EXHIBIT 2.01
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STOCK PURCHASE AGREEMENT
FOR THE ACQUISITION
OF
CALIFORNIA TUBE LABORATORY, INC.
BY
JAYMARK, INC.
FROM
INTERCELL CORPORATION
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DATED AS OF FEBRUARY 6, 1998
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of this
6th day of February 1998, by and among JAYMARK, INC., a California corporation
("Jaymark") and INTERCELL CORPORATION, a Colorado corporation ("INTERCELL") and
California Tube Laboratory, Inc., a California corporation ("CTL"). Certain
other capitalized terms used in this Agreement are defined in Exhibit A attached
hereto.
RECITALS
WHEREAS, INTERCELL owns one hundred percent (100%) of the issued and
outstanding shares of the capital stock of CTL (the "CTL Stock").
WHEREAS, Jaymark wishes to acquire and INTERCELL wishes to sell all of the
CTL Stock in exchange for cash (the "Acquisition") in accordance with the terms
and subject to the conditions set forth in this Agreement.
WHEREAS, the parties hereto desire to set forth in this Agreement certain
representations, warranties, covenants and agreements made by each to the other
as an inducement to the consummation of the Acquisition.
AGREEMENT
NOW, THEREFORE, in reliance on the foregoing recitals and in and for the
consideration and mutual covenants set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:
1. PURCHASE AND SALE OF THE CTL STOCK.
1.1 DEFINITIONS. The definitions set forth in Exhibit A attached
hereto shall apply throughout this Agreement.
1.2 PURCHASE AND SALE OF THE CTL STOCK. Upon the terms and subject
to the conditions set forth in this Agreement, at the Closing INTERCELL shall
sell, transfer and deliver to Jaymark the CTL Stock and Jaymark will pay to
INTERCELL the Consideration in the manner described in Section 1.3 below.
1.3 CONSIDERATION FOR THE CTL STOCK. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing Jaymark shall deliver
to (i) INTERCELL One Million Four Hundred Fifty Thousand Dollars ($1,450,000) in
cash to be adjusted by the amount, if any, equal to the Adjustment Payment in
accordance with Section 1.4 of this Agreement (such net amount being the
"Consideration") and (ii) Chicago Title Company as escrow agent, Two Hundred
Thousand Dollars ($200,000) in cash (as more fully discussed in Section
11.8.(b)). In addition to the foregoing, on January 30, 1998 Jaymark paid to
INTERCELL the sum of Fifty Thousand Dollars ($50,000) cash as an advance payment
as set forth in that certain side letter agreement and security agreement
attached hereto as Exhibit B
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(the "Advance Payment") and INTERCELL hereby acknowledges receipt of the Advance
Payment. Further, at the Closing, Jaymark will deliver to INTERCELL an Jaymark's
unsecured corporate promissory note in the amount of Five Hundred Thousand
Dollars ($500,000) in the form attached hereto as Exhibit D (the "Promissory
Note") payable upon the satisfaction of certain specified conditions relating to
the investigation and remediation of certain hazardous substances contamination
affecting the Santa ▇▇▇▇ Site, as more fully described in Section 11.8(a) and in
the Environmental Remediation and Indemnification Agreement attached hereto as
Exhibit C. Collectively (i), (ii), the Advance Payment and the Promissory Note
shall hereinafter be referred to as the "Purchase Price."
1.4 PURCHASE PRICE ADJUSTMENT, PROCEDURE AND ADJUSTMENT PAYMENT.
(a) The purchase price adjustment (which may be a positive or negative
number) will be equal to the difference, if any, between (i) total assets
($3,161,442) minus long term receivable (parent) ($679,399) minus total
liabilities ($425,141) or $2,056,902, as shown on the unaudited balance sheet of
CTL as of October 26, 1997 (the "October 26, 1997 Balance Sheet"), as previously
provided to Jaymark, and (ii) total assets minus $679,399 minus total
liabilities (the "Net Worth"), as shown on the Closing Balance Sheet (the
"Purchase Price Adjustment").
(b) INTERCELL will prepare and will cause KPMG Peat Marwick,
INTERCELL's certified public accountants, to prepare a balance sheet of CTL as
of the Closing Date (the "Closing Balance Sheet") prepared in a manner
consistent with GAAP, excluding adjustments for purchase accounting and
including any and all previously unrecorded liabilities existing as of the
Closing Date, and the related statement of income and cash flow, together with
the work papers related thereto and their report thereon (including the Closing
Balance Sheet, the "Closing Financial Statements"). INTERCELL will deliver the
Closing Financial Statements to Jaymark within forty five days after the Closing
Date. If within thirty days following delivery of the Closing Financial
Statements, Jaymark has not given INTERCELL notice of its objection to the
Closing Balance Sheet (such notice must contain a statement in reasonable detail
of the basis of the Jaymark's objection), then the Net Worth will be used in
computing the Purchase Price Adjustment, if any. If Jaymark gives such notice of
objection, and the parties are unable to resolve all disputes, then the issues
in dispute will be submitted to Price Waterhouse LLP, certified public
accountants (the "Accountants"), for resolution. If issues in dispute are
submitted to the Accountants for resolution, (i) INTERCELL and Jaymark will each
furnish to the Accountants such work papers and other documents and information
relating to the disputed issues as the Accountants may request and are
reasonably available to that party, and will be afforded the opportunity to
present to the Accountants any material relating to the determination and to
discuss the determination with the Accountants; (ii) the determination by the
Accountants, as set forth in a notice delivered to INTERCELL and Jaymark by the
Accountants, will be binding and conclusive on the parties; and (iii) INTERCELL
and Jaymark will each bear 50% of the fees of the Accountants for such
determination.
(c) On the tenth business day following the final determination of the
Purchase Price Adjustment the Adjustment Payment will be made, if necessary, in
cash in an amount determined as follows: (i) If the Purchase Price Adjustment is
a positive number, then INTERCELL will deliver to Jaymark an Adjustment Payment
equal to the Purchase Price
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Adjustment; (ii) If the Purchase Price Adjustment is a negative number (i.e. the
Net Worth is greater than $2,056,902) between zero and -$143,098, then no
Adjustment Payment will be made; and (iii) If the Purchase Price Adjustment is a
negative number less than -$143,098, then Jaymark will deliver to INTERCELL an
Adjustment Payment equal to the Purchase Price Adjustment (expressed as a
positive number) minus $143,098 (any such payment to be made in accordance with
this Section 1.4(c) shall herein be referred to as an "Adjustment Payment"). For
example, if at the Closing Date the Net Worth equals: (i) $2,000,000, then
INTERCELL will pay Jaymark an Adjustment Payment equal to $56,902 ($2,056,902 -
$2,000,000 = $56,902); (ii) $2,100,000, then no Adjustment Payment will be made
because $2,056,902 -$2,100,000 = -$43,098 (which is between 0 and $143,000); and
(iii) $2,400,000, then Jaymark will pay INTERCELL an Adjustment Payment equal to
$200,000 ($2,056,902 - $2,400,000 = -$343,098, and $343,098 - $143,098 =
$200,000).
1.5 ESCROW AGREEMENT. On the Closing Date, Jaymark will deposit into
the Indemnity Escrow Fund the amount of Two Hundred Thousand Dollars ($200,000).
The amount on deposit in the Indemnity Escrow Fund shall be held as collateral
for INTERCELL's indemnification obligations under Article 11 (as more fully
described in Section 11.8).
1.6 THE CLOSING. Subject to termination of this Agreement according
to the provisions set forth in Article 9 below, the closing of the transactions
contemplated in this Agreement (the "Closing") shall take place at the offices
of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich, a Professional Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as soon as possible upon the satisfaction or
waiver of all conditions set forth in Article 7 and Article 8 hereof (the
"Closing Date"), or such other time and place as is mutually agreeable to the
parties.
2. REPRESENTATIONS AND WARRANTIES OF INTERCELL. Except as otherwise set
forth in the CTL Disclosure Schedule, attached hereto as Exhibit E (the "CTL
Disclosure Schedule"), INTERCELL hereby represents and warrants to Jaymark as
set forth below (each an "INTERCELL Representation and Warranty," and
collectively, the "INTERCELL Representations and Warranties"). Where an
INTERCELL Representation and Warranty is qualified by knowledge, INTERCELL is
charged with any and all knowledge of CTL's officers, directors, employees and
agents relevant to such representation and warranty. No fact or circumstance
disclosed to Jaymark shall constitute an exception to the INTERCELL
Representations and Warranties unless such fact or circumstance is set forth in
the corresponding section of the CTL Disclosure Schedule. The INTERCELL
Representations and Warranties shall be true and correct in all respects as of
the date hereof and on and as of the Closing Date except with respect to any
INTERCELL Representation or Warranty specified as of a different date.
2.1 ORGANIZATION. CTL is a corporation duly organized, validly
existing and in good standing under the laws of California and has all requisite
corporate power and authority to carry on its business as it is now being
conducted. CTL is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or properties
makes such qualification or licensing necessary except where the failure to so
qualify shall not have a material adverse effect on CTL's business, assets,
properties, financial condition or results of operations. Section 2.1 of the
CTL Disclosure Schedule contains a true and complete listing of (a) the
locations of all sales offices, manufacturing facilities and any other
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offices or facilities of CTL and (b) a true and complete list of all locations,
including addresses, states and countries, in which CTL maintains any employees.
Section 2.1 of the CTL Disclosure Schedule contains a true and complete list of
all states in which CTL is duly qualified to transact business as a foreign
corporation. True and complete copies of CTL's articles of incorporation and
bylaws all as in effect on the date hereof and as to be in effect immediately
prior to the Closing Date, have been provided to Jaymark.
2.2 SUBSIDIARIES. Except as set forth in Section 2.2 of the CTL
Disclosure Schedule, CTL does not own any equity interest, directly or
indirectly, in any corporation, partnership, limited liability company, joint
venture, business, trust or other business organization or Entity (each a
"Subsidiary," and collectively, the "Subsidiaries"). With respect to each
Subsidiary, if any, Section 2.2 of the CTL Disclosure Schedule sets forth a true
and accurate list of (a) its name and jurisdiction or organization, (b) the
jurisdictions in which it is duly qualified or licensed to do business, (c) its
authorized numbers of shares or other ownership interests, (d) its outstanding
numbers of shares or other ownership interests, (e) the number of shares or
other ownership interests and percentage of outstanding voting shares or other
ownership interests owned by CTL or any other Subsidiary, (f) its address and
(g) the names, addresses and titles of its directors and officers. Except as
set forth in Schedule 2.2 of the CTL Disclosure Schedule, no capital stock or
any other security or ownership interest (including but not limited to any debt
security) of any Subsidiary is held by any Person other than CTL or a
Subsidiary. Except as set forth in Schedule 2.2 of the CTL Disclosure Schedule,
neither CTL nor any Subsidiary is a party to or bound by any contract, agreement
or arrangement to issue, sell or otherwise dispose of or redeem, purchase or
otherwise acquire any capital stock or any other security or other ownership
interests of any Subsidiary, and there is no outstanding option, warrant or
other right to subscribe for or to purchase, or contract, agreement or
arrangement with respect to, any capital stock or any other security or other
ownership interest exercisable or convertible into any shares of capital stock
or any other security or other ownership interest of any Subsidiary.
2.3 CAPITALIZATION.
(a) The authorized capital stock of CTL as of the date of this
Agreement consists of Two Thousand Five Hundred (2,500) shares of common stock.
As of the date of this Agreement One Thousand Seven Hundred Ninety Three (1,793)
shares of CTL common stock are issued and outstanding and held of record by
INTERCELL. INTERCELL owns the CTL Stock free and clear of all liabilities
(absolute or contingent), liens, Encumbrances, mortgages, deeds of trust,
pledges, options, claims, proxies and other security interests or rights of
others.
(b) Except as set forth in Section 2.3(b) of the CTL Disclosure
Schedule, CTL has no outstanding options to purchase any shares of its capital
stock.
(c) Except as set forth in Section 2.3(c) of the CTL Disclosure
Schedule, CTL has no outstanding warrants to purchase any shares of its capital
stock.
(d) All of the outstanding CTL securities have been duly
authorized and are validly issued, fully paid and nonassessable, and none of
them was issued in violation of
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any preemptive or other right. All outstanding CTL securities were issued in
compliance with applicable securities laws. Except as otherwise set forth in
this Section 2.3 or in Section 2.3(d) of the CTL Disclosure Schedule, CTL has no
other shares of its capital stock issued or outstanding and does not have any
other outstanding subscriptions, options, warrants, rights or other agreements
or commitments obligating CTL to issue shares of its capital stock or other
securities. Except as set forth in Section 2.3(d) of the CTL Disclosure
Schedule, CTL is not a party to or bound by any contract, agreement or
arrangement to issue, sell or otherwise dispose of or redeem, purchase or
otherwise acquire any capital stock or any other security of CTL or any other
security exercisable or exchangeable for or convertible into any capital stock
or any other security of CTL, and, except for this Agreement, there is no
outstanding option, warrant, or other right to subscribe for or purchase, or
contract, agreement or arrangement with respect to, any capital stock or any
other security of CTL or any other security exercisable or convertible into any
capital stock or any other security of CTL.
2.4 POWER, AUTHORITY AND VALIDITY. INTERCELL has the corporate power
and authority to enter into this Agreement and the other Transaction Documents
to which it is a party and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Transaction
Documents to which INTERCELL is a party and the consummation of the transactions
contemplated herein and therein have been duly authorized by the board of
directors of INTERCELL and no other corporate proceedings are necessary to
authorize INTERCELL's execution, delivery and performance of its obligations
under this Agreement and the other Transaction Documents. Except as otherwise
set forth in Section 2.4(a) of the CTL Disclosure Schedule, CTL is not subject
to or obligated under any charter, bylaw or provision of any Material Contract
or any material license, franchise or Permit, or subject to any order or decree,
which would be breached or violated by or in conflict with its execution,
delivery and performance of this Agreement and the Transaction Documents, to
which INTERCELL is a party. Except as otherwise set forth on Section 2.4(a) of
the CTL Disclosure Schedule, no consent of any Person who is a party to a
Material Contract, nor any consent of any Governmental Entity is required to be
obtained on the part of CTL or INTERCELL to permit the execution, delivery and
performance of this Agreement or any of the Transaction Documents to which
INTERCELL is a party and to permit Jaymark to continue the business activities
of CTL substantially as previously conducted by CTL and INTERCELL. This
Agreement is, and the other Transaction Documents to which INTERCELL is a party
when executed and delivered by INTERCELL shall be, the valid and binding
obligations of INTERCELL, enforceable in accordance with their respective terms,
subject to (i) laws of general application relating to bankruptcy, insolvency,
or the relief of debtors and (ii) rules of law or equity governing specific
performance, injunctive relief and other equitable remedies.
