EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 13, 2001
BY AND AMONG
EXTEN INDUSTRIES, INC.
MULTI-CELL ASSOCIATES, INC.,
MULTI-CELL ASSOCIATES, INC. IRREVOCABLE TRUST
AND
THE ESTATE OF ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TABLE OF CONTENTS
PAGE
STOCK PURCHASE AGREEMENT.......................................................4
ARTICLE I......................................................................5
PURCHASE AND SALE OF STOCK.....................................................5
SECTION 1.1 TRANSFER OF SHARES.......................................5
SECTION 1.2 PURCHASE PRICE...........................................5
SECTION 1.3 CLOSING..................................................6
ARTICLE II.....................................................................6
REPRESENTATIONS AND WARRANTIES OF MULTI-CELL AND THE SHAREHOLDER CONCERNING
MULTI-CELL.....................................................................6
SECTION 2.1 ORGANIZATION AND QUALIFICATION...........................6
SECTION 2.2 CAPITALIZATION...........................................6
SECTION 2.3 SUBSIDIARIES; OTHER INVESTMENTS..........................7
SECTION 2.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS..................7
SECTION 2.5 FINANCIAL STATEMENTS.....................................8
SECTION 2.6 ABSENCE OF UNDISCLOSED LIABILITIES.......................8
SECTION 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.....................8
SECTION 2.8 LITIGATION...............................................8
SECTION 2.9 COMPLIANCE WITH LAWS; PERMITS............................9
SECTION 2.10 AGREEMENTS, CONTRACTS AND COMMITMENTS....................9
SECTION 2.11 TAX MATTERS.............................................11
SECTION 2.12 EMPLOYMENT..............................................12
SECTION 2.13 INVESTMENT COMPANY ACT..................................13
SECTION 2.14 LABOR CONTROVERSIES.....................................13
SECTION 2.15 ENVIRONMENTAL MATTERS...................................13
SECTION 2.16 INTERESTED PARTY TRANSACTIONS...........................14
SECTION 2.17 INSURANCE...............................................14
SECTION 2.18 INTELLECTUAL PROPERTY RIGHTS............................15
SECTION 2.19 BOOKS AND RECORDS.......................................16
SECTION 2.20 TITLE TO AND CONDITION OF PROPERTIES....................16
SECTION 2.21 REPRESENTATIONS COMPLETE................................17
ARTICLE III...................................................................17
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.............................17
SECTION 3.1 AUTHORITY; NON-CONTRAVENTION; APPROVALS................17
SECTION 3.2 SHARES.................................................18
SECTION 3.3 INVESTMENT FOR OWN ACCOUNT.............................18
SECTION 3.4 RESIDENCY..............................................19
SECTION 3.5 ACKNOWLEDGMENT.........................................19
SECTION 3.6 RESTRICTED EXTEN COMMON STOCK..........................19
SECTION 3.7 LEGENDS................................................20
SECTION 3.8 LITIGATION.............................................20
SECTION 3.9 REPRESENTATIONS COMPLETE...............................20
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ARTICLE IV....................................................................20
REPRESENTATIONS AND WARRANTIES OF THE TRUST...................................20
SECTION 4.1 AUTHORITY; NON-CONTRAVENTION; APPROVALS................20
SECTION 4.2 SHARES.................................................21
SECTION 4.3 INVESTMENT FOR OWN ACCOUNT.............................22
SECTION 4.4 RESIDENCY..............................................22
SECTION 4.5 ACKNOWLEDGMENT.........................................22
SECTION 4.6 RESTRICTED EXTEN COMMON STOCK..........................22
SECTION 4.7 LEGENDS................................................23
SECTION 4.8 LITIGATION.............................................23
SECTION 4.9 REPRESENTATIONS COMPLETE...............................23
ARTICLE V.....................................................................24
REPRESENTATIONS AND WARRANTIES OF EXTEN.......................................24
SECTION 5.1 ORGANIZATION AND QUALIFICATION.........................24
SECTION 5.2 CAPITALIZATION.........................................24
SECTION 5.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS................24
SECTION 5.4 REPORTS AND FINANCIAL STATEMENTS.......................25
SECTION 5.5 [INTENTIONALLY OMITTED]................................26
SECTION 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS...................26
SECTION 5.7 LITIGATION.............................................26
SECTION 5.8 COMPLIANCE WITH LAWS...................................26
SECTION 5.9 REPRESENTATIONS COMPLETE...............................26
ARTICLE VI....................................................................27
ADDITIONAL AGREEMENTS.........................................................27
SECTION 6.1 EXPENSES...............................................27
SECTION 6.2 PUBLIC STATEMENTS......................................27
SECTION 6.3 SHAREHOLDER INDEMNIFICATION............................27
SECTION 6.4 TRUST INDEMNIFICATION..................................28
SECTION 6.5 EXTEN INDEMNIFICATION..................................30
SECTION 6.6 [INTENTIONALLY OMITTED.]...............................31
ARTICLE VII...................................................................31
CONDITIONS....................................................................31
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
TRANSACTION............................................31
SECTION 7.2 CONDITIONS TO OBLIGATION OF THE SHAREHOLDER AND THE
TRUST TO EFFECT THE TRANSACTION........................31
SECTION 7.3 CONDITIONS TO OBLIGATION OF EXTEN TO EFFECT THE
TRANSACTION............................................32
SECTION 7.4 [INTENTIONALLY OMITTED.]...............................33
ARTICLE VIII..................................................................33
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POST-CLOSING COVENANTS........................................................33
SECTION 8.1 [INTENTIONALLY OMITTED.]...............................33
SECTION 8.2 EMPLOYMENT AGREEMENT...................................33
SECTION 8.3 INCENTIVE STOCK OPTIONS................................33
SECTION 8.4 REGISTRATION...........................................34
SECTION 8.5 OTHER MATTERS..........................................34
SECTION 8.6 TERMINATION OF S CORPORATION STATUS; MULTI-CELL TAX
RETURN.................................................34
ARTICLE IX....................................................................34
GENERAL PROVISIONS............................................................34
SECTION 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
COVENANTS..............................................34
SECTION 9.2 BROKERS................................................35
SECTION 9.3 NOTICES................................................35
SECTION 9.4 INTERPRETATION.........................................36
SECTION 9.5 MISCELLANEOUS..........................................37
SECTION 9.6 COUNTERPARTS...........................................37
SECTION 9.7 PARTIES IN INTEREST....................................37
SECTION 9.8 CONFIDENTIALITY........................................37
SECTION 9.9 TIME PERIOD............................................37
SECTION 9.10 AMENDMENT..............................................37
SECTION 9.11 GOVERNING LAW..........................................37
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of September 13, 2001 (this
"Agreement") is entered into by and among Exten Industries, Inc., a Delaware
corporation ("Exten"), Multi-Cell Associates, Inc., a Rhode Island Corporation
("Multi-Cell"), Multi-Cell Associates, Inc. Irrevocable Trust, a Rhode Island
trust (the "Trust") and the Estate of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a Rhode Island estate
(the "Shareholder").
R E C I T A L S
WHEREAS, Exten, Multi-Cell and the Shareholder are parties to a letter
of intent dated March 29, 2001, as amended on May 31, 2001 (the "Letter of
Intent"), which contemplates the purchase by Exten of all of the issued and
outstanding capital stock of Multi-Cell (the "Transaction") for an aggregate
purchase price of Two Million Two Hundred Thousand Dollars ($2,200,000) (the
"Purchase Price") consisting of cash and common stock of Exten, $0.01 par value
per share ("Exten Common Stock");
WHEREAS, subsequent to March 29, 2001, Multi-Cell filed Articles of
Amendment to the Multi-Cell Articles of Incorporation, whereby Multi-Cell
established two classes of common stock, Class A Voting Common Stock, no par
value (the "Class A Stock") and Class B Nonvoting Common Stock, no par value
(the "Class B Stock");
WHEREAS, all of the Multi-Cell common stock issued to the Shareholder
prior to March 29, 2001 has been converted to One Hundred (100) shares of the
Class A Stock;
WHEREAS, the Shareholder currently owns One Hundred Percent (100%) of
the issued and outstanding shares of the Class A Stock;
WHEREAS, the Trust currently owns for the benefit of certain Multi-Cell
employees and/or consultants One Hundred Percent (100%) of the issued and
outstanding shares of the Class B Stock (collectively the Class A Stock and the
Class B Stock are referred to herein as the "Shares");
WHEREAS, Multi-Cell issued a Common Stock Purchase Warrant (the
"Warrant") dated February, 1999 to the Rhode Island Center for Cellular
Medicine, Inc. (the "Rhode Island Center") entitling the Rhode Island Center to
purchase one (1) share of Multi-Cell common stock, at a purchase price of twenty
thousand ($20,000) per share;
WHEREAS, the Shareholder acknowledges that Exten has paid to the
Shareholder a non-refundable deposit (the "Deposit") of Fifty Thousand Dollars
($50,000) on March 28, 2001 and that the Deposit shall be credited towards the
portion of the Purchase Price due to the Shareholder at the Closing, reducing
the remaining payments on the Purchase Price at the Closing to an aggregate
amount of Two Million One Hundred Fifty Thousand Dollars ($2,150,000); and
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WHEREAS, the Boards of Directors of Exten, the Shareholder of
Multi-Cell, the Co-Executors of the Shareholder and the Shareholder of
Multi-Cell and the Trustee of the Trust have approved the Transaction pursuant
to this Agreement and any other transactions contemplated hereby upon the terms
and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
SECTION 1.1 TRANSFER OF SHARES.
