SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT ("AGREEMENT") is dated as of December 3,
2001 by and among Valesc Inc., a Delaware corporation ("BUYER"), OJI Surgical,
Inc., an Oregon corporation (the "COMPANY"), and the Company's parent, SMT
Enterprises Corporation, a Pennsylvania corporation ("SELLER").
WHEREAS, Seller owns all of the issued and outstanding capital stock of
the Company (the "OJI SHARES") and intends to ensure performance by the Company
of its obligations hereunder;
WHEREAS, Buyer desires to purchase, and Seller desires to sell, all of
the capital stock of the Company.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and conditions
hereinafter set forth, the parties do hereby agree as follows:
1. DEFINITIONS
"Acquisition" means the acquisition of all of the OJI Shares by the
Buyer and all related transactions provided for in or contemplated by this
Agreement or any Exhibit hereto.
"Ancillary Documents" means all documents and instruments contemplated
to be entered into under the terms of this Agreement.
"Assets" means all of the Company's assets, properties, business,
goodwill and rights of every kind and description, real and personal, tangible
and intangible, wherever situated and whether or not reflected on the Latest
Year-End Balance Sheet or the Interim Balance Sheet.
"Business" means the existing and prospective business, operations,
facilities and other Assets, financial condition, results of operations,
finances, markets, products, competitive position, raw materials and other
supplies, customers and customer relations and personnel of the Company.
"Business Day" means a day that is not a Saturday, Sunday or public
holiday.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any written or oral contract, agreement, lease, plan,
instrument or other document, commitment, arrangement, undertaking, practice or
authorization that is or may be binding on any person or its property under
applicable law.
"Copyrights" means registered copyrights, copyright applications and
unregistered copyrights.
"Court Order" means any judgment, decree, injunction, order or ruling
of any federal, state or local court or governmental or regulatory body or
authority that is binding on any person or its property under applicable law.
"Default" means (1) a breach of or default under any Contract, (2) the
occurrence of an event that with the passage of time or the giving of notice or
both would constitute a breach of or default under any Contract, or (3) the
occurrence of an event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination, renegotiation or
acceleration under any Contract.
"Employee Benefit Plans" means "employee benefit plans" as defined in
section 3(3) of ERISA and any other plan, policy, program, practice or
arrangement providing compensation or other benefits to any current or former
officer or employee of the Company, or any dependent or beneficiary thereof,
which are now or have been maintained by the Company, or any affiliate or under
which the Company or any affiliate has any obligation or liability, whether
actual or contingent, including, without limitation, all incentive, bonus,
deferred compensation, vacation, holiday, medical, disability, share purchase or
other similar plans, policies, programs, practices or arrangements.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Intellectual Property" means Copyrights, Patents, Trademarks,
technology rights and licenses, computer software (including without limitation
any source or object codes therefor or documentation relating thereto), trade
secrets, franchises, know-how, inventions and intellectual property rights.
"Interim Financial Statements," "Interim Balance Sheet" and "Interim
Balance Sheet Date" are defined in SECTION 4.7.
"IRS" means the Internal Revenue Service.
"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, deficiency, guaranty or endorsement of or by any
person (other than endorsements of notes, bills and checks presented to banks
for collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute, contingent, matured, unmatured or other.
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"Licenses" means licenses, franchises, permits, easements, rights and
other authorizations.
"Lien" means any mortgage, lien, security interest, pledge,
encumbrance, restriction on transferability, defect of title, charge or claim of
any nature whatsoever on any property or property interest.
"Lienholder" means the holder of or other person entitled to any
benefits arising under any Lien.
"Litigation" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or inquiry
involving or affecting the Company, the Business, the Assets or any Contracts to
which the Company is a party or by which it or any of the Assets or the Business
may be bound or affected.
"Patents" means all patents and patent applications.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plans" means "employee pension benefit plans" as defined in
section 3(2) of ERISA.
"Permitted Liens" means liens for taxes not yet due and payable.
"Regulation" means any statute, law, ordinance, regulation, order or
rule of any federal, state, local or other governmental agency or body or of any
other type of regulatory body, including, without limitation, those covering
environmental, energy, safety, health, transportation, bribery, recordkeeping,
zoning, antidiscrimination, antitrust, wage and hour, and price and wage control
matters.
"Trademarks" means registered trademarks, registered service marks,
trademark and service ▇▇▇▇ applications and unregistered trademarks and service
marks.
2. SALE AND PURCHASE OF THE OJI SHARES
Subject to the terms and conditions hereinafter set forth and on the
basis of and in reliance upon the representations, warranties, obligations and
agreements set forth herein, at the Closing the Seller shall sell to the Buyer
and the Buyer shall purchase from the Seller all 100 of the OJI Shares owned by
the Seller in exchange for 266,000 shares of the Buyer's common stock, $.0001
par value per share (the "VALESC STOCK"). The Valesc Stock shall be issued and
delivered to Buyer at the Closing.
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3. CLOSING
3.1 CLOSING DATE. The closing of the sale and purchase of the OJI
Shares (the "CLOSING") shall take place at the offices of ▇▇▇▇▇ & Associates,
P.C., ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 A.M. local time, on
December ___, 2001 or at such other time or place or on such other date as the
Buyer and the Seller may agree. The date of the Closing is hereinafter sometimes
referred to as the "Closing Date."
3.2. DELIVERIES. At the Closing, subject to the provisions of this
Agreement, the Seller shall deliver to the Buyer, free and clear of all Liens,
the certificates for the OJI Shares in negotiable form, duly endorsed in blank,
or with separate notarized stock transfer powers attached thereto and signed in
blank, in exchange for a stock certificate for 266,000 shares of the Buyer's
common stock executed by the Buyer or its transfer agent. At the Closing, the
Seller shall also deliver to the Buyer, and the Buyer shall deliver to the
Seller, the certificates, opinions and other instruments and documents referred
to in SECTIONS 9 AND 10.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER
The Company and the Seller hereby jointly and severally represent and
warrant to the Buyer, except as set forth on the Disclosure Schedule attached
hereto, each of which exceptions shall specifically identify the relevant
subsection hereof to which it relates and shall be deemed to be representations
and warranties as if made hereunder, that:
4.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Orgeon,
having full power and authority to carry on the Business as it