2.5 FINANCIAL STATEMENTS AND NO UNDISCLOSED LIABILITIES.
(a) INTERCELL (i) has delivered to Jaymark a copy of CTL's
audited financial statements (balance sheet, income statement and statement of
cash flows) for the year ended September 30, 1996 and the unaudited October 26,
1997 Balance Sheet, and (ii) will deliver to Jaymark, promptly upon completion,
the Closing Balance Sheet and CTL's audited financial statements (balance sheet,
income statement and statement of cash flows) for the year ended September 30,
1997 ((i)-(ii) above shall hereinafter collectively be referred to as the "CTL
Financial Statements"). The CTL Financial Statements are, or will be, complete
and in
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accordance with CTL's books and records and have been, or will be,
prepared in accordance with GAAP. The CTL Financial Statements present fairly,
or will present fairly, in all material respects the financial position of CTL
as of their respective dates and the results of CTL's operations and cash flows
for the periods indicated. CTL maintains a standard system of accounting
established and administered in accordance with GAAP. The aggregate reserves,
if any, reflected, or to be reflected, on the CTL Financial Statements are
adequate in light of the contingencies with respect to which such aggregate
reserves are made.
(b) There is no debt, Liability, or obligation of any nature,
whether accrued, absolute, contingent, or otherwise, and whether due or to
become due, that is not reflected or reserved against in the CTL Financial
Statements, except for those (i) that have been incurred after October 26, 1997
or (ii) that are not required by GAAP to be included in a balance sheet or the
notes thereto. Except as set forth on Schedule 2.5(b) of the CTL Disclosure
Schedule, all debts, liabilities, and obligations incurred after October 26,
1997 were incurred in the ordinary course of business, and are usual and normal
in amount both individually and in the aggregate.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 2.6 of the CTL Disclosure Schedule, since October 26, 1997, CTL has
conducted its business in the ordinary and usual course and, without limiting
the generality of the foregoing, has not:
(a) suffered any adverse change in its business, assets,
properties, financial condition or results of operations, nor any materially
adverse change in its balance sheet, including but not limited to any cash
distributions or decreases in the net assets or increases in the net liabilities
of CTL;
(b) suffered any damage, destruction or loss with respect to
CTL's assets, whether or not covered by insurance, in an amount in excess of
Five Thousand Dollars ($5,000);
(c) granted any increase in the compensation payable or to become
payable by CTL to any CTL Employees, except those occurring in the ordinary
course of business;
(d) made any change in the accounting methods or practices it
follows, whether for general financial or Tax purposes, or any change in
depreciation or amortization policies or rates adopted therein;
(e) sold, assigned, transferred, licensed or otherwise disposed
of any Intellectual Property or interest thereunder or other intangible asset
except in the ordinary course of its business;
(f) sold, assigned, transferred, licensed or otherwise disposed
of any real property or any machinery, equipment or other operating property
other than in the ordinary course of business;
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(g) incurred any liabilities except in the ordinary course of business
and consistent with past practice;
(h) permitted or allowed any of its properties or assets to be
subjected to any Encumbrance of any kind, other than a Permitted Encumbrance;
(i) made any material amendment to or terminated any contract or any
other agreement which is listed on any schedule to this Agreement;
(j) incurred any contingent liability as guarantor or otherwise with
respect to the obligations of others other than in the ordinary course of
business consistent with past practices;
(k) declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of the capital stock of CTL or
declared any direct or indirect redemption, retirement, purchase or other
acquisition by CTL of such shares;
(l) issued any shares of the capital stock of CTL or any warrants,
rights or options to purchase such shares of the capital stock of CTL or entered
into any commitment relating to such shares, warrants, rights or options;
(m) suffered, or become involved with, any dispute, including but not
limited to any dispute involving a CTL Employee, that has, or reasonably may
have, a material adverse effect on CTL's business, assets, properties, financial
condition or results of operations;
(n) made any capital expenditure or commitment for additions to
property, plant or equipment in excess of Ten Thousand Dollars ($10,000);
(o) paid, loaned or advanced any amounts to, or sold, transferred or
leased any properties or assets to, or entered into any agreement or arrangement
with any of its Affiliates, officers, directors or stockholders or any Affiliate
or associate of any of the foregoing; or
(p) agreed to take any action described in this Section 2.6 or which
constitutes a breach of any of the INTERCELL Representations and Warranties.
2.7 PROPERTY, TITLE AND RELATED MATTERS. Except as otherwise set forth in
Section 2.7 of the CTL Disclosure Schedule, CTL has good and marketable title to
all the properties, interests in properties and assets, real and personal,
reflected in the October 26, 1997 Balance Sheet, or acquired after October 26,
1997 (except properties, interests in properties and assets sold or otherwise
disposed of since October 26, 1997 in the ordinary course of business), free and
clear of all Encumbrances except for Permitted Encumbrances. Except as reflected
in the CTL Financial Statements or Section 2.7 of the INTERCELL Disclosure
Schedule, the equipment of CTL used in the operations of its business is in
satisfactory operating condition and repair, normal wear and tear excepted. All
real or personal property leases to which CTL is a party are valid, binding,
enforceable and effective with respect to CTL in accordance with their
respective terms, subject to (a) laws of general application relating to
bankruptcy, insolvency, or the relief of debtors, (b) rules of law or equity
governing specific performance, injunctive relief
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and other equitable remedies and (c) any third-party consents which may be
required as a result of the transactions contemplated in this Agreement. There
does not exist under any of such leases any existing material default by CTL or
event of default or other event which, with notice or lapse of time or both,
would constitute a material default. Section 2.7 of the INTERCELL Disclosure
Schedule contains a description of all real and personal property leased or
owned by CTL, describing its interest in said property and with respect to real
property a description of each parcel and a summary description of the
buildings, structures and improvements thereon. True and correct copies of CTL's
leases have been provided to Jaymark or Jaymark's Representatives.
2.8 INTELLECTUAL PROPERTY.
(a) Section 2.8(a) of the CTL Disclosure Schedule lists and
describes all domestic and foreign patents, patent applications, patent
licenses, written know-how licenses, trade names, secrecy agreements, registered
Trademarks, registered copyrights, registered servicemarks and Trademark and
servicemark applications currently used or held for use by CTL.
(b) Except as set forth in Section 2.8(b) of the CTL Disclosure
Schedule, CTL owns all right, title and interest in and to all of the
Intellectual Property used by CTL, free and clear of all claims and Encumbrances
except for Permitted Encumbrances. The Intellectual Property comprises all
rights necessary for Jaymark to permit CTL to continue to conduct CTL's business
in the same manner after the Closing Date as CTL had conducted its business
prior to the Closing Date.
(c) No claims have been asserted against CTL or INTERCELL (and
INTERCELL is not aware of any claims that are likely to be asserted against CTL
or which have been asserted against others) by any Person challenging CTL's use
or distribution of any patents, Trademarks, trade names, copyrights, trade
secrets, software, technology, know-how or processes utilized by CTL or
challenging or questioning the validity of, effectiveness of, or full
performance by CTL of its obligations under any license or agreement relating
thereto.
(d) To INTERCELL's knowledge after reasonable investigation,
none of the CTL Products or the use of the Intellectual Property by CTL in the
conduct of CTL's business infringes on the rights of, constitutes
misappropriation of, or involves unfair competition with respect to, any
proprietary information or intangible or Intellectual Property right of any
third Person or Entity, including without limitation any patent, trade secret,
copyright, trademark, trade name or mask works.
(e) All designs, drawings, specifications, documentation, flow
charts and diagrams incorporating, embodying or reflecting any of the CTL
Products at any stage of their development (collectively, the "CTL Components")
were written, developed and created solely and exclusively by employees of CTL
without the assistance of any third party, or were created by third parties who
assigned ownership of their rights to CTL in valid and enforceable agreements
subject to (i) laws of general application relating to bankruptcy, insolvency or
the relief of debtors and (ii) rules of law or equity governing specific
performance, injunctive relief and other equitable remedies.
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(f) To INTERCELL's knowledge, no CTL Employee is in violation of
any term of any employment contract, patent disclosure agreement or any other
contract or agreement relating to the relationship of any such Person with CTL
or, to INTERCELL's knowledge, any other party.
(g) Except for product returns in the ordinary course of CTL's
business, no product liability or warranty claim with respect to any CTL Product
has been communicated to or overtly threatened against CTL nor, to INTERCELL's
knowledge, is there any specific situation, set of facts or occurrence that
provides a basis for any such claim. Section 2.8(g) of the CTL Disclosure
Schedule sets forth an accurate list of all known claims with the CTL Products.
2.9 EMPLOYEE BENEFITS.
(a) (i) All binding obligations for salaries, vacation pay and
bonuses which were or will be due and payable to employees of CTL on or before
the Closing Date have been paid or will be paid prior to the Closing Date or
adequate accruals therefor have been provided.
(ii) Section 2.9(a) of the CTL Disclosure Schedule sets
forth, as of the date specified in said schedule, a correct and complete list of
names of the employees of CTL, date employment began, current position and full
or part time status, and their salary or wage rates.
(b) Set forth in Section 2.9(b) of the CTL Disclosure Schedule
is a correct and complete list of each Employee Plan. INTERCELL has provided to
Jaymark the most recent copy of each such Employee Plan and any amendments
thereto, including any trust agreements, insurance contracts and other similar
documents and agreements. To the extent any such Employee Plan is not in
writing, a short summary of the plan has been set forth in Section 2.9(b) of the
CTL Disclosure Schedule.
(c) None of the Employee Plans is a Multiemployer Plan (as
defined in Section 3(37) of ERISA). Neither CTL nor any ERISA Affiliate has made
within the preceding six plan years, or expects to make prior to the Closing, a
complete or partial withdrawal from any Multiemployer Plan so as to incur
withdrawal liability as defined in Section 4201 of ERISA or contingent
withdrawal liability, under Section 4204 of ERISA for which CTL would be liable
or potentially liable. No withdrawal liability would result under Section 4201
of ERISA if CTL or an ERISA Affiliate were to withdraw in a complete withdrawal
(as defined in Section 4203 of ERISA) on the Closing Date from each
Multiemployer Plan in which CTL or the ERISA Affiliate participates.
(d) INTERCELL has previously provided to Jaymark the most recent
summary plan description of each Employee Plan disseminated to employees of CTL
(including any addenda to such summaries); and the most recent annual report
(Form 5500) with attached schedules for those Employee Plans that cover any
employees or former employees of CTL, and in the case of such a plan which is
defined benefit Qualified Plan, the most recent actuarial valuation report.
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(e) There is no obligation or Liability to provide post
retirement welfare benefits to current or future retirees of CTL (other than
those required by Section 601 et seq. of ERISA).
(f) Each Employee Plan has been administered in material
compliance with its terms, and in material compliance with all applicable U.S.
laws and regulations, including without limitation, ERISA and the Code.
(g) With respect to any Employee Plan, there are: (i) no
prohibited transactions, within the meaning of Section 406 of ERISA or Section
4975 of the Code, which have been committed; (ii) no pending or to INTERCELL's
knowledge threatened suits, claims, investigations or proceedings against an
Employee Plan by an employee or former employee of CTL (other than routine
claims for benefits); (iii) no reportable events under Section 4043(c) of ERISA;
and (iv) no claims or other matters currently pending, nor are there any
investigations or claims to INTERCELL's knowledge threatened or pending, by,
with or before the Internal Revenue Service, Department of Labor, Pension
Benefit Guaranty Corporation or other federal governmental agency.
(h) All contributions, premiums and other payments required to
be paid prior to the Closing Date to Employee Plans or required to be paid after
the Closing Date but attributable to periods prior to and through the Closing
Date, under applicable law or the terms of such plans, have been paid or
provided for. Each Employee Plan which is a "group health plan" (as defined in
the Code and ERISA) is and has been operated in material compliance with the
requirements of part 6 of Subtitle B of Title 1 of ERISA and Section 4980B of
the Code with respect to former employees of CTL. Each Employee Plan which is a
"group health plan" is being operated in material compliance with the
requirements of Title IV of the Health Insurance Portability and Accountability
Act of 1996 and Section 4980D of the Code. Neither CTL nor any ERISA Affiliate
has incurred any Liability to the Pension Benefit Guaranty Corporation, except
for annual premiums that have been paid when due. CTL and its ERISA Affiliates
have made all contributions required under Section 302 of ERISA or Section 412
of the Code with respect to all Employee Plans. CTL and its ERISA Affiliates
have made all contributions required during the preceding five plan years under
Section 302 of ERISA or Section 412 of the Code when due with respect to all
Employee Plans.
(i) The execution, delivery and performance of this Agreement
will not result in any increase in the compensation or benefits payable by CTL
or otherwise payable to any employee of CTL or the acceleration of the time of
payment or vesting of any such compensation or benefits. The execution, delivery
and performance of this Agreement will not result in any parachute payments
within the meaning of Section 280G of the Code or the payment of any severance
by CTL.
(j) All Employee Plans intended to be a Qualified Plan have
received a favorable determination letter that considers amendments required by
the Tax Reform Act of 1986 from the Internal Revenue Service to the effect that
such plans so qualify (and such letter has not been revoked), or an application
for such a letter has been applied for within the retroactive amendment period
for such plan, and such application is pending and no event has occurred and no
condition exists as of the Closing Date which would reasonably be expected to
11
result in the loss of Qualified Plan status or the imposition of any Liability,
penalty or Tax on CTL under ERISA or the Code with respect to said Qualified
Plans and which cannot be cured retroactively without any Liability (other than
compliance with the amendment or modification referred to in this sentence) by
an amendment or modification to the Qualified Plan document.
(k) CTL does not as of the Closing have any Liability under the joint
and several liability provisions of the Code of Title IV or ERISA as the result
of pre-Closing Date liabilities of INTERCELL ERISA Affiliates.
(l) No Liability under any Employee Plan has been funded nor has any
such obligation been satisfied with the purchase of a contract from an insurance
company as to which CTL or any ERISA Affiliate has received notice that such
insurance company is in rehabilitation.
(m) Except as set forth in Section 2.9(m) of the CTL Disclosure
Schedule, all current Employees of CTL may be terminated at will, without notice
and without CTL incurring any severance or other Liability or obligation to the
Employee in connection with the termination other than the payment of accrued
sick and vacation pay, if any, absent any violation of any laws applicable to
such termination by CTL or Jaymark after Closing.
2.10 BANK ACCOUNTS AND RECEIVABLES. Section 2.10 of the CTL
Disclosure Schedule sets forth the names and locations of all banks, trusts,
companies, savings and loan associations, and other financial institutions at
which CTL maintains accounts of any nature and the names of all Persons
authorized to draw thereon or make withdrawals therefrom. Section 2.10 of the
CTL Disclosure Schedule sets forth an accurate and complete breakdown and aging
of all accounts receivable, notes receivable and any other receivables of CTL as
of December 31, 1997. Except as set forth in Section 2.10 of the CTL Disclosure
Schedule, all existing accounts receivable of CTL (including those accounts
receivable reflected on the CTL Financial Statements that have not yet been
collected and those accounts receivable that have arisen since October 26, 1997
and have not yet been collected) (a) represent valid obligations of customers of
CTL arising from bona fide transactions entered into in the ordinary course of
business and (b) are current and to the knowledge of INTERCELL will be collected
in full (net of reserves) when due, without any counterclaim or setoff.
2.11 CONTRACTS.
(a) Except as set forth in Section 2.11(a) of the CTL Disclosure
Schedule:
(i) CTL has no agreement, contract or commitment that calls for
fixed and/or contingent payments or expenditures by or to CTL of more than Ten
Thousand Dollars ($10,000);
(ii) CTL has no purchase agreement, contract or commitment that
calls for fixed and/or contingent payments by CTL that CTL is currently
performing work under that are in excess of the normal, ordinary and usual
requirements of CTL's businesses;
12
(iii) There is no sales contract, commitment or proposal that
CTL is currently performing work under that CTL currently expects to result in
any loss to CTL upon completion or performance thereof;
(iv) CTL has no outstanding agreement, contract or commitment
with officers, employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that is not cancelable by it on notice
of not longer than ninety (90) days and without Liability, penalty or premium;
(v) CTL has entered into no employment, independent contractor
or similar agreement, contract or commitment that is not terminable on not more
than ninety (90) days' notice without penalty or Liability of any type,
including without limitation severance or termination pay;
(vi) CTL has no currently effective collective bargaining or
union agreements, contracts or commitments;
(vii) CTL is not restricted by any agreement known to it or
INTERCELL from competing with any Person or from carrying on its business
anywhere in the world;
(viii) CTL is under no Liability or obligation, and no such
outstanding claim has been made, with respect to the likely or expected return
to CTL of inventory or merchandise in the possession of wholesalers,
distributors, retailers, or other customers, except such liabilities,
obligations and claims as, in the aggregate, do not exceed the reserves therefor
set forth in the CTL Financial Statements;
(ix) CTL has no guarantees presently in effect of any
obligations of other Persons or made any agreements to acquire or guarantee any
obligations of other Persons;
(x) CTL has no outstanding loan or advance to any Person except
as set forth in the CTL Financial Statements; nor is it party to any line of
credit, standby financing, revolving credit or other similar financing
arrangement of any sort which would permit the borrowing by CTL of any sum not
reflected in the CTL Financial Statements; and
(xi) All contracts, agreements and instruments to which CTL is a
party are valid, binding, in full force and effect, and enforceable by CTL, as
applicable, in accordance with their respective terms, subject to (A) laws of
general application relating to bankruptcy, insolvency or the relief of debtors
and (B) rules of law or equity governing specific performance, injunctive relief
and other equitable remedies. No such contract, agreement or instrument contains
any material liquidated-damages, penalty or similar provision enforceable
against CTL. To the best of INTERCELL's and CTL's knowledge, no party to any
such contract, agreement or instrument intends to cancel, withdraw, modify or
amend such contract, agreement or arrangement.
(b) Section 2.11(b) of the CTL Disclosure Schedule lists all
unperformed agreements pursuant to which CTL has agreed to manufacture for or
supply to any
13
third party any CTL Products or CTL Components thereto requiring, or expected to
require, payments of Ten Thousand Dollars ($10,000) or more over the life of any
such agreement which continues beyond the date hereof. Section 2.11(b) of the
CTL Disclosure Schedule also lists each vendor who manufactures for or supplies
to CTL any product or component included in the CTL Products or CTL Components
or is the sole source for any product or component included in the CTL Products.
(c) INTERCELL has delivered to Jaymark accurate and complete copies of
all written contracts identified in Section 2.11 of the CTL Disclosure Schedule.
CTL has entered into no material oral contracts, except for telephone orders and
renewals or extensions of written agreements or arrangements in the ordinary
course of business. Each contract identified in Section 2.11 of the CTL
Disclosure Schedule is valid and in full force and effect, and is enforceable by
CTL, as applicable, in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency or the relief of debtors and (ii)
rules of law or equity governing specific performance, injunctive relief and
other equitable remedies.
(d) Except as set forth in Section 2.11(d) of the CTL Disclosure
Schedule:
(i) CTL has not violated or breached, or committed any default
under, any Material Contract, and, to INTERCELL's knowledge, no other Person has
violated or breached, or committed any default under, any Material Contract.
(ii) No event has occurred and, to INTERCELL's knowledge after
reasonable investigation, no circumstance or condition exists, that (with or
without notice or lapse of time) will, or could reasonably be expected to, (A)
result in a violation or breach of any of the provisions of any Material
Contract, (B) give any Person the right to declare default or exercise any
remedy under any Material Contract, (C) give any Person the right to accelerate
the maturity or performance of any Material Contract or (D) give any Person the
right to cancel, terminate or modify any Material Contract.
(e) Except as set forth in Section 2.11(e) of the CTL Disclosure
Schedule, none of the agreements, contracts and commitments listed or described
in the CTL Disclosure Schedule (each a "Material Contract," and collectively,
the "Material Contracts") contains any provision which would require the consent
of third parties to the Acquisition or which would be altered as a result of the
Acquisition. If any Material Contract contains any such provision, then CTL has
described in Section 2.11(e) of the CTL Disclosure Schedule such actions as are
necessary with respect to each such Material Contract to avoid any material
adverse consequence as a result of the Acquisition and listed all such necessary
consents (each a "Material Consent," and collectively, the "Material Consents")
and INTERCELL shall, prior to the Closing Date, have used its Best Efforts to
obtain the Material Consents and shall have taken such other necessary action
with respect to each such Material Contract.
2.12 COMPLIANCE WITH LAW. CTL is in compliance in all material respects with
all applicable Laws or Decrees. Neither CTL nor, to the best of INTERCELL's
knowledge, any of CTL's employees, has directly or indirectly paid or delivered
any fee, commission or other sum of money or item of property, however
characterized, to any finder, agent, government
14
official or other party in the United States or any other country, that was or
is in material violation of any applicable Law or Decree. CTL has not
participated directly or indirectly in any boycotts or other similar practices
affecting any of its customers except as may be required by law. CTL has
complied in all material respects at all times with any and all applicable Laws
or Decrees relating to the importation and exportation of its products. All
Permits held by CTL and which are material to its business are valid and legally
sufficient in all respects to allow CTL to conduct its business as presently
conducted.
2.13 LABOR DIFFICULTIES; NO DISCRIMINATION.
(a) CTL is not engaged in any unfair labor practice and is not in
violation of any applicable laws relating to employment and employment
practices, terms and conditions of employment, and wages and hours.
(b) There is no pending or to the knowledge of INTERCELL threatened
unfair labor practice complaint against CTL before the National Labor Relations
Board.
(c) There is no strike, labor dispute, slowdown, or stoppage actually
pending or to the knowledge of INTERCELL threatened against CTL.
(d) No union representation question exists respecting the employees
of CTL and to INTERCELL's knowledge, no union organizing activities are taking
place at CTL or with respect to CTL Employees.
(e) No grievance or arbitration proceeding arising out of or under any
collective bargaining agreement to which CTL or any employee of CTL is a party
is pending and to the knowledge of INTERCELL no claims therefor exist.
(f) No collective bargaining agreement that is binding on CTL
restricts it from relocating or closing any of its operations.
(g) CTL has experienced no work stoppage or other labor difficulty
having a material adverse effect on CTL's business, assets, properties,
financial condition or results of operations.
(h) There have not been nor are there currently any claims against CTL
based on actual or alleged wrongful termination or on actual or alleged race,
age, sex, disability or other harassment or discrimination, or similar tortious
conduct, nor to the knowledge of INTERCELL is there any basis for any such
claim.
(i) CTL is not aware of any CTL Employee who intends to terminate his or
her employment with CTL.
2.14 EMPLOYEES, INDEPENDENT CONTRACTORS AND CONSULTANTS. Section 2.14 of the
CTL Disclosure Schedule lists and describes all currently effective and material
written or oral consulting, independent contractor and/or employment agreements
and other material agreements with individual employees, independent contractors
or consultants to which CTL is a
15
party. True and correct copies of all such written agreements have been provided
to Jaymark or its Representatives. All salaries and wages paid by CTL are in
compliance with applicable Laws or Decrees. Section 2.14 of the CTL Disclosure
Schedule lists the names of all Persons currently employed by CTL (each a "CTL
Employee," and collectively, the "CTL Employees") and the salaries and other
compensation arrangements (bonus, deferred compensation, etc.) for each such
Person. CTL's aggregate accrued vacation as of December 31, 1997 was
approximately One Hundred Two Thousand and Ninety Dollars ($102,090) and
aggregate accrued severance pay as of the date of this Agreement was
approximately Zero Dollars.
2.15 TRADE REGULATION. Except as otherwise set forth in Section 2.15
of the CTL Disclosure Schedule, CTL has not terminated its relationship with or
refused to ship CTL Products to any dealer, distributor, third party marketing
Entity or customer which had theretofore paid or been obligated to pay CTL in
excess of Five Thousand Dollars ($5,000) over any consecutive twelve (12) month
period. To the knowledge of INTERCELL, all of the prices charged by CTL in
connection with the marketing or sale of any products or services have been in
compliance in all material respects with all applicable Laws or Decrees. No
claims against CTL have been communicated or threatened in writing to CTL with
respect to wrongful termination of any dealer, distributor or any other
marketing Entity, discriminatory pricing, price fixing, unfair competition,
false advertising, or any other violation of any laws or regulations relating to
anti-competitive practices or unfair trade practices of any kind, and to the
knowledge of INTERCELL, no specific situation, set of facts, or occurrence
exists which provides any basis for any such claim.
2.16 INSIDER TRANSACTIONS. Except as otherwise set forth in Section
2.16 of the CTL Disclosure Schedule, no Affiliate of CTL has any interest in (a)
any equipment or other material property or asset, real or personal, tangible or
intangible, including, without limitation, any proprietary asset, used in
connection with or pertaining to the business of CTL or (b) any creditor,
supplier, customer, manufacturer, agent, representative, or distributor of
products of CTL; provided, however, that no such Affiliate or other Person shall
be deemed to have such an interest solely by virtue of the ownership of less
than one percent (1%) of the outstanding stock or debt securities of any
publicly-held company whose stock or debt securities are traded on a recognized
stock exchange or quoted on the National Association of Securities Dealers
Automated Quotation System.
2.17 INSURANCE. Section 2.17 of the CTL Disclosure Schedule contains
a list of the principal policies of fire, liability and other forms of insurance
held by CTL. All such policies are in full force and effect, and CTL has done
nothing, either by way of action or inaction, that, to the knowledge of
INTERCELL, might invalidate such policies in whole or in part or constitute a
default under any such policy. CTL has not received notice from any issuer or
carrier of any of such policies of such issuer's or carrier's intention to
cancel, terminate, or refuse any policy issued to CTL.
2.18 LITIGATION. Except as otherwise set forth in Section 2.18 of
the CTL Disclosure Schedule, there is no claim, investigation, suit, action or
proceeding (a) pending against CTL, (b) which, to INTERCELL's knowledge after
reasonable investigation, has been threatened against or materially affects CTL
or (c) which questions or challenges the validity of
16
this Agreement or the Transaction Documents. CTL is not a party to or subject to
any judgment, decree, injunction or order of any Governmental Entity.
2.19 TAX MATTERS.
(a) CTL (or INTERCELL with respect to or including the taxable
income or activities of CTL) has duly and timely filed all required Tax Returns
and such Tax Returns are true, correct and complete in all material respects.
All Taxes owed by CTL (or INTERCELL with respect to or including the taxable
income or activities of CTL), whether or not shown on any Tax Return, have been
paid. No claim has ever been made by any Governmental Entity in a jurisdiction
where CTL (or INTERCELL with respect to or including the taxable income or
activities of CTL) does not file Tax Returns that CTL (or INTERCELL with respect
to or including the taxable income or activities of CTL) is or may be subject to
taxation by that jurisdiction. There are no liens or security interests on any
of the CTL's assets with respect to Taxes, other than liens for Taxes not yet
due and payable.
(b) CTL (or INTERCELL with respect to or including the taxable
income or activities of CTL) has withheld and paid all Taxes required to have
been withheld and paid and complied with all information reporting and backup
withholding requirements, including maintenance of required records in respect
thereto, in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(c) Section 2.19(c) of the CTL Disclosure Schedule (i) lists all
Tax Returns filed by CTL (or INTERCELL with respect to or including the taxable
income or activities of CTL) for taxable periods ended on or after September 30,
1995, (ii) indicates those Tax Returns that have been audited and (iii)
indicates those Tax Returns that currently are the subject of audit. CTL has
delivered to Jaymark correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by CTL (or INTERCELL with respect to or including the taxable income
or activities of CTL) since September 30, 1995.
(d) Section 2.19(d) of the CTL Disclosure Schedule sets forth the
following information with respect to CTL as of the most recent practicable
date: (i) the basis of CTL in its assets, (ii) the amount of any net operating
loss, net capital loss, unused investment or other credit, unused foreign tax,
or excess charitable contribution allocable to CTL and (iii) the amount of any
deferred gain or loss allocable to CTL arising out of any deferred intercompany
transaction.
(e) Except as set forth in Section 2.19(e) of CTL Disclosure
Schedule, CTL's (or INTERCELL's with respect to or including that taxable income
or activities of CTL) Tax Returns have never been audited by any Governmental
Entity, nor is any such audit in process, pending or threatened (either in
writing or verbally, formally or informally). No deficiencies exist or have been
asserted (either in writing or verbally, formally or informally) or are expected
to be asserted with respect to Taxes of CTL (or INTERCELL with respect to or
including the taxable income or activities of CTL). Except as set forth in
Section 2.19(c) of the CTL Disclosure Schedule, CTL (or INTERCELL with respect
to or including the taxable income or activities of CTL) has not received notice
(either in writing or verbally, formally or
17
informally) and does not expect to receive notice that it has not filed a Tax
Return or paid Taxes required to be filed or paid by it. CTL (or INTERCELL with
respect to or including the taxable income or activities of CTL) is not a party
to any action or proceeding for assessment or collection of Taxes, nor has such
event been asserted or threatened (either in writing or verbally, formally or
informally) against CTL (or INTERCELL with respect to or including the taxable
income or activities of CTL) or any of its assets.
(f) CTL (or INTERCELL with respect to or including the taxable
income or activities of CTL) has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency. CTL (or INTERCELL with respect to or including the
taxable income or activities of CTL) is not currently the beneficiary of any
extension of time within which to file any Tax Return.
(g) CTL (or INTERCELL with respect to or including the taxable
income or activities of CTL) has not made any payments, is not obligated to make
any payments, and is not a party to any agreement that under any circumstances
could obligate CTL (or INTERCELL with respect to or including the taxable income
or activities of CTL) to make any payments with respect to employees or
independent contractors of CTL that will not be deductible by Jaymark after the
Closing Date under Code Section 280G.
(h) CTL (or INTERCELL with respect to or including the taxable
income or activities of CTL) is not (nor has it ever been) a party to any Tax
allocation or Tax sharing agreement and is not liable for the Taxes of any other
Person as a transferee or successor, by contract, or otherwise.
(i) The amount of CTL (or INTERCELL with respect to or including
the taxable income or activities of CTL) liability for unpaid Taxes for all
periods ending on or before the date of this Agreement do not, in the aggregate,
exceed the amount of the current liability accruals for Taxes (excluding
reserves for deferred Taxes), and the amount of CTL (or INTERCELL with respect
to or including the taxable income or activities of CTL) liability for unpaid
Taxes for all periods ending on or before the Closing Date shall not, in the
aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred Taxes).
2.20 WARRANTIES AND SERVICE: PAYMENT OBLIGATIONS. Section 2.20 of
the CTL Disclosure Schedule sets forth (a) copies of all general forms of
warranties or warranty agreements or obligations now in effect or provided
during the past three years with respect to any of the CTL Products and with
respect to any services provided, or to be provided, by CTL in connection
therewith, (b) a complete and accurate list of all agreements pursuant to which
CTL is obligated to provide service or support services with respect to the CTL
Products, (c) a complete and accurate list of all other agreements and other
documents of CTL which relate to any CTL Products, and pursuant to which CTL is
obligated to make any other accommodation for such purchaser or distributor, or
take back any product from such purchaser or distributor, including, without
limitation, any warranties and (d) a complete list of CTL expenses, as incurred,
associated with warranties, services, returns, defects or similar items with
respect to the CTL Products from October 1, 1996 to September 30, 1997. All
sales of, and services relating to, CTL Products have been, or are being, made
pursuant to the form of warranty set forth
18
in Section 2.20 of the CTL Disclosure Schedule, or the terms of a contract and
no other warranty, express or implied, has been made or extended by CTL with
respect to the CTL Products, or the services provided by CTL in relation
thereto. CTL has not granted to any Person the right to repair, maintain,
service or support any of the CTL Products. Except as set forth on Section 2.20
of the Disclosure Schedule, no agreement for the sale, license, service, support
or maintenance of the CTL Products obligates CTL to provide any change in
functionality or other alternations in the performance of the CTL Products or to
provide new products or technology.
2.21 ORDERS, COMMITMENTS AND RETURNS. All accepted and unfilled
orders entered into by CTL for the sale, license, or lease or other disposition
by CTL of CTL Products, and all agreements, contracts, or commitments for the
purchase of supplies by CTL, were made in the ordinary course of business. No
outstanding purchase or outstanding lease commitment of CTL is in excess of the
normal, ordinary and usual requirements of its business or was made at a price
(on both a per unit and aggregate basis) materially in excess of the current
market price at the time made, or to the knowledge of INTERCELL, contains terms
and conditions materially more onerous to CTL than those usual and customary in
the industry.
2.22 ENVIRONMENTAL MATTERS. CTL has obtained all Permits required
under Environmental Laws to conduct its business (collectively, "Licenses"), and
all such Licenses are current, valid and in good standing, and copies of all
such Licenses have been provided to Jaymark. CTL is conducting and at all times
has conducted its business in full compliance with Environmental Laws and
Licenses, including without limitation giving required notifications of any
Release of Hazardous Materials. Except as set forth in Section 2.11(e) of the
CTL Disclosure Schedule, no notice or other filing, or consent or approval is
required under any Environmental Laws in connection with or as a result of the
transactions contemplated by this Agreement. With respect to CTL's business and
any Facility, no civil, criminal or administrative actions, proceedings,
directives, inquiries, or investigations are pending, or to the knowledge of
INTERCELL threatened, by any Governmental Entity or Person regarding any
alleged non-compliance with Environmental Laws, nor does INTERCELL have any
basis to expect the institution or receipt of any such actions, proceedings,
directives, inquiries or investigations. No Governmental Entity or Person has,
currently or in the past, charged or alleged or, to the knowledge of INTERCELL
threatened to charge or allege, that Hazardous Materials have been Handled
improperly or in violation of Environmental Laws or in such a manner as to harm
or threaten to harm human health, ecology, or the environment, in connection
with CTL's business or any Facility. Neither CTL nor INTERCELL have received
any notice with respect to any Facility, and neither is aware of the issuance,
at any time, to any Person of any notice with respect to any Facility, alleging
that a Facility has been listed or is proposed to be listed on any list,
registry or inventory maintained by any Governmental Entity of sites where a
Release of Hazardous Materials has occurred or is suspected of having occurred,
and neither CTL nor INTERCELL has received any notice that they have been
identified as potentially responsible parties under any Environmental Laws with
respect to any Facility. There are no liens or other Encumbrances in effect
under any Environmental Laws with respect to any Facility or any other asset or
real property owned, operated, leased or controlled in connection with CTL's
business. Other than as set forth and described in Section 2.22 of the CTL
Disclosure Schedule, no Release of Hazardous Materials has occurred at any time
in connection with CTL's business or any Facility, except in compliance with
Environmental Laws and Licenses. To INTERCELL's knowledge after reasonable
investigation (except as described in Section 2.22 of the CTL
19
Disclosure Schedule), there are no conditions existing at any Facility which
require any remedial action, removal action, corrective action, closure action,
or other environmental response action under Environmental Laws or Licenses.
There are not currently, nor are there any plans to install, nor have there been
in the past, at any Facility any underground storage tanks, vaults,
containments, impoundments or other underground structures or equipment, that
are used, will be used, or were used, or that are or were intended to be used,
for Handling of Hazardous Materials. There is no asbestos or asbestos-containing
material in, on or at any real property or Facility or equipment owned, leased
or operated in connection with CTL's business. No equipment or improvements used
in CTL's business presently require, or to the knowledge of INTERCELL may
require, any expenditure of funds or any removal, closure, updating,
modification or replacement to comply with Environmental Laws and Licenses. To
the knowledge of INTERCELL, no Release of Hazardous Materials has migrated to,
or threatens to migrate to, the soil, surface water, or groundwater on, under or
adjacent to any Facility. With respect to CTL's business and to the knowledge of
INTERCELL, there are no conditions existing at any site to which CTL has sent
Hazardous Materials for transportation, transfer, recycling, treatment, storage,
or disposal, which require any investigation, remedial action, removal action,
corrective action, or other environmental response action pursuant to
Environmental Laws, and no administrative actions, proceedings, directives,
inquiries or investigations are pending, or to the knowledge of INTERCELL,
threatened, with respect to any such site. No employee of CTL and no other
Person has asserted or, to the knowledge of INTERCELL threatened to assert,
currently or in the past, a demand or claim pertaining to CTL's business or any
Facility, based upon or relating to alleged damage to health caused by any
Hazardous Material used in connection with the business or present at any
Facility. INTERCELL has delivered or otherwise made available for inspection to
Jaymark or its agents true, complete and correct copies of any reports, studies,
assessments, analyses, evaluations, test or monitoring results possessed or
available to INTERCELL pertaining to any Release of any Hazardous Materials in,
on, beneath or adjacent to any Facility.
2.23 CORPORATE DOCUMENTS. INTERCELL has made available to Jaymark
for Jaymark's examination: (a) copies of CTL's articles of incorporation and
bylaws, (b) CTL's minute book containing all records of all proceedings,
consents, actions, and meetings of the stockholders, the board of directors and
any committees thereof, (c) all material Permits, orders, and consents issued by
any regulatory agency with respect to CTL or any of CTL's securities, and all
applications for such Permits, orders, and consents and (d) CTL's stock transfer
books setting forth all transfers of any of its capital stock. The corporate
minute books, stock certificate books, stock registers and other corporate
records of CTL are complete and accurate in all material respects, and the
signatures appearing on all documents contained therein are the true signatures
of the Persons purporting to have signed the same. All actions reflected in
such books and records were duly and validly taken in compliance in all material
respects with the laws of the applicable jurisdiction.
2.24 BROKERS. Except as set forth in Section 2.24 of the CTL
Disclosure Schedule, neither CTL nor INTERCELL is obligated for the payment of
fees or expenses of any broker or finder in connection with the origin,
negotiation or execution of this Agreement or any of the Transaction Documents
in connection with any transaction contemplated herein or therein.
20
2.25 DISCLOSURE. No statement by CTL or INTERCELL contained in this
Agreement, its exhibits and schedules, nor any of the certificates or documents
required to be delivered by CTL or INTERCELL to Jaymark under this Agreement
contains any untrue statement of a fact or omits to state a fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances under which they were made.
3. REPRESENTATIONS AND WARRANTIES OF JAYMARK. Except as set forth in the
Jaymark Disclosure Schedule in the form attached hereto as Exhibit F, Jaymark
hereby represents and warrants to INTERCELL (each a "Jaymark Representation and
Warranty," and collectively, the "Jaymark Representations and Warranties") that:
3.1 ORGANIZATION AND GOOD STANDING. Jaymark is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has full power and authority to carry on its business as now
conducted.
3.2 POWER, AUTHORIZATION AND VALIDITY. Jaymark has all requisite
right, power, legal capacity and authority to enter into and perform its
obligations under this Agreement and the other Transaction Documents to which it
is a party. The execution and delivery of this Agreement and the other
Transaction Documents to which Jaymark is a party have been duly and validly
approved and authorized by the board of directors of Jaymark. No authorization
or approval, governmental or otherwise, is necessary in order to enable Jaymark
to enter into and to perform the terms of this Agreement or the other
Transaction Documents on its part to be performed, except for such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the laws of any foreign country in which
Jaymark or any of the Jaymark' subsidiaries conducts any business or owns any
property or assets. This Agreement is, and the other Transaction Documents when
executed and delivered by Jaymark shall be, the valid and binding obligations of
Jaymark enforceable in accordance with their respective terms subject to (a)
laws of general application relating to bankruptcy, insolvency, or the relief of
debtors and (b) rules of law or equity governing specific performance,
injunctive relief and other equitable remedies.
3.3 NO VIOLATION OF EXISTING AGREEMENTS. Neither the execution and
delivery of this Agreement or any of the Transactions Documents to which Jaymark
is a party nor the consummation of the transactions contemplated herein or
therein will conflict with, or result in a material breach or violation of, any
provision of Jaymark's articles of incorporation or its bylaws, as currently in
effect, any instrument or contract to which Jaymark is a party or by which any
such party is bound, or any federal, state or local judgment, writ, decree,
order, statute, rule or regulation applicable to any such Person. Neither the
execution and delivery of this Agreement nor any of the Transaction Documents to
which Jaymark is a party nor the consummation of the transactions contemplated
herein or therein will have a material adverse effect on the operations, assets,
or financial condition of Jaymark.
3.4 LITIGATION. There is no suit, action, proceeding, claim or
investigation pending or, to the best of Jaymark's knowledge, threatened,
against Jaymark which questions or challenges the validity of this Agreement or
the Transaction Documents.
21
3.5 DISCLOSURE. No representation or warranty made by Jaymark in
this Agreement, the Transaction Documents or in any schedule, certificate or
exhibit prepared and furnished or to be prepared and furnished by Jaymark
pursuant hereto or thereto, or in connection herewith or therewith, contains or
will contain any untrue statement of a fact, or omits or will omit to state a
fact necessary to make the statements or facts contained herein or therein not
misleading in light of the circumstances under which they were made.
3.6 BROKERS. Jaymark is not obligated for the payment of fees or
expenses of any broker or finder in connection with the origin, negotiation or
execution of this Agreement or any of the Transaction Documents in connection
with any transaction contemplated herein or therein.
4. PRECLOSING AND OTHER COVENANTS OF INTERCELL AND CTL.
4.1 OBTAINING MATERIAL CONSENTS. INTERCELL and CTL shall use their
Best Efforts to obtain any and all Material Consents set forth on Section
2.11(e) of the CTL Disclosure Schedule.
4.1 ADVICE OF CHANGES. INTERCELL will promptly advise Jaymark in
writing (a) of any event occurring subsequent to the date of this Agreement
which would render any INTERCELL Representation and Warranty if made on or as of
the date of such event or the Closing Date, untrue or inaccurate in any respect
and (b) of any material adverse change in CTL's business, assets, properties,
financial condition or results of operations.