Subject to the terms and conditions of this Agreement, the Shareholder
agrees to sell and deliver to Exten, and Exten agrees to purchase from the
Shareholder, good and marketable title to the Class A Stock, free and clear of
all claims, liens, pledges, security interests and similar encumbrances or
restrictions on transfer. At the Closing, as defined in Section 1.3 below, the
Shareholder shall deliver to Exten one or more stock certificates representing
the Class A Stock, duly endorsed for transfer or accompanied by duly executed
stock powers in proper form for transfer. Subject to the terms and conditions of
this Agreement, the Trust agrees to sell and deliver to Exten, and Exten agrees
to purchase from the Trust, good and marketable title to the Class B Stock, free
and clear of all claims, liens, pledges, security interests and similar
encumbrances or restrictions on transfer. At the Closing, as defined in Section
1.3 below, the Trust shall deliver to Exten one or more stock certificates
representing the Class B Stock, duly endorsed for transfer or accompanied by
duly executed stock powers in proper form for transfer. Multi-Cell shall
continue as a wholly-owned subsidiary of Exten.
SECTION 1.2 PURCHASE PRICE.
As full and complete consideration for the Shares, Exten shall deliver
to the Shareholder and the Trust at the Closing (as defined in Section 1.3
below) the remaining payments on the Purchase Price as follows: (i) cash, by
wire transfer of immediately available funds or by certified or cashier's check
to the Shareholder, in the amount of Seven Hundred Thousand Dollars ($700,000),
which together with the amount of the Deposit shall equal total cash
consideration of Seven Hundred Fifty Thousand Dollars ($750,000), (ii) stock
certificates to the Shareholder representing that number of shares of Exten
Common Stock determined by dividing the Stock Value (as defined below) by the
average closing bid price of the Exten Common Stock, as quoted on the
over-the-counter bulletin board, for the thirty (30) trading days immediately
preceding the Closing, and which is set forth on Schedule 1.2 attached hereto,
and (iii) stock certificates to the Trust representing that number of shares of
Exten Common Stock determined by dividing the Stock Value (as defined below) by
the average closing bid price of the Exten Common Stock, as quoted on the
over-the-counter bulletin board, for the thirty (30) trading days immediately
preceding the Closing, and which is set forth on Schedule 1.2 attached hereto.
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The Stock Value for the Shareholder is One Million Forty Seven Thousand Dollars
($1,047,000); the Stock Value for the Trust is Four Hundred and Three Thousand
Dollars ($403,000). The aggregate Stock Value is One Million Four Hundred Fifty
Thousand Dollars ($1,450,000). Exten agrees to grant the Shareholder and the
Trust registration rights with respect to the shares of Exten Common Stock being
delivered as part of the Purchase Price, pursuant to the terms of the
Registration Rights Agreement, a form of which is attached hereto as Exhibit
"A".
SECTION 1.3 CLOSING.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place by September 15, 2001 at the offices of ▇▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇, LLP, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at
such other time and place as Exten, the Trust and the Shareholder shall agree in
writing (the date of the Closing is hereinafter referred to as the "Closing
Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
MULTI-CELL AND THE SHAREHOLDER CONCERNING MULTI-CELL
Multi-Cell and the Shareholder represent and warrant to Exten as of the
Closing Date as follows:
SECTION 2.1 ORGANIZATION AND QUALIFICATION
Multi-Cell is a close corporation duly organized, validly existing and
in good standing under the laws of the State of Rhode Island and has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Multi-Cell
is qualified to do business and is in good standing in each jurisdiction in
which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary. True, accurate and
complete copies of Multi-Cell's Articles of Incorporation and By-laws, including
all amendments thereto, have heretofore been delivered to Exten.
SECTION 2.2 CAPITALIZATION.
(a) The authorized capital stock of Multi-Cell consists of 8,000 shares
of common stock of Multi-Cell, no par value (the "Multi-Cell Common Stock")
2,000 of which are designated as Class A Voting Common Stock and 6,000 of which
are designated as Class B Nonvoting Common Stock. As of the date hereof, there
are 100 shares of Class A Stock issued and outstanding and 38.491 shares of
Class B Stock issued and outstanding. All of the issued and outstanding shares
of Multi-Cell Common Stock are duly authorized, validly issued, fully paid,
nonassessable, free of preemptive rights and were issued in compliance with
federal and applicable state securities laws.
(b) As of the date hereof and except for the Warrant as set forth on
Schedule 2.2 attached hereto, there are no outstanding subscriptions, options,
calls, contracts, agreements, commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement, obligating
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Multi-Cell to issue, deliver, sell, purchase, redeem or acquire, or cause to be
issued, delivered, sold, purchased, redeemed or acquired, shares of the capital
stock of Multi-Cell or obligating Multi-Cell to grant, extend or enter into any
such agreement or commitment, except for this Agreement. There are no
outstanding or authorized stock appreciation, phantom stock, stock
participation, or other similar rights with respect to Multi-Cell. There are no
voting trusts, proxies, other agreements or understandings to which Multi-Cell
is a party or is bound with respect to the voting of any shares of capital stock
of Multi-Cell.
SECTION 2.3 SUBSIDIARIES; OTHER INVESTMENTS
Multi-Cell does not own, directly or indirectly, any capital stock of
any corporation and has no subsidiaries. Multi-Cell does not own any securities
issued by any other business organization or governmental authority. Except as
set forth on Schedule 2.3, Multi-Cell is not a partner or participant in any
joint venture or partnership of any kind.
SECTION 2.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Multi-Cell has the power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, and the consummation by Multi-Cell
of the transactions contemplated hereby, have been duly authorized and approved
by the Shareholder of Multi-Cell and the Shareholder and no other legal
proceedings are necessary to authorize the execution and delivery of this
Agreement and the consummation by Multi-Cell of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Multi-Cell and, assuming the due authorization, execution and delivery hereof by
Exten, the Trust and the Shareholder, constitutes a valid and binding agreement
of Multi-Cell, enforceable against Multi-Cell, in accordance with its terms,
except that such enforcement may be subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (b) general equitable principles.
(b) The execution and delivery of this Agreement by Multi-Cell does
not, and the consummation by Multi-Cell of the transactions contemplated hereby
will not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Multi-Cell under
any of the terms, conditions or provisions of (i) the charter or by-laws of
Multi-Cell, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to Multi-Cell or any of its properties or assets, or (iii)
any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which Multi-Cell is now a party or by which Multi-Cell or any of its
properties or assets may be bound or affected.
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(c) No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority, including the probate court, is necessary for the execution, delivery
or performance of this Agreement by Multi-Cell or consummation by Multi-Cell of
the transactions contemplated hereby. No consent of any party to any contract,
agreement, instrument, lease, license, arrangement or understanding to which
Multi-Cell is a party, or to which any of its properties or assets are subject,
is required for the execution, delivery or performance of this Agreement.
SECTION 2.5 FINANCIAL STATEMENTS.
Multi-Cell shall deliver to Exten copies of its audited financial
statements for the fiscal year ending December 31, 2000 (the "Multi-Cell
Financial Statements"). The Multi-Cell Financial Statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis (except as may be indicated therein or in the notes thereto)
and fairly and accurately present the financial position of Multi-Cell as of the
dates thereof and the results of operations and changes in financial position
for the periods then ended.
SECTION 2.6 ABSENCE OF UNDISCLOSED LIABILITIES.
Except as expressly disclosed and described in the Multi-Cell Financial
Statements, Multi-Cell did not have at December 31, 2000, any liability,
indebtedness, expense, claim, deficiency, guarantee or obligation of any type
(whether absolute, accrued, contingent, matured, unmatured or otherwise) or of
any nature, except liabilities, obligations or contingencies which are accrued
or reserved against in the Multi-Cell Financial Statements or reflected in the
notes thereto. Since December 31, 2000, Multi-Cell has not incurred liabilities
or obligations in the ordinary course of business which, in the aggregate,
exceed $20,000, except those liabilities or obligations listed on Schedule 2.6
attached hereto.
SECTION 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
From December 31, 2000 through the date hereof, there has not been any
material adverse change in the business, operations, properties, assets,
liabilities, condition (financial or other), results of operations or prospects
of Multi-Cell.
SECTION 2.8 LITIGATION.
There are no claims, suits, actions, proceedings or investigations
pending or, to the knowledge of Multi-Cell and the Shareholder, threatened
against, relating to or affecting Multi-Cell, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator,
except as disclosed on Schedule 2.8 attached hereto. Multi-Cell is not subject
to any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby or would have any material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Multi-Cell. For the purposes of this Agreement, "Knowledge" shall
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mean actual knowledge of the party of the relevant subject matter to which it
relates, and such knowledge as should have come to the attention of any such
party in the course of discharging such party's duties as an officer or director
of the relevant entity in a reasonable and prudent manner consistent with sound
business practices.
SECTION 2.9 COMPLIANCE WITH LAWS; PERMITS.
Multi-Cell is not in violation of, nor has it been given notice or been
charged with any violation of, any law, statute, order, rule, regulation,
ordinance, or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental or regulatory
body or authority except for violations which, in the aggregate, do not have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of
Multi-Cell. As of the date of this Agreement, no investigation or review by any
governmental or regulatory body or authority is pending or to the knowledge of
Multi-Cell and the Shareholder threatened, nor has any governmental or
regulatory body or authority indicated an intention to conduct the same.
Multi-Cell holds all permits, licenses, certificates and other authorizations of
foreign, federal, state and local governmental agencies required for the conduct
of its business.
SECTION 2.10 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Except for the agreements set forth on Schedule 2.10 attached
hereto (true and correct copies of which have been delivered to Exten),
Multi-Cell is not a party to and it is not bound by:
(i) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or salesperson or
consulting or sales agreement, contract or commitment with a firm or
other organization;
(ii) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation rights plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement;
(iii) any fidelity or surety bond or completion bond;
(iv) any lease of personal property with fixed annual rental
payments in excess of $10,000;
(v) any agreement, contract, commitment or grant containing
any covenant limiting the freedom of Multi-Cell or any of its
subsidiaries to engage in any line of business or to compete with any
person;
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(vi) any agreement, contract or commitment relating to capital
expenditures and involving future payments in excess of $10,000 either
individually or in the aggregate;
(vii) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business
enterprise outside the ordinary course of Multi-Cell's business;
(viii) any mortgage, indenture, loan or credit agreement,
security agreement or other agreement or instrument relating to the
borrowing of money, extension of credit or placing of liens on any
assets of Multi-Cell;
(ix) any guaranty of any obligation for borrowed money or
otherwise;
(x) any purchase order or contract for the purchase of
materials involving in excess of $10,000 either individually or in the
aggregate;
(xi) any dealer, distribution, joint marketing or development
agreement;
(xii) any sales representative, original equipment
manufacturer, value added, remarketing or other agreement for
distribution of Multi-Cell's products or services;
(xiii) any collective bargaining agreement or contract with
any labor union;
(xiv) any bonus, pension, profit sharing, retirement or other
form of deferred compensation plan;
(xv) any medical insurance or similar plan; or
(xvi) any other agreement, contract, commitment or grant
pursuant to which the obligations of any party thereto is in excess of
$10,000.
(b) To the knowledge of Multi-Cell and the Shareholder, Multi-Cell is
in compliance with and has not breached, violated or defaulted under, or
received notice that it has breached, violated or defaulted under, any of the
terms or conditions of any existing agreement, contract, grant, covenant,
instrument, lease, license or commitment to which Multi-Cell is a party or by
which it is bound (collectively, a "Contract"), nor is Multi-Cell or the
Shareholder aware of any event that would constitute such a breach, violation or
default with the lapse of time, giving of notice or both. To the knowledge of
Multi-Cell and the Shareholder, each Contract is in full force and effect and is
not subject to any default thereunder by any party obligated to Multi-Cell
pursuant thereto. Multi-Cell has obtained, or will obtain prior to the Closing
Date, all necessary consents, waivers and approvals of parties to any Contract
as are required thereunder for such Contracts to remain in effect without
modification or termination after the Closing. Following the Closing Date,
Multi-Cell will be permitted to exercise all of its rights under the Contracts
without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which Multi-Cell would otherwise be required
to pay had the transactions contemplated by this Agreement not occurred.
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SECTION 2.11 TAX MATTERS.
(a) DEFINITION OF TAXES. For the purposes of this Agreement, "Tax" or,
collectively, "Taxes" means (i) any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts; (ii) any liability for the payment of any amounts of the type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period; and (iii) any liability
for the payment of any amounts of the type described in clause (i) or (ii) as a
result of any express or implied obligation to indemnify any other person or as
a result of any obligations under any agreements or arrangements with any other
person with respect to such amounts and including any liability for taxes of a
predecessor entity.
(b) TAX RETURNS AND AUDITS.
(i) Multi-Cell has prepared and timely filed (or have properly
filed extensions for) all required federal, state, local and foreign
returns, estimates, information statements and reports ("Returns")
relating to any and all Taxes concerning or attributable to Multi-Cell,
its subsidiaries or operations thereof and such Returns are true and
correct and have been completed in accordance with applicable law.
(ii) Multi-Cell (A) has paid all Taxes it is required to pay
and has withheld with respect to its employees all federal and state
income taxes, Federal Insurance Contribution Act ("FICA"), Federal
Unemployment Tax Act ("FUTA") and other Taxes required to be withheld,
and (B) has accrued on the Multi-Cell Financial Statements all Taxes
attributable to the periods covered by the Multi-Cell Financial
Statements and has not incurred any liability for Taxes for the period
prior to the Closing Date other than in the ordinary course of
business.
(iii) Multi-Cell has not been delinquent in the payment of any
Tax and there is no Tax deficiency outstanding, assessed or proposed
against Multi-Cell by the Internal Revenue Service (the "IRS") or any
other governmental taxing authority, and Multi-Cell has not executed
any waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of Multi-Cell
is presently in progress, and Multi-Cell has not been notified of any
request for such an audit or other examination.
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(v) No adjustment relating to any Returns filed by Multi-Cell
has been proposed formally or informally by any Tax authority to
Multi-Cell or any representative of Multi-Cell.
(vi) Multi-Cell has made available to Exten or its legal
counsel, copies of all federal and state income and all state sales and
use Returns for Multi-Cell filed for the past five (5) years.
(vii) There are (and immediately following the Closing Date
there will be) no liens, pledges, charges, claims, restrictions on
transfer, mortgages, security interests or other encumbrances of any
sort (collectively, "Liens") on the assets of Multi-Cell relating to or
attributable to Taxes other than Liens for Taxes not yet due and
payable.
(viii) Neither Multi-Cell nor the Shareholder has any
knowledge of any basis for the assertion of any claim relating or
attributable to Taxes which, if adversely determined, would result in
any Lien on the assets of Multi-Cell.
(ix) None of Multi-Cell's assets are treated as "tax-exempt
use property" within the meaning of Section 168(h) of the Internal
Revenue Code of 1986, as amended (the "Code").
(x) There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement, covering
any employee or former employee of Multi-Cell that, individually or
collectively, could give rise to the payment of any amount that would
not be deductible by Multi-Cell as an expense under applicable law.
(xi) Multi-Cell has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(4) of the
Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Multi-Cell.
(xii) Multi-Cell is not a party to any tax sharing,
indemnification or allocation agreement and Multi-Cell does not owe any
amount under any such agreement.
SECTION 2.12 EMPLOYMENT.
(a) Except as set forth in Schedule 2.12(a) attached hereto, at the
date hereof, Multi-Cell does not maintain, contribute to or have any liability
under any employee benefit plans, programs, arrangements or practices, including
employee benefit plans within the meaning set forth in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any
deferred compensation or retirement plans or arrangements, or other similar
material arrangements for the provision of benefits (excluding any
"Multiemployer Plan" within the meaning of Section 3(37) of ERISA or a "Multiple
Employer Plan" within the meaning of Section 413(c) of the Code). Multi-Cell
does not have any obligation to create any such plan.
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(b) With respect to each plan listed in Schedule 2.12 (a): (i)
Multi-Cell has performed in all material respects all obligations required to be
performed by it under each such plan and each such plan has been established and
maintained in all material respects in accordance with its terms and in
compliance with all applicable laws, statutes, rules and regulations, including
but not limited to the Code and ERISA; (ii) there are no actions, suits or
claims pending or, to the knowledge of Multi-Cell and the Shareholder,
threatened (other than routine claims for benefits) against any such plan; (iii)
each such plan can be amended or terminated after the Closing Date in accordance
with its terms, without liability to Multi-Cell; and (iv) there are no inquiries
or proceedings pending or, to the knowledge of Multi-Cell and the Shareholder,
threatened by the IRS or the Department of Labor with respect to any such plan.
(c) Schedule 2.12 (c) attached hereto contains a complete and accurate
list of the employees for Multi-Cell, including job title, current compensation,
vacation accrued and service credited for purposes of vesting and eligibility to
participate under any pension, retirement, profit-sharing, thrift-savings,
deferred compensation, stock bonus, stock option, cash bonus, employee stock
ownership, severance pay, insurance, medical, welfare or vacation plan. No
employee of Multi-Cell is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee and any other person or entity that in
any way adversely affects or will affect (i) the performance of his or her
duties as an employee of Multi-Cell, or (ii) the ability of Multi-Cell to
conduct its business. Neither Multi-Cell nor the Shareholder have received
verbal or written notice that any of the employees listed in Schedule 2.12(c)
will not continue their employment relationship with Multi-Cell after the
Closing Date. All employees of Multi-Cell are terminable at will by Multi-Cell.
SECTION 2.13 INVESTMENT COMPANY ACT.
Multi-Cell either (a) is not an "investment company", or a company
"controlled" by, or an "affiliated company" with respect to, an "investment
company", within the meaning of the Investment Company Act of 1940 (the
"Investment Company Act") or (b) satisfies all conditions for an exemption from
the Investment Company Act, and, accordingly, Multi-Cell is not required to be
registered under the Investment Company Act.
SECTION 2.14 LABOR CONTROVERSIES.
There are no significant controversies pending or, to the knowledge of
Multi-Cell and the Shareholder, threatened between Multi-Cell and its employees.
There are no material organizational efforts presently being made involving any
of the presently unorganized employees of Multi-Cell. Multi-Cell has complied in
all material respects with all laws relating to the employment of labor,
including, without limitation, any provisions thereof relating to wages, hours,
and the payment of social security and similar taxes, and no person has asserted
that Multi-Cell is liable in any material amount for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing.
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SECTION 2.15 ENVIRONMENTAL MATTERS.
Except as set forth in Schedule 2.15 attached hereto, Multi-Cell (i)
has obtained all applicable permits, licenses and other authorizations which are
required under federal, state or local laws relating to pollution or protection
of the environment ("Environmental Laws"), including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous or toxic materials or wastes into ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or hazardous or toxic materials or wastes by Multi-Cell
(or its agents); (ii) is in compliance in all material respects with all terms
and conditions of any required permits, licenses and authorizations, and any
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in Environmental
Laws or in any regulation, code, plan, order, decree, judgment, notice or demand
letter issued, entered, promulgated or approved thereunder; (iii) is not aware
of nor has it received notice of any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued compliance with or which would give rise to any
Environmental Law or statutory liability, or otherwise form the basis of any
claim, action, suit or proceeding, based on or resulting from Multi-Cell's (or
any agent's) manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant, or hazardous or toxic material or
waste; (iv) has taken all actions necessary under applicable requirements of
Environmental Laws, rules or regulations to register any products or materials
required to be registered by Multi-Cell (or its agents) thereunder; and (v) has
not transported, stored, used, manufactured, released, disposed of or handled
any hazardous substance or any product containing a hazardous substance in
violation of any Environmental Law.
