marcum, (iii) furnish appropriate endorsements and transfer documents if
required by Marcum, and (iv) pay any transfer or similar tax, if required.
The date upon which Marcum receives the duly signed and completed Conversion
Notice, the Note and all other required documentation and fees is referred to
herein as the "Conversion Date." As promptly as practicable after the
Conversion Date, Marcum shall issue and deliver one or more certificates for
the whole number of Common Shares issuable upon such conversion, together with
an cash payment in lieu of any fractional Common Shares. Such conversion
shall be deemed effective immediately prior to the close of business on the
Conversion Date, and at such time the rights of the Holder with respect to the
indebtedness evidenced hereby shall cease. The Holder shall not be entitled
to receive any cash dividends payable to holders of Common Shares as of any
record date before the Conversion Date.
(e) Fractional Shares. No fractional Common Shares shall be
issued upon conversion of this Note but, in lieu thereof, Marcum will pay to
the Holder an amount in cash based upon the Conversion Rate.
(f) Conversion Rate Adjustment for Certain General Events.
(i) General Events. The Conversion Rate is subject to adjustment upon the
occurrence of any of the following events: (A) the issuance of Common Shares
as a dividend or a distribution with respect to the Common Shares; (B) the
subdivision of the outstanding Common Shares into a greater number of shares;
(C) the combination of the outstanding Common Shares into a smaller number of
shares; (D) the issuance to all holders of Common Shares of certain rights or
warrants entitling them to subscribe for or purchase Common Shares (or
securities convertible into Common Shares) at a price less than the lesser of
the then current market price per Common Share or the Conversion Rate; and (E)
the distribution to all holders of Common Shares of shares of capital stock
(other than Common Shares), evidences of indebtedness of Marcum or of other
non-cash assets (including securities but excluding those rights, warrants,
dividends and distributions referred to above or paid in cash).
(ii) Adjustment.
(A) Generally. In the event of the occurrence of any of the foregoing
events, then the Conversion Rate in effect immediately prior to such event
shall be adjusted so that, upon the conversion of the Note the Holder receives
the number of Common Shares or other Securities or assets which it would have
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received immediately following such event if it had converted the Note
immediately prior to the record date relative to such event. Any adjustment
of the Conversion Rate shall become effective immediately after the record
date, in the case of a dividend or distribution, and immediately after the
effective date, in the case of a subdivision, combination or reclassification.
All calculations under this Section 4(f) shall be made to the nearest 1/100th
of a cent.
(B) 1% Minimum Adjustment. No adjustment in the Conversion Rate will
be required to be made unless and until such adjustment that would require a
change of at least one percent (1%) of the Conversion Rate then in effect;
provided, however, that any adjustment that would not be required to be made
shall be taken into account in any subsequent adjustment.
(C) Multiple Adjustments. If any event would require adjustment of
the Conversion Rate pursuant to more than one of the provisions described
above, only one adjustment shall be made, and such adjustment shall be in the
amount of the adjustment having the highest absolute value to the Holder.
(D) Events Not Requiring Adjustment. Except as set forth in this
Section 4, the Conversion Rate shall not be adjusted for the issuance of
Common Shares or securities convertible into or exchangeable for Common Shares
or securities granting the right to purchase any of the foregoing. No
adjustments shall be made for a event referred to above if the Holder is
entitled to participate in the event on the basis and with notice that the
Board of Directors of Marcum determines to be fair and appropriate in light of
the basis and notice on which the holders of Common Shares participate in the
event. No adjustments need to be made for rights to purchase Common Shares
pursuant to a company plan for reinvestment of dividends or interest. No
adjustments need to be made for a change in the par value of the Common
Shares.
(E) Special Authority. Marcum reserves the right to make such
reductions in the Conversion Rate in addition to these required in the
foregoing provisions as it considers to be advisable in order that any event
treated for federal income tax purposes as a dividend of stock or stock rights
will not be taxable to the recipients.
(F) Notices of Adjustments. Whenever the Conversion Rate is
adjusted, the Company will promptly mail to the Holder a notice of the
adjustment.