4.3 CONDUCT OF BUSINESS. From the date hereof through the Closing
Date, CTL and INTERCELL will continue to conduct CTL's business and maintain its
business relationships in the ordinary and usual course and will not, except as
set forth in the CTL Disclosure Schedule or with the prior written consent of
Jaymark:
(a) borrow any money which borrowings exceed in the aggregate
Five Thousand Dollars ($5,000);
(b) incur or commit to incur any capital expenditure or
commitment for additions to property, plant and equipment individually in excess
of Five Thousand Dollars ($5,000);
(c) lease, license, sell, transfer or encumber or permit to be
encumbered any asset, Intellectual Property or other property associated with
the business of CTL (including sales or transfers to Affiliates of CTL or
INTERCELL), except for licenses granted in the usual and ordinary course of
business and except for cash applied in payment of CTL's respective liabilities
in the usual and ordinary course of its business;
(d) dispose of any of its assets, except inventory in the regular
and ordinary course of business;
(e) enter into any lease or contract for the purchase or sale of
any property, real or personal, except in the ordinary course of business;
22
(f) fail to maintain its equipment and other assets in good
working condition and repair according to the standards it has maintained up to
the date of this Agreement, subject only to ordinary wear and tear;
(g) pay any bonus, increased salary, or special remuneration to
any officer or employee, including any amounts for accrued but unpaid bonuses;
(h) declare, set aside or pay any cash or stock dividend or other
distribution in respect of capital, or redeem or otherwise acquire any of its
capital stock;
(i) amend or terminate any Material Contract, agreement or
license to which it is a party except in the ordinary course of business;
(j) loan any amount to any Person or Entity, or guaranty or act
as a surety for any obligation;
(k) waive or release any right or claim, except in the ordinary
course of business;
(l) issue or sell any shares of its capital stock of any class or
any other of its securities, or issue or create any warrants, obligations,
subscriptions, options, convertible securities, or other commitments to issue
shares of capital stock;
(m) split or combine the outstanding shares of its capital stock
of any class or enter into any recapitalization affecting the number of
outstanding shares of its capital stock of any class or affecting any other of
its securities;
(n) merge, consolidate or reorganize with any Entity;
(o) amend its articles of incorporation or bylaws;
(p) make or change any election, change any annual accounting
period, adopt or change any accounting method, file any amended Tax Return,
enter into any closing agreement, settle any tax claim or assessment relating to
CTL [or the consolidated group], surrender any right to claim refund of Taxes,
consent to any extension or waiver of the limitation period applicable to any
tax claim or assessment relating to CTL [or the consolidated group], or take any
other action or omit to take any action, if any such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other action or omission
would have the effect of increasing the Tax liability of CTL or Jaymark;
(q) do anything that is not contemplated in this Agreement or
would cause there to be a material adverse change in the CTL Financial
Statements (with such CTL Financial Statements analyzed as if they had been
prepared according to GAAP, and including but not limited to cash distributions
or decreases in the net assets of CTL), except as would occur in the ordinary
course of CTL's business, between October 26, 1997 and the Closing Date; or
(r) agree to do any of the things described in the preceding
clauses Section 4.3(a) through (q).
23
4.4 RISK OF LOSS. Except as otherwise provided in this Agreement,
until the Closing, all risk of loss, damage or destruction to CTL's assets shall
be borne by INTERCELL.
4.5 ACCESS TO INFORMATION. Until the Closing and subject to Section
6.1 of this Agreement, CTL shall allow Jaymark and its agents free access upon
reasonable notice and during normal working hours to its files, books, records,
and offices, including, without limitation, any and all information relating to
taxes, commitments, contracts, leases, licenses, and personal property and
financial condition. Until the Closing, INTERCELL shall cause its accountants
to cooperate with Jaymark and its agents in making available all financial
information requested, including without limitation the right to examine all
working papers pertaining to all financial statements prepared or audited by
such accountants.
4.6 SATISFACTION OF CONDITIONS PRECEDENT. INTERCELL and CTL will use
their Best Efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Article 8, and INTERCELL will use its Best
Efforts to cause the transactions contemplated in this Agreement to be
consummated, and, without limiting the generality of the foregoing, to obtain
all Material Consents and other consents and authorizations of third parties and
to make all filings with, and give all notices to, third parties which may be
necessary or reasonably required on its part in order to effect the transactions
contemplated herein.
4.7 OTHER NEGOTIATIONS. Between the date hereof and February 6,
1998, (subject to extension upon mutual agreement), or such earlier date as
Jaymark and INTERCELL mutually agree to discontinue discussions of the
Acquisition, INTERCELL and CTL will not (and INTERCELL and CTL will assure that
their respective officers, directors, employees, agents and Affiliates do not on
their behalf) take any action to solicit, initiate, seek, encourage or support
any inquiry, proposal or offer from, furnish any information to, or participate
in any negotiations with, any corporation, partnership, Person or other Entity
or group (other than discussions with Jaymark) regarding any acquisition of CTL,
any merger or consolidation with or involving CTL, or any acquisition of any
material portion of the stock or assets of CTL. INTERCELL agrees that any such
negotiations in progress as of the date hereof will be terminated or suspended
during such period. In no event will INTERCELL or CTL solicit or enter into an
agreement concerning any such third party transaction. INTERCELL represents and
warrants that it has the legal right to terminate or suspend any such pending
negotiations. If between the date of this Agreement and the termination of this
Agreement, INTERCELL or CTL receives from a third party any offer or indication
of interest regarding any of the transactions referred to above, or any request
for information regarding any of such transactions, INTERCELL shall (a) notify
Jaymark immediately of such offer, indication of interest or request, including
the full terms of any proposal therein, (b) notify such third party of
INTERCELL's obligations under this Agreement and (c) reject any offer so
received.
5. PRECLOSING AND OTHER COVENANTS OF JAYMARK.
5.1 ADVICE OF CHANGES. Jaymark will promptly advise INTERCELL in
writing of any event occurring subsequent to the date of this Agreement which
would render any Jaymark representation or warranty, if made on or as of the
date of such event or the Closing Date, untrue or inaccurate in any respect.
24
5.2 SATISFACTION OF CONDITIONS PRECEDENT. INTERCELL will use its
Best Efforts to satisfy or cause to be satisfied all the conditions precedent
which are set forth in Article 7, and Jaymark will use its Best Efforts to cause
the transactions contemplated in this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties which may be necessary or reasonably required on its
part in order to effect the transactions contemplated herein.
6. MUTUAL COVENANTS.
6.1 CONFIDENTIALITY. Each party acknowledges that in the course of
the performance of this Agreement it may obtain the Confidential Information of
the other party. The Receiving Party shall, at all times, both during the term
of this Agreement and thereafter, keep in confidence and trust all of the
Disclosing Party's Confidential Information received by it. The Receiving Party
shall not use the Confidential Information of the Disclosing Party other than as
expressly permitted under the terms of this Agreement or by a separate written
agreement. The Receiving Party shall take all reasonable steps to prevent
unauthorized disclosure or use of the Disclosing Party's Confidential
Information and to prevent it from falling into the public domain or into the
possession of unauthorized persons. The Receiving Party shall not disclose
Confidential Information of the Disclosing Party to any Person or Entity other
than its officers or employees (or outside legal, financial or accounting
advisors) who need access to such Confidential Information in order to effect
the intent of this Agreement and who have entered into confidentiality
agreements with such Person's employer or who are subject to ethical
restrictions on disclosure which protects the Confidential Information of the
Disclosing Party. The Receiving Party shall immediately give notice to the
Disclosing Party of any unauthorized use or disclosure of Disclosing Party's
Confidential Information. The Receiving Party agrees to assist the Disclosing
Party to remedy such unauthorized use or disclosure of its Confidential
Information. These obligations shall not apply to the extent that Confidential
Information includes information which:
(a) is already known to the Receiving Party at the time of
disclosure, which knowledge the Receiving Party shall have the burden of
proving;
(b) is, or through no act or failure to act of the Receiving
Party becomes, publicly known;
(c) is received by the Receiving Party from a third party without
restriction on disclosure (although this exception shall not apply if such third
party is itself violating a confidentiality obligation by making such
disclosure);
(d) is independently developed by the Receiving Party without
reference to the Confidential Information of the Disclosing Party, which
independent development the Receiving Party will have the burden of proving;
(e) is approved for release by written authorization of the
Disclosing Party; or
25
(f) is required to be disclosed by Laws or Decrees, a Government
Body or by a proper order of a court of competent jurisdiction; provided,
however that the Receiving Party will use its Best Efforts to minimize such
disclosure and will, with respect to a proper order, consult with and assist the
Disclosing Party in obtaining a protective order prior to such disclosure.
6.2 NO PUBLIC ANNOUNCEMENT. Prior to the Closing, the parties shall
make no public announcement concerning the Acquisition, this Agreement, any of
the terms or conditions set forth in this Agreement or any of the transactions
contemplated in this Agreement or any of the Transaction Documents. INTERCELL
may, but only after consultation with Jaymark, at any time make disclosure if it
is advised by its legal counsel that such disclosure is required under
applicable Laws or Decrees. Except as otherwise permitted in this Section 6.2,
under no circumstances will Jaymark, CTL or INTERCELL (or any of their
respective officers, directors, employees, Affiliates or agents) discuss or
disclose the existence or terms or conditions set forth in this Agreement with
or to any third party other than such legal, accounting and financial advisors
of Jaymark or INTERCELL who have a need to know such information solely for the
purposes of Jaymark or INTERCELL, as the case may be, with respect to the
Acquisition.
6.3 REGULATORY FILINGS; CONSENTS; REASONABLE EFFORTS. Subject to the
terms and conditions of this Agreement, each of INTERCELL and Jaymark shall use
its respective Best Efforts to (a) make all necessary filings with respect to
the Acquisition and this Agreement under the Securities Act, the Exchange Act
and applicable blue sky or similar securities laws and obtain required approvals
and clearances with respect thereto and supply all additional information
requested in connection therewith, (b) make any and all appropriate filings with
federal, state or local governmental bodies or applicable foreign governmental
agencies and obtain required approvals and clearances with respect thereto and
supply all additional information requested in connection therewith, (c) obtain
all consents, waivers, approvals, authorizations and orders required in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the Acquisition and (d) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated in this
Agreement as promptly as practicable, but no later than February 6, 1998.
6.4 FURTHER ASSURANCES. Prior to and following the Closing, each
party agrees to cooperate fully with the other parties and to execute such
further instruments, documents and agreements, and to give such further written
assurances, as may be reasonably requested by any other party to better evidence
and reflect the transactions described herein and the Transaction Documents and
contemplated herein and therein and to carry into effect the intents and
purposes of this Agreement.
7. CONDITIONS TO INTERCELL'S OBLIGATION TO CLOSE. The obligations of
INTERCELL to close the transactions contemplated in this Agreement are subject
to the fulfillment or satisfaction on and as of the Closing Date of each of the
following conditions (any one or more of which may be waived by INTERCELL but
only in a writing signed by INTERCELL):
26
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The Jaymark
Representations and Warranties set forth in Article 3 shall be true and correct
when made and on and as of the Closing Date with the same force and effect as if
they had been made as to the Closing Date, and INTERCELL shall receive a
certificate to such effect signed by the President of Jaymark.
7.2 COVENANTS. Jaymark shall have performed and complied with all of
its covenants and obligations required to be performed or complied with prior to
the Closing Date on or before the Closing Date, and INTERCELL shall receive a
certificate from Jaymark to such effect signed by the President of Jaymark.
7.2 AUTHORIZATIONS. INTERCELL shall have received from Jaymark
written evidence that the execution, delivery and performance of Jaymark's
obligations under this Agreement have been duly and validly approved and
authorized prior to the date hereof by the board of directors of Jaymark and
INTERCELL shall receive a certificate from Jaymark to such effect signed by the
President of Jaymark.
7.4 GOVERNMENT CONSENTS. There shall have been obtained on or prior
to the Closing Date such Permits or authorizations, and there shall have been
taken such other action, as may be required by any regulatory authority having
jurisdiction over the parties and the subject matter and the actions herein
proposed to be taken.
7.5 NO LITIGATION. On and as of the Closing Date, no litigation or
proceeding shall be threatened or pending against Jaymark for the purpose or
with the probable effect (in the reasonable opinion of Jaymark's counsel) of
enjoining or preventing the consummation of any of the transactions contemplated
in this Agreement.
7.6 ESCROW AGREEMENT. Each of Jaymark, INTERCELL and the Indemnity
Escrow Agent shall have executed and delivered the Indemnity Escrow Agreement in
the form attached hereto as Exhibit G and the Indemnity Escrow Fund shall have
been posted with the Indemnity Escrow Agent.
7.7 PROMISSORY NOTE. Jaymark and INTERCELL shall have executed and
delivered the Promissory Note in the form attached hereto as Exhibit D.
8. CONDITIONS TO JAYMARK'S OBLIGATIONS TO CLOSE. The obligations of
Jaymark to close the transactions contemplated by this Agreement are subject to
the fulfillment or satisfaction on and as of the Closing Date of each of the
following conditions (any one or more of which may be waived by Jaymark, but
only in a writing signed by Jaymark):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The INTERCELL
Representations and Warranties made in Article 2 and in any certificate
delivered by INTERCELL or CTL in connection with this Agreement shall be true
and correct when made and on and as of the Closing Date with the same force and
effect as if they had been made as of the Closing.
8.2 COVENANTS. Each of INTERCELL and CTL shall have performed and
complied with all of its or their respective covenants and obligations required
to be performed or
27
complied with on or before the Closing Date contained in this Agreement on or
before the Closing Date.
8.2 NO LITIGATION. On and as of the Closing Date, no litigation or
proceeding shall be threatened or pending against CTL or INTERCELL for the
purpose or with the probable effect (in the reasonable opinion of INTERCELL's
counsel) of enjoining or preventing the consummation of any of the transactions
contemplated in this Agreement, or which would have a material adverse effect on
the business, assets, liabilities, income, property, financial condition or
results of operations of CTL subsequent to the Closing, and no material
judgment, decree, injunction or order of any court, governmental department,
commission, agency, instrumentality or arbitrator shall be outstanding against
CTL.
8.4 AUTHORIZATIONS. Jaymark shall have received from INTERCELL
written evidence that the execution, delivery and performance of INTERCELL's
obligations under this Agreement have been duly and validly approved and
authorized by INTERCELL's board of directors.
8.5 REQUIRED CONSENTS. Jaymark shall be reasonably satisfied that
INTERCELL has engaged in its Best Efforts to obtain and deliver to Jaymark all
written consents, assignments, waivers, authorizations or other certificates,
including but not limited to the Material Consents, reasonably deemed necessary
by Jaymark's legal counsel to provide for the continuation in full force and
effect or assignment or termination of any and all contracts and leases of CTL.
8.6 OPINION OF INTERCELL'S COUNSEL. Jaymark shall have received from
counsel to INTERCELL, an opinion in substantially the form attached hereto as
Exhibit H.
8.7 EMPLOYMENT AGREEMENTS. Each of ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have executed and delivered an employment
agreement regarding their respective employment with CTL.
8.8 GOVERNMENT CONSENTS. There shall have been obtained at or prior
to the Closing Date such Permits or authorizations, and there shall have been
taken such other actions, as may be required by any regulatory authority having
jurisdiction over the parties and the subject matter and the transactions
contemplated herein.
8.9 CONFIDENTIALITY AGREEMENT AND ASSIGNMENT OF INVENTIONS.
Confidentiality Agreement and Assignment of Inventions agreements, reasonably
satisfactory in form and content to Jaymark, shall have been executed by all
current employees of CTL and by all current consultants to and independent
contractors of CTL who have not already signed such agreements.
8.10 ESCROW AGREEMENT. Each of Jaymark, INTERCELL and the Indemnity
Escrow Agent shall have executed and delivered the Indemnity Escrow Agreement in
the form attached hereto as Exhibit G and the Indemnity Escrow Fund shall have
been posted with the Indemnity Escrow Agent.
28
8.10 RESIGNATIONS OF CTL OFFICERS AND DIRECTORS. All of the officers
and directors of CTL listed on Section 8.11 of the CTL Disclosure Schedule shall
have executed and delivered to Jaymark written resignations, effective as of the
Closing Date.
8.12 RECEIPT OF CERTIFICATES. Jaymark shall have received at Closing
certificates signed by the President and Chief Financial Officer of CTL and
INTERCELL certifying the accuracy of the matters set forth in Sections 8.1, 8.2,
8.3, and 8.4 (as such matters relate to CTL and INTERCELL).
8.13 NO MATERIAL ADVERSE CHANGE. There shall not have been any
material adverse change in the business, assets, properties, financial condition
or results of operations of CTL since October 26, 1997.
8.14 SATISFACTORY COMPLETION OF JAYMARK'S DUE DILIGENCE REVIEW.
Jaymark shall have completed its due diligence investigation of CTL to its
reasonable satisfaction.
8.15 ACCOUNTING TREATMENT. Jaymark shall have received confirmation
by its auditors that the Acquisition will receive Jaymark's desired in process
research and development purchase accounting treatment; provided, however, that
Jaymark will have obtained a preliminary favorable determination from its
auditors as to the availability of such accounting treatment on or before the
date of this Agreement.
8.16 (INTENTIONALLY LEFT BLANK)
8.17 Environmental Remediation and Indemnification Agreement.
Jaymark, INTERCELL and CTL shall have executed and delivered the Environmental
Remediation and Indemnification Agreement in the form attached hereto as
Exhibit C.
8.18 EVIDENCES OF TERMINATION OF INDEBTEDNESS AND SECURITY INTERESTS
AND RELEASES OF LIENS. Except as listed on Section 8.18 of the CTL Disclosure
Schedule, INTERCELL shall have delivered to Jaymark (a) payoff letters
containing provisions legally sufficient to terminate all indebtedness of CTL
not reflected on the October 26, 1997 Balance Sheet (the "Indebtedness") and any
security interests granted by INTERCELL or CTL in connection with the
Indebtedness, (b) canceled original promissory notes evidencing all of the
Indebtedness, (c) executed UCC Termination Statements for each UCC-1 Financing
Statement filed in connection with the Indebtedness and (d) any other
documentation reasonably requested by counsel to Jaymark to effect the
termination of the Indebtedness and all security interests granted and liens
arising in connection with the Indebtedness.
9. TERMINATION OF AGREEMENT.
9.1 MUTUAL CONSENT. This Agreement may be terminated at any time
before the Closing Date, by the mutual written consent of Jaymark and INTERCELL,
approved by their respective boards of directors.
9.1 TERMINATION BY JAYMARK. This Agreement may be terminated at any
time before the Closing Date by Jaymark upon written notice to INTERCELL,
specifying the basis for such termination, if (a) INTERCELL shall have breached
in any material respect any of
29
the INTERCELL Representations and Warranties or any of INTERCELL's covenants or
agreements contained in this Agreement, (b) any INTERCELL Representation or
Warranty contained in this Agreement shall have been materially inaccurate, or
(c) through no fault of Jaymark, the Closing shall not have occurred on or
before February 6, 1998.
9.3 TERMINATION BY INTERCELL. This Agreement may be terminated at
any time before the Closing Date by INTERCELL upon written notice to Jaymark,
specifying the basis for such termination, if (a) Jaymark shall have breached in
any material respect any of Jaymark's Representations and Warranties or any of
its covenants or agreements contained in this Agreement, (b) any Jaymark
Representation or Warranty contained in this Agreement shall have been
materially inaccurate, or (c) through no fault of INTERCELL, the Closing shall
not have occurred on or before February 6, 1998.
9.4 TERMINATION FOR OTHER REASONS. This Agreement may be terminated
at any time before the Closing Date by either Jaymark or INTERCELL if a court of
competent jurisdiction or other Governmental Entity shall have issued a final
order, decree or ruling, or taken any other action, or failed to grant its
consent, having the effect of permanently restraining, enjoining or otherwise
prohibiting the Acquisition, and all appeals with respect to such order or
action have been exhausted or the time for appeal of such order, decree, ruling,
action or consent shall have expired.
9.5 EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to Sections 9.1, 9.2, 9.3 or 9.4 hereof, there shall be no
Liability or obligation on the part of Jaymark, INTERCELL or CTL or their
respective officers, directors, stockholders or Affiliates, except to the extent
that such termination results from the willful breach by a part of any of their
or its respective representations, warranties, covenants or agreements in this
Agreement; provided, however, that the provisions of Sections 6.1, and 6.2 of
this Agreement shall remain in full force and effect and survive the termination
of this Agreement.
10. POST-CLOSING COVENANTS.
10.1 CLOSING BALANCE SHEET. In accordance with Section 1.4(b),
INTERCELL shall deliver to Jaymark the Closing Financial Statements.
10.2 PURCHASE PRICE ADJUSTMENT AND ADJUSTMENT PAYMENT. In accordance
with Section 1.4, the Purchase Price Adjustment shall be determined and the
Adjustment Payment, if any, shall be made.
10.3 NONCOMPETITION. For and in consideration of the payment by
Jaymark to INTERCELL of the Consideration, INTERCELL hereby covenants to and
agrees with Jaymark that, except as otherwise expressly consented to, approved
or otherwise permitted by the Board of Directors of Jaymark in writing, for a
period of four (4) years commencing on the Closing Date (provided, however, that
such period shall be extended by and for the duration of any period of time
during which INTERCELL is in violation of any provision of this Agreement),
INTERCELL and its officers, directors, employees and agents shall not, directly
or indirectly, acting alone, or as a member of a partnership or other business
entity or as a holder of any security of any class issued by a corporation or
other business entity or as creditor, partner, distributor or representative of
any corporation, partnership or other business entity or otherwise:
30
(a) engage, within the State of California or in any other
jurisdiction in which CTL carries on business, in any business, trade or other
enterprise substantially similar to or directly or indirectly in competition
with the business of CTL as it then exists; extend or assist in arranging credit
to establish or conduct any such business or permit its name, reputation or
affiliations to be used in connection with any such business;
(b) use or disclose to any person, firm, corporation, association
or other entity (except as required by law) any confidential or proprietary
information pertaining to the organization, business, inventions, discoveries,
customers, suppliers, operations, affairs or other trade secrets of CTL at any
time; provided, however, that such obligations of non-use and non-disclosure
shall not apply to information that is or becomes a part of the public domain
without breach of the aforementioned obligations of INTERCELL or its officers,
directors, employees or agents;
(c) request, induce or attempt to influence any current, future
or prospective customer or supplier of CTL to limit, curtail or cancel its
business with CTL; or
(d) request, induce or attempt to influence any current, future
or prospective officer, director, employee, consultant, agent or representative
of CTL to (i) terminate his, her or its employment or business relationship with
CTL or (ii) commit any act that, if committed by CTL, would constitute a breach
of any provision hereof.
10.4 ENVIRONMENTAL REPORTS. INTERCELL hereby covenants and agrees to
promptly provide Jaymark with a copy of any and all reports, plans, schedules
and other documents relating to the planning and progress of the environmental
remediation effort to take place at the Santa ▇▇▇▇ Site.
11. INDEMNIFICATION AND ESCROW.
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties, covenants and agreements contained in this
Agreement (including representations and warranties set forth in any of the
Transaction Documents and certificates delivered by the parties in connection
with this Agreement) shall survive (and not be affected in any respect by) the
Closing, any investigation conducted by any party hereto and any information
which any party may receive, until the end of the Indemnification Period,
whereupon all such representations, warranties, covenants and agreements shall
expire and terminate and shall be of no further force or effect, except as
follows: (i) the representations and warranties contained in Sections 2.9, 2.19
and 2.22 shall survive the Closing for the period of the applicable statute of
limitations plus any extensions or waivers granted or imposed with respect
thereto or, if no statute of limitations is applicable, indefinitely; (ii) the
representations and warranties in Section 2.3(a) shall survive indefinitely; and
(iii) the representations, warranties, covenants and agreements relating to any
Deficiency (as defined in Section 11.4) of which the Indemnifying Party has
received notice from the other party prior to the expiration of the
Indemnification Period (except that notice relative to claims made pursuant to
the above referenced Sections 2.9, 2.19 and 2.22 need only be made prior to the
expiration of such representations and warranties as provided above), shall
survive until the existence of such Deficiency has been finally established and
the Deficiency is resolved as provided below. Provided, however, that the
termination
31
hereunder of any of the above representations and warranties shall not terminate
or limit in any manner whatsoever any rights which INTERCELL or Jaymark may have
pursuant to this Article 11 for Deficiencies arising out of or resulting from
fraud or knowing and intentional misrepresentation relating to such
representations and warranties.
11.2 BASIC PROVISION.
(a) INTERCELL (sometimes hereinafter an "Indemnifying Party")
hereby agrees to indemnify and hold harmless Jaymark, its directors, officers,
employees and all Persons which directly or indirectly, through one or more
intermediaries, control, are controlled by, or are under common control with
Jaymark, and their respective successors and assigns (collectively, the "Jaymark
Indemnitees") from, against and in respect of, and to reimburse Jaymark
Indemnitees for, the amount of any and all Deficiencies (as defined in Section
11.4).
(b) Jaymark (sometimes hereinafter an "Indemnifying Party")
hereby agrees to indemnify and hold harmless INTERCELL and its directors,
officers, employees and all Persons which directly or indirectly, through one or
more intermediaries, control, are controlled by, or are under common control
with INTERCELL, and their respective successors and assigns (collectively, the
"INTERCELL Indemnitees") from, against and in respect of, and to reimburse the
INTERCELL Indemnitees for, the amount of any and all Deficiencies (as defined in
Section 11.4)
(c) If, subsequent to the Closing, CTL suffers, incurs or
otherwise becomes subject to any Deficiencies as a result of or in connection
with any breach of any representation, warranty, covenant or obligation set
forth in this Agreement, then Jaymark shall also be deemed, by virtue of its
ownership of the stock of CTL, to have incurred Deficiencies as a result of and
in connection with such breach.
11.3 ENVIRONMENTAL INDEMNIFICATION. During the period of the
applicable statute of limitations plus any extensions granted with respect
thereto, or, if no statute of limitations is applicable, indefinitely, INTERCELL
and its successors and assigns agree to indemnify, defend, reimburse and hold
harmless Jaymark and its Affiliates and its and their respective stockholders,
partners, members, officers, directors, employees, owners, agents,
representatives, successors and permitted assigns from and against any and all
Losses, liabilities, damages, demands, claims, actions, judgments, causes of
action, defects in title, assessments, penalties, costs and expenses (including,
without limitation, the reasonable fees and disbursements of outside legal
counsel, accountants and consultants and the reasonable charges of in-house
legal counsel, accountants, and other personnel), and all foreseeable and
unforeseeable consequential damages (including, without limitation, costs of any
and all investigations, costs of clean-up, removal, repair, remediation,
detoxification, closure, site restoration, or any other remedial acts that are
required to be performed on or with respect to any Facility) that are imposed by
any Environmental Laws.
11.4 DEFINITION OF "DEFICIENCIES."
(a) As used in this Article 11 the term "Deficiencies" when
asserted by Jaymark Indemnitees or arising out of a third party claim against
Jaymark Indemnitees shall
32
mean any and all Losses, damages, liabilities and claims sustained by the
Jaymark Indemnitees and arising out of, based upon or resulting from:
(i) Any misrepresentation, breach of warranty, or any non-
fulfillment of any representation, warranty, covenant, obligation or agreement
on the part of INTERCELL contained in or made pursuant to this Agreement;
(ii) Any error contained in any written statement, report,
certificate or other document or instrument delivered to the Jaymark Indemnitees
by INTERCELL pursuant to this Agreement or contained in any of the Transaction
Documents or any exhibits or schedules hereto or thereto;
(iii) The Assignment, Assumption and Release Agreements as
attached hereto as Exhibit I, except for liabilities expressly assumed by
Jaymark.
(iv) Any Purchase Price Adjustment pursuant to Section 1.4
if not paid when due; and
(v) Any and all acts, suits, proceedings, demands,
assessments and judgments, and all reasonable fees, costs and expenses of any
kind, related or incident to any of the foregoing (including, without
limitation, any and all Legal Expenses);
(vi) Notwithstanding anything to the contrary in this
Section 11.4, INTERCELL and Jaymark agree that all liabilities incurred by
Jaymark in connection with items listed on Sections 2.19(e) and 2.22 of the CTL
Disclosure Schedule shall be deemed to be Deficiencies.
(b) As used in this Article 11, the term "Deficiencies" when
asserted by INTERCELL Indemnitees or arising out of a third party claim against
INTERCELL Indemnitees shall mean any and all Losses, damages, liabilities and
claims sustained by the INTERCELL Indemnitees and arising out of, based upon or
resulting from:
(i) Any misrepresentation, breach of warranty, or any non-
fulfillment of any representation, warranty, covenant, obligation or agreement
on the part of Jaymark contained in or made pursuant to this Agreement;
(ii) Any error contained in any written statement, report,
certificate or other document or instrument delivered to the INTERCELL
Indemnitees by Jaymark pursuant to this Agreement or contained in any or the
Transaction Documents or any exhibits or schedules hereto or thereto;
(iii) Any and all acts, suits, proceedings, demands,
assessments and judgments, and all fees, costs and expenses of any kind, related
or incident to any of the foregoing (including, without limitation, any and all
Legal Expenses); and
(iv) Any Purchase Price Adjustment pursuant to Section 1.4
if not paid when due.
33
11.5 PROCEDURES FOR ESTABLISHMENT OF DEFICIENCIES.
(a) In the event that any claim shall be asserted by any third
party against the Jaymark Indemnitees or INTERCELL Indemnitees (Jaymark
Indemnitees or INTERCELL Indemnitees, as the case may be, shall hereinafter be
referred to as the "Indemnitees"), or any claim is asserted falling within the
scope of Section 11.3 above, which, if sustained, would result in a Deficiency,
then the Indemnitees, within a reasonable time after learning of such claim,
shall notify the Indemnifying Party of such claim, and shall extend to the
Indemnifying Party a reasonable opportunity to defend against such claim, at the
Indemnifying Party's sole expense and through legal counsel acceptable to the
Indemnitees, provided that the Indemnifying Party proceeds in good faith,
expeditiously and diligently. The Indemnitees shall, at their option and
expense, have the right to participate in any defense undertaken by the
Indemnifying Party with legal counsel of their own selection. No settlement or
compromise of any claim which may result in a Deficiency may be made by the
Indemnifying Party without the prior written consent of the Indemnitees unless:
(i) prior to such settlement or compromise the Indemnifying Party acknowledges
in writing its obligation to pay in full the amount of the settlement or
compromise and all associated expenses; and (ii) the Indemnitees are furnished
with security reasonably satisfactory to the Indemnitees that the Indemnifying
Party will in fact pay such amount and expenses. No settlement or compromise of
any claim which acknowledges any liability for a violation of law, or purports
to impose any non-monetary obligation on the indemnified party may be entered
into without such party's consent.
(b) In the event that the Indemnitees assert the existence of any
Deficiency against the Indemnifying Party, they shall give written notice to the
Indemnifying Party of the nature and amount of the Deficiency asserted. If
within thirty (30) days after the giving of the written notice by the
Indemnitees the Indemnifying Party does not provide written notice to the
Indemnitees that the Indemnifying Party intends to contest the assertion by the
Indemnitees (such notice by the Indemnifying Party being hereinafter referred to
as the "Contest Notice"), such assertion of the Indemnitees shall be deemed
accepted and the amount of the Deficiency shall be deemed established. In the
event, however, that a Contest Notice is given to the Indemnitees within said
30-day period, then the contested assertion of a Deficiency shall be settled by
arbitration to be held in San Diego, California, in accordance with the
Commercial Rules of the American Arbitration Association then existing. The
determination of the arbitrator shall be delivered in writing to the
Indemnifying Party and the Indemnitees and shall be final, binding and
conclusive upon all of the parties hereto, and the amount of the Deficiency, if
any, determined to exist, shall be deemed established.
(c) The Indemnitees and the Indemnifying Party may agree in
writing, at any time, as to the existence and amount of a Deficiency, and, upon
the execution of such agreement such Deficiency shall be deemed established.
(d) Notwithstanding anything to the contrary in this Section
11.5, the failure to promptly notify the Indemnifying Party of any third party
claim or the alleged existence of a Deficiency will not relieve the Indemnifying
Party of any liability it may have to any Indemnitee, except to the extent that
the Indemnifying Party demonstrates that it has been prejudiced by the
Indemnitee's failure to timely give such notice.
34
11.6 PAYMENT OF DEFICIENCIES.
(a) Notwithstanding the establishment of a Deficiency in
accordance with Section 11.5, after the Closing INTERCELL shall not be liable to
the Jaymark Indemnitees for the first Ten Thousand Dollars ($10,000) of
aggregate Deficiencies except to the extent such aggregate Deficiencies exceed
$10,000 at which point indemnification shall then be made by INTERCELL for the
full amount of such Deficiencies.
(b) The Indemnifying Party hereby agrees to pay the amount of
established Deficiencies within thirty (30) days after the establishment
thereof. The amount of established Deficiencies shall be paid in cash. Any
amounts not paid by the Indemnifying Party when due under this Section shall
bear interest from and after the due date thereof until the date paid at a rate
equal to the lesser of: (i) fifteen percent (15%) per annum; or (ii) the highest
legal rate permitted by applicable law. At the option of the Indemnitees, the
Indemnitees may offset any Deficiency established in accordance with this
Agreement or any portion thereof that has not been paid by the Indemnifying
Party to the Indemnitees against any obligation the Indemnitees, or any of them,
may have to the Indemnifying Party.
11.7 LEGAL EXPENSES. As used in this Article 11, the term "Legal
Expenses" shall mean any and all reasonable fees (whether of attorneys,
accountants or other professionals), costs and expenses of any kind reasonably
incurred by any Indemnitees and its counsel in investigating, preparing for,
defending against, or providing evidence, producing documents or taking other
action with respect to any threatened or asserted claim.
11.8 PAYMENT OF PROMISSORY NOTE AND INDEMNITY ESCROW FUND.
(a) On the Closing Date, Jaymark shall deliver its unsecured
corporate promissory note in the amount of Five Hundred Thousand Dollars
($500,000) to INTERCELL Corporation in the form attached hereto as Exhibit D.
The Promissory Note is payable to INTERCELL upon its satisfaction, on or before
the fifth anniversary of the Closing Date, of all of the following conditions:
(i) INTERCELL has delivered to Jaymark a complete and accurate copy of a "no
further action" letter issued by the Santa ▇▇▇▇ County Environmental Health
Department (or other applicable state regulatory agency) relating to the Santa
▇▇▇▇ Site; (ii) there is no claim, investigation, suit, action or proceeding
pending or threatened in writing against INTERCELL, CTL, Jaymark or the Santa
▇▇▇▇ Site relating to the Contamination; and (iii) all invoices, bills and costs
of work performed, whether investigatory or remedial, have been paid in full,
and no such work remains uninvoiced and/or unpaid relating to the Contamination.
The parties acknowledge and agree that the environmental indemnification
obligations of INTERCELL pursuant to the Environmental Remediation and
Indemnification Agreement are in addition to and in no way should be limited by
any of the environmental indemnity provisions contained in this Agreement. This
Section 11.8(a) is not intended to establish a ceiling or maximum amount that
INTERCELL shall indemnify Jaymark Indemnitees.
(b) At Closing, Jaymark shall deliver, in cash, a portion of the
Purchase Price in the amount of Two Hundred Thousand Dollars ($200,000) to
Chicago Title Company as escrow agent (the "Indemnity Escrow Agent"), such
deposit to constitute the "Indemnity Escrow Fund" which shall be governed by the
terms set forth herein and in the form
35
Indemnity Escrow Agreement attached hereto as Exhibit G (the "Indemnity Escrow
Agreement"). The Indemnity Escrow fund will serve as collateral for the
indemnification obligations of and the payment of Deficiencies by INTERCELL as
set forth in this Article 11. Withdrawal of such funds shall be subject to
restrictions consistent with this Article 11 and the terms of the Indemnity
Escrow Agreement. Fifty percent (50%) of such funds that are not then subject to
claims regarding Deficiencies shall be released to INTERCELL one (1) year after
the Closing Date, and the remainder of such funds not then subject to claims
regarding Deficiencies shall be released to INTERCELL on the second anniversary
of the Closing; provided, however, that any funds which are subject to claims
regarding Deficiencies remaining in such account upon the second (2nd)
anniversary of the Closing shall be released to INTERCELL only upon the
resolution of such Deficiencies. This Section 11.8(b) is not intended to
establish a ceiling or maximum amount that INTERCELL shall indemnify Jaymark
Indemnitees pursuant to this Article 11.
12. MISCELLANEOUS.
12.1 GOVERNING LAW. It is the intention of the parties hereto that
the internal laws of the State of California (irrespective of its choice of law
principles) shall govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties hereto.
12.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and unless
otherwise provided in, this Agreement, each and all of the covenants, terms,
provisions, and agreements contained herein shall be binding upon, and inure to
the benefit of, the permitted successors, executors, heirs, Representatives,
administrators and assigns of the parties hereto provided that no party hereto
shall assign this Agreement to any such Entity without the prior written consent
of the other party, which consent shall not be unreasonably withheld.
12.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other Persons or circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
12.4 ENTIRE AGREEMENT. This Agreement, the exhibits hereto, the
documents referenced herein, and the exhibits thereto, constitute the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous agreements
or understandings, inducements or conditions, express or implied, written or
oral, between the parties with respect hereto and thereto.
12.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
36
12.6 EXPENSES. In the event the Acquisition is not consummated, each
party hereto shall pay all of its own costs and expenses incurred with respect
to the negotiation, execution and delivery of this Agreement and the exhibits
hereto. In the event the Acquisition is consummated, (a) all legal, accounting,
investment banking, broker's and finder's fees and expenses incurred by CTL in
connection with the Acquisition shall be deemed to be expenses of INTERCELL, and
(b) all legal, accounting, investment banking, brokers and finders' fees and
expenses incurred by Jaymark in connection with the Acquisition shall be deemed
to be expenses of Jaymark.
12.7 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by Jaymark and INTERCELL. The waiver by
a party of any breach hereof for default in payment of any amount due hereunder
or default in the performance hereof shall not be deemed to constitute a waiver
of any other default or any succeeding breach or default.
12.8 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby notwithstanding any investigation of the parties hereto and are binding
upon the successors and assigns of the parties hereto including, but not limited
to, a receiver, trustee, or debtor in possession, and except as otherwise
provided herein shall terminate on the date two years after the Closing Date.
12.9 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
12.10 ATTORNEYS' FEES. Subject to the limitations or claims set
forth in Article 11 and elsewhere in this Agreement, should suit be brought to
enforce or interpret any part of this Agreement, the prevailing party shall be
entitled to recover, as an element of the costs of suit and not as damages,
reasonable attorneys' fees to be fixed by the court (including, without
limitation, costs, expenses and fees on any appeal). The prevailing party shall
be the party entitled to recover its costs of suit, regardless of whether such
suit proceeds to final judgment. A party not entitled to recover its costs
shall not be entitled to recover attorneys' fees. No sum for attorneys' fees
shall be counted in calculating the amount of a judgment for purposes of
determining if a party is entitled to recover costs or attorneys' fees.
12.11 NOTICES. Any notice provided for or permitted under this
Agreement will be treated as having been given when (a) delivered personally,
(b) sent by confirmed telex or telecopy, (c) sent by commercial overnight
courier with written verification of receipt, or (d) mailed postage prepaid by
certified or registered mail, return receipt requested, to the party to be
notified, at the address set forth below, or at such other place of which the
other party has been notified in accordance with the provisions of this Section
12.11.
37
INTERCELL: INTERCELL Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President and
Chief Executive Officer
With copy to: ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Jaymark: Jaymark, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, President and Chief Executive
Officer
With copy to: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Cameron ▇▇▇ ▇▇▇▇▇, Esq.
Except as provided above, such notice will be treated as having been received
upon actual receipt.
12.12 CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated
by the respective parties hereto and their attorneys and the language hereof
shall not be construed for or against any party. The titles and headings herein
are for reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole.
12.13 NO JOINT VENTURE. Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party shall have any power or authority to bind or
commit any other. No party shall hold itself out as having any authority or
relationship in contravention of this Section 12.13.
12.14 PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, Entity or entities may require.
38
12.15 FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
12.16 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of
this Agreement are intended, nor shall be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, Affiliate, stockholder, partner of any party hereto or any other
Person or Entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the parties
to this Agreement.
12.17 CONSULTATION OF COUNSEL AND ARMS-LENGTH TRANSACTION. Jaymark
and INTERCELL acknowledge that they have been represented by legal counsel of
their own choice throughout all of the negotiations which preceded the execution
of this Agreement and that they have executed this Agreement with the consent
and on the advice of such legal counsel, and without reliance upon any promise
or representation of any person or persons acting for or on behalf of the other
party. Jaymark and INTERCELL further acknowledge that each of them and their
counsel have had adequate opportunity to make whatever investigation or inquiry
they may deem necessary or desirable in connection with the subject matter of
this Agreement prior to the execution hereof and the delivery and acceptance of
the consideration described herein. Jaymark and INTERCELL further acknowledge
that each of them have negotiated this Agreement at arms-length and that each of
them have tendered adequate consideration to the other in connection with this
Agreement.
39
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
JAYMARK, INC., a Delaware corporation
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, President and Chief Executive
Officer
INTERCELL CORPORATION, a Colorado
corporation
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President and Chief
Executive Officer
CALIFORNIA TUBE LABORATORY, INC., a
California corporation
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President and Chief
Executive Officer
40
LIST OF EXHIBITS:
EXHIBIT A: CERTAIN DEFINITIONS
EXHIBIT B: SIDE LETTER AGREEMENT AND SECURITY AGREEMENT
EXHIBIT C: FORM OF ENVIRONMENTAL REMEDIATION AND INDEMNIFICATION AGREEMENT
EXHIBIT D: FORM OF UNSECURED PROMISSORY NOTE
EXHIBIT E: CTL DISCLOSURE SCHEDULE*
EXHIBIT F: JAYMARK DISCLOSURE SCHEDULE*
EXHIBIT G: FORM OF INDEMNITY ESCROW AGREEMENT
EXHIBIT H: FORM OF OPINION OF COUNSEL TO INTERCELL*
EXHIBIT I: ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENTS*
------------------------------
* This Exhibit has been omitted because it does not contain information which is
material to an investment decision and will be supplied supplementally to the
Comission upon request in accordance with Item 601(b)(2) of Regulation S-K.
41
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACCOUNTANTS. "Accountants" shall have the meaning set forth in
Section 1.4 of the Agreement.
ACQUISITION. "Acquisition" shall have the meaning set forth in the
Recitals.
ADJUSTMENT PAYMENT. "Adjustment Payment" shall have the meaning set
forth in Section 1.4 of the Agreement.
ADVANCE PAYMENT. "Advance Payment" shall have the meaning set forth
in Section 1.3 of the Agreement.
AFFILIATE. "Affiliate" shall have the meaning set forth in the rules
and regulations promulgated by the Commission pursuant to the Securities Act.
AGREEMENT. "Agreement" shall mean the Stock Purchase Agreement to
which this Exhibit A is attached.
ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENTS. "Assignment,
Assumption and Release Agreements" shall mean Exhibit I attached to the
Agreement.
BEST EFFORTS. "Best Efforts" shall mean the efforts that a prudent
person desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved as expeditiously as possible; provided,
however, that an obligation to use Best Efforts under this Agreement does not
require the Person subject to that obligation to take actions that would result
in a material adverse change in the benefits to such Person of this Agreement
and the transactions contemplated herein.
CLOSING AND CLOSING DATE. "Closing" and "Closing Date" shall have the
meanings set forth in Section 1.6 of the Agreement.
CLOSING FINANCIAL STATEMENTS. "Closing Financial Statements" shall
have the meaning set forth in Section 1.4 of the Agreement.
CLOSING BALANCE SHEET. "Closing Balance Sheet" shall have the meaning
set forth in Section 1.4 of the Agreement.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
COMMISSION. "Commission" shall mean the United States Securities and
Exchange Commission.
42
CONFIDENTIAL INFORMATION. "Confidential Information" shall mean
confidential information of a party ("Disclosing Party") which is disclosed to
another party ("Receiving Party"). Confidential Information shall include, but
not be limited to, trade secrets, know-how, inventions, techniques, processes,
schematics, designs, contracts, customer lists, financial information, sales and
marketing plans and business information.
CONSIDERATION. "Consideration" shall have the meaning set forth in
Section 1.3 of this Agreement.
CONTAMINATION. "Contamination" shall mean the various toxic and
hazardous substances in the groundwater and soil underlying the Santa ▇▇▇▇ Site
including, but not limited to, tetrachloroethane, trichloroethane, carbon
tetrachloride, motor oil, diesel, polychlorinated biphenyls and various other
contaminants.
CONTEST NOTICE. "Contest Notice" shall have the meaning set forth in
Section 11.5 of this Agreement.
CTL. "CTL" shall mean California Tube Laboratory, Inc., a California
corporation.
CTL COMPONENTS. "CTL Components" shall have the meaning set forth in
Section 2.8 of the Agreement.
CTL DISCLOSURE SCHEDULE. "CTL Disclosure Schedule" shall mean Exhibit
E, as attached to the Agreement.
CTL EMPLOYEE. "CTL Employee" shall have the meaning set forth in
Section 2.14 of the Agreement.
CTL FINANCIAL STATEMENTS. "CTL Financial Statements" shall have the
meaning set forth in Section 2.5.
CTL PRODUCTS. "CTL Products" shall mean those products used or usable
in connection with, or marketed, licensed or sold in connection with CTL's
business and all modifications thereof.
CTL STOCK. "CTL Stock" shall have the meaning set forth in the
Recitals.
DEFICIENCIES. "Deficiencies" shall have the meaning set forth in
Section 11.4 of the Agreement.
DISCLOSING PARTY. "Disclosing Party" shall have the meaning set forth
in the definition of "Confidential Information."
EMPLOYEE PLAN means any (i) employee benefit plan as that term is
defined in Section 3(3) of ERISA and (ii) any other pension, compensation or
benefit, plan, policy or arrangement sponsored, contributed to or maintained by
CTL or any other Affiliate thereof or ERISA Affiliate for the benefit of current
or former employees of CTL.
43
ENCUMBRANCES. "Encumbrances" shall mean any and all restrictions on
or conditions to transfer or assignment, claims, liabilities, liens, pledges,
mortgages, restrictions, and encumbrances of any kind, whether accrued,
absolute, contingent or otherwise affecting CTL's assets.
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
ENVIRONMENTAL LAWS. "Environmental Laws" shall mean any and all
applicable civil, criminal, and administrative laws (including common law),
statutes, codes, rules, regulations, ordinances, orders, decrees, judgments,
Permits, licenses, approvals, authorizations, and other requirements,
directives, consents and obligations lawfully imposed by any Governmental Entity
pertaining to the protection of the environment, protection of ecology,
protection of public health, protection of worker health and safety, and/or the
treatment, emission and/or discharge of gaseous, particulate and/or effluent
pollutants, and/or the Handling of Hazardous Materials, and regulations,
guidelines, and policies promulgated under any of the foregoing, all as amended
from time to time, including, but not limited to the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. 136 et seq. as amended), the Federal
Water Pollution Control Act (33 U.S.C. 1251 et seq. as amended), the Resource
Conservation and Recovery Act (42 U.S. C. 6901 et seq. as amended) ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"),
the Clean Air Act (42 U.S.C. 7401 et seq. as amended), the Toxic Substances
Control Act (15 U.S.C. 2601 et seq. as amended), the Occupational Safety and
Health Act (PL 91-596), related common law doctrines, and any similar state,
country, foreign, or local laws, rules and regulations.
ENVIRONMENTAL REMEDIATION AND INDEMNIFICATION ESCROW AGREEMENT.
"Environmental Remediation and Indemnification Agreement" shall mean Exhibit C,
as attached to the Agreement.
ERISA. "ERISA" shall mean the Employment Retirement Income Security
Act of 1974, as amended.
ERISA AFFILIATE means any corporation or trade or business member of
any group of organizations described in Section 414(b), (c), (m) or (o) of the
Code of which CTL is a member.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any substituted federal statute and the rules and
regulations thereunder, all as the same shall be in effect at the time.
FACILITY. "Facility" shall mean any facility or real property,
including without limitation any improvement, equipment, structure, building, or
fixture thereat, that is currently owned, used, occupied, controlled, or rented,
or was formerly owned, used, occupied, controlled or rented in connection with
the business of CTL.
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GAAP. "GAAP" shall mean generally accepted accounting principles, as
in effect in the United States from time to time, and as supplemented by
Regulation S-X as promulgated by the Commission, as in effect from time to time,
applied on a consistent basis.
GOVERNMENTAL ENTITY. "Governmental Entity" shall mean any court, or
any federal, state, municipal, provincial or other governmental authority,
department, commission, board, service, agency or other instrumentality.
HANDLING OR HANDLED. "Handling" or "Handled" shall mean used,
generated, manufactured, processed, contained, transferred, recycled, stored,
treated, loaded, transported, removed or Released.
HAZARDOUS MATERIALS. "Hazardous Materials" shall mean any substance,
waste, material, chemical, compound or mixture which is (or which contains any
substance, waste, material, chemical, compound, or mixture which is) harmful or
threatens to harm the environment, ecology, or public health, or which is
flammable, ignitable, corrosive, reactive, radioactive, or explosive, or which
is defined, listed, designated, described or characterized under Environmental
Laws or under any rules, guidances, policies, or regulations promulgated
thereunder, as hazardous, toxic, a contaminant, a pollutant or words of similar
import, and includes without limitation any asbestos, polychlorinated biphenyls,
petroleum (including crude oil or any fraction or distillate thereof), natural
gas, natural gas liquids, and liquefied natural gas.
INDEBTEDNESS. "Indebtedness" shall have the meaning set forth in
Section 8.18 of the Agreement.
INDEMNIFICATION PERIOD. "Indemnification Period" shall mean the
period commencing on the Closing Date and ending at the close of business on the
date two (2) years following the Closing Date.
INDEMNIFYING PARTY. "Indemnifying Party" shall have the meaning set
forth in Section 11.2 of the Agreement.
INDEMNITEES. "Indemnitees" shall have the meaning set forth in
Section 11.5 of the Agreement.
INDEMNITY ESCROW AGENT. "Indemnity Escrow Agent" shall have the
meaning set forth in Section 11.8 of the Agreement.
INDEMNITY ESCROW AGREEMENT. "Indemnity Escrow Agreement" shall mean
Exhibit G, as attached to the Agreement.
INDEMNITY ESCROW FUND. "Indemnity Escrow Fund" shall have the meaning
set forth in Section 11.8 of the Agreement.
INTELLECTUAL PROPERTY. "Intellectual Property" shall mean any and all
(a) Trademarks and Patent Rights, (b) Related Know-How, (c) copyrights, moral
rights, mask works, trade dress and other rights in works of authorship,
including all registrations and applications therefor relating to CTL, (d)
inventions, ideas, discoveries, technologies, customer
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lists and vendor lists, methodologies, processes, product information, formulae,
databases, designs, design information, algorithms, engineering specifications
and work papers, techniques, prototypes and development work in progress and all
other intangible, intellectual, proprietary and industrial property rights
relating to CTL, (e) tangible embodiments, documentation and media constituting,
describing or relating to any of (a) through (d) above, (f) copies of the items
described in (a) through (e) above and (g) licenses or written agreements
relating to any of (a) through (f) above.
INTERCELL INDEMNITEES. "INTERCELL Indemnitees" shall have the meaning
set forth in Section 11.2 of this Agreement.
INTERCELL REPRESENTATIONS AND WARRANTIES. "INTERCELL Representations
and Warranties" shall have the meaning set forth in Section 2 of this Agreement.
JAYMARK DISCLOSURE SCHEDULE. "Jaymark Disclosure Schedule" shall mean
Exhibit F, as attached to the Agreement.
JAYMARK INDEMNITEES. "Jaymark Indemnitees" shall have the meaning set
forth in Section 11.2 of this Agreement.
JAYMARK REPRESENTATIONS AND WARRANTIES. "Jaymark Representations and
Warranties" shall have the meaning set forth in Section 3 of this Agreement.
LAWS OR DECREES. "Laws or Decrees" shall mean all applicable federal,
state, provincial and local laws, ordinances, rules, statutes, regulations and
all orders, writs, injunctions, awards, judgments or decrees.
LEGAL EXPENSES. "Legal Expenses" shall have the meaning set forth in
Section 11.7 of the Agreement.
LIABILITY. "Liability" shall mean any direct or indirect liability,
indebtedness, obligation, guarantee or endorsement, whether known or unknown,
whether accrued or unaccrued, whether absolute or contingent, whether due or to
become due, or whether liquidated or unliquidated.
LICENSES. "Licenses" shall have the meaning set forth in Section 2.22
of the Agreement.
LOSSES. "Losses" shall mean any loss, demand, action, cause of
action, assessment, damage, Liability, cost or expense, including without
limitation, interest, penalties and reasonable attorneys' and other professional
fees and expenses incurred in the investigation, prosecution, defense or
settlement thereof, but excluding special or consequential damages related to
any such loss, demand, action, cause of action, assessment, damage, Liability,
cost or expense, other than special or consequential damages actually awarded to
a third party and paid or payable to such third party by a party hereto.
MATERIAL CONTRACT. "Material Contract" shall have the meaning set
forth in Section 2.11 of the Agreement.
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MATERIAL CONSENT. "Material Consent" shall have the meaning set forth
in Section 2.11 of the Agreement.
NET WORTH. "Net Worth" shall have the meaning set forth in Section
1.4 of the Agreement.
OCTOBER 26, 1997 BALANCE SHEET. "October 26, 1997 Balance Sheet"
shall have the meaning set forth in Section 1.4 of the Agreement.
PATENT RIGHTS. "Patent Rights" shall mean any and all of CTL's rights
under patents, including but not limited to with respect thereto, (a) issued
patents, patent applications, reissues, reissues-in-part or patents of
additions, continuations, continuations-in-part, divisionals, divisions-in-part,
filing priorities, certificates of invention, certificates of protection and (b)
any other rights (and applications therefor) granted by any Governmental Entity,
for any period of time, to manufacture, sell or use a process, apparatus or
article, to license others to perform such activities and/or to restrain others
from so doing.
PERMITS. "Permits" shall mean any and all licenses, permits,
authorizations, certificates, variances, waivers, consents and other approvals
from any Governmental Entity relating to CTL's business.
PERMITTED ENCUMBRANCES. "Permitted Encumbrances" shall mean liens for
taxes which are not yet due and payable, and liens described in the CTL
Disclosure Schedule hereto.
PERSON. "Person" shall mean an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a Governmental Entity (or any department,
agency, or political subdivision thereof).
PROMISSORY NOTE. "Promissory Note" shall mean Exhibit D, as attached
to the Agreement.
PURCHASE PRICE. "Purchase Price" shall have the meaning set forth in
Section 1.3 of this Agreement.
PURCHASE PRICE ADJUSTMENT. "Purchase Price Adjustment" shall have the
meaning set forth in Section 1.4 of this Agreement.
QUALIFIED PLAN. "Qualified Plan" means an employee pension benefit
plan within the meaning of Section 3(2) of ERISA that meets the qualification
requirements of Section 401(a) of the Code, and whose trust or other funding
medium is exempt from federal income tax under Section 501(a) of the Code.
RECEIVING PARTY. "Receiving Party" shall have the meaning set forth
in the definition of "Confidential Information."
RELATED KNOW-HOW. "Related Know-How" shall mean any and all of CTL's
technical data, know-how, knowledge or information or trade secrets, or
confidential or proprietary information of any kind, written or oral, relating
to the design, development,
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engineering, manufacture, marketing, assembly, use, sale, installation,
operation, support or servicing of CTL's assets, the CTL Products or CTL's
business.
RELEASE OR RELEASED. "Release" or "Released" shall mean any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into the environment, or in a manner or with a
consequence not authorized by Environmental Laws.
REPRESENTATIVES. "Representatives" of any Person shall mean officers,
directors, employees, agents, attorneys, accountants, advisors and
representatives of any Person.
SANTA ▇▇▇▇ SITE. "Santa ▇▇▇▇ Site" shall mean the location at which
CTL conducted its business until January 1998 at ▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended, or any substituted federal statute and the rules and
regulations thereunder, all as the same shall be in effect at the time.
SUBSIDIARY. "Subsidiary" shall have the meaning set forth in Section
2.2 of the Agreement.
TAX. "Tax" shall mean any federal, state, local, or foreign income,
profits, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, business license, occupation, value added, goods and
service, alternative or add-on minimum, estimated, or other tax or governmental
charge of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not, relating to CTL.
TAX RETURN. "Tax Return" shall mean any return, declaration, report,
estimates, claim for refund, or information return or statement relating to CTL,
including any schedule or attachment thereto, and including any amendment
thereof, relating to CTL.
TRADEMARKS. "Trademarks" shall mean all of CTL's trademarks, service
marks, trade names and applications therefor.
TRANSACTION DOCUMENTS. "Transaction Documents" shall mean all
documents or agreements required to be delivered by any party hereunder on or
prior to the Closing.
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EXHIBIT B
SIDE LETTER AGREEMENT AND SECURITY AGREEMENT
See attached Exhibit 10.01.
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EXHIBIT C
FORM OF ENVIRONMENTAL
REMEDIATION AND INDEMNIFICATION AGREEMENT
See attached Exhibit 10.02.
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EXHIBIT D
FORM OF UNSECURED PROMISSORY NOTE
See attached Exhibit 10.03.
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EXHIBIT E
CTL DISCLOSURE SCHEDULE
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EXHIBIT F
JAYMARK DISCLOSURE SCHEDULE
There are no exceptions to Jaymark's representations and warranties.
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EXHIBIT G
FORM OF INDEMNITY ESCROW AGREEMENT
See attached Exhibit 10.04.
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EXHIBIT H
FORM OF OPINION TO INTERCELL
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EXHIBIT I
ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENTS
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