SECTION 2.16 INTERESTED PARTY TRANSACTIONS.
Except as set forth on Schedule 2.16 attached hereto, Multi-Cell is not
a party to any oral or written (a) consulting or similar agreement with any
present or former director, officer or employee or any entity controlled by any
such person, (b) agreement with any executive officer or other key employee of
Multi-Cell the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Multi-Cell of
the nature contemplated by this Agreement or (c) agreement with respect to any
executive officer or other key employee of Multi-Cell providing any term of
employment or compensation guarantee. Multi-Cell is not a party to any
agreement, contract, lease, license, arrangement, or other understanding with
the Shareholder or any employee of Multi-Cell (except employment agreements
disclosed on Schedule 2.12(c)), any relative or affiliate of the Shareholder or
any employee of Multi-Cell, or any other partnership or enterprise in which the
Shareholder or any employee of Multi-Cell, or any such relative or affiliate
thereof, had or now has a 5% or greater ownership interest, or other substantial
interest, other than contracts or agreements listed and so specified in Schedule
2.16.
SECTION 2.17 INSURANCE.
Schedule 2.17 attached hereto lists all insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of Multi-Cell. All insurance policies listed
are in full force and effect. There is no claim by Multi-Cell pending under any
of such policies or bonds as to which coverage has been questioned, denied or
14
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and there is no
retroactive premium adjustment obligation of any kind, and Multi-Cell is
otherwise in compliance with the terms of such policies and bonds (or other
policies and bonds providing substantially similar insurance coverage). Neither
Multi-Cell nor the Shareholder has any knowledge of any threatened termination
of, or premium increase with respect to, any of such policies.
SECTION 2.18 INTELLECTUAL PROPERTY RIGHTS.
(a) Schedule 2.18 attached hereto identifies all of Multi-Cell's
Intellectual Property Rights including the following: all federal, state and
foreign patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuation-in-part, revisions, extensions, and
reexaminations thereof and all other inventions and discoveries that have not
been the subject of a patent application, all copyrightable works, all
copyrights and all applications, registrations and renewals in connection
therewith; all registered and unregistered trademarks, service marks, trade
dress, logos, trade names, and corporate names including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; and all pending applications for any patents or other intellectual
property rights in which Multi-Cell has any interest whatsoever in each case
relating to its business (collectively, "Multi-Cell Intellectual Property
Rights").
(b) No person has a right to receive a royalty, honoraria, fees or
similar payment in respect of any Multi-Cell Intellectual Property Rights.
Multi-Cell does not have any licenses granted, sold or otherwise transferred by
or to it or other agreements to which it is a party, relating in whole or in
part to any of the Multi-Cell Intellectual Property Rights, except as set forth
in Schedule 2.18.
(c) The Multi-Cell Intellectual Property Rights (and licenses granted
to it as listed on Schedule 2.18 (the "Licensed Intellectual Property")) are all
those necessary for the operation of the business of Multi-Cell and any
subsidiary as it is currently conducted. Multi-Cell is the owner of all right,
title, and interest in and to the Multi-Cell Intellectual Property Rights, free
and clear of all liens, security interests, charges, encumbrances and other
adverse claims, except as noted on Schedule 2.18, and has the right to use,
sell, license and dispose of and has the right to bring actions for the
infringement of, and where necessary, has made timely and proper application
for, all Multi-Cell Intellectual Property Rights (other than the Licensed
Intellectual Property), without payment to a third party. All officers,
directors and employees of and consultants to Multi-Cell that work with or have
access to Multi-Cell Intellectual Property Rights have signed nondisclosure
agreements and intellectual property agreements.
(d) None of the Multi-Cell Intellectual Property Rights is involved in
any pending or, to the knowledge of Multi-Cell and the Shareholder, threatened
litigation, or has been the subject of any interference, opposition or
cancellation proceedings. Multi-Cell has not received any notice of invalidity
or infringement of any rights of others with respect to the Multi-Cell
Intellectual Property Rights. Multi-Cell has taken all reasonable and prudent
steps to protect the Multi-Cell Intellectual Property Rights from infringement
15
by any other firm, corporation, entity or person. The use of the Multi-Cell
Intellectual Property Rights by Multi-Cell is not, to the knowledge of
Multi-Cell and the Shareholder, infringing upon or otherwise violating the
rights of any third party in or to such Multi-Cell Intellectual Property Rights,
nor has any such infringement been alleged by any third party. All of the
Multi-Cell Intellectual Property Rights are valid and enforceable rights of
Multi-Cell and will not cease to be valid and in full force and effect by reason
of the execution, delivery and performance of this Agreement or the consummation
of the transactions contemplated by this Agreement. To the knowledge of
Multi-Cell and the Shareholder, there is no infringement by any third party of
the Multi-Cell Intellectual Property Rights.
(e) In addition to the Multi-Cell Intellectual Property Rights
described above, Multi-Cell has the right to use, free and clear of any claims
or rights of others, except claims or rights described in SCHEDULE 2.18, all
trade secrets, customer lists, supplier lists, business and marketing plans and
other confidential business information such as manufacturing and other secret
processes and technologies (collectively "Trade Secrets") required for or used
in the manufacture or marketing of all products formerly or presently produced
by Multi-Cell, including products licensed from others. Multi-Cell has disclosed
to Exten all written documentation relating to its Trade Secrets and has taken
commercially reasonable action to maintain and protect its Trade Secrets.
SECTION 2.19 BOOKS AND RECORDS.
The books of account, minute books, stock record ledgers and other
records of Multi-Cell, all of which have been made available to Exten, are
complete and correct. The minute books of Multi-Cell contain accurate and
complete records of all meetings held of, and corporate action taken by, the
Shareholder, the Board of Directors and committees of the Board of Directors of
Multi-Cell (including certain ratifying votes by the Shareholder and Board of
Directors confirming prior actions taken by Multi-Cell) and no meeting of the
Shareholder, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books.
SECTION 2.20 TITLE TO AND CONDITION OF PROPERTIES.
(a) Multi-Cell owns good and marketable title to the properties and
assets reflected on the Multi-Cell Financial Statements or acquired since the
date thereof, free and clear of all liens and encumbrances, except for (i) liens
for current taxes not yet due and payable, and (ii) assets disposed of since
December 31, 2000, in the ordinary course of business.
(b) (i) Multi-Cell does not own any real estate; (ii) the properties
subject to the real property leases described in Schedule 2.20 attached hereto
constitute all of the real estate used or occupied by Multi-Cell (the
"Multi-Cell Real Estate"), and (iii) Multi-Cell Real Estate has access,
sufficient for the conduct of Multi-Cell's business, to public roads and to all
utilities, including electricity, sanitary and storm sewer, potable water,
natural gas and other utilities, used in the operations of Multi-Cell.
(c) The real property leases described in Schedule 2.20 are in full
force and effect, and Multi-Cell has a valid and existing leasehold interest
under each such lease for the term set forth therein. Multi-Cell has delivered
to Exten complete and accurate copies of each of the leases and none of such
16
leases has been modified in any respect, except to the extent that such
modifications are disclosed by the copies delivered to Exten. Multi-Cell is not
in default, and no circumstances exist which could result in such default, under
any of such leases, nor, to the knowledge of the Shareholder, is any other party
to any of such leases in default.
(d) All of the buildings, machinery, equipment and other tangible
assets necessary for the conduct of Multi-Cell's business are in good condition
and repair, ordinary wear and tear excepted, and are usable in the ordinary
course of business. A complete list of all items of machinery and equipment used
in the business of Multi-Cell is included in Schedule 2.20. Multi-Cell owns or
leases under valid leases, all buildings, machinery, equipment and other
tangible assets necessary for the conduct of its business. Multi-Cell has
delivered to Exten complete and accurate copies of all equipment leases and such
leases are listed in Schedule 2.20. None of such equipment leases has been
modified in any respect, except to the Extent that such modifications are
disclosed by the copies delivered to Exten. Multi-Cell is not in default, and no
circumstances exist which could result in such default, under any of such
equipment leases, nor, to the knowledge of the Shareholder, is any other party
to any of such equipment leases in default.
(e) Multi-Cell is not in any material respect in violation of any
applicable zoning ordinance or other law, regulation or requirement relating to
the operation of any properties used in the operation of its business, and
Multi-Cell has not received any notice of any such violation, or of the
existence of any condemnation proceeding with respect to any properties owned or
leased by Multi-Cell.
SECTION 2.21 REPRESENTATIONS COMPLETE.
None of the representations or warranties nor any statement made by
Multi-Cell in this Agreement or any Schedule or certificate furnished by
Multi-Cell pursuant to this Agreement, contains any untrue statement of a
material fact, or omits to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder represents and warrants to Exten as of the Closing Date
as follows:
SECTION 3.1 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) The Shareholder has the power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, and the consummation by the
Shareholder of the transactions contemplated hereby, have been duly authorized
and approved by the Co-Executors of the Shareholder and no other legal
proceedings are necessary to authorize the execution and delivery of this
Agreement and the consummation by the Shareholder of the transactions
17
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Shareholder and, assuming the due authorization, execution and
delivery hereof by Exten, the Trust and Multi-Cell, constitutes a valid and
binding agreement of the Shareholder, enforceable against the Shareholder, in
accordance with its terms, except that such enforcement may be subject to (a)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (b)
general equitable principles.
(b) The execution and delivery of this Agreement by the Shareholder
does not, and the consummation by the Shareholder of the transactions
contemplated hereby will not, violate, conflict with or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Shareholder under any of the terms, conditions or provisions of (i) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to the
Shareholder or any of the Shareholder's properties or assets, or (ii) any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Shareholder is now a party or by which the Shareholder or any
of the Shareholder's properties or assets may be bound or affected.
(c) Except as set forth on Schedule 3.1, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority, including the probate court, is
necessary for the execution, delivery or performance of this Agreement by the
Shareholder or the consummation by the Shareholder of the transactions
contemplated hereby. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement or understanding to which the
Shareholder is a party, or to which any of them or any of the Shareholder's
properties or assets are subject, is required for the execution, delivery or
performance of this Agreement.
SECTION 3.2 SHARES.
All of the Class A Stock held by the Shareholder is owned by the
Shareholder free and clear of all liens, claims, security interests, pledges and
other encumbrances or restrictions on transfer. There are no voting trusts,
proxies, other agreements or understandings to which the Shareholder is a party
or is bound with respect to the Class A Stock. The Shareholder is not a party to
any option, warrant, right or other contract or commitment that could require
the Shareholder to sell, transfer, or otherwise dispose of the Class A Stock
(other than pursuant to this Agreement).
SECTION 3.3 INVESTMENT FOR OWN ACCOUNT.
The Exten Common Stock is being acquired by the Shareholder for
investment for its own account, not as a nominee or agent; the Shareholder has
no present intention of selling, granting any participation in or otherwise
distributing any of the Exten Common Stock in a manner contrary to the
Securities Act of 1933 (the "Securities Act") or to any applicable state
18
securities or Blue Sky law, nor does the Shareholder have any contract,
undertaking, agreement or arrangement with any person or entity to sell,
transfer or grant a participation to such person or entity with respect to any
of the Exten Common Stock, other than the current beneficiaries of the
Shareholder.
SECTION 3.4 RESIDENCY.
The Shareholder is a Rhode Island estate. The beneficiaries of the
estate are residents of the States of Rhode Island and North Carolina and of
Argentina.
SECTION 3.5 ACKNOWLEDGMENT.
The Shareholder hereby acknowledges that the Shareholder has read this
Agreement, the attached schedules and exhibits and the other documents to be
delivered in connection with the consummation of the Transaction and has made an
independent examination of the Transaction (including the tax consequences
thereof). The Shareholder acknowledges that the Shareholder has had an
opportunity to consult with and has relied upon the advice of the Shareholder's
legal counsel, financial advisors, or accountants with respect to the
Transaction to the extent the Shareholder has deemed necessary, and has not been
advised or directed by Exten or its legal counsel or other advisors in respect
of any tax or securities laws matters and has not relied on such parties with
respect to such matters in connection with this Agreement and the Transaction.
SECTION 3.6 RESTRICTED EXTEN COMMON STOCK.
(a) The Shareholder understands that the shares of Exten Common Stock
that it will receive have not been registered under the Securities Act, by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the BONA FIDE nature of
the investment intent and the accuracy of the Shareholder's representations as
expressed herein. The Shareholder understands that the shares of Exten Common
Stock that it will receive are "restricted securities" under applicable U.S.
federal and state securities laws and that, pursuant to these laws, the
Shareholder must hold the shares of Exten Common Stock indefinitely unless they
are registered with the Securities and Exchange Commission (the "Commission")
and qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Shareholder acknowledges that Exten
is obligated to register and qualify the Exten Common Stock for resale within
one (1) year of the Closing pursuant to the terms and conditions of the
Registration Rights Agreement. The Shareholder further acknowledges that if an
exemption from registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and manner of
sale, the holding period of the Exten Common Stock, and on requirements relating
to Exten which are outside of the Shareholder's control.
(b) In connection with the registration of the Exten Common Stock, the
Shareholder agrees not to sell or otherwise transfer or dispose of any Exten
Common Stock held by it for a period of one year after the Closing. Exten may
impose stop transfer instructions with respect to the Exten Common Stock subject
to the foregoing restriction until the end of said period.
19
SECTION 3.7 LEGENDS.
The Shareholder understands that the Exten Common Stock may bear one or
all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM REASONABLY SATISFACTORY TO THE PURCHASER THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED."
(b) Any legend required by the Blue Sky laws of any state to the extent
such laws are applicable to the shares represented by the certificate so
legended.
SECTION 3.8 LITIGATION.
There are no claims, suits, actions, proceedings or investigations
pending or, to the knowledge of the Shareholder, threatened against, relating to
or affecting the Shareholder, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator, except as
disclosed on Schedule 3.8 attached hereto. The Shareholder is not subject to any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby.
SECTION 3.9 REPRESENTATIONS COMPLETE.
None of the representations or warranties nor any statement made by the
Shareholder in this Agreement or any Schedule or certificate furnished by the
Shareholder pursuant to this Agreement, contains any untrue statement of a
material fact, or omits to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to Exten as of the Closing Date as
follows:
SECTION 4.1 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
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(a) The Trust has the power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, and the consummation by the Trust
of the transactions contemplated hereby, have been duly authorized and approved
by the beneficiaries of the Trust and no other legal proceedings are necessary
to authorize the execution and delivery of this Agreement and the consummation
by the Trust of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Trust and, assuming the due
authorization, execution and delivery hereof by Exten, the Shareholder and
Multi-Cell, constitutes a valid and binding agreement of the Trust, enforceable
against the Trust, in accordance with its terms, except that such enforcement
may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (b) general equitable principles.
(b) The execution and delivery of this Agreement by the Trust does not,
and the consummation by the Trust of the transactions contemplated hereby will
not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Trust under
any of the terms, conditions or provisions of (i) any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction, writ, permit or license
of any court or governmental authority applicable to the Trust or any of the
Trust's properties or assets, or (ii) any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Trust is now a
party or by which the Trust or any of the Trust's properties or assets may be
bound or affected.
(c) No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority, including the probate court, is necessary for the execution, delivery
or performance of this Agreement by the Trust or the consummation by the Trust
of the transactions contemplated hereby. No consent of any party to any
contract, agreement, instrument, lease, license, arrangement or understanding to
which the Trust is a party, or to which any of them or any of the Trust's
properties or assets are subject, is required for the execution, delivery or
performance of this Agreement.
SECTION 4.2 SHARES.
All of the Class B Stock held by the Trust is owned by the Trust free
and clear of all liens, claims, security interests, pledges and other
encumbrances or restrictions on transfer. There are no voting trusts, proxies,
other agreements or understandings to which the Trust is a party or is bound
with respect to the Class B Stock (other than the Multi-Cell Associates, Inc.
Irrevocable Trust). The Shareholder is not a party to any option, warrant, right
or other contract or commitment that could require the Trust to sell, transfer,
or otherwise dispose of the Class B Stock (other than pursuant to this
Agreement).
21
SECTION 4.3 INVESTMENT FOR OWN ACCOUNT.
The Exten Common Stock is being acquired by the Trust for investment
for its own account, not as a nominee or agent; the Trust has no present
intention of selling, granting any participation in or otherwise distributing
any of the Exten Common Stock in a manner contrary to the Securities Act or to
any applicable state securities or Blue Sky law, nor does the Trust have any
contract, undertaking, agreement or arrangement with any person or entity to
sell, transfer or grant a participation to such person or entity with respect to
any of the Exten Common Stock, other than the current beneficiaries of the
Trust.
SECTION 4.4 RESIDENCY.
The Trust is a Rhode Island trust. The beneficiaries of the Trust are
residents of Rhode Island and New York.
SECTION 4.5 ACKNOWLEDGMENT.
The Trust hereby acknowledges that the Trust has read this Agreement,
the attached schedules and exhibits and the other documents to be delivered in
connection with the consummation of the Transaction and has made an independent
examination of the Transaction (including the tax consequences thereof). The
Trust acknowledges that the Trust has had an opportunity to consult with and has
relied upon the advice of the Trust's legal counsel, financial advisors, or
accountants with respect to the Transaction to the extent the Trust has deemed
necessary, and has not been advised or directed by Exten or its legal counsel or
other advisors in respect of any tax or securities laws matters and has not
relied on such parties with respect to such matters in connection with this
Agreement and the Transaction.
SECTION 4.6 RESTRICTED EXTEN COMMON STOCK.
(a) The Trust understands that the shares of Exten Common Stock that it
will receive have not been registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the BONA FIDE nature of the investment intent
and the accuracy of the Trust's representations as expressed herein. The Trust
understands that the shares of Exten Common Stock that it will receive are
"restricted securities" under applicable U.S. federal and state securities laws
and that, pursuant to these laws, the Trust must hold the shares of Exten Common
Stock indefinitely unless they are registered with the Commission and qualified
by state authorities, or an exemption from such registration and qualification
requirements is available. The Trust acknowledges that Exten is obligated to
register and qualify the Exten Common Stock for resale within one (1) year of
the Closing pursuant to the terms and conditions of the Registration Rights
Agreement. The Trust further acknowledges that if an exemption from registration
or qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
of the Exten Common Stock, and on requirements relating to Exten which are
outside of the Trust's control.
22
(b) In connection with the registration of the Exten Common Stock, the
Trust agrees not to sell or otherwise transfer or dispose of any Exten Common
Stock held by it for a period of one year after the Closing. Exten may impose
stop-transfer instructions with respect to the Exten Common Stock subject to the
foregoing restriction until the end of said period.
SECTION 4.7 LEGENDS.
The Trust understands that the Exten Common Stock may bear one or all
of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM REASONABLY SATISFACTORY TO THE PURCHASER THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED."
(b) Any legend required by the Blue Sky laws of any state to the extent
such laws are applicable to the shares represented by the certificate so
legended.
SECTION 4.8 LITIGATION.
There are no claims, suits, actions, proceedings or investigations
pending or, to the knowledge of the Trust, threatened against, relating to or
affecting the Trust, before any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator, except as disclosed on
Schedule 4.8 attached hereto. The Trust is not subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby.
SECTION 4.9 REPRESENTATIONS COMPLETE.
None of the representations or warranties nor any statement made by the
Trust in this Agreement or any Schedule or certificate furnished by the Trust
pursuant to this Agreement, contains any untrue statement of a material fact, or
omits to state any material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which made,
not misleading.
23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EXTEN
Exten hereby represents and warrants to the Shareholder, the Trust and
Multi-Cell as of the Closing Date as follows:
SECTION 5.1 ORGANIZATION AND QUALIFICATION.
Exten is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Exten is qualified to do business and
is in good standing in each jurisdiction in which the properties owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary. True, accurate and complete copies of Exten's
Certificate of Incorporation and By-laws, in each case as in effect on the date
hereof, including all amendments thereto, have heretofore been delivered to the
Shareholder.
SECTION 5.2 CAPITALIZATION.
(a) The authorized capital stock of Exten consists of 200,000,000
shares of Exten Common Stock and 5,000,000 shares of preferred stock, $0.01 par
value per share ("Exten Preferred Stock"). As of the date hereof, there are
78,474,801 shares of Exten Common Stock issued and outstanding and no shares of
Exten Preferred Stock outstanding, except as set forth on Schedule 5.2(a)
hereto. All of the issued and outstanding shares of Exten Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights and were issued in compliance with federal and applicable state
securities laws.
(b) The shares of Exten Common Stock issued to the Shareholder and the
Trust will be at the Closing Date duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights and issued in compliance with
federal and applicable state securities laws.
SECTION 5.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Exten has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement, and the consummation by Exten of the
transactions contemplated hereby, have been duly authorized by Exten's Board of
Directors and no other corporate proceedings on the part of Exten are necessary
to authorize the execution and delivery of this Agreement and the consummation
by Exten of the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Exten and, assuming the due authorization,
execution and delivery hereof by the Shareholder, the Trust and Multi-Cell,
constitutes a valid and binding agreement of Exten, enforceable against Exten in
accordance with its terms, except that such enforcement may be subject to (a)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (b)
general equitable principles.
24
(b) The execution and delivery of this Agreement by Exten does not, and
the consummation by Exten of the transactions contemplated hereby will not,
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Exten under any of the
terms, conditions or provisions of (i) the charter or by-laws of Exten, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to
Exten or any of its properties or assets, or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which Exten is
now a party or by which Exten or any of its properties or assets may be bound or
affected.
(c) No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution, delivery and performance of this
Agreement by Exten or the consummation by Exten of the transactions contemplated
hereby. No consent of any party to any contract, agreement, instrument, lease,
license, arrangement or understanding to which Exten or any subsidiary is a
party, or to which any of them or any of their properties or assets are subject,
is required for the execution, delivery or performance of this Agreement.
SECTION 5.4 REPORTS AND FINANCIAL STATEMENTS.
Exten has previously delivered to Multi-Cell, the Trust and the
Shareholder copies of its (a) Form 10-KSB for the fiscal year ending November
30, 2000, (b) Form 10-QSB for the quarter ended May 31, 2001 and (c) all other
reports or registration statements filed by Exten with the Commission since
November 30, 2000, (such reports and other filings, together with any amendments
or supplements thereto, are collectively referred to herein as the "Exten
Reports"). Since November 30, 2000, Exten has filed all forms, reports and
documents with the Commission required to be filed by it pursuant to the federal
securities laws and Commission rules and regulations promulgated thereunder, and
all such forms, reports and documents, as amended, filed with the Commission
have complied in all material respects with all applicable provisions of the
federal securities laws and the Commission rules and regulations promulgated
thereunder. As of their respective dates, the Exten Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
statements and unaudited interim financial statements of Exten included in the
Exten Reports (together, the "Exten Financial Statements") have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly and accurately present the
consolidated financial position of Exten and its subsidiaries as of the dates
thereof and the consolidated results of operations and changes in financial
position for the periods then ended.
25
SECTION 5.5 [INTENTIONALLY OMITTED].
SECTION 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
From May 31, 2001 through the date hereof, there has not been any
material adverse change in the business, operations, properties, assets,
liabilities, condition (financial or other), results of operations or prospects
of Exten and its subsidiaries, taken as a whole.
SECTION 5.7 LITIGATION.
Except as disclosed in the Exten Reports, there are no claims, suits,
actions, proceedings or investigations pending or, to the knowledge of Exten,
threatened against, relating to or affecting Exten or any of its subsidiaries,
before any court, governmental department, commission, agency, instrumentality
or authority, or any arbitrator, except as disclosed on Schedule 5.7 attached
hereto. Neither Exten nor any of its subsidiaries is subject to any judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or authority or any arbitrator which
prohibits or restricts the consummation of the transactions contemplated hereby
or would have any material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Exten and its subsidiaries.
SECTION 5.8 COMPLIANCE WITH LAWS.
Neither Exten nor any of its subsidiaries is in violation of, or has
been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance, or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
do not have a material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
Exten and its subsidiaries, taken as a whole. As of the date of this Agreement,
no investigation or review by any governmental or regulatory body or authority
is pending or, to the knowledge of Exten, threatened, nor has any governmental
or regulatory body or authority indicated an intention to conduct the same.
SECTION 5.9 REPRESENTATIONS COMPLETE.
None of the representations or warranties nor any statement made by
Exten in this Agreement or any Schedule or certificate furnished by Exten
pursuant to this Agreement, contains any untrue statement of a material fact, or
omits to state any material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which made,
not misleading.
26
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 EXPENSES.
Except as set forth in Section 6.3 and 6.4, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not such
transactions are consummated.
SECTION 6.2 PUBLIC STATEMENTS.
The parties shall consult with each other prior to issuing any press
release or any written public statement with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such press release or
written public statement prior to such consultation.
SECTION 6.3 SHAREHOLDER INDEMNIFICATION.
(a) Following the Closing, the Shareholder releases Multi-Cell from all
claims for events which occurred prior to the Closing.
(b) Following the Closing, the Shareholder agrees to protect, defend,
indemnify and hold Exten harmless with respect to any and all claims, demands,
suits, actions, administrative proceedings, losses, damages, obligations,
liabilities, costs and expenses, including without limitation reasonable legal
and other costs and expenses of investigating and defending any actions or
threatened actions, up to the amount of the Purchase Price paid to the
Shareholder at the Closing (minus up to $179,500 to be transferred promptly
after the Closing by the Shareholder to Multi-Cell for distribution to employees
and consultants for bonuses earned prior to the Closing), which arise within one
year of the Closing Date as a result of or which are related to (i) any active
or passive act, omission, occurrence, event or condition that occurred prior to
the Closing Date in connection with (a) the ownership of the Class A Stock; (b)
Multi-Cell's compliance with federal, state or local laws, regulations or
orders; (c) any environmental or hazardous material claim, personnel claim or
product liability claim relating to Multi-Cell; (d) any dispute or controversy
between Multi-Cell's customers and other parties which, in the aggregate, are
valued at more than $10,000; or (ii) any material misrepresentation or breach of
any of the representations, covenants or warranties of Multi-Cell or the
Shareholder contained herein which, in the aggregate, are valued at more than
$10,000; or (iii) any material misstatements or failure to state a material fact
required to be stated with respect to the information provided prior to the
Closing Date by Multi-Cell or prior to or after the Closing Date by the
Shareholder for inclusion in the Form 8-K to be filed with the Commission in
connection with the Transaction and any registration statement filed with the
Commission to register the resale of the Exten Common Stock, provided that Exten
complies with the following indemnification procedure:
(1) Exten shall, as soon as practicable (but in any event within sixty
(60) days) after it learns of a claim for indemnification under this Section
6.3(b), give written notice to the Shareholder of its claim for indemnification,
which notice shall set forth the amount involved in the claim for
indemnification and contain a reasonably thorough description of the facts
constituting the basis of such claim;
27
(2) The Shareholder shall have a period of thirty (30) days from the
receipt of the notice referred to above to respond to the indemnity claim to the
satisfaction of Exten. During such 30-day period, Exten, on the one hand, and
the Shareholder, on the other hand, shall use their respective best efforts to
attempt in good faith to agree upon a mutually acceptable resolution as to their
respective rights with respect to any such claim for indemnification, in which
case the parties shall promptly prepare and sign a memorandum setting forth such
agreement;
(3) In the event that no agreement is reached during the 30-day period
specified in subsection 6.3(b)(2) above, then the Shareholder shall be obligated
to pay such claim. Exten may elect to pay such claim and the Shareholder shall
be obligated to reimburse Exten the amount thereof.
(4) Exten shall not settle or compromise any such claim without the
prior written consent of the Shareholder unless suit shall have been instituted
against Exten and the Shareholder shall have failed, after reasonable notice of
institution of the suit, to take control of such suit on behalf of Exten. If the
Shareholder admits in writing that it will be liable to Exten with respect to
the full amount and as to all material elements of a third party claim alleging
damages should the third party prevail in such suit, then the Shareholder shall
have the right to assume full control of the defense of such claim, and Exten
shall be entitled to participate in the defense of such claim only with the
consent of the Shareholder.
(5) Exten shall be entitled to recover all costs, fees (including
reasonable attorneys' fees), expenses and other damages to enforce against the
Shareholder its indemnification rights under this Section 6.3(b).
(c) Notwithstanding anything to the contrary contained in this
Agreement, the indemnification obligations of the Shareholder shall first be
satisfied by return of the shares of Exten Common Stock which have been held
back pursuant to Section 3.6 hereof, such Exten Common Stock to be valued at the
higher of (i) $.12 per share as set forth on Schedule 1.2, or (ii) the highest
price per share at which Exten sold shares or has an agreement to sell shares of
Exten Common Stock to any other person at any time following the Closing Date,
in each case as adjusted for any stock split, stock dividend, recapitalization
or similar change in the Exten Common Stock. Thereafter, the Shareholder may
continue to satisfy its indemnification obligations hereunder by delivery to
Exten of a sufficient number of shares of the Exten Common Stock to cover such
obligations, such Exten Common Stock to be valued as provided above.
Notwithstanding the foregoing, the Shareholder may elect, in its sole
discretion, to satisfy any of its indemnification obligations in cash.
28
SECTION 6.4 TRUST INDEMNIFICATION.
Following the Closing, the Trust agrees to protect, defend, indemnify
and hold Exten harmless with respect to any and all claims, demands, suits,
actions, administrative proceedings, losses, damages, obligations, liabilities,
costs and expenses, including without limitation reasonable legal and other
costs and expenses of investigating and defending any actions or threatened
actions, up to the amount of the Purchase Price paid to the Trust at the Closing
which arise within one year of the Closing Date as a result of or which are
related to (i) any active or passive act, omission, occurrence, event or
condition that occurred prior to the Closing Date in connection with the
ownership of the Class B Stock; (ii) any material misrepresentation or breach of
any of the representations, covenants or warranties of the Trust contained
herein which, in the aggregate, are valued at more than $10,000; or (iii) any
material misstatements or failure to state a material fact required to be stated
with respect to the information provided by the Trust for inclusion in any
registration statement filed with the Commission to register the resale of the
Exten Common Stock, provided that Exten complies with the following
indemnification procedure:
(1) Exten shall, as soon as practicable (but in any event within sixty
(60) days) after it learns of a claim for indemnification under this Section
6.4, give written notice to the Trust of its claim for indemnification, which
notice shall set forth the amount involved in the claim for indemnification and
contain a reasonably thorough description of the facts constituting the basis of
such claim;
(2) The Trust shall have a period of thirty (30) days from the receipt
of the notice referred to above to respond to the indemnity claim to the
satisfaction of Exten. During such 30-day period, Exten, on the one hand, and
the Trust, on the other hand, shall use their respective best efforts to attempt
in good faith to agree upon a mutually acceptable resolution as to their
respective rights with respect to any such claim for indemnification, in which
case the parties shall promptly prepare and sign a memorandum setting forth such
agreement;
(3) In the event that no agreement is reached during the 30-day period
specified in subsection 6.4(2) above, then the Trust shall be obligated to pay
such claim. Exten may elect to pay such claim and the Trust shall be obligated
to reimburse Exten the amount thereof.
(4) Exten shall not settle or compromise any such claim without the
prior written consent of the Trust unless suit shall have been instituted
against Exten and the Trust shall have failed, after reasonable notice of
institution of the suit, to take control of such suit on behalf of Exten. If the
Trust admits in writing that it will be liable to Exten with respect to the full
amount and as to all material elements of a third party claim alleging damages
should the third party prevail in such suit, then the Trust shall have the right
to assume full control of the defense of such claim, and Exten shall be entitled
to participate in the defense of such claim only with the consent of the Trust.
(5) Exten shall be entitled to recover all costs, fees (including
reasonable attorneys' fees), expenses and other damages to enforce against the
Trust its indemnification rights under this Section 6.4.
29
(6) Notwithstanding anything to the contrary contained in this
Agreement, the indemnification obligations of the Trust shall first be satisfied
by return of shares of the Exten Common Stock which have been held back pursuant
to Section 4.6 hereof, such Exten Common Stock to be valued at the higher of (i)
$.12 per share as set forth on Schedule 1.2, or (ii) the highest price per share
at which Exten sold shares or has an agreement to sell shares of Exten Common
Stock to any other person at any time following the Closing Date, in each case
as adjusted for any stock split, stock dividend, recapitalization or similar
change in the Exten Common Stock. Thereafter, the Trust may continue to satisfy
its indemnification obligations hereunder by delivery to Exten of a sufficient
number of shares of the Exten Common Stock to cover such obligations, such Exten
Common Stock to be valued as provided above. Notwithstanding the foregoing, the
Trust may elect, in its sole discretion, to satisfy any of its indemnification
obligations in cash.
SECTION 6.5 EXTEN INDEMNIFICATION.
Following the Closing, Exten agrees to protect, defend, indemnify and
hold the Shareholder and the Trust harmless with respect to any and all damages,
including without limitation reasonable legal and other costs and expenses of
investigating and defending any actions or threatened actions (including any
actions arising from any and all liabilities identified on Schedule 2.6), which
arise within one year of the Closing Date as a result of or which are related to
any material misrepresentation or breach of any of the representations,
covenants or warranties of Exten contained herein, which, in the aggregate, are
valued at more than $10,000, provided that the Shareholder and/or the Trust
complies with the following indemnification procedure:
(1) The Shareholder or Trust shall, as soon as practicable (but in any
event within sixty (60) days) after it learns of a claim for indemnification
under this Section 6.5, give written notice to Exten of its claim for
indemnification, which notice shall set forth the amount involved in the claim
for indemnification and contain a reasonably thorough description of the facts
constituting the basis of such claim;
(2) Exten shall have a period of thirty (30) days from the receipt of
the notice referred to above to respond to the indemnity claim to the
satisfaction of the Shareholder or the Trust. During such 30-day period, Exten,
on the one hand, and the Shareholder and/or the Trust, on the other hand, shall
use their respective best efforts to attempt in good faith to agree upon a
mutually acceptable resolution as to their respective rights with respect to any
such claim for indemnification, in which case the parties shall promptly prepare
and sign a memorandum setting forth such agreement;
(3) In the event that no agreement is reached during the 30-day period
specified in subsection 6.5(2) above, then Exten shall be obligated to pay such
claim. The Shareholder and/or the Trust may elect to pay such claim and Exten
shall be obligated to reimburse the Shareholder and/or the Trust the amount
thereof.
(4) The Shareholder and the Trust shall not settle or compromise any
such claim without the prior written consent of Exten unless suit shall have
been instituted against the Shareholder and/or the Trust and Exten shall have
failed, after reasonable notice of institution of the suit, to take control of
such suit on behalf of the Shareholder and/or the Trust. If Exten admits in
writing that it will be liable to the Shareholder and/or the Trust with respect
30
to the full amount and as to all material elements of a third party claim
alleging damages should the third party prevail in such suit, then Exten shall
have the right to assume full control of the defense of such claim, and the
Shareholder and/or the Trust shall be entitled to participate in the defense of
such claim only with the consent of Exten.
(5) The Shareholder and the Trust shall be entitled to recover all
costs, fees (including attorneys' fees), expenses and other damages to enforce
against Exten its indemnification rights under this Section 6.5.
SECTION 6.6 [INTENTIONALLY OMITTED.]
ARTICLE VII
CONDITIONS
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
TRANSACTION.
The respective obligations of each party to effect the Transaction
shall be subject to the fulfillment at or prior to the Closing Date of the
following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by the Board of Directors of Exten and the Sole
Shareholder of Multi-Cell;
(b) No preliminary or permanent injunction or other order or decree by
any federal or state court or other legal restraint or prohibition which
prevents the consummation of the Transaction shall have been issued and remain
in effect (each party agreeing to use its reasonable efforts to have any such
injunction, order or decree lifted);
(c) No action shall have been taken, and no statute, rule or regulation
shall have been enacted, by any state or federal government or governmental
agency in the United States which would prevent the consummation of the
Transaction; and
(d) All governmental consents, orders and approvals legally required
for the consummation of the Transaction and any other transaction contemplated
hereby shall have been obtained and be in effect at the Closing Date, and all
other third party consents, orders and approvals legally required for the
consummation of the Transaction and any other transaction contemplated hereby
shall have been obtained or become final orders.
SECTION 7.2 CONDITIONS TO OBLIGATION OF THE SHAREHOLDER AND THE TRUST TO EFFECT
THE TRANSACTION.
Unless waived by the Shareholder and the Trust in writing, the
obligation of the Shareholder and the Trust to effect the Transaction shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
31
(a) The Shareholder shall have received a certificate from the Delaware
Secretary of State as to the good standing of Exten, as of a date within five
(5) days of the Closing Date;
(b) The Shareholder shall have received certified copies of the
resolutions or consents of the Board of Directors of Exten approving the
Transaction, this Agreement, the Registration Rights Agreement, the issuance of
Exten Common Stock subject hereto and the other documents and transactions
contemplated hereby all in form and substance reasonably satisfactory to
Multi-Cell;
(c) The Shareholder shall have received a certificate of the corporate
secretary of Exten certifying the name, title and true signature of each officer
of Exten executing this Agreement and any of the other documents and
certificates to be delivered pursuant to or in connection with this Agreement;
(d) Exten shall have performed in all material respects its
obligations, agreements and covenants contained in this Agreement required to be
performed on or prior to the Closing Date and the representations and warranties
of Exten contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date, and the Shareholder shall have received
certificates of the Chairman and Chief Executive Officer of Exten, to that
effect;
(e) Exten shall have obtained all consents and approvals from third
parties as are required for it to consummate the Transaction and execute this
Agreement and the documents and transactions contemplated hereby;
(f) The Shareholder and the Trust shall have received the opinion of
Exten counsel addressed to the Shareholder and the Trust in the form set forth
as Exhibit "F" attached hereto;
(g) The Shareholder, the Trust and Exten shall have entered into the
Registration Rights Agreement in the form attached hereto as Exhibit "A"; and
(h) Exten acknowledges that the Trust is relying upon those items
identified in this Section 7.2 (a-e) delivered to the Shareholder as if such
documents had been delivered to the Trust.
SECTION 7.3 CONDITIONS TO OBLIGATION OF EXTEN TO EFFECT THE TRANSACTION.
Unless waived by Exten in writing, the obligation of Exten to effect
the Transaction shall be subject to the fulfillment at or prior to the Closing
Date of the additional following conditions:
(a) Exten shall have received a certificate from the Rhode Island
Secretary of State as to the good standing of Multi-Cell, as of a date within
five (5) days of the Closing Date;
(b) Exten shall have received a certificate of the corporate secretary
of Multi-Cell certifying the Articles of Incorporation and By-laws of
Multi-Cell;
(c) Multi-Cell, the Trust and the Shareholder shall have obtained all
consents and approvals from third parties, including the probate court, if
applicable, as are required for it to consummate the Transaction and for the
Shareholder, the Trust and Multi-Cell to execute this Agreement and the
documents and transactions contemplated hereby;
32
(d) ▇▇▇▇▇▇ ▇▇▇▇▇ shall have entered into an employment and
noncompetition agreement with Exten substantially in the form attached hereto as
Exhibit "D";
(e) Exten shall have received the opinion of Multi-Cell counsel, the
Shareholder counsel and the Trust counsel in the form set forth as Exhibit "E"
attached hereto;
(f) The Shareholder, the Trust and Multi-Cell shall have performed in
all material respects their obligations, agreements and covenants contained in
this Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of Multi-Cell with respect to Article II, the
Shareholder with respect to Articles II and III and the Trust with respect to
Article IV contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date, and Exten shall have received
certificates from Multi-Cell (signed by its President and Secretary) the
Shareholder and the Trust to that effect; and
(g) Multi-Cell shall have furnished to Exten (i) a balance sheet dated
a date not more than thirty days prior to the Closing Date (the "Current Balance
Sheet") and (ii) an income statement for the period from January 1, 2001 to the
date of the Current Balance Sheet.
SECTION 7.4 [INTENTIONALLY OMITTED.]
ARTICLE VIII
POST-CLOSING COVENANTS
SECTION 8.1 [INTENTIONALLY OMITTED.]
SECTION 8.2 EMPLOYMENT AGREEMENT.
Exten agrees that it will negotiate employment agreements with the
following Multi-Cell employees: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇
(the "Key Employees").
SECTION 8.3 INCENTIVE STOCK OPTIONS.
Exten agrees that it will grant incentive stock options to the
Multi-Cell employees listed below in the amounts set forth next to their names
within sixty (60) days of the Closing in accordance with Exten's Stock Option
Plan as follows:
33
NAME NUMBER OF OPTIONS
---- -----------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 25,000 SHARES
----------------------------------------
▇▇▇▇ ▇▇▇▇▇ 25,000 SHARES
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ 15,000 SHARES
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 25,000 SHARES
----------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 15,000 SHARES
----------------------------------------
▇▇▇ ▇▇▇ 50,000 SHARES
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 50,000 SHARES
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 25,000 SHARES
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ 250,000 SHARES
-----------------------------------------
Each of the above options shall vest in three equal annual installments
over a period of three years in accordance with Exten's Stock Option Plan, and
shall have an exercise price equal to the last reported sales price of the Exten
Common Stock as reported by the OTC Bulletin Board on the date of grant.
SECTION 8.4 REGISTRATION.
Exten shall file with the Commission within ten (10) months after the
Closing Date a registration statement to register for resale the Exten Common
Stock within one (1) year after the Closing Date, as set forth in the
Registration Rights Agreement. All costs of registering the Exten Common Stock,
other than payment of any underwriting fee or brokerage commission on the sale
of the Exten Common Stock, shall be borne by Exten, at Exten's own expense.
SECTION 8.5 OTHER MATTERS.
(a) For a period of two years after the Closing, Exten shall take all
reasonable actions to promptly pay, or cause to be paid when due, all material
indebtedness incident to the operations of Multi-Cell and to promptly pay and
discharge, when due and payable, all lawful taxes, assessments and governmental
charges or levies imposed upon the income, profits, property or business of
Multi-Cell.
(b) Exten shall take all reasonable actions necessary to promptly pay
the liabilities listed on Schedule 2.6, but in any event, shall pay all such
liabilities within thirty (30) days of the Closing.
SECTION 8.6 TERMINATION OF S CORPORATION STATUS; MULTI-CELL TAX RETURN.
The Shareholder and Exten agree that they shall cause to be timely
filed all applicable income tax returns for the final S corporation tax year and
the expense of prepaying such income tax returns shall be born post-closing by
Multi-Cell.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.
34
The representations and warranties of the Shareholder and Multi-Cell
shall terminate at the end of one year after the Closing Date with the exception
of those representations and warranties contained in Sections 2.2 and 2.11,
which will terminate at the end of three years after the Closing Date. The
representations and warranties of the Trust shall terminate at the end of one
year after the Closing Date. The representations and warranties of Exten shall
terminate at the end of one year after the Closing Date with the exception of
those representations and warranties contained in Section 5.2(b), which will
terminate at the end of three years after the Closing Date. Any claim of any
party based on fraud shall survive the Closing for the applicable statute of
limitations. The covenants and agreements contained in this Agreement and the
Registration Rights Agreement shall survive the Closing and shall continue until
all obligations with respect thereto shall have been performed or satisfied or
shall have terminated in accordance with their terms.
SECTION 9.2 BROKERS.
(a) Except as set forth in Schedule 10.2(a) attached hereto, Multi-Cell
represents and warrants that no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
Transaction or any other transaction contemplated by this Agreement based upon
arrangements made by or on behalf of Multi-Cell.
(b) Except as set forth in Schedule 10.2(b) attached hereto, Exten
represents and warrants that no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
Transaction or any other transaction contemplated by this Agreement based upon
arrangements made by or on behalf of Exten.
(c) Except as set forth in Schedule 10.2(c) attached hereto, the
Shareholder represents and warrants that no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Transaction or any other transaction contemplated by this Agreement
based upon arrangements made by or on behalf of the Shareholder.
(d) Except as set forth in Schedule 10.2(d) attached hereto, the Trust
represents and warrants that no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
Transaction or any other transaction contemplated by this Agreement based upon
arrangements made by or on behalf of the Trust.
SECTION 9.3 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
mail (return receipt requested) or sent via facsimile to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Exten to: Exten Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇
35
with a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) If to the Estate of
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇ ▇▇▇▇, M.D.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇▇, Esq.
Brown, Rudnick, Freed & Gesmer
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(c) If to Multi-Cell: Multi-Cell Associates, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇, M.D. (pre-closing),
or ▇▇▇▇▇▇ ▇▇▇▇▇, Ph.D. (post-closing)
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇▇, Esq.
(pre-closing) at address above, or
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. (post-closing)
at address above
(d) If to the Multi-Cell Associates,
Inc. Irrevocable Trust: ▇▇▇▇▇▇▇ ▇▇▇▇, M.D.
Trustee, Multi-Cell Associates, Inc.
Irrevocable Trust
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇▇, Esq.
at address above
SECTION 9.4 INTERPRETATION.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
36
SECTION 9.5 MISCELLANEOUS.
This Agreement (including the documents and instruments referred to
herein) (a) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof; (b) shall not be assigned by
operation of law or otherwise; and (c) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware (without giving effect to the provisions thereof relating to conflicts
of law).
SECTION 9.6 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
SECTION 9.7 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto. Nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 9.8 CONFIDENTIALITY.
The parties agree that they will keep confidential and not disclose or
divulge any confidential, proprietary or secret information which they may
obtain from Multi-Cell, Exten, the Trust or the Shareholder in connection with
the transactions contemplated herein, or pursuant to inspection rights granted
hereunder, or reveal the financial or other terms and conditions of this
Agreement unless such information is or hereafter becomes public information
through means other than a default hereof by such party or is required to be
disclosed by applicable law, including applicable securities laws or stock
exchange rules or regulations. The obligations of this Section 9.8 shall survive
any termination of this Agreement.
SECTION 9.9 TIME PERIOD.
The parties acknowledge that time is of the essence with respect to the
fulfillment of the respective obligations of the parties hereto and the Closing
of the Transaction as contemplated by this Agreement.
SECTION 9.10 AMENDMENT.
This Agreement may be amended only by a written agreement executed by
all the parties.
SECTION 9.11 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware (other than choice of law principles thereof).
37
IN WITNESS WHEREOF, Exten, Multi-Cell, the Trust and the Shareholder
have caused this Stock Purchase Agreement to be signed by their respective duly
authorized representatives as of the date first written above.
EXTEN INDUSTRIES, INC.
By: /S/ ▇. ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇. ▇. ▇▇▇▇▇▇
Title: Chairman & CEO
THE ESTATE OF ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Co-Executor
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Title: Co-Executor
MULTI-CELL ASSOCIATES, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
MULTI-CELL ASSOCIATES, INC. IRREVOCABLE TRUST
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Trustee
38
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
A-1
EXHIBIT B
MULTI-CELL ARTICLES OF INCORPORATION
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇-▇▇▇▇ ▇▇-▇▇▇▇
▇-▇
▇▇▇▇▇▇▇ ▇
EMPLOYMENT AGREEMENT WITH ▇▇▇▇▇▇ ▇▇▇▇▇
D-1
EXHIBIT E
MULTI-CELL, THE SHAREHOLDER AND THE TRUST LEGAL OPINION
E-1
EXHIBIT F
EXTEN LEGAL OPINION
F-1