(g) Mergers, Consolidations, and Sale of Assets. In the event
the Company shall be a party to any transaction (including without limitation
(i) any recapitalization or reclassification of the Common Shares (other than
a change in par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination of the Common
Shares), (ii) any consolidation or merger of the Company with or into another
person or any merger of another person into the Company (other than a merger
that does not result in a reclassification, conversion, exchange or
cancellation of the Common Shares), (iii) any sale or transfer of all or
substantially all of the assets of the Company, or (iv) any compulsory share
exchange) pursuant to which either the Common Shares shall be converted into
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the right to receive other securities, cash or other property, or in the case
of a sale or transfer of all or substantially all of the assets of the
Company, the holders of the Common Shares shall be entitled to receive other
securities, cash or other property, then appropriate provision shall be made
as part of the terms of such transaction so that Holder shall have the right
thereafter to convert this Note only into the kind and amount of the
securities, cash or other property that would have been receivable upon such
recapitalization, reclassification, consolidation, merger, sale, transfer or
share exchange by a holder of the number of Common Shares issuable upon
conversion of such Note immediately prior to such recapitalization,
reclassification, consolidation, merger, sale, transfer or share exchange.
(h) Voluntary Reduction in Conversion Rate. The Maker from time
to time may, to the extent permitted by law, reduce the Conversion Rate of
this Note by any amount for any period of at least twenty (20) days, in which
case the Maker shall give at least fifteen (15) days prior written notice of
such reduction.
(i) Reservation of Common Shares. Marcum shall at all times
reserve and keep available out of its authorized but unissued Common Shares,
solely for the purpose of effecting the conversion of this Note, such number
of Common Shares as shall from time to time be sufficient to effect the
conversion of the then outstanding principal sum of the Note. If at any time
the number of authorized but unissued Common Shares shall not be sufficient to
effect the conversion of this Note, then Marcum shall take such corporate
action as may be necessary to increase its authorized but unissued Common
Shares to such number of Common Shares as shall be sufficient for such
purpose.
(j) Cost of Conversion. Marcum shall pay all documentary, stamp
or other transactional taxes attributable to the issuance or delivery of
Common Shares upon conversion of this Note. However, Holder shall be required
to pay any taxes which may be payable in respect of any transfer involved in
the issuance or delivery of any certificate for such Common Shares in a name
other than that of the Holder.
(k) Common Share Limitation. Notwithstanding any other
provision of the Note to the contrary, in no event shall the aggregate number
of Common Shares to be issued by Marcum upon conversion of the Note when added
to the aggregate number of Common Shares issued by Marcum to Purchaser upon
the closing of the Purchase Agreement, exceed 19.99% of the aggregate number
of Common Shares outstanding as of the date immediately prior to the date
hereof.
5. Subordination.
(a) Subordination of Payment. The indebtedness evidenced by
this Note is subordinated and junior in right of payment to the prior payment
in full of all indebtedness of the Company and its subsidiaries to any bank,
or other financial institution for money borrowed under any loan agreement,
credit agreement, promissory note or similar instruments ("Bank Debt"). No
payment of principal or interest on that Note may be paid (i) if any Bank Debt
is not paid when due and any applicable grace period with respect to such<PAGE>
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default has ended and such default has not been cured or waived or ceased to
exist, or (ii) if the maturity of any Bank Debt has been accelerated because
of a default by Marcum.
(b) Dissolution, Liquidation and Bankruptcy. Upon any
distribution of assets of Marcum to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary,
or in bankruptcy, insolvency, receivership or other proceeding, all principal
premium, if any, and interest due or to become due on all Bank Debt must be
paid in full before the Holder is entitled to receive or retain any payments.
(c) Subrogation. Upon satisfaction of all claims of all Bank
Debt then outstanding, the rights of the Holder shall be subrogated to the
rights of the Holders of Bank Debt to receive payments or distributions
applicable to Bank Debt until all amounts owing on this Note are paid in full.
(d) Certain Distributions. In the event that, notwithstanding
the foregoing, a payment or distribution of assets of Marcum of any kind in
contravention of any of the provisions set forth in this Section 5(e)
pertaining to subordination, whether in cash, property or securities,
including, without limitation, by way of set-off or otherwise, in respect of
the Note before all Bank Debt is paid in full, then such payment or
distribution shall be held by the Holder in trust for the benefit of Holders
of Bank Debt or their representatives to the extent necessary to make payment
in full of all Bank Debt remaining unpaid, after giving effect to any
concurrent payment or distribution or provision therefor, to or for the
holders of Bank Debt.
6. Debt Covenant.
[To be based upon, and slightly less restrictive than, the debt
covenant in Marcum's new credit facility.]
7. Default.
(a) Events of Default. Each of the following shall be deemed an
"Event of Default":
(i) The failure of the Maker to pay interest on the Note
within thirty (30) days of the date when the same becomes due and payable;
(ii) The failure of the Maker to pay the principal sum of
this Note on the date when the same becomes due and payable;
(iii) The failure of the Maker to convert the principal sum
of the Note into Common Shares (as defined below) upon the terms and subject
to the conditions set forth in this Note;
(iv) The failure of the Maker to observe or perform any of
its other covenants set forth in this Note, which failure continues for a
period of thirty (30) days after receipt of notice by the Holder of such
failure;
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(v) The commencement by the Maker of a voluntary
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or a substantial part of
its property, or the consent by the Maker to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or the making by the Maker of a
general assignment for the benefit of creditors; or
(vi) The commencement of an involuntary proceeding against
the Maker seeking liquidation, reorganization, or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official for it or a substantial part
of its property, which involuntary proceeding remains undismissed and unstayed
for a period of sixty (60) days.
(b) Remedies upon Default. If an Event of Default under this Note
shall occur and be continuing, the Holder shall have the right to declare the
outstanding principal sum of and accrued interest to the date of acceleration
on this Note then outstanding to be due and payable by giving written notice
to the Maker to that effect, and upon the Company's receipt of such Notice,
the principal sum of and accrued interest on this Note shall become due and
payable. In addition, if an Event of Default shall occur and be continuing,
the Holder may pursue any available remedy to collect the payment of principal
or interest on this Note or to enforce the performance of any provision of
this Note. The Holder shall have the right to waive any past or existing
default or Event of Default and its consequences Note.
8. Asset Purchase Agreement and Convertible Note Adjustment. This
Note is the "Convertible Note" provided for in that certain Asset Purchase
Agreement, dated March , 1998 (the "Agreement"), by and among Payee,
American Meter Company, Purchaser and Marcum and is executed by Maker as part
of the consideration for the sale by Payee to Purchaser of the "Assets" (as
that term is defined in the Agreement). The principal sum of this Note shall
be reduced by the amount of any "Convertible Note Adjustment", as such term is
defined, at the time and in the manner that such reduction is provided for in
Section 2.4 of the Agreement.
9. Waiver of Procedural Defenses. Makers and each endorser, surety
and guarantor hereby waives presentment for payment, demand for payment,
notice of non-payment or dishonor, protest, notice of protest, notice of
acceleration or maturity, and any and all other notices and demands
whatsoever, and agree to remain bound until the principal and interest are
paid in full, notwithstanding any extensions of time for payment which may be
granted, even though the period of extension may be indefinite, and
notwithstanding any inaction by or failure to asset any legal right available
to the Holder.
10. Severability. If any provision of this Note or application
thereof to any person or circumstance is held invalid, such invalidity shall
not affect other provisions of this Note which can be given effect without the
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invalid provisions, and to this end the provisions of this Note shall be
severable.
11. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflict or choice of law.
12. No Waiver. No delay or omission of the Holder to exercise any
right or power arising under this Note shall impair any such right or power or
be construed to be a waiver of any such right or power, nor shall the action
or nonaction of the Holder in case of default on the part of Maker impair any
right or power resulting therefrom.
13. Successors and Assigns. This Note shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither this Note nor the rights nor obligations herein may
be assigned by the Maker without the prior written consent of the Holder;
provided, however, that the Maker has the right at all times to assign any of
its respective rights or obligations under this Note to a direct or indirect
wholly-owned subsidiary of the Maker, wholly-owned provided that, in the event
of such assignment, the Maker shall remain liable for all of its respective
obligations hereunder.
MAKER:
METRETEK, INCORPORATED
By:
Its:
MARCUM NATURAL GAS SERVICES, INC.
By:
Its:
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EXHIBIT A
CONVERSION NOTICE
The undersigned, the Holder of the enclosed Convertible, Subordinated
Promissory Note (the "Note"), hereby irrevocably elects to exercise its option
to convert the Note into shares of common stock, par value per unit $.01 per
share ("Common Shares"), of Marcum Natural Gas Services, Inc. in the following
amount:
$
The undersigned requests that a certificate for such Common Shares be
issued in the name of and delivered to:
(Name)
(Address)
(City, State, Zip Code)
(Employer Identification Number)
Dated: Signature:
