SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
________________
Date of Report (Date of earliest event reported) November 30, 1997
AQUAGENIX, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-24490 65-0419263
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(State or other jurisdiction (Commission File Number) I.R.S. Employer
of incorporation) Identification No.)
6500 Northwest 15th Avenue, Fort Lauderdale, Florida 33309
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (954) 975-7771
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On November 30, 1997, Aquagenix, Inc. (the "Company") entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") with Thomas Terry, Jr.
("Terry") to acquire all of the issued and outstanding stock of Lewis Tree
Service, Inc. ("Lewis"), a privately-owned business located in Rochester, New
York. The purchase price for the stock will be Twenty-five Million ($25,000,000)
Dollars plus shares of Common Stock of the Company having a Fair Market Value
(as defined in the Stock Purchase Agreement) equal to the Applicable Percentage
(defined below) of Lewis' EBITDA for the twelve (12) months ended October 31,
1998. The Applicable Percentage shall be as follows: (i) if EBITDA is less than
$4,500,000, the Applicable Percentage shall be twenty-five (25%) percent, (ii)
if EBITDA is at least $4,500,000 but less than $5,250,000, the Applicable
Percentage shall be forty (40%) percent, (iii) if EBITDA is at least $5,250,000
but less than $6,000,000, the Applicable Percentage shall be fifty (50%)
percent, and (iv) if EBITDA is at least $6,000,000, the Applicable Percentage
shall be sixty (60%) percent.
Under the terms of the Amended and Restated Escrow Agreement (the "Escrow
Agreement"), the Company has deposited Six Hundred Seventy Thousand ($670,000)
Dollars (the "Escrow Amount") with the Escrow Agent. If the closing of the
acquisition has not occurred by January 31, 1998, and the Company has not
terminated the Stock Purchase Agreement no later than five (5) business days
after the Company receives the audited balance sheet of Lewis as at October 25,
1997 which are materially and adversely different from the unaudited balance
sheet of Lewis as at October 25, 1997, the Company shall either (a) elect to
extend the term of the Stock Purchase Agreement to March 31, 1998 and make an
additional deposit with the Escrow Agent sufficient to increase the Escrow
Amount to Two Million Five Hundred Thousand ($2,500,000) Dollars or (b) the
Escrow Agent shall pay the Escrow Amount to Terry and the Stock Purchase
Agreement will terminate, provided that certain conditions have been met,
including but not limited to, the accuracy in all material respects of all
representations and warranties made by Lewis in the Stock Purchase Agreement, no
prohibition on the sale of the stock by Terry and no material adverse change in
the properties, assets, business, financial condition or prospects of Lewis
since the date of the Stock Purchase Agreement.
The proposed acquisition is subject, among other things, to the Company's
obtaining the required financing for the acquisition and the necessary credit
facilities to finance and/or repay the working capital requirements and the
current debt obligations of Lewis. The closing shall take place on January 31,
1998 unless extended by the Company to March 31, 1998 by complying with the
terms and conditions of the Escrow Agreement.
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Founded in 1938, Lewis also known as Monroe Tree Service, is one of the oldest
and largest tree trimming vegetation management companies in the United States
with approximately 1,000 employees. It provides vegetation management services
to utilities and government entities in eighteen states throughout the eastern
United States. Based on the audited financial statements for the fiscal year
ended October 25, 1997, Lewis generated total revenues of approximately $50
million. The top ten customers of Lewis accounted for approximately 64% of the
total revenues for 1997.
This business combination of Aquagenix and Lewis should further expand the
Company's operations throughout eastern United States. With the established
customer base of Lewis and its reputation for quality service, combined with the
Company's technology and infrastructure, this acquisition will expand the range
of vegetation management services and enable the combined company to provide
integrated vegetation management solutions to the utility and governmental
customers. Members of the executive management team of Lewis will remain with
the Company to ensure a seamless transition for its customers with the added
benefits of expanded service capabilities and significantly broader insurance
and bonding coverages.
The information herein is qualified in its entirety by reference to the Stock
Purchase Agreement filed as part of this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibits
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(a) Stock Purchase Agreement, dated November 30, 1997 between Company and
Thomas Terry, Jr.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AQUAGENIX, INC.
By: /s/ Helen Chia
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Helen Chia
Chief Financial Officer
DATED: December 12, 1997
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of November 30,
1997, by AQUAGENIX, INC., a Delaware corporation ("Buyer"), THOMAS TERRY, JR.,
an individual resident in New York (sometimes referred to hereinafter as "Terry"
or "Seller").
RECITALS
Seller desires to sell, and Buyer desires to purchase, all of the issued
and outstanding shares (the "Shares") of capital stock of Lewis Tree Service,
Inc., a New York corporation (the "Company"), for the consideration and on the
terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"APPLICABLE CONTRACT"--any Contract (a) under which the Company has
or may acquire any rights, (b) under which the Company has or may become subject
to any obligation or liability, or (c) by which the Company or any of the assets
owned or used by it is or may become bound.
"APPLICABLE PERCENTAGE"--as defined in Section 2.2.
"BALANCE SHEET"--as defined in Section 3.4.
"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 provided, however, that an obligation
to use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse change
in the benefits to such person of this Agreement and the Contemplated
Transactions.
"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 any inaccuracy in or breach of, or any failure to perform or comply with,
such representation, warranty, covenant, obligation, or other provision.
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"BUYER"--as defined in the first paragraph of this Agreement.
"CLOSING"--as defined in Section 2.3.
"CLOSING DATE"--the date and time as of which the Closing actually
takes place.
"COMPANY"--as defined in the Recitals of this Agreement.
"CONSENT"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONSULTING AGREEMENT"--as defined in Section 2.4(a)(iii).
"CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated by
this Agreement, including:
(a) the sale of the Shares by Seller to Buyer;
(b) the execution, delivery, and performance of the Lease, the
Consulting Agreement, and the Registration Rights Agreement;
(c) the performance by Buyer and Seller of their respective
covenants and obligations under this Agreement;
(d) Buyer's acquisition and ownership of the Shares and exercise
of control over the Company; and
(e) the issuance of the Securities to Seller.
"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.
"DISCLOSURE LETTER"--the disclosure letter delivered by Seller to
Buyer concurrently with the execution and delivery of this Agreement.
"EBITDA"--for any particular period shall mean the Company's
earnings (determined in accordance with GAAP), before interest, taxes and
depreciation and amortization, as adjusted to (a) exclude the amount of any
increased expenses or reduced revenues (unless such reduction in revenues
results from a course of action approved as in the best interests of the Company
on a stand-alone basis by Seller or other members of the pre-Closing management
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of the Company in consultation with Buyer) incurred by the Company that the
Company would not have incurred had Seller continued to operate the Company on a
stand-alone basis consistent with past practice and (b) amounts representing
corporate expenses of Buyer and other expenses which Buyer may incur on the
Company's behalf provided such amounts are not in excess of the amounts which
Company would have occurred on a stand-alone basis.
"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.
"ENVIRONMENT"--soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(b) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(c) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as
amended ("CERCLA").
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"ENVIRONMENTAL LAW"--any Legal Requirement that requires or relates
to:
(a) advising or notifying appropriate authorities, employees, and
the public of intended or actual releases of pollutants or hazardous substances
or materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) protecting resources, species, or ecological amenities;
(e) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(f) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(g) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ESCROW AGREEMENT"--as defined in Section 2.5.
"FACILITIES"--any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures, or equipment (including motor vehicles, tank cars, and
rolling stock) currently or formerly owned or operated by the Company.
"FAIR MARKET VALUE"--THE AVERAGE OF (A) the average closing price of
Buyer's Common Stock for the ten (10) trading days ending one (1) trading day
prior to Closing, and (b) the average closing price of Buyer's Common Stock for
the ten (10) trading days ending one (1) trading day prior to the date the
Securities are issued to Seller, provided that such prices and Fair Market Value
shall be proportionately and equitably adjusted to take into account the effect
of any stock dividend, subdivision, split or similar event that occurs between
(i) the commencement of the measurement period
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described in clause (a) above and (ii) the date of any issuance or surrender of
Securities pursuant to this Agreement.
"GAAP"--generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and the
other financial statements referred to in Section 3.4(b) were prepared.
"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); or
(d) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"HAZARDOUS ACTIVITY"--the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under, or
from the Facilities or any part thereof into the Environment.
"HAZARDOUS MATERIALS"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code 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.
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"KNOWLEDGE"--an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware 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.
"LEASES"--as defined in Section 2.4(c)(iii).
"LEGAL REQUIREMENT"--any existing or prior federal, state, local,
municipal, foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards.
"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 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.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles of incorporation and
the bylaws of a corporation; (b) any charter or similar document adopted or
filed in connection with the creation, formation, or organization of a Person;
and (c) 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.
"PLAN"--as defined in Section 3.13.
"PROCEEDING"--any action, arbitration, audit, hearing, known
investigation, litigation, or suit (whether civil, criminal, or administrative)
commenced, brought, conducted, or heard by or before, or otherwise involving,
any Governmental Body or arbitrator.
"REGISTRATION RIGHTS AGREEMENT"--as defined in Section 2.4(a)(v).
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"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
(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; and
(e) any Related Person of any individual described in clause (b)
or (c).
(f) 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 Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least five (5%)
percent of the outstanding voting power of a Person or equity securities or
other equity interests representing at least five (5%) percent of the
outstanding equity securities or equity interests in a Person.
"RELEASE"--any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
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"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"--as defined in Section 2.5.
"SECURITIES ACT"--the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"SELLER"--as defined in the first paragraph of this Agreement.
"SHARES"--as defined in the Recitals of this Agreement.
"SUBSIDIARY"--with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"TAX"--any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax- sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"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.
"THREAT OF RELEASE"--a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"THREATENED"--a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any written demand or statement has
been made or any written notice has been given that would lead a prudent Person
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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. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the
Closing, Seller will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Seller.
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares will
be (a) Twenty-five Million ($25,000,000) Dollars plus (b) shares of Common Stock
of Buyer having a Fair Market Value equal to the Applicable Percentage of the
Company's EBITDA for the twelve (12) months ended October 31, 1998
("Securities). The Applicable Percentage shall be as follows: (i) if EBITDA is
less than $4,500,000, the Applicable Percentage shall be twenty-five (25%)
percent, (ii) if EBITDA is at least $4,500,000 but less than $5,250,000, the
Applicable Percentage shall be forty (40%) percent, (iii) if EBITDA is at least
$5,250,000 but less than $6,000,000, the Applicable Percentage shall be fifty
(50%) percent, and (iv) if EBITDA is at least $6,000,000, the Applicable
Percentage shall be sixty (60%) percent.
Within sixty (60) calendar days after October 31, 1998, Buyer shall cause
its independent auditing firm to deliver to the Seller a report of EBITDA of the
Company for the twelve (12) month period then ended.
The Buyer shall provide to the Seller, its accountants and advisors full
access to its books, records, employees involved in the Company's operations, as
well as all of the Company's employees and personnel of the Buyer having
knowledge of the Company's operations, and all such persons shall cooperate with
the Seller, and the Seller shall cooperate with the Buyer in preparing the
EBITDA report or investigating the basis of any dispute in connection therewith.
The Seller shall have a period of thirty (30) days after the delivery of
the EBITDA certificate, to present in writing to Buyer, any objections that the
Seller may have to any of the matters set forth in such certificate, which
objections shall be set forth in reasonable detail. If no objections are raised
within such thirty (30) day period, the certificate shall be deemed accepted and
approved by the Seller. If the Seller raises any objections within the thirty
(30) day period, the parties shall attempt to resolve the matter or matters in
dispute. If such dispute cannot be resolved, within a further period of twenty
(20) days, the parties shall submit the dispute to Deloitte & Touche LLP, or its
successor (or KPMG Peat Marwick LLP, if Deloitte & Touche LLP or its successor
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is then the independent auditor for Buyer), which firm shall make a final and
binding determination as to such matter or matters in dispute. Each party shall
bear its own costs; provided, however, that the arbitrating accountant's costs,
fees and expenses shall be shared equally by both parties.
The Securities shall be delivered within five (5) business days after
determination of the EBITDA.
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Buyer's counsel at 200 East Las Olas
Boulevard, Suite 1900, Fort Lauderdale, Florida 33301, at 10:00 a.m. (local
time) on the later of (i) January 31, 1998; (ii) March 31, 1998, if the
termination date of this Agreement is extended by Buyer pursuant to Section
9.1(d); or (iii) at such other time and place as the parties may agree. Subject
to the provisions of Section 9, failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place determined
pursuant to this Section 2.3 will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Seller will deliver to Buyer:
(i) certificates representing the Shares, duly
endorsed (or accompanied by duly executed stock powers), for transfer to Buyer;
(ii) a consulting agreement in the form of Exhibit
2.4(a)(ii), executed by Seller ("Consulting Agreement");
(iii) the leases (the "Leases") in the form of Exhibit
2.4(a)(iii), executed by Seller;
(iv) a certificate executed by Seller representing and
warranting to Buyer that each of Seller's representations and warranties in this
Agreement was accurate in all material respects as of the date of this Agreement
and is accurate in all material respects as of the Closing Date as if made on
the Closing Date(giving full effect to any supplements to the Disclosure Letter
that were delivered by Seller to Buyer prior to the Closing Date in accordance
with Section 5.5); and
(v) a registration rights agreement (the "Registration
Rights Agreement") in the form of Exhibit 2.4(a)(v);
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(b) Buyer will deliver to Seller:
(i) Twenty-five Million ($25,000,000) Dollars by wire
transfer of immediately available funds to the account specified by Seller less
any amounts paid to Seller under the Escrow Agreement;
(ii) a certificate executed by Buyer to the effect
that, except as otherwise stated in such certificate, each of Buyer's
representations and warranties in this Agreement was accurate in all respects as
of the date of this Agreement and is accurate in all respects as of the Closing
Date as if made on the Closing Date;
(iii) the Consulting Agreement, executed by Buyer;
(iv) the Leases executed by Buyer; and
(v) the Registration Rights Agreement executed by
Buyer.
2.5 ESCROW AGREEMENT
On the date of this Agreement, Buyer and Seller have executed
an amended and restated escrow agreement (the "Escrow Agreement") with Harris
Beach and Wilcox, LLP, as escrow agent ("Escrow Agent"), to provide, among other
things, for the disposition of the amount previously deposited by Buyer in
escrow in the event of the Closing or termination of this Agreement.
2.6 NO SECTION 338 ELECTION
Neither Buyer nor the Company shall make any election or
deemed election under Section 338 of the Code or, without the consent of Seller,
under Section 338(h)(10) of the Code with respect to the Contemplated
Transactions. Buyer and Sellers agree that, for all tax purposes, neither shall
treat the Contemplated Transactions as anything other than a sale by Seller to
Buyer of all issued and outstanding capital stock of the Company.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows, except as set
forth in the Disclosure Letter:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
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incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under Applicable
Contracts. As set forth on Part 3.1 of the Disclosure Schedule, the Company is
duly qualified to do business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in which to Seller's
Knowledge, the failure to be so qualified (individually or in the aggregate) is
likely to have a material adverse effect on the Company.
(b) Seller has delivered to Buyer copies of the
Organizational Documents of the Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
Upon the execution and delivery by Seller of the Employment and Consulting
Agreements, (the "Seller's Closing Documents"), the Seller's Closing Documents
will constitute the legal, valid, and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms. Seller has the
absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the Seller's Closing Documents and to perform its
obligations under this Agreement and the Seller's Closing Documents.
(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 Organizational Documents of the Company,
or (B) any resolution adopted by the board of directors or the stockholders of
the Company;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which the Company
or Seller, or any of the assets owned or used by the Company, may be subject;
(iii) Seller's Knowledge, after giving of appropriate
notices and making of appropriate filings, contravene, conflict with, or result
in a violation of any of the terms or requirements of, or cause any Governmental
Body to revoke, withdraw, suspend, cancel, terminate, or modify, any material
Governmental Authorization that is held by the Company or that otherwise relates
to the business of, or any of the assets owned or used by, the Company;
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(iv) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract
required to be listed in Part 3.17(a) of the Disclosure Letter; or
(v) result in any material respect in the imposition
or creation of any Encumbrance upon or with respect to any of the assets owned
or used by the Company.
Seller is not and will not be required to give any
notice to or obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
(c) The Seller is an "accredited investor" as such term is
defined in Rule 501(a) under the Securities Act. The Seller is acquiring the
Buyer's common stock for his own account and not with a view to distribution
within the meaning of Section 2(11) (the Securities Act). Seller acknowledges
that the certificates representing the Securities acquired pursuant to this
Agreement shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THE CERTIFICATE (THE "SHARES") HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE SOLD OR OFFERED
FOR SALE OR OTHERWISE DISTRIBUTED WITHOUT ONE OF THE FOLLOWING: (i)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE
SECURITIES ACT, OR (ii) AN OPINION OF COUNSEL, SATISFACTORY TO THE
CORPORATION, THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SAID SALE,
OFFER OR DISTRIBUTION.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of one
thousand (1,000) shares of common stock, no par value per share, of which two
hundred (200) shares are issued and outstanding and constitute the Shares.
Seller is and will be on the Closing Date the record and beneficial owner and
holder of all of the Shares, free and clear of all Encumbrances. All of the
outstanding securities of the Company are free and clear of all Encumbrances. No
legend or other reference to any purported Encumbrance appears upon any
certificate representing securities of the Company. All of the outstanding
equity securities of the Company have been duly authorized and validly issued
and are fully paid and nonassessable (except pursuant to Section 630 of the New
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York Business Corporation Law). There are no Contracts relating to the issuance,
sale, or transfer of any equity securities or other securities of the Company.
None of the outstanding equity securities or other securities of the Company was
issued in violation of the Securities Act or any other Legal Requirement. The
Company does not own, or have any 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
Seller has delivered to Buyer: (i) an audited balance sheet of
the Company as at the last Saturday in October, 1994, 1995 and 1996, and the
related statements of income, changes in stockholders' equity, and cash flow for
the fiscal years then ended, together with the report thereon of Arthur
Anderson, LLP, independent certified public accountants and (b) an unaudited
balance sheet of the Company as at October 25, 1997, "the Unaudited 1997 Balance
Sheet") and the related statements of income, changes in stockholders equity and
cash flow for the fiscal year then ended. Such financial statements and notes
fairly present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Company as at the respective dates of
and for the periods referred to in such financial statements, all in accordance
with GAAP, subject, in the case of the 1997 Unaudited Balance Sheet and related
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be material adverse),
adjustments to tax accounts (which may be materially adverse), and the absence
of notes. On or before December 10, 1997, Seller will deliver to Buyer an
audited balance sheet of the Company as at October 25, 1997 (including the notes
thereto, the "Balance Sheet"), and the related statements of income, changes in
stockholders equity and cash flow for the fiscal year then ended. Such financial
statements and notes will fairly present the financial condition and the results
of operations, changes in stockholders equity and cash flow of the Company as at
October 25, 1997 and for the fiscal year then ended in accordance with GAAP. The
financial statements referred to in this Section 3.4 reflect the consistent
application of such accounting principles throughout the periods involved. No
financial statements of any Person other than the Company are required by GAAP
to be included in the financial statements of the Company.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and
other records of the Company, which have been made available to Buyer, and have
been maintained in accordance with sound business practices. The minute book of
the Company contains accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Board of Directors, and
committees of the Board of Directors of the Company, and no meeting of any
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute book. At the
Closing, all of those books and records will be in the possession of the
Company.
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3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete and
accurate list of all real property, leaseholds, or other interests therein owned
by the Company, except leasehold interests for which the Company pays rent less
than $12,000 per year, the termination of which would not materially adversely
affect the Company. The Company owns (with good and marketable title in the case
of real property, subject only to the matters permitted by the following
sentence) all the properties and assets (whether real, personal, or mixed and
whether tangible or intangible) that it purports to own located in the
facilities owned or operated by the Company or reflected as owned in the books
and records of the Company, including all of the properties and assets reflected
in the Balance Sheet (except for assets held under capitalized leases disclosed
in Part 3.6 of the Disclosure Letter and personal property used or sold since
the date of the Balance Sheet, in the Ordinary Course of Business), and all of
the properties and assets purchased or otherwise acquired by the Company since
the date of the Balance Sheet (except for personal property acquired and used or
sold since the date of the Balance Sheet in the Ordinary Course of Business and
consistent with past practice). All material properties and assets reflected in
the Balance Sheet are free and clear of all Encumbrances and are not, in the
case of real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except, with
respect to all such properties and assets, (a) mortgages or security interests
securing liabilities or obligations shown on the Balance Sheet with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date of the Balance
Sheet, (such mortgages and security interests being limited to the property or
assets so acquired), with respect to which no default (or event that, with
notice or lapse of time or both, would constitute a default) exists, (c) liens
for current taxes not yet due, and (d) with respect to real property, (i) minor
Encumbrances, if any, none of which is substantial in amount, materially
detracts from the value or impairs the use of the property subject thereto, or
impairs the operations of the Company, and (ii) zoning laws and other land use
restrictions that do not impair the present or anticipated use of the property
subject thereto. All buildings, plants, and structures owned by the Company lie
wholly within the boundaries of the real property owned by the Company and do
not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and material pieces of
equipment of the Company are structurally sound, are generally 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. The building, plants, structures, and
equipment of the Company are sufficient for the continued conduct of the
Company's business after the Closing in substantially the same manner as
conducted prior to the Closing.
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3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected on
the Balance Sheet or on the accounting records of the Company as of the Closing
Date (collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date collectible net of the
respective reserves shown on the Balance Sheet or on the accounting records of
the Company as of the Closing Date (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserve as of the Closing
Date, will not represent a greater percentage of the Accounts Receivable as of
the Closing Date than the reserve reflected in the Balance Sheet represented of
the Accounts Receivable reflected therein and will not represent a material
adverse change in the composition of such Accounts Receivable in terms of
aging).
3.9 INVENTORY
All inventory of the Company, whether or not reflected in the
Balance Sheet consists of a quality and quantity usable in the Ordinary Course
of Business, except for obsolete items and items of below-standard quality, all
of which have been written off or written down to net realizable value in the
Balance Sheet or on the accounting records of the Company as of the Closing
Date, as the case may be. The quantities of each item of inventory are not
excessive, but are reasonable in the present circumstances of the Company.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the Disclosure Letter, to
Seller's Knowledge the Company has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) that are of the type required to be reflected as liabilities on a
balance sheet prepared in accordance with GAAP or described in the notes
thereto, except for liabilities or obligations reflected or reserved against in
the Balance Sheet and current liabilities incurred in the Ordinary Course of
Business since the date thereof.
3.11 TAXES
(a) The Company has filed or caused to be filed (on a timely
basis) all Tax Returns that are or were required to be filed by or with respect
to it, pursuant to applicable Legal Requirements or has properly extended the
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time for filing such Tax Returns. Seller has delivered to Buyer copies of, and
Part 3.11 of the Disclosure Letter contains a complete and accurate list of, all
such Tax Returns relating to income or franchise taxes filed since December 31,
1995. The Company has paid, or made provision for the payment of, all Taxes that
have or may have become due pursuant to those Tax Returns or otherwise, or
pursuant to any assessment received by Seller or the Company, except such Taxes,
if any, as are listed in Part 3.11 of the Disclosure Letter and are being
contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided in the Balance Sheet.
(b) The United States federal income Tax Returns of the
Company have been audited by the IRS or are closed by the applicable statute of
limitations for all taxable years through October 26, 1996. Part 3.11 of the
Disclosure Letter contains a complete and accurate list of all audits of all
such Tax Returns since December 31, 1992, including a reasonably detailed
description of the nature and outcome of each audit. All deficiencies proposed
as a result of such audits have been paid, reserved against, settled, or, as
described in Part 3.11 of the Disclosure Letter, are being contested in good
faith by appropriate proceedings. Part 3.11 of the Disclosure Letter describes
all adjustments to the United States federal income Tax Returns filed by the
Company for all taxable years since December 31, 1992, and the resulting
deficiencies proposed by the IRS. Except as described in Part 3.11 of the
Disclosure Letter, neither Seller nor the Company has given or been requested to
give waivers or extensions (or is or would be subject to a waiver or extension
given by any other Person) of any statute of limitations relating to the payment
of Taxes of the Company or for which the Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes
on the books of the Company are adequate (determined in accordance with GAAP)
and are at least equal to the Company's liability for Taxes. To Seller's
Knowledge, there exists no proposed tax assessment against the Company except as
disclosed in the Balance Sheet or in Part 3.11 of the Disclosure Letter. All
Taxes that the Company is or was required by Legal Requirements to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Body or other Person.
(d) All Tax Returns filed by the Company are true, correct,
and complete in all material respects. There is no tax sharing agreement that
will require any payment by the Company after the date of this Agreement.
3.12 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there has not been any
material adverse change in the business, operations, properties, prospects,
assets, or condition of the Company.
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3.13 EMPLOYEE BENEFITS
(a) As used in this Section 3.13, the following terms have the
meanings set forth below.
"COMPANY MULTI-EMPLOYER PLAN" means all Multi-Employer Plans
to which the Company contributes or has contributed since December 31, 1992, or
in which the Company otherwise participates or has participated since December
31, 1992.
"COMPANY OTHER BENEFIT OBLIGATION" means an Other Benefit
Obligation owed, adopted, or followed by the Company.
"COMPANY PLAN" means all Plans (other than Multi-Employer
Plans) of which the Company is or was a Plan Sponsor, or to which the Company
otherwise contributes or has contributed,or in which the Company otherwise
participates or has participated. All references to Plans are to Company Plans
unless the context requires otherwise.
"MULTI-EMPLOYER PLAN" has the meaning given in ERISA ss.
3(37)(A).
"OTHER BENEFIT OBLIGATIONS" means all obligations to provide
benefits, other than salary, as compensation for services rendered, to present
or former directors, employees, or agents, other than obligations, that are
Plans. Other Benefit Obligations include consulting agreements under which the
compensation paid does not depend upon the amount of service rendered,
sabbatical policies, severance payment policies, and fringe benefits within the
meaning of IRC ss. 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PENSION PLAN" has the meaning given in ERISA ss. 3(2)(A).
"PLAN" has the meaning given in ERISA ss. 3(3).
"PLAN SPONSOR" has the meaning given in ERISA ss. 3(16)(B).
"QUALIFIED PLAN" means any Plan that meets or purports to meet
the requirements of IRC ss. 401(a).
"WELFARE PLAN" has the meaning given in ERISA ss. 3(1).
(b) The Disclosure Letter contains a complete and accurate
list of all Company Plans, Company Multi-Employer Plans, and the Company Other
Benefit Obligations, and identifies as such all Company Plans that are Qualified
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Plans. No Company Plan is a defined benefit Pension Plan. Except for Company
Multi-Employer Plans, the Company has not, since December 31, 1992, maintained,
or contributed to or otherwise participated in, or had an obligation to
maintain, contribute to, or otherwise participate in, any Plan otherwise subject
to Title IV or ERISA, 29 U.S.C. ss. 1301 et seq. There is no voluntary
employee's beneficiary association under IRC ss. 501(c)(9) whose members include
employees of the Company. There is no other person, firm or entity that,
together with the Company, would be treated as a single employer under IRC ss.
414.
(c) Seller has made available to Buyer, or will make
available to Buyer by December 10, 1997:
(i) all documents that set forth the terms of each
Company Plan or Company Other Benefit Obligation, and of any related trust,
including (A) all plan descriptions and summary plan descriptions of Company
Plans for which Seller or the Company is required to prepare, file, and
distribute plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and beneficiaries regarding
Company Plans and Company Other Benefit Obligations for which a plan description
or summary plan description is not required;
(ii) all personnel, payroll, and employment manuals and
policies;
(iii) all collective bargaining agreements pursuant to
which contributions are being made or obligations are owed by the Company;
(iv) all insurance policies purchased by or to provide
benefits under any Company Plan;
(v) all contracts with third party administrators,
actuaries, investment managers, consultants, and other independent contractors
that relate to any Company Plan or Company Other Benefit Obligation;
(vi) all reports submitted since December 31, 1994 by
third party administrators, actuaries, investment managers, consultants, or
other independent contractors with respect to any Company Plan or Company Other
Benefit Obligation;
(vii) all Forms 5500 filed since December 31, 1994 with
respect to each Company Plan, including all schedules thereto and any required
opinions of independent accountants;
(viii)all notices that were given by the IRS, the PBGC,
or the Department of Labor to the Company or any Company Plan since December 31,
1994; and
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(ix) the most recent IRS determination letter for each
Plan of the Company that is a Qualified Plan.
(d) The Company has performed all of its obligations under
all Company Plans and Company Other Benefit Obligations except for possible
noncompliance that is not likely, individually or in the aggregate, to have a
material adverse effect on the Company. The Company has made appropriate entries
in its financial records and statements for all obligations and liabilities
under such Plans and Obligations that have accrued but are not due.
(e) The Company, with respect to all Company Plans, and
Company Other Benefit Obligations, is, and each Company Plan and Company Other
Benefit Obligation is in full compliance with ERISA, the IRC, and other
applicable Laws including the provisions of such Laws expressly mentioned in
this Section 3.13, except for possible noncompliance that is not likely,
individually or in the aggregate, to have a material adverse effect on the
Company.
(f) No transaction prohibited by ERISA ss. 406 and no
"prohibited transaction" under IRC ss. 4975(c) has occurred with respect to any
Company Plan.
(g) Neither the Company nor Seller has any liability to the
IRS with respect to any Plan, including any liability imposed by Chapter 43 of
the IRC.
(h) Except for possible liabilities that are not likely,
individually, or in the aggregate, to have a material adverse effect on the
Company, the Company has no liability to the PBGC or to the IRS (including any
liability imposed by Chapter 43 of the IRS) with respect to any Plan and has no
liability under ERISA ss. 502.
(i) All filings required by ERISA and the IRC as to each
Plan have been timely filed, and all notices and disclosures to participants
required by either ERISA or the IRC have been timely provided, except for
possible omitted or delayed filings, notices and disclosures that are not
likely, individually or in the aggregate, to have a material adverse effect on
the Company.
(j) All contributions and payments made or accrued with
respect to all Company Plans, and Company Other Benefit Obligations are
deductible under IRC ss. 162 or ss. 404. No amount, or any asset of any Company
Plan, is subject to tax as unrelated business taxable income.
(k) Since December 31, 1996, there has been no establishment
or amendment of any Company Plan or Company Other Benefit Obligation.
(l) Since December 31, 1995, no event has occurred or
circumstances exists that could result in a material increase in premium costs
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of Company Plans and Company Other Benefit Obligations that are insured, or a
material increase in benefit costs of such Plans and Obligations that are
self-insured.
(m) Other than claims for benefits submitted by participants
or beneficiaries, no claim against, or legal proceeding involving any Company
Plan or Company Other Benefit Obligation is pending or, to Seller's knowledge,
is Threatened.
(n) Each Qualified Plan of the Company is qualified in form
and operation under IRC ss. 401(a); each trust for each such Plan is exempt from
federal income tax under IRC ss. 501(a). No event has occurred or circumstance
exists that will or could give rise to disqualification or loss of tax-exempt
status of any such Plan or trust.
(o) The Company has not withdrawn from any Multi-Employer
Plan with respect to which there is any outstanding liability as of the date of
this Agreement. To Seller's Knowledge, no event has occurred or circumstances
exists that presents a risk of the occurrence of any withdrawal from, or the
participation, termination, reorganization, or insolvency of, any Company
Multi-Employer Plan that could result in any liability of either the Company or
Buyer to a Company Multi-Employer Plan.
(p) The Company has not received notice from any Company
Multi-Employer Plan that it is in reorganization or is insolvent, that increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of any excise tax, or that such Plan intends to terminate or has
terminated.
(q) Except to the extent required under ERISA ss. 601 et
seq. and IRC ss. 4980B, the Company does not provide health or welfare benefits
for any retired or former employee and is not obligated to provide health or
welfare benefits to any active employee following such employee's retirement or
other termination of service.
(r) Seller and the Company have complied with the provisions
of ERISA ss. 601 et seq. and IRC ss. 4980B.
(s) No payment that is owed or may become due to any
director, officer, employee, or agent of the Company will be non-deductible to
the Company or subject to tax under IRC ss. 280G or ss. 4999; nor will the
Company be required to "gross up" or otherwise compensate any such person
because of the imposition of any excise tax on a payment to such person.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure
Letter:
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(i) the Company is in compliance with each Legal
Requirement that is or was applicable to it or to the conduct or operation of
its business or the ownership or use of any of its assets except for possible
non-compliance that is not likely, individually or in the aggregate, to have a
material adverse effect on the Company;
(ii) the Company has not received, at any time since
November 1, 1996 any written notice or other communication from any Governmental
Body or any other Person regarding any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal Requirement.
(b) The Company has in effect all of the Governmental
Authorizations necessary to permit the Company to lawfully conduct and operate
its business in the manner it currently conducts and operates such business and
to permit the Company to own and use its assets in the manner in which it
currently owns and uses such assets, except for Governmental Authorizations the
absence of which is not likely, individually or in the aggregate, to have a
material adverse effect on the Company. The Company is in compliance with all of
the terms and requirements of each such Governmental Authorization, except for
possible non-compliance that is not likely, individually or in the aggregate, to
have a material adverse effect on the Company. The Company has not received, at
any time since November 1, 1996, any written notice from any Governmental Body
or any other Person regarding (a) any violation of or failure to comply with any
term or requirement of any Governmental Authorization, or (b) any actual or
proposed revocation, withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.15 of the Disclosure
Letter, there is no pending Proceeding that has been commenced by or against the
Company:
(i) that if resolved adversely to the Company would
have, individually or in the aggregate, a material adverse affect on the
business or operations or financial condition of, or any of the assets owned or
used by, the Company, or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
To the Knowledge of Seller no such Proceeding has
been Threatened.
(b) Except as set forth in Part 3.15 of the Disclosure
Letter:
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(i) there is no Order to which the Company, or any of
the assets owned or used by the Company, is subject;
(ii) Seller is not subject to any Order that relates to
the business of, or any of the assets owned or used by, the Company; and
(iii) to Seller's Knowledge, no officer, director,
agent, or employee of the Company is subject to any Order that prohibits such
officer, director, agent, or employee from engaging in or continuing any
conduct, activity, or practice relating to the business of the Company.
(c) Except as set forth in Part 3.15 of the Disclosure
Letter:
(i) the Company is in full compliance with all of the
terms and requirements of each Order to which it, or any of the assets owned or
used by it, is or has been subject;
(ii) no event has occurred or circumstance exists that
may constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any Order to
which the Company, or any of the assets owned or used by the Company, is
subject; and
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is or has been
subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure Letter,
between the date of the Balance Sheet and the date of this Agreement, the
Company has conducted its business only in the Ordinary Course of Business and
there has not been any:
(a) change in the Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
the Company; issuance of any security convertible into such capital stock; grant
of any registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of the
Company;
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(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees of
the Company;
(e) damage to or destruction or loss of any asset or
property of the Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of the Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, loan or similar agreement, or (ii) any Contract or
transaction involving a total remaining commitment by or to the Company of at
least $100,000;
(g) sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or property of the
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of the Company;
(h) cancellation or waiver of any claims or rights with a
value to the Company in excess of $25,000;
(i) material change in the accounting methods used by the
Company; or
(j) binding agreement, whether oral or written, by the
Company to do any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter contains a
complete and accurate list as of the date of this Agreement, and Seller has
delivered to Buyer true and complete copies, of:
(i) each Applicable Contract that involves performance
of services or delivery of goods or materials by the Company of an amount or
value in excess of $500,000;
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(ii) each Applicable Contract that involves performance
of services or delivery of goods or materials to the Company of an amount or
value in excess of $250,000;
(iii) each Applicable Contract that was not entered into
in the Ordinary Course of Business and that involves expenditures or receipts of
the Company in excess of $250,000;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property (except real
property leases for which the Company pays rent less than $12,000 per year, the
termination of which would not materially adversely affect the Company and
personal property leases, licenses and installment and conditional sales
agreements having a value per item or aggregate payments of less than $250,000
and with remaining payments of less than $100,000);
(v) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee representative
of a group of employees;
(vi) each joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by the Company with any other Person;
(vii) each Applicable Contract containing covenants that
in any way purport to restrict the business activity of the Company or Seller or
limit the freedom of the Company or Seller to engage in any line of business or
to compete with any Person;
(viii)each Applicable Contract providing for payments
to or by any Person based on sales, purchases, or profits, other than direct
payments for goods;
(ix) each Applicable Contract entered into other than
in the Ordinary Course of Business that contains or provides for an express
undertaking by the Company to be responsible for consequential damages;
(x) each Applicable Contract for capital expenditures
in excess of $250,000;
(xi) each written warranty, guaranty, and or other
similar undertaking with respect to contractual performance extended by the
Company other than in the Ordinary Course of Business; and
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(xii) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 3.17(b) of the Disclosure
Letter:
(i) Seller (and no Related Person of Seller) has not
or may not acquire any rights under, and Seller has not or may not become
subject to any obligation or liability under, any Contract that relates to the
business of, or any of the assets owned or used by, the Company; and
(ii) to Seller's Knowledge, no officer, director,
agent, employee, consultant, or contractor of the Company is bound by any
Contract that purports to limit the ability of such officer, director, agent,
employee, consultant, or contractor to (A) engage in or continue any conduct,
activity, or practice relating to the business of the Company, or (B) assign to
the Company or to any other Person any rights to any invention, improvement, or
discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure
Letter, each Contract identified or required to be identified in Part 3.17(a) of
the Disclosure Letter is in full force and effect and is valid and enforceable
in accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure
Letter:
(i) the Company is in compliance with all applicable
terms and requirements of each Contract under which the Company has or had any
obligation or liability or by which the Company or any of the assets owned or
used by the Company is or was bound except for possible non-compliance that is
not likely, individually or in the aggregate, to have a material adverse effect
on the Company;
(ii) to Seller's Knowledge, each other Person that has
or had any obligation or liability under any Contract under which the Company
has or had any rights is in full compliance with all applicable terms and
requirements of such Contract except for possible non-compliance that is not
likely, individually or in the aggregate, to have a material adverse effect on
the Company;
(iii) to Seller's Knowledge, no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a violation or breach of, or give the
Company or other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any material Applicable Contract; and
(iv) since November 1, 1996, the Company has not given
to or received from any other Person any written notice or other communication
regarding any actual, alleged, possible, or potential violation or breach of, or
default under, any Contract.
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(e) The Contracts relating to the sale or provision of
products or services by the Company have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in material
Violation of any Legal Requirement.
3.18 INSURANCE
(a) Seller has delivered to Buyer:
(i) true and complete copies of all policies of
insurance (or binders if policies are not available) to which the Company is a
party or under which the Company, or any director of the Company, is or has been
covered at any time within the three (3) years preceding the date of this
Agreement; and
(ii) true and complete copies of all pending
applications for policies of insurance.
(b) Part 3.18(b) of the Disclosure Letter describes any
self-insurance arrangement by or affecting the Company, including any reserves
established thereunder;
(c) Part 3.18(c) of the Disclosure Letter sets forth, by
year, for the current policy year and each of the three (3) preceding policy
years:
(i) a summary of the loss experience under each
policy;
(ii) a statement describing each claim under an
insurance policy for an amount in excess of $100,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer,
type of insurance, and period of coverage; and
(C) the amount and a brief description of the
claim; and
(iii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost of such
claims.
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(d) Except as set forth on Part 3.18(d) of the Disclosure
Letter:
(i) All policies to which the Company is a party or
that provide coverage to either Seller, the Company, or any director or officer
of the Company:
(A) are valid, outstanding, and enforceable;
(B) are sufficient for compliance with all Legal
Requirements and Contracts to which the Company is a party or by which the
Company is bound;
(C) will continue in full force and effect
following the consummation of the Contemplated Transactions; and
(D) do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of the Company.
(ii) Neither Seller nor the Company has received (A)
any refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder.
(iii) The Company has paid all premiums due, and has
otherwise performed all of its respective obligations, under each policy to
which the Company is a party or that provides coverage to the Company or
director thereof.
(iv) The Company has given notice to the insurer of all
material claims currently pending against the Company that may be insured
thereby.
3.19 INTENTIONALLY LEFT BLANK
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Letter contains a complete
and accurate list as of November 24, 1997 of the following information for each
employee or director of the Company, including each employee on leave of absence
or layoff status: employer; name; job title; employment classification; current
compensation paid or payable and any change in compensation since December 31,
1996; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under the Company's pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock ownership (including investment credit or
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payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit plan or any Director Plan.
(b) Seller is not, and to Seller's Knowledge, no employee or
director of the Company is a party to, or is otherwise bound by, any agreement
or arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee or director and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or will
affect (i) the performance of his duties as an employee or director of the
Company, or (ii) the ability of the Company to conduct its business, including
any Proprietary Rights Agreement with Seller or the Company by any such employee
or director.
(c) Part 3.20 of the Disclosure Letter also contains a
complete and accurate list of the following information for each retired
employee or director of the Company, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name, pension benefit, pension
option election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.21 LABOR RELATIONS; COMPLIANCE
The Company is not a party to any collective bargaining or
other labor Contract. There has not been, there is not presently pending or
existing, and to Seller's Knowledge there is not Threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process, (b) any
Proceeding against the Company relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment dispute
against or affecting the Company or its premises that, if resolved adversely to
the Company, would have a material adverse effect on the business, operations or
financial condition of the Company, or (c) any application for certification of
a collective bargaining agent. There is no lockout of any employees by the
Company, and no such action is contemplated by the Company. The Company has
complied in all respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing except for possible
noncompliance that is not likely, individually or in the aggregate, to have a
material adverse effect on the Company. The Company is liable for the payment of
any compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
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3.22 INTELLECTUAL PROPERTY
The Company owns, or is validly licensed or otherwise has the
right to use, all patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, service marks, service mark rights, copyrights,
know-how, trade secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings, blue prints,
and other proprietary intellectual property rights (collectively, "Intellectual
Property Rights") that are material to the conduct of the business of the
Company. No claims are pending or, to Seller's Knowledge, Threatened that the
Company is infringing or otherwise adversely affecting the rights of any Person
with regard to any Intellectual Property Right. To Seller's Knowledge, no Person
is infringing the rights of the company with respect to any Intellectual
Property Right.
3.23 CERTAIN PAYMENTS
Neither the Company nor Seller, nor to Seller's Knowledge, any
director, officer, agent, or employee of the Company, or any other Person
associated with or acting for or on behalf of the Company, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Company or any Affiliate of the Company, or
(iv) in violation of any Legal Requirement, (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Company.
3.24 DISCLOSURE
(a) No representation or warranty of Seller in this
Agreement and no statement in the Disclosure Letter omits to state a material
fact necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
3.25 RELATIONSHIPS WITH RELATED PERSONS
Except as disclosed on Part 3.25 of the Disclosure Letter,
neither Seller nor any Related Person of Seller has had any interest in any
property (whether real, personal, or mixed and whether tangible or intangible),
used in or pertaining to the Company's business. Neither Seller nor any Related
Person of Seller is or has owned (of record or as a beneficial owner) an equity
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interest or any other financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any transaction with the
Company; or (ii) engaged in competition with the Company with respect to any
line of the products or services of the Company (a "Competing Business") in any
market presently served by the Company. Except as set forth in Part 3.25 of the
Disclosure Letter, neither Seller nor any Related Person of Seller is a party to
any Contract with, or has any claim or right against, the Company.
3.26 BROKERS OR FINDERS
Seller and its agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Buyer harmless from any such payment alleged to be due by or
through Seller as a result of the action of Seller or its officers or agents..
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Consulting Agreement, the
Leases, and the Registration Rights Agreement (collectively, the "Buyer's
Closing Documents"), the Buyer's Closing Documents will constitute the legal,
valid, and binding obligations of Buyer, enforceable against Buyer in accordance
with their respective terms. Buyer has the absolute and unrestricted right,
power, and authority to execute and deliver this Agreement and the Buyer's
Closing Documents and to perform its obligations under this Agreement and the
Buyer's Closing Documents. The execution and delivery of this Agreement and
Buyer's Closing Agreements and the consummation and performance of the
contemplated Transactions have been duly authorized by all necessary corporate
action on the part of the Buyer.
(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):
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(i) contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of the Buyer, or
(B) any resolution adopted by the board of directors or the stockholders of the
Buyer;
(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 the Buyer,
or any of the assets owned or used by the Buyer, may be subject;
(iii) to Seller's Knowledge, after giving of appropriate
notices and making of appropriate filings, contravene, conflict with, or result
in a violation of any of the terms or requirements of, or cause any Governmental
Body to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company or that otherwise relates
to the business of, or any of the assets owned or used by, the Buyer;
(iv) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify any material agreement
required to be filed as an exhibit to Buyer's SEC Reports pursuant to Item
601(b)(10) of Regulation S-K (17 C.F.R. ss. 229.601(b)(1)); or
(v) result in any material respect in the imposition
or creation of any Encumbrance upon or with respect to any of the assets owned
or used by the Buyer.
4.3 INVESTMENT INTENT
Buyer is acquiring the Shares for its own account and not with
a view to their distribution within the meaning of Section 2(11) of the
Securities Act.
4.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against
Buyer and that challenges, or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Buyer's Knowledge, no such Proceeding has been Threatened.
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4.5 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no obligation
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Seller harmless from any such payment alleged to be due by or
through Buyer as a result of the action of Buyer or its officers or agents.
4.6 DUE AUTHORIZATION
The Securities to be issued to Buyer, when and if issued will
be duly authorized and validly issued fully paid and nonassessable, free and
clear of any Encumbrances, except the legend contained in Section 3.2 hereof.
4.7 SEC REPORT
Buyer has made available to Seller, true, correct and complete
copies all Buyer's periodic reports with the Securities and Exchange Commission
since December 31, 1995 ("Buyer's SEC Reports"). Each of the Buyer's SEC Reports
complies in form and content in all material respects to applicable legal
requirements, contains no misstatement of a material fact and does not omit to
state facts necessary to make the statements therein in light of the
circumstance under which they were made, not materially misleading.
5. COVENANTS OF SELLER PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date,
Seller will, and will cause the Company and its Representatives to, (a) afford
Buyer and its Representatives and prospective lenders and their Representatives
(collectively, "Buyer's Advisors") full and free access to the Company's
personnel, properties, contracts, books and records, and other documents and
data, (b) furnish Buyer and Buyer's Advisors with copies of all such contracts,
books and records, and other existing documents and data as Buyer may reasonably
request, and (c) furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information as Buyer may reasonably
request. On or before December 10, 1997, Seller will deliver to Buyer true and
complete copies of each Applicable Contract that involves performance of
services or delivery of goods or materials by the Company of an amount or value
between $250,000 and $500,000.
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5.2 OPERATION OF THE BUSINESS OF THE COMPANY
Between the date of this Agreement and the Closing Date,
Seller will, and will cause the Company to:
(a) conduct the business and operations of the Company only
in the Ordinary Course of Business;
(b) use its Best Efforts to preserve intact the current
business organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with the Company;
(c) confer with Buyer concerning operational matters of a
material nature;
(d) otherwise report periodically to Buyer concerning the
status of the business, operations, and finances of the Company;
(e) not engage in any extraordinary transactions;
(f) not make any dividends or distributions;
(g) not issue any indebtedness, except in the Ordinary
Course of Business;
(h) not amend the Organizational Documents of the Company;
(i) not to make any payment or increase by the Company of
any bonuses, salaries or other compensation to any stockholder, director,
officer except in the Ordinary Course of Business and bonuses scheduled to be
paid on December 18, 1997 in the aggregate amount of $306,665.31 (provided that
any increase in the compensation of Seller or any member of the family of Seller
shall not be deemed to be in the ordinary course of business);
(j) not adopt or increase the payments due or benefits under
any profit sharing, bonus, deferred compensation, saving, insurance, pension,
retirement or employee benefit for Seller or any Related Person of Seller.
5.3 INTENTIONALLY LEFT BLANK
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5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement,
Seller will, and will cause the Company to, make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Seller
will, and will cause the Company to, cooperate with Buyer with respect to all
filings that Buyer elects to make or is required by Legal Requirements to make
in connection with the Contemplated Transactions.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date,
Seller will promptly notify Buyer in writing if Seller or the Company becomes
aware of any fact or condition that causes or constitutes a Breach of any of
Seller's representations and warranties as of the date of this Agreement, or if
Seller or the Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a Breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in the Disclosure Letter if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition, Seller will promptly deliver to Buyer a supplement to the Disclosure
Letter specifying such change. During the same period, Seller will promptly
notify Buyer of the occurrence of any Breach of any covenant of Seller in this
Section 5 or of the occurrence of any event that may make the satisfaction of
the conditions in Section 7 impossible or unlikely.
5.7 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated
pursuant to Section 9, Seller will not, and will cause the Company and each of
their Representatives not to, directly or indirectly solicit, initiate,
encourage or accept any inquiries or proposals from, discuss or negotiate with,
provide any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyer) relating to any
transaction involving the sale of the business or assets other than in the
Ordinary Course of Business relating to the Company, or any of the capital stock
of the Company, or any merger, consolidation, business combination, or similar
transaction involving the Company. Seller shall promptly notify Buyer if it or
the Company should receive any such inquiries or proposals.
5.8 BEST EFFORTS
Between the date of this Agreement and the Closing Date,
Seller will use its Best Efforts to cause the conditions in Sections 7 and 8 to
be satisfied.
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6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement,
Buyer 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. Between the date of this Agreement and the Closing Date, Buyer
will, and will cause each Related Person to, cooperate with Seller with respect
to all filings that Seller is required by Legal Requirements to make in
connection with the Contemplated Transactions; provided that this Agreement will
not require Buyer to dispose of or make any change in any portion of its
business or to incur any other burden to obtain a Governmental Authorization.
6.2 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the
date of this Agreement and the Closing Date, Buyer will use its Best Efforts to
cause the conditions in Sections 7 and 8 to be satisfied.
6.3 NOTIFICATION
Between the date of this Agreement and the Closing Date, Buyer
will promptly notify Seller in writing if Buyer becomes aware of any fact or
condition that causes or constitutes a Breach of any of Buyer's representations
and warranties as of the date of this Agreement, or if Buyer 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 or
condition.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
All of Seller's representations and warranties in this
Agreement (considered collectively), 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, without giving
effect to any supplement to the Disclosure Letter.
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7.2 SELLER'S PERFORMANCE
(a) All of the covenants and obligations that Seller is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), must have been duly performed and
complied with in all material respects.
7.3 CONSENTS
Either The Chase Manhattan Bank shall have agreed to continue
the credit facility currently provided to the Company or such credit facility
shall have been repaid by Buyer.
7.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to
Buyer:
(a) an opinion of Harris, Beach & Wilcox, dated the Closing
Date, in the form of Exhibit 7.4(a);
(b) the Employment Agreements, set forth in Exhibit 7.4(c);
(c) the Leases and the Registration Rights Agreement; and
(d) such other documents as Buyer 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 Seller's representations
and warranties, (iii) evidencing the performance by Seller of, or the compliance
by Seller with, any covenant or obligation required to be performed or complied
with by such Seller, (iv) evidencing the satisfaction of any condition referred
to in this Section 7, or (v) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS
There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the Shares by Seller to
Buyer or the Contemplated Transaction, and (b) has been adopted or issued, or
has otherwise become effective, since the date of this Agreement.
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7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any
claim asserting that such Person (a) is the holder or the beneficial owner of,
or has the right to acquire or to obtain beneficial ownership of, any stock of,
or any other voting, equity, or ownership interest in, any of the Company, or
(b) is entitled to all or any portion of the Purchase Price payable for the
Shares.
7.7 FINANCING
Buyer shall have consummated a financing with proceeds of at
least Twenty-Five Million Dollars ($25,000,000).
7.8 NO PROHIBITION
There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the Shares by Seller to
Buyer, and (b) has been adopted or issued, or has otherwise become effective,
since the date of this Agreement.
7.9 NO MATERIAL ADVERSE CHANGE
There has been no material adverse change in the properties,
assets, business, financial condition or prospects of the Company since the date
of this Agreement.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
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8.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
(b) Buyer must have delivered each of the documents required
to be delivered by Buyer pursuant to Section 2.4 and must have made the cash
payment required to be made by Buyer pursuant to Sections 2.4(b)(i).
8.3 FINANCIAL CONDITION OF COMPANY
Either The Chase Manhattan Bank shall have agreed to continue
the credit facility currently provided to the Company or such credit facility
shall have been repaid by Buyer. The terms of the financing obtained by Buyer
pursuant to this section and Section 7.7 shall not adversely affect the
financial condition of the Company (taking into account any liabilities
guaranteed by the Company, collateralized by assets of the Company, or for which
the Company otherwise becomes liable).
8.4 ADDITIONAL DOCUMENTS
Buyer must have caused the following documents to be delivered
to Seller:
(a) an opinion of Atlas, Pearlman, Trop & Borkson, dated the
Closing Date, in the form of Exhibit 8.4(a); and
(b) such other documents as Seller may reasonably request
for the purpose of (i) enabling their counsel to provide the opinion referred to
in Section 7.4(a), (ii) evidencing the accuracy of any representation or
warranty of Buyer, (iii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be performed or
complied with by Buyer, (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.
8.5 NO INJUNCTION
There must not be in effect any Legal Requirement or any
injunction or other Order that (a) prohibits the sale of the Shares by Seller to
Buyer or the Contemplated Transactions, and (b) has been adopted or issued, or
has otherwise become effective, since the date of this Agreement.
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9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the
Closing, be terminated:
(a) by either Buyer or Seller if a material Breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date; or (ii) by Seller, if any of the conditions in
Section 8 has not been satisfied of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the failure of Seller
to comply with their obligations under this Agreement) and Seller have not
waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Seller;
(d) by either Buyer or Seller if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before January 31, 1998, provided, however, Buyer may elect to extend the
termination date to March 31, 1998 by complying with the terms and conditions of
the Escrow Agreement;
(e) by Buyer, not later than five (5) business days after
Buyer receives the Balance Sheet, if the Balance Sheet and the related
statements of income, changes in stockholders equity and cash flow differ
materially and adversely from the Unaudited 1997 Balance Sheet and the related
statements of income, changes in stockholders equity and cash flow.
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 11.1 and 11.3 will survive; provided, however, that if this Agreement
is terminated by a party because of the willful Breach of the Agreement by the
other party or because one or more of the conditions to the terminating party's
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obligations under this Agreement is not satisfied as a result of the other
party's willful failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL
Subject to Section 10.3, all representations, warranties,
covenants, and obligations in this Agreement, the Disclosure Letter, the
supplements to the Disclosure Letter, the certificate delivered pursuant to
Section 2.4(a)(v), and any other certificate or document delivered pursuant to
this Agreement will survive the Closing. The right to indemnification, payment
of Damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with respect
to, or any Knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant, or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER
Seller will indemnify and hold harmless Buyer, the Company,
and its respective Representatives, stockholders, controlling persons, and
affiliates (collectively, the "Indemnified Persons") for, and will pay to the
Indemnified Persons the amount of, any loss, liability, claim, damage (including
incidental and consequential damages), expense (including costs of investigation
and defense and reasonable attorneys' fees) whether or not involving a
third-party claim (collectively, "Damages"), arising, directly or indirectly,
from or in connection with:
(a) any Breach of any representation or warranty made by
Seller in this Agreement (without giving effect to any supplement to the
Disclosure Letter), the Disclosure Letter, the supplements to the Disclosure
Letter, or any other certificate or document delivered by Seller pursuant to
this Agreement;
(b) any Breach by Seller of any covenant or obligation of
such Seller in this Agreement; or
(c) any Environmental, Health and Safety Liabilities arising
out of or relating to: (i) (A) the ownership, operation or condition at any time
on or prior to the Closing Date of any real properties in which the Company has
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or had an interest, or (B) any Hazardous Materials that were present on, at, in
or under such properties at any time on or prior to the Closing Date; or (ii)
(A) any Hazardous Materials, wherever located, that were generated, transported,
stored, treated, disposed of, released, or otherwise handled by the Company at
any time on or prior to the Closing Date, or (B) any Hazardous Activities that
were conducted by the Company at time on or prior to the Closing Date; provided
that Buyer shall permit Seller to assume control of the remediation of any
condition for which Seller is responsible under this Section 10.2(c), and no
such remediation or indemnification with respect to a matter shall be required
unless the Company or Buyer has received, without solicitation, an order or
written notice from (a) any Governmental Body, or (b) any other Person asserting
or threatening a claim, of any violation or failure to comply with any
Environmental Law, or of any obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities;
(d) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Seller or the Company (or any
Person acting on their behalf) in connection with any of the Contemplated
Transactions; or
(e) the claim of Reginald and Karen Rogan against the
Company described in Part 3.15 of the Disclosure Letter, but only to the extent
Damages resulting from such claim exceed $250,000.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Seller, and will pay to
Seller the amount of any Damages arising, directly or indirectly, from or in
connection with (a) any Breach of any representation or warranty made by Buyer
in this Agreement or in any certificate delivered by Buyer pursuant to this
Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer in
this Agreement, or (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
10.4 TIME LIMITATIONS
If the Closing occurs, Seller will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, other than those in Sections 3.3, 3.11, and 3.20, unless on or before
twenty-four (24) months from the date of Closing Buyer notifies Seller of a
claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Buyer; a claim with respect to Section 3.20, may be made
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within thirty-six (36) months from the date of Closing and a claim with respect
to Section 3.3 and 3.11 may be made at any time prior to the expiration of the
applicable statute of limitations. If the Closing occurs, Seller will have no
liability (for indemnification under Section 10.2) or otherwise with respect to
any matter covered by Section 10.2(c) unless on or before the date thirty-six
(36) months after the Closing Date Buyer notifies Sellers of a claim specifying
the factual basis of that claim in reasonable detail to the extent then known by
Buyer. If the Closing occurs, Buyer will have no liability (for indemnification
or otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, unless
on or before twenty-four (24) months from the date of Closing Seller notify
Buyer of a claim specifying the factual basis of that claim in reasonable detail
to the extent then known by Seller provided, however, that a claim by Seller
under Section 4.6 may be made at any time prior to the expiration of the
applicable statute of limitations.
10.5 LIMITATIONS ON AMOUNT--SELLER
Seller will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 10.2 (other than
Section 10.2(e)) until the total of all Damages with respect to such matters
exceeds Five Hundred Thousand Dollars ($500,000). Furthermore, Seller's
aggregate liability hereunder shall no event exceed Fifteen Million Dollars
($15,000,000). Seller may satisfy any indemnification obligation by surrendering
the Securities valued at the Fair Market Value.
10.6 LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 10.3 until the total
of all Damages with respect to such matters exceeds Five Hundred Thousand
Dollars ($500,000), provided this limitation shall not apply for failure to
deliver the Securities.
10.7 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under
Section 10.2 or 10.3 of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an indemnifying
party under such Section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section 10.7(a) is
brought against an indemnified party and it gives notice to the indemnifying
party of the commencement of such Proceeding, the indemnifying party will be
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entitled to participate in such Proceeding and, to the extent that it wishes to
assume the defense of such Proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless the sole relief provided is
monetary damages that are paid in full by the indemnifying party; and (iii) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any Proceeding and the indemnifying
party does not, within twenty days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the indemnified party.
10.8 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim may be asserted by notice to the party from whom
indemnification is sought.
10.9 INSURANCE PROCEEDS
The rights of Indemnified Persons to indemnification and
payment under Sections 10.2 and 10.3 and the amount of any Damages incurred by
Indemnified Persons shall be reduced by the net amount any Indemnified Person
recovers (after deducting all attorneys' fees, expenses and other costs of
recovery) from any insurer or other third party liable for such Damages.
10.10 EXCLUSIVE REMEDY
The exclusive remedy available to a party hereto in respect of
the matters covered by Section 10.2 or 10.3 hereof shall be to proceed in the
manner and subject to the limitations contained in this Article 10.
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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 agents,
representatives, counsel, and accountants. The Company shall pay the attorneys'
fees and expenses of counsel for Seller and the Company relating to the
preparation, execution, and (except as otherwise expressly provided herein)
performance of this Agreement. Buyer shall pay all expenses incurred by Seller
or the Company in connection with the effort to satisfy the condition set forth
in Section 7.7. In the event of termination of this Agreement, the obligation of
each party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS
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 Buyer and Seller agree, provided, however, that
Buyer may make disclosures of this Agreement and the contemplated transactions
in any filing required by Legal Requirements or in any financing transaction in
connection herewith. Unless consented to by Buyer in advance, prior to the
Closing Seller shall, and shall cause the Company to, keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person. Seller and Buyer will consult with each other concerning the means by
which the Company's employees, customers, and suppliers and others having
dealings with the Company will be informed of the Contemplated Transactions, and
Buyer will have the right to be present for any such communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer
and Seller will maintain in confidence, and will cause the directors, officers,
employees, agents, and advisors of Buyer and the Company to maintain in
confidence, any written, oral, or other information obtained in confidence from
another party or the Company in connection with this Agreement or the
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 or appropriate 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 or appropriate in connection with legal proceedings.
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If the Contemplated Transactions are not consummated, each
party will return or destroy as much of such written information as the other
party may reasonably request.
11.4 NOTICES
All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
SELLER: THOMAS TERRY, JR.
c/o Lewis Tree Service, Inc.
225 Ballantyne Road
Rochester, NY 14623
Facsimile No.: (716) 235-5864
With a copy to: HARRIS BEACH & WILCOX, LLP
130 East Main Street
Rochester, NY 14604
Attention: Gunther K. Buerman, Esq.
Facsimile No.: (716) 232-6925
BUYER: AQUAGENIX, INC.
6500 Northwest 15th Avenue
Fort Lauderdale, FL 33309
Attention: ANDREW P. CHESLER, CHAIRMAN
Facsimile No.: (954) 967-7700
With a copy to: ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 East Las Olas Boulevard
Suite 1900
Fort Lauderdale, FL 33301
Attention: JOEL D. MAYERSOHN, ESQ.
Facsimile No.: (954) 766-7800
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11.5 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other
such further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
11.6 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.
11.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement and the Escrow Agreement supersede all prior
agreements between the parties with respect to their subject matter (including
the Letter of Intent between Buyer and Seller dated October 23, 1997 and
constitute (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 such subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.8 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter, and those in
any Supplement thereto, must identify the Section(s) of the Agreement to which
they expressly relate and shall apply to the representations and warranties in
the Section of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement, except to the extent that the
relevance to such other representation or warranty is manifest on the face of
the Disclosure Letter or Supplement.
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(b) In the event of any inconsistency between the statements
in the body of this Agreement and those in the Disclosure Letter (other than an
exception expressly set forth as such in the Disclosure Letter with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
11.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this
Agreement without the prior consent of the other parties, which will not be
unreasonably withheld, except that Buyer may assign any of its rights under this
Agreement to any Subsidiary of Buyer. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
11.10 SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.11 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
11.12 TIME OF ESSENCE
With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
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11.13 GOVERNING LAW
This Agreement will be governed by the laws of the State of
Florida without regard to conflicts of laws principles.
11.14 COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER:
AQUAGENIX, INC.
By: /s/ Andrew P. Chesler
---------------------------------------------
ANDREW P. CHESLER, Chairman
SELLER:
/s/ Thomas Terry, Jr.
---------------------------------------------
THOMAS TERRY, JR.
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