<PAGE> 1
OMB APPROVAL
OMB Number: 3235-0145
Expires: 08/31/1999
Estimated average burden
hours per form 14.90
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. _______)*
Focus Surgery, Inc.
------------------------------------------------------------
(Name of Issuer)
Common Stock $.0001 Par Value
------------------------------------------------------------
(Title of Class of Securities)
0-344158
-----------------------------------------------------
(CUSIP Number)
Lawrence B. Seidman, Esq.
100 Misty Lane, Parsippany, New Jersey 07054
Telephone: (973) 560-1400
------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
January 9, 1998
-------------------------------------------------------
(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-1(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.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
CUSIP No. 0-344158 Page 2 of 8
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Rosebud Holding, L.L.C.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)/X/
(b)/ /
3. SEC USE ONLY
4. SOURCE OF FUNDS:
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
New Jersey
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
4,990,000
8. SHARED VOTING POWER
-0-
9. SOLE DISPOSITIVE POWER
4,990,000
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON:
4,990,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES: / /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
94.8%
14. TYPE OF REPORTING PERSON:
CO
<PAGE> 3
CUSIP No. 0-344158 Page 3 of 8
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Richard Greenberg
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)/X/
(b)/ /
3. SEC USE ONLY
4. SOURCE OF FUNDS:
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
5,000
8. SHARED VOTING POWER
4,995,000
9. SOLE DISPOSITIVE POWER
5,000
10. SHARED DISPOSITIVE POWER
4,995,000
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON:
4,995,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES: / /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
94.9%
14. TYPE OF REPORTING PERSON:
IN
<PAGE> 4
CUSIP No. 0-344158 Page 4 of 8
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
George Greenberg
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a)/X/
(b)/ /
3. SEC USE ONLY
4. SOURCE OF FUNDS:
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
5,000
8. SHARED VOTING POWER
-0-
9. SOLE DISPOSITIVE POWER
5,000
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON:
5,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES: / /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
0.001%
14. TYPE OF REPORTING PERSON:
IN
<PAGE> 5
CUSIP No. 0-344158 Page 5 of 8
Item 1. Security and Issuer
Common Stock, $.0001 par value
Focus Surgery, Inc.
225 Hammond Avenue
Fremont, California 94539
2. Identity and Background
The persons filing this statement (the "Reporting Persons") are: Rosebud
Holding, L.L.C., Richard Greenberg and George Greenberg. The business address
of all Reporting Persons is 100 Misty Lane, P.O. Box 5430, Parsipanny, New
Jersey 07054.
Rosebud Holding, L.L.C. is a New Jersey Limited Liability Company, the
principal business of which is environmental consulting and analysis, and
whose members are (i) the Greenberg Family Trust, one of whose two trustees is
George Greenberg and whose sole beneficiary is Richard Greenberg, 99%, and
(ii) George Greenberg, 1%. Messrs. Richard and George Greenberg are United
States citizens.
During the past five years, none of the Reporting Persons or the Greenberg
Family Trust has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding 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.
Item 3. Source and Amount of Funds or Other Consideration
The consideration to be used by the Reporting Persons in making the
acquisition is their exchange of all of the issued and outstanding shares of
capital stock of Environmental Waste Management Associates, Inc. and
Integrated Analytical Laboratories, Inc. and all of the ownership interest of
Environmental Waste Management Associates, L.L.C. and Integrated Analytical
Laboratories, L.L.C. The transactions are included as part of the issuer's
Plan of Reorganization which is subject to approval by the Bankruptcy Court.
Item 4. Purpose of Transaction
The purpose of the Reporting Persons in making the acquisition is to control
the issuer. In connection therewith, the Reporting Persons plan to change the
present
<PAGE> 6
CUSIP No. 0-344158 Page 6 of 8
board of directors and management of the issuer and to change the business
from ultrasound image guidance systems to environmental consulting and
laboratory testing and analysis. The Reporting Persons do not have any plan
or proposal which relates to or would result in any of the following, but
reserve the right to revise their plans in the future if any such revision
becomes, in their sole discretion, necessary, appropriate or otherwise
advisable:
(a) The acquisition by any person of additional securities of the
issuer, or the disposition of securities of the issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the issuer
or of any of its subsidiaries;
(d) Any material change in the present capitalization or dividend
policy of the issuer;
(e) Any material change in the issuer's business or corporate
structure except as described above;
(f) Changes in the issuer's charter or bylaws or other actions which
may impede the acquisition of control of the issuer by any person;
(g) Causing a class of securities of the issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system;
(h) A class of equity securities of the issuer becoming eligible for
termination of registration pursuant to Section 12(g) of the Securities
Exchange Act of 1934; or
(i) Any action similar to any of those enumerated above.
<PAGE> 7
CUSIP No. 0-344158 Page 7 of 8
Item 5. Interest in Securities of the Issuer
The Reporting Persons shall acquire 5,000,000 shares of the issuer's common
stock, representing 95% of the issued and outstanding shares after giving
effect to the acquisition. Rosebud Holding, L.L.C. shall acquire 4,990,000
shares of the issuer's common stock and each of Messrs. Richard and George
Greenberg shall acquire 5,000 such shares. Rosebud Holding, L.L.C. is the
beneficial owner of 4,990,000 shares. Richard Greenberg, the record and
beneficial owner of 5,000 shares, also may be deemed the beneficial owner of
the 4,990,000 shares held by Rosebud Holding, L.L.C., by virtue of his
position as Managing Member. George Greenberg is the record and beneficial
owner of 5,000 shares.
Except for the acquisition of 5,000,000 shares, no transactions in the
issuer's securities were effected by any of the Reporting Persons in the past
60 days
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer
There are no contracts, arrangements, understandings or relationships
between the Reporting Persons and the Greenberg Family Trust, on the one hand,
and any person, on the other, with respect to any securities of the issuer.
Item 7. Material to be Filed as Exhibits
The following exhibits are filed as part of this statement:
Exhibit Description
1 Stock Acquisition Agreement made as
of January 9, 1998
2 Statement Required by Rule 13d-1(f)
(included after Signatures)
<PAGE> 8
CUSIP No. 0-344158 Page 8 of 8
SIGNATURES
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.
ROSEBUD HOLDING, L.L.C.
By: /s/ RICHARD GREENBERG
Dated: January 23, 1998 -----------------------------------
Richard Greenberg,
Manager
Dated: January 23, 1998 /s/ GEORGE GREENBERG
-----------------------------------
GEORGE GREENBERG
Dated: January 23, 1998 /s/ RICHARD GREENBERG
-----------------------------------
RICHARD GREENBERG
STATEMENT REQUIRED BY RULE 13d-1(f)
The foregoing Schedule 13D and any amendments thereto with respect to
the common stock of Focus Surgery, Inc. is a joint filing on behalf of the
persons named below pursuant to the provisions of Rule 13d-1(f) of the
Securities Exchange Act of 1934.
ROSEBUD HOLDING, L.L.C.
By: /s/ RICHARD GREENBERG
Dated: January 23, 1998 -----------------------------------
Richard Greenberg, Manager
Dated: January 23, 1998 /s/ GEORGE GREENBERG
-----------------------------------
GEORGE GREENBERG
Dated: January 23, 1998 /s/ RICHARD GREENBERG
-----------------------------------
RICHARD GREENBERG
<PAGE> 1
EXHIBIT 99.1
STOCK ACQUISITION AGREEMENT
This Stock Acquisition Agreement ("Agreement") is made as of January 9, 1998,
by Focus Surgery, Inc., a Delaware Corporation ("Acquiror"), and Rosebud
Holding, L.L.C. ("Rosebud"), Richard Greenberg ("RG") and George Greenberg
("GG"), (collectively the "Exchangors").
RECITALS
Exchangors desire to exchange, and Acquiror desires to acquire, all of
the issued and outstanding shares of capital stock of Environmental Waste
Management Associates, Inc. and Integrated Analytical Laboratories, Inc. (the
"Stock") and all of the ownership interest of Environmental Waste Management
Associates, L.L.C. and Integrated Analytical Laboratories, L.L.C. (the
"Ownership Interest"); [hereinafter Stock and Ownership Interest shall be
referred to collectively as the "Shares"], for the consideration and on the
terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"Acquired Companies" - Environmental Waste Management Associates, Inc.
("EWMA"), Environmental Waste Management Associates, L.L.C. ("EWLLC"),
Integrated Analytical Laboratories, Inc. ("IAL"), and Integrated Analytical
Laboratories, L.L.C. ("ILLC"), and each an "Acquired Company".
"Acquiror" - as defined in the first paragraph of this Agreement.
"Acquiror's Stock" - the Five Million (5,000,000) shares of Focus
Surgery, Inc. to be issued to Exchangors.
"Best Efforts" - the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible.
"Breach" - a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any material inaccuracy in or breach of, or any failure to perform or
comply with, such representation, warranty, covenant, obligation, or other
provision, or (b) any material claim (by any Person) or other occurrence or
circumstance that is or was inconsistent with such representation, warranty,
covenant, obligation, or other
1
<PAGE> 2
provision, and the term "Breach" means any such material inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Closing" - as defined in Section 2.3.
"Closing Date" - the date and time as of which the Closing actually
takes place.
"Consent" - any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" - all of the transactions contemplated by
this Agreement, including:
(a) the exchange of the Shares by Exchangors and [or
with] Acquiror;
(b) the performance by Acquiror and Exchangors of their
respective covenants and obligations under this Agreement; and
(c) Acquiror's acquisition and ownership of the Shares
and exercise of control over the Acquired Companies.
"Contract" - any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Damages" - as defined in Section 10.2.
"Encumbrance" - any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Exchange Act" - the Securities Exchange Act of 1934, as amended.
"Exchangors" - as defined in the first paragraph of this Agreement.
"Facilities" - any leaseholds or other interest currently or formerly
owned or operated by any Acquired Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by any Acquired Company.
"GAAP" - generally accepted accounting principles, applied on a basis
consistent with the basis on which the Audited Financial Statements referred to
in Section 3.4 were prepared.
2
<PAGE> 3
"Governmental Authorization" - any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" - any:
(a) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) multinational organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"IRC" - the Internal Revenue Code of 1986, as amended or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code of
1986, as amended, or any successor law.
"IRS" - the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or
other matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a reasonably comprehensive investigation concerning the existence of such fact
or other matter.
A Person (other than an individual) will be deemed to have "knowledge' of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"Legal Requirement" - any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
3
<PAGE> 4
"Order" - any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" - an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of Persons
exercising similar authority); and
(c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that are
in the same line of business as such Person.
"Organization Documents" - (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) the certificate of formation and the operating agreement of a
limited liability company; (e) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a Person; and
(f) any amendment to any of the foregoing.
"Person" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Proceeding" - any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Related Person" - with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled
by such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of
such individual's Family hold (individually or in the aggregate) a Material
Interest; and
4
<PAGE> 5
(d) any Person with respect to which such individual or
one or more members of such individual's Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer,
partner, executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a
Material Interest;
(e) any Person with respect to which such specified
Person serves as a general partner, manager or a trustee (or in a similar
capacity); and
(f) any Related Person of any individual described in
clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual (ii) the individual's spouse (iii) any other natural person who
is related to the individual or the individual's spouse within the second
degree and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of voting securities or other
voting interests representing at least ten percent (10%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least ten percent (10%) of the outstanding equity securities or
equity interests in a Person.
"Representative" - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act" - the Securities Act of 1933, as amended or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Shares" - as defined in the Recitals of this Agreement.
"Tax" or "Taxes" - means all income, gross receipts, sales, use,
employment, franchise, profits, property, excise or other taxes, estimated
import duties, fees, stamp taxes and duties, assessments or charges of any kind
whatsoever (whether payable directly or by withholding), together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority with respect thereto.
5
<PAGE> 6
"Tax Return" - any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threatened" - a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
2. TRANSFER OF SHARES AND ACQUIROR'S STOCK; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the
Closing, Exchangors will sell and transfer the Shares to Acquiror, and Acquiror
will acquire the Shares from Exchangors.
2.2 EXCHANGE OF SHARES AND ACQUIROR'S STOCK
(a) Acquiror shall issue to Exchangors Five Million
(5,000,000) shares of Acquiror's Stock in exchange for Exchangors' transfer to
Acquiror of the Shares.
(b) The Acquiror's Stock issued to the Exchangors
pursuant to (a) above shall represent, after issuance, ninety-five (95%)
percent of all the issued and outstanding shares of Acquiror.
(c) Exchangors shall place in an escrow account
$50,000.00 to be used by the Acquiror to defer the expenses incurred in
connection with this transaction. The escrow funds shall be disbursed pursuant
to the provisions of Section 11.1.
2.3 CLOSING
The exchange of Shares and Acquiror's Stock (the "Closing")
provided for in this Agreement will take place at 10 o'clock A.M., local time,
at the offices of Exchangors' counsel thirty (30) calendar days after the entry
of a Final Order of the United States Bankruptcy Court confirming a Plan of
Reorganization or, if such date shall not be a regular business day, then on
the next ensuing regular business day, provided however that the Closing may be
held at such other time, or such other date after entry of such Final Order, or
at such other time as the parties may mutually agree. All parties shall use
their best efforts to Close this transaction on or before June 1, 1998.
6
<PAGE> 7
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Exchangors will deliver to Acquiror:
(i) certificates representing the Stock duly
endorsed;
(ii) certificates representing the transfer of the
Ownership Interest;
(iii) an opinion of counsel satisfactory to
Acquiror; and
(iv) a certificate executed by Exchangors
representing and warranting to Acquiror that, except as stated in such
certificate, each of Exchangors' representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the Closing Date.
(b) Acquiror will deliver to Exchangors:
(i) certificates representing the Acquiror's
Stock as required by Section 2.2 above in such denominations and numbers and in
such names as are in accordance with Exhibit 2.2;
(ii) Final Non-appealable Order of the United
States Bankruptcy Court confirming a Plan of Reorganization which incorporates
the terms and conditions of this Agreement;
(iii) an opinion of counsel satisfactory to
Exchangors, which shall include an affirmative representation in form and
substance satisfactory to Exchangors in their sole discretion, that the
Contemplated Transactions have been approved by the United States Bankruptcy
Court and that Notice of the Contemplated Transactions and Plan of
Reorganization has been given to all of the Acquiror's creditors and potential
parties in interest; and
(iv) a certificate executed by Acquiror to the
effect that, except as otherwise stated in such certificate, each of Acquiror's
representations and warranties in this Agreement was accurate in all respects
as of the date of this Agreement and is accurate in all respects as of the
Closing Date as if made on the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF EXCHANGORS
Exchangors represent and warrant to Acquiror as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Exhibit 3.1 contains a complete and accurate list for
each Acquired Company of its name, its jurisdiction of incorporation, other
jurisdictions in which it is qualified
7
<PAGE> 8
or authorized to do business, and its capitalization (including the identity of
each stockholder and the number of shares held by each). Each Acquired Company
is a corporation or limited liability company duly organized, validly existing,
and in good standing under the laws of its jurisdiction of incorporation or
organization, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform its obligations. Each Acquired Company
is duly qualified or authorized to do business as a foreign corporation and is
in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification, except
where the failure to be so qualified or authorized would not have a material
adverse effect on the Acquired Companies, taken as a whole.
(b) Exchangors have delivered to Acquiror copies of the
Organization Documents of each Acquired Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and
binding obligation of Exchangors, enforceable against Exchangors in accordance
with its terms. Exchangors have the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and to perform
their obligations under this Agreement and in connection with the Contemplated
Transactions.
(b) Neither the execution and delivery of this Agreement
nor the consummation or performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organization Documents of the Acquired
Companies, or (B) any resolution adopted by the board of directors or the
stockholders of any Acquired Company;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which any
Acquired Company, or any of the assets owned or used by any Acquired Company,
may be subject;
(iii) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any Acquired Company or that
otherwise relates to the business of, or any of the assets owned or used by,
any Acquired Company;
(iv) cause Acquiror or any Acquired Company to
become subject to, or to become liable for the payment of, any Tax;
8
<PAGE> 9
(v) cause any of the assets owned by any Acquired
Company to be reassessed or revalued by any taxing authority or other
Governmental Body;
(vi) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Contract; or
(vii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or used by any
Acquired Company.
(c) That Exchangors hold and own all of the issued and
outstanding Stock and Ownership Interest in each of the Acquired Companies.
No Acquired Company is or will be required to give any notice to or obtain any
Consent from any Person, except PNC Bank, N.A., which consent will be obtained
within 60 days of the execution of this Agreement by all parties, in
connection with the execution and delivery of this Agreement or the
consummation or performance by it of any of the Contemplated Transactions.
3.3 CAPITALIZATION
The authorized equity securities and the ownership interest of the
Acquired Companies consists of the Stock and Ownership Interest reflected on
Exhibit 3.1. Exchangors are and will be on the Closing Date the record and
beneficial owners and holders of the Stock and Ownership Interest free and
clear of all Encumbrances. No legend or other reference to any purported
Encumbrance appears upon any certificate representing equity securities of any
Acquired Company. All of the outstanding equity securities of each Acquired
Company have been duly authorized and validly issued and are fully paid and
nonassessable. Except for this Agreement, there are no contracts relating to
the issuance, sale, or transfer of any equity securities or other securities of
any Acquired Company. None of the outstanding equity securities or other
securities of any Acquired Company was issued in violation of the Securities
Act or any other Legal Requirement. No Acquired Company owns, or has any
contract to acquire, any equity securities or other securities of any Person or
any direct or indirect equity or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS
Complete, true and correct copies of the balance sheets of EWMA and
IAL as at December 31, 1996 and December 31, 1995, and complete, true and
correct copies of the related statements of income, stockholders' equity and
changes in financial position for the two years ended December 31, 1996,
together with the report thereon of J.H. Cohn, LLP (collectively, the "Audited
Financial Statements") and the unaudited interim balance sheet, related
statement of income and expenses and statement of cash flows for the three
month period ended as at March 31, 1997 of the Acquired Companies (the March 31
Financial Statements") heretofore have been
9
<PAGE> 10
delivered to Acquiror and are attached hereto as Exhibit 3.4. The Audited
Financial Statements, heretofore have been delivered to Acquiror and including
the related notes, (A) are in accordance with the books of account and records
of EWMA and IAL, (B) present fairly the financial condition and results of
operations of EWMA and IAL as of the dates and for the periods indicated, and
(C) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis through the periods covered thereby.
The Acquired Companies shall be permitted to write-off or distribute up to two
million ($2,000,000) dollars of assets as reflected in the March 31 Financial
Statements.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other
records of the Acquired Companies, all of which have been made available to
Acquiror, are complete and correct and have been maintained in accordance with
sound business practices. The minute books of the Acquired Companies contain
accurate and complete records of all meetings held of, corporate action taken
by, the stockholders, the Boards of Directors, and committees of the Boards of
Directors of the Acquired Companies, and no meeting of any such stockholders,
Board of Directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Acquired Companies.
3.6 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and equipment of the Acquired
Companies are structurally sound, are in good operating condition and repair,
and are adequate for the uses to which they are being put, and none of such
buildings, plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost to the Acquired Companies, taken as a whole. The
building, plants, structures and equipment of the Acquired Companies are
sufficient for the continued conduct of the Acquired Companies' businesses
after the Closing in substantially the same manner as conducted prior to the
Closing.
3.7 TAXES
(a) The Acquired Companies have filed or caused to be
filed (on a timely basis since 1993) all Tax Returns that are or were required
to be filed by or with respect to any of them, either separately or as a member
of a group of corporations, pursuant to applicable Legal Requirements.
Exchangors have made available to Acquiror copies of all such Tax Returns for
the calendar years 1994, 1995 and 1996. The Acquired Companies have paid, or
made provision for the payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by any Acquired Company, except such Taxes, if any, as are listed in
Exhibit 3.11 and are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided in the Audited
Financial Statements or the March 31 Financial Statements.
10
<PAGE> 11
(b) The charges, accruals and reserves with respect to
Taxes on the respective books of each Acquired Company are adequate (determined
in accordance with GAAP) and are at least equal to that Acquired Company's
liability for Taxes. There exists no proposed tax assessment against any
Acquired Company except as disclosed in the Audited Financial Statements or the
March 31 Financial Statements or on Exhibit 3.11. No consent to the
application of Section 341(f)(2) of the IRC has been filed with respect to any
property or assets held, acquired, or to be acquired by any Acquired Company.
All Taxes that any Acquired Company is or was required by Legal Requirements to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body or other Person.
(c) All Tax Returns filed by (or that include on a
consolidated basis) any Acquired Company are true, correct, and complete.
There is no tax sharing agreement that will require any payment by any Acquired
Company after the date of this Agreement. Each of the Acquired Companies has
made a proper election to be treated as a Subchapter "S" corporation.
3.8 COMPLIANCE WITH LAWS
On the Closing Date, each of the Acquired Companies will be in
material compliance with all applicable laws, regulations or Orders with
respect to the operation of its business and name of the Acquired Companies
shall have received any notice of any such alleged violation, except for
violations the existence of which would not individually or in the aggregate
have a material adverse effect on the Acquired Companies, taken as a whole.
3.9 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Exhibit 3.15, there is no
pending Proceeding:
(i) that has been commenced by or against any
Acquired Company or that otherwise relates to or may affect the business of, or
any of the assets owned or used by, any Acquired Company; or
(ii) that challenges, or that may have the effect
of preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions.
To the Knowledge of the Exchangors, (1) no such Proceeding has been Threatened,
and (2) no event has occurred or circumstance exists that may give rise to or
serve as a basis for the commencement of any such Proceeding. Exchangors have
delivered to Acquiror copies of all pleadings, correspondence, and other
documents relating to each Proceeding listed on Exhibit 3.15. The Proceedings
listed on Exhibit 3.15 will not have a material adverse effect on the Acquired
Companies, taken as a whole.
(b) Except as set forth on Exhibit 3.15:
11
<PAGE> 12
(i) there is no Order to which any of the
Acquired Companies, or any of the assets owned or used by any Acquired Company,
is subject;
(ii) no Exchangor is subject to any Order that
relates to the business of, or any of the assets owned or used by, any Acquired
Company; and
(iii) to the Knowledge of the Exchangors, no
officer, director, agent, or employee of any Acquired Company is subject to any
Order that prohibits such officer, director, agent, or employee from engaging
in or continuing any conduct, activity, or practice relating to the business of
any Acquired Company.
3.10 INSURANCE
(a) Exhibit 3.18 lists all policies or binders of fire,
casualty, liability, burglary, fidelity, workers' compensation, vehicular, life
and other insurance held by or on behalf of the Acquired Companies. Such
policies and binders are in full force and effect. The Acquired Companies are
not in default with respect to any provision contained in any such policy or
binder and have not failed to give notice or present any claim under any such
policy or binder in due and timely fashion which failure could have a material
adverse effect on the Acquired Companies, taken as a whole. Except as set
forth in Section 3.10, there are no outstanding unpaid claims under any such
policy or binder, and the Acquired Companies have not received any notice of
cancellation or non-renewal of any such policy or binder. The Exchangors
agree to cause the affected Acquired Company promptly to notify Acquiror if
such Acquired Company learns of the occurrence of any event set forth in the
preceding sentence after the date hereof and prior to the Closing. All
premiums due and payable for the policies of fire, casualty, liability,
burglary, fidelity, workers' compensation, vehicular, life and other forms of
insurance owned or held by the Acquired Companies have been duly paid or
accrued, and each Acquired Company has used its Best Efforts to arrange for all
such insurance (or extensions, renewals or replacements thereof) in such
amounts and types of coverage to be in full force and effect on the Closing
Date.
3.11 LABOR RELATIONS; COMPLIANCE
None of the Acquired Companies is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by the
Acquired Companies and currently there are no organizational campaigns, pending
petitions or activities seeking recognition of a collective bargaining unit, in
any such case, applicable to persons employed by the Acquired Companies. There
are currently no strikes, slowdowns, work stoppages or lockouts by or with
respect to any employees of the Acquired Companies. To the Knowledge of the
Exchangors, no labor problem exists with the Acquired Companies' employees or
is imminent, and the Exchangors have no Knowledge of any existing or imminent
labor disturbance by the employees of any of the Acquired Companies' suppliers,
contractors or customers that could reasonably be expected to have a material
adverse effect on its business.
3.12 BROKERS OR FINDERS
12
<PAGE> 13
Exchangors and their Representatives have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to Exchangors as follows:
4.1 ORGANIZATION AND GOOD STANDING
Acquiror is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement will constitute a legal, valid and
binding obligation of Acquiror, enforceable against Acquiror in accordance with
its terms upon entry of a Final Order of the Bankruptcy Court confirming a Plan
of Reorganization which provides for consummation of the Contemplated
Transactions. Thereafter, Acquiror shall have the absolute and unrestricted
right, power and authority to execute and deliver this Agreement and to perform
its obligations under this Agreement and in connection with the Contemplated
Transactions. However, Acquiror will not obtain approval of its Board of
Directors for this transaction.
(b) Acquiror, before the Closing may occur, must obtain
the Consent of the United States Bankruptcy Court for the Contemplated
Transactions in the form of a Final Order described above. Acquiror shall use
its Best Efforts to obtain (i) the Final Order and (ii) the approval of the
creditors and shareholders for the Plan of Reorganization.
(c) Except as set forth in Section 4.2 (c), neither the
execution and delivery of this Agreement by Acquiror nor the consummation or
performance of any of the Contemplated Transactions by Acquiror will give any
Person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
(i) any provision of Acquiror's Organization
Documents as presently in effect or as in effect immediately subsequent to the
Closing;
(ii) any resolution adopted by the board of
directors or the stockholders of Acquiror;
(iii) any Legal Requirement or Order to which
Acquiror may be subject; or
(iv) any Contract to which Acquiror is a party or
by which Acquiror may be bound.
13
<PAGE> 14
(d) It is hereby acknowledged by Exchangors that
Acquiror's ability to obtain the Final Order is contingent upon the approval of
the Plan of Reorganization by both the creditors and shareholders of Acquiror.
Except as set forth in Section 4.2(b) above, Acquiror is not and will not be
required to obtain any consent from any Person or Governmental Body in
connection with the execution and delivery of this Agreement or the
consummation or performance by it of any of the Contemplated Transactions.
4.3 DISCLOSURE STATEMENT AND PLAN OF REORGANIZATION
The Disclosure Statement and Plan of Reorganization is true,
accurate and complete, is not misleading in any material respect and does not
misstate any material information or omit any material information required to
make the statements made not misleading. The terms and conditions of the
Disclosure Statement and Plan of Reorganization are incorporated here by
reference and if there is a conflict between the Disclosure Statement and Plan
of Reorganization and this Agreement, the terms and conditions of the Plan of
Reorganization shall govern. Exchangors represent that any information
provided to Acquiror which shall be included in the Disclosure Statement and
Plan of Reorganization is true, accurate and complete, is not misleading in any
material respect and does not misstate any material information or omit any
material information required to make the statements made not misleading.
4.4 SCHEDULE OF CREDITORS
The Schedule of Creditors attached hereto as Exhibit 4.4 is
true, accurate and complete.
4.5 INVESTMENT INTENT
The Acquiror acknowledges that the shares of Acquiror's Stock to be
issued pursuant hereto have not been registered under the Act, or under the
securities laws of any state of the United States.
4.6 CERTAIN PROCEEDINGS
Except for the confirmation of the Plan of Reorganization, there is no
pending Proceeding that has been commenced against Acquiror and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To
Acquiror's Knowledge, no such Proceeding has been Threatened.
14
<PAGE> 15
4.7 BROKERS OR FINDERS
Acquiror and its officers and Representatives have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Exchangors harmless from any such payment
alleged to be due by or through Acquiror as a result of the action of Acquiror
or its officers or Representatives.
4.8 ABSENCE OF UNDISCLOSED LIABILITIES
Except for the payment of the administrative Bankruptcy Court claims,
payment of all priority, secured and unsecured creditors, which claims and
creditors will be paid in accordance with the Plan of Reorganization, Acquiror
does not have any direct or indirect indebtedness, liability, claim, loss,
damage, deficiency, obligation or responsibility, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise, that is not
reflected on its financial statements, Schedule of Creditors or otherwise
disclosed in writing to Exchangors. Furthermore, Acquiror represents and
warrants that Acquiror has sufficient assets to pay any of the before-
mentioned administrative claims and creditors.
4.9 CLASS OF SECURITIES AND REPORTS
The Acquiror has a class of securities registered under the Exchange
Act and all of Acquiror's reports and financial statements required to be filed
under the Exchange Act were current on the date Acquiror filed its Petition
with the Bankruptcy Court. Furthermore, all of the financial reports required
to be filed under the cover of Form 8-K have been filed since the Acquiror
filed its Petition with the Bankruptcy Court, except for certain reports and
financial statements which are the subject of a "no action" letter from the
Securities and Exchange Commission, a copy of which has been provided to
Exchangors. Acquiror's Common Stock is a class of securities registered
pursuant to the Exchange Act.
4.10 VALUE OF ACQUIROR
Acquiror represents that its net asset value at the date of this
Agreement is approximately $1.00.
4.11 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to
Section 9, Acquiror will not, and will cause each of their Representatives not
to, directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
Person relating to any transaction involving the sale of the business or assets
of Acquiror, or any of the capital stock of or any ownership interest in
Acquiror, or any merger, consolidation, business combination, or similar
transaction involving Acquiror.
15
<PAGE> 16
5. COVENANTS OF EXCHANGORS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Exchangors
will, and will cause each Acquired Company and its Representatives to, (a)
afford Acquiror and its Representatives and prospective lenders and their
Representatives (collectively, "Acquiror's Advisors") full and free access to
each Acquired Company's personnel, properties, contracts, books and records,
and other documents and data, upon reasonable notice during normal business
hours, (b) furnish Acquiror and Acquiror's Advisors with copies of all such
contracts, books and records, and other existing documents and data as Acquiror
may reasonably request, and (c) furnish Acquiror and Acquiror's Advisors with
such additional financial, operating, and other data and information as
Acquiror may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES
Between the date of this Agreement and the Closing Date, Exchangors
will, and will cause each Acquired Company to:
(a) conduct the business of such Acquired Company only in the
Ordinary Course of Business; and
(b) use their Best Efforts to preserve intact the current business
organization of such Acquired Company, keep available the services of the
current officers, employees, and agents of such Acquired Company, and maintain
the relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with such Acquired
Company.
5.3 NOTIFICATION
Between the date of this Agreement and the Closing Date, the
Exchangors will promptly notify Acquiror in writing if such Exchangors or any
Acquired Company becomes aware of any fact or condition that causes or
constitutes a Breach of any of Exchangors' representations and warranties as of
the date of this Agreement, or if such Exchangor or any Acquired Company
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty, had such
representation or warranty been made as of the time of occurrence or discovery
of such fact of condition. Should any such fact or condition require any
change in the Agreement or any Exhibit hereto, Exchangors will promptly deliver
to Acquiror a supplement to Agreement or such Exhibit specifying such change.
During the same period, the Exchangors will promptly notify Acquiror of the
occurrence of any breach of any covenant of Exchangors in this Section 5 or of
the occurrence of any event that may make the satisfaction of the conditions in
Section 7 impossible.
16
<PAGE> 17
5.4 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Except as expressly provided in this Agreement, Exchangors will cause
all indebtedness owed to an Acquired Company by an Exchangor or any Related
Person of an Exchangor to be paid in full prior to Closing.
5.5 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to
Section 9, Exchangors will not, and will cause each Acquired Company and each
of their Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public; information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Acquiror) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of any Acquired Company, or any of the capital
stock of or any ownership interest in any Acquired Company, or any merger,
consolidation, business combination or similar transaction involving any
Acquired Company.
5.6 BEST EFFORTS
Between the date of this Agreement and the Closing Date,
Exchangors will use their Best efforts to cause the conditions in Sections 7
and 8 to be satisfied.
5.7 BROKERS OR FINDERS
Exchangors and its officers and Representatives have incurred
no obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Acquiror harmless from any such payment
alleged to be due by or through Exchangors as a result of the action of
Exchangors or its officers or Representatives.
6. COVENANTS OF ACQUIROR PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Acquiror
will and will cause each of its Related Persons to, make all filings required
by Legal Requirements to be made by them to consummate the Contemplated
Transactions (including all filings with the Bankruptcy Court). Between the
date of this Agreement and the Closing Date, Acquiror will, and will cause each
Related Person to, cooperate with Exchangors with respect to and use their Best
Efforts to facilitate all filings that Exchangors are required by Legal
Requirements to make in connection
17
<PAGE> 18
with the Contemplated Transactions, and (ii) cooperate with Exchangors in and
use their Best Efforts to facilitate obtaining all Consents required by this
Agreement; provided that this Agreement will not require Acquiror to dispose of
or make any change in any portion of its business or to incur any other burden
to obtain a Governmental Authorization.
6.2 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the date of
this Agreement and the Closing Date, Acquiror and Exchangor will use their Best
Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
6.3 ACQUIROR'S CERTIFIED FINANCIAL STATEMENT
Acquiror shall permit the accountants for the Acquired Companies to
prepare, and shall use its Best Efforts to facilitate the prompt preparation
of, audited financial statements of the Acquiror for the past three (3) fiscal
years in accordance with the requirements of Form 10-KSB of the Exchange Act.
Exchangors shall be responsible for the costs to prepare said audited financial
statements.
7. CONDITIONS PRECEDENT TO ACQUIROR'S OBLIGATION TO CLOSE
Acquiror's obligation to acquire the Shares and to take the other
actions required to be taken by Acquiror at the Closing or otherwise as
contemplated hereby or in connection with the Contemplated Transactions is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Acquiror, in whole or in
part):
7.1 ACCURACY OF REPRESENTATIONS
(a) All of Exchangors' representations and warranties in
this Agreement (considered collectively), and each of these representations and
warranties (considered individually) must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
7.2 EXCHANGORS' PERFORMANCE
(a) All of the covenants and obligations that Exchangors
are required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to
Section 2.4 must have been delivered, and each of the other covenants and
obligations of Exchangors must have been performed and complied with in all
respects.
18
<PAGE> 19
7.3 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to Acquiror:
(a) an opinion of Bray Chiocca Rappaport & Rothstadt
dated the Closing Date, in the form of Exhibit 7.3(a);
(b) such other documents as Acquiror may reasonably
request for the purpose of (i) enabling its counsel to provide the opinion
referred to in Section 8.4(a), (ii) evidencing the accuracy of any of
Exchangors' representations and warranties, (iii) evidencing the performance by
the Exchangors of, or the compliance by the Exchangors with, any covenant or
obligation required to be performed or complied with by such Exchangors, (iv)
evidencing the satisfaction of any condition referred to in this Section 7, or
(v) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
7.4 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced
or Threatened against Acquiror, or against any Person affiliated with Acquiror,
any Proceeding (a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Contemplated Transactions, or (b) that
could reasonably be expected to have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions.
7.5 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any claim
asserting that such Person is the holder or the beneficial owner of, or has the
right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, any of the Acquired Companies.
7.6 NO PROHIBITION
Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
of lapse of time), materially contravene, or conflict with, or result in a
material violation of, or cause Acquiror or any Person affiliated with Acquiror
to suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise formally proposed by or before any
Governmental Body.
7.7 BANKRUPTCY COURT APPROVAL
19
<PAGE> 20
Acquirors shall have obtained a Final Order of the Bankruptcy Court
confirming a Plan of Reorganization which provides for consummation of the
Contemplated Transaction.
8. CONDITIONS PRECEDENT TO EXCHANGORS' OBLIGATION TO CLOSE
Exchangors' obligation to transfer the Shares and to take the other
actions required to be taken by Exchangors at the Closing or otherwise as
contemplated hereby or in connection with the Contemplated Transactions is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Exchangors, in whole or in
part):
8.1 ACCURACY OF REPRESENTATIONS
All of Acquiror's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.
8.2 ACQUIROR'S PERFORMANCE
(a) All of the covenants and obligations that Acquiror is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
(b) Acquiror must have delivered each of the documents
required to be delivered by Acquiror pursuant to Section 2.4 and must have
issued the Acquired Stock required to be issued by Acquiror pursuant to
Sections 2.4(b)(i).
8.3 CONSENTS
Each of the Consents identified in Section 4.2(b) must have been
obtained and must be in full force and effect.
8.4 REVENUE RULING
Exchangors shall have the right to apply for a Revenue Ruling from the
IRS that the transaction shall be tax-free to the Exchangors, but the receipt
of said Revenue Ruling shall not be a condition precedent to Closing.
8.5 ADDITIONAL DOCUMENTS
The following documents must have been delivered to Exchangors:
(a) an opinion of Murray & Murray, dated the Closing
Date, in the form of Exhibit 8.5(a); and
20
<PAGE> 21
(b) such other documents as Exchangors may reasonably
request for the purpose of (i) enabling their counsel to provide the opinion
referred to in Section 8.5 (a), (ii) evidencing the accuracy of any
representation or warranty of Acquiror, (iii) evidencing the performance by
Acquiror of, or the compliance by Acquiror with, any covenant or obligation
required to be performed or complied with by Acquiror, (ii) evidencing the
satisfaction of any condition referred to in this Section 8, or (v) otherwise
facilitating the consummation of any of the Contemplated Transactions.
8.6 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the transfer of the Shares by Exchangors to
Acquiror, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
8.7 STOCK ISSUANCE
Acquiror shall cancel all of its presently issued and outstanding
shares and issue 5,000,000 new shares of Acquiror's Stock to Exchangors and
263,157 new shares to the present shareholders of Acquiror.
8.8 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced
or Threatened against Exchangors, or against any Person affiliated with
Exchangors, any Proceeding (a) involving any challenge to, or seeking damages
or other relief in connection with, any of the Contemplated Transactions, or
(b) that could reasonably be expected to have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the Contemplated
Transactions.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may by notice given prior to or at the Closing, be
terminated:
(a) by either Acquiror or Exchangors if a material Breach
of any provision of this Agreement has been committed by the other party and
such Breach has not been waived;
(b) (i) by Acquiror if any of the conditions in Section 7
has not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than
21
<PAGE> 22
through the failure of Acquiror to comply with its obligations under this
Agreement) and Acquiror has not waived such condition on or before the Closing
Date; or (ii) by Exchangors, if any of the conditions in Section 8 has not been
satisfied of the Closing Date or if satisfaction of such condition is or
becomes impossible (other than through the failure of Exchangors to comply with
their obligations under this Agreement) and Exchangors have not waived such
condition on or before the Closing Date; and
(c) by mutual consent of Acquiror and Exchangor.
Notwithstanding the above, either party may cancel this Agreement without any
further liability to the other party if this transaction is not Closed prior to
June 1, 1998, so long as each party has used their best efforts to Close the
transaction.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the
exercise of a right of termination will not be an election of remedies. If
this Agreement is terminated pursuant to Section 9.1, all further obligations
of the parties under this Agreement will terminate, except that the obligations
in Sections 10.2, 10.3, 11.1 and 11.3 will survive; provided, however, that if
this Agreement is terminated by a party because of the Breach of the Agreement
by the other party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of the
other party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
9.3. TERMINATION OR RESCISSION BY EXCHANGORS
(a) If there is a Breach of any representation or
warranty by Acquiror before the Closing, Exchangors may terminate this
Agreement, and the obligations of the parties to each other shall be null and
void, except for those obligations provided by Section 11.1.
(b) If there is a Breach of any representation or
warranty by Acquiror after the Closing, the Exchangors shall have the right to
rescind the Contemplated Transactions to the extent consummated and to receive
a return of the Stock and Ownership Interest of the Acquired Companies upon
return of the Acquiror's Stock issued pursuant to this Agreement. The
Exchangors shall have no right to receive any compensation in addition to the
return of the Stock and Ownership Interest upon recission of this transaction.
9.4 EFFECT OF TERMINATION OR RESCISSION BY EXCHANGORS
22
<PAGE> 23
The Exchangors' right to terminate or rescind under Section 9.3 is in
addition to any other rights they may have under this Agreement or otherwise,
and the exercise of a right of termination or rescission will not be an
election of remedies. If this Agreement is terminated or rescinded pursuant to
Section 9.3, all further obligations of the parties pursuant to this Agreement,
will terminate, except any obligations imposed by Section 9.3 and except that
the obligations in Sections 10.2, 10.3, 11.1 and 11.3 will survive.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
Notwithstanding any other provision of this Agreement, the liability
of Exchangors or Acquiror for damages for any Breach prior to the Closing shall
be limited to the return or retention of the deposit in accordance with Section
11.1 of this Agreement.
10.2 EXCHANGORS' DAMAGES
If Acquiror Breaches any covenant or representation contained herein,
Exchangors sole right to damages shall be as provided for in Sections 9.3 and
11.1 above.
11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party
to this Agreement will bear its respective expenses incurred in connection with
the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of Representatives.
Notwithstanding the before-mentioned statement, the Exchangors shall deposit
$50,000.00 with Acquiror's counsel, to be held in trust, to be used to pay for
the expenses incurred by Acquiror up to $50,000.00, in connection with this
transaction. Exchangors shall deposit $25,000.00 upon submission of the draft
of this Agreement and $25,000.00 upon Acquiror's filing of the Plan and
Disclosure Statement with the Bankruptcy Court. The Deposit shall be returned
in full if the Acquiror terminates this transaction, other than pursuant to
Section 9.1(a) or (b) (i). If the Exchangors terminate this transaction, the
Exchangors shall forfeit the entire deposit, other than pursuant to Section
9.1(a) or (b) (ii). If the Bankruptcy Court declines to confirm the Plan of
Reorganization, the Exchangors shall be responsible for one-half (1/2) of the
Acquiror's legal and professional expenses for this transaction up to a maximum
of $25,000.
11.2 PUBLIC ANNOUNCEMENTS
23
<PAGE> 24
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Acquiror determines. Unless consented to by
Acquiror in advance or required by Legal Requirements, prior to the Closing
Exchangors shall, and shall cause the Acquired Companies to, keep this
Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person. Exchangors and Acquiror will consult with each other
concerning the means by which the Acquired Companies' employees, customers, and
suppliers and others having dealings with the Acquired Companies will be
informed of the Contemplated Transactions, and Acquiror will have the right to
have designated Representatives present for any such communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Acquiror and
Exchangors will maintain in confidence, and will cause the directors, officers,
employees, agents, and advisors of Acquiror and the Acquired Companies to
maintain in confidence, and not use to the detriment of another party or an
Acquired Company any written, oral, or other information obtained in confidence
from another party or an Acquired Company in connection with this Agreement or
the Contemplated Transactions, unless (a) such information is already known to
such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary in making any filing or obtaining any
Consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by
or necessary in connection with Legal Proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such confidential written information as the other
party may reasonably request.
11.4 MOTION TO PAY ALLOWED CLAIMS
Exchangors acknowledge that Acquiror intends to file a motion with the
Bankruptcy Court seeking authority to pay the allowed claims. Any Order of the
Bankruptcy Court permitting the payment of allowed claims shall not be deemed
to be a Breach so long as none of the Acquiror's creditors shall have a claim
on the assets of the Acquiror after the Closing of the Contemplated Transaction
or be deemed a creditor of the Acquiror after the Closing.
11.5 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
24
<PAGE> 25
<TABLE>
<S> <C>
EXCHANGORS:
Attention: Richard S. Greenberg, Ph.D.
100 Misty Lane
P. O. Box 5430
Parsipanny, NJ 07054
Facsimile No.: (201) 560-0400
With a copy to: David J. Levenson, Esq.
Venable, Baetjer, Howard & Civiletti
1201 New York Avenue, N.W., Suite 1000
Washington, DC 20005
Facsimile No.: (202) 962-8300
With a copy to: Daniel M. Stolz, Esq.
Wasserman Jurista & Stolz
225 Millburn Avenue
Millburn, NJ 07041
Facsimile No.: (201) 467-8126
ACQUIROR:
Attention: Richard J. Redett
The Redett Management Group
895 San Mateo Drive
Menlo Park, CA 94025
Facsimile No.: (415) 529-0624
With a copy to: Patrick M. Costello, Esq.
Murray & Murray
3030 Hansen Way, Suite 200
Palo Alto, CA 94304-1009
Facsimile No.: (415) 852-9244
</TABLE>
11.6 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the Oakland Bankruptcy Court, and each of the parties consents to
the jurisdiction of such courts (and of the appropriate appellate courts) in
any such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may
be served on any party anywhere in the world.
11.7 FURTHER ASSURANCES
25
<PAGE> 26
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
request for the purpose of carrying out the intent of this Agreement and the
Contemplated Transactions and the documents referred to in this Agreement.
11.8 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.
To the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement or the documents referred to in this Agreement
can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement.
11.9 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the Agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
party to be charged with the amendment.
11.10 ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS
Neither Acquiror nor the Exchangors may assign any of their respective
rights under this Agreement without the prior consent of the other, which will
not be unreasonably withheld. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
11.11 SEVERABILITY
26
<PAGE> 27
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
11.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
11.13 GOVERNING LAW
This Agreement will be governed by the laws of the State of Delaware
without regard to conflicts of laws principles.
11.14 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
ACQUIRER: EXCHANGORS:
FOCUS SURGERY, INC. ROSEBUD, L.L.C.
BY: BY:
--------------------------- ---------------------------
RICHARD GREENBERG, MANAGER
27
<PAGE> 28
---------------------------
GEORGE GREENBERG
---------------------------
RICHARD GREENBERG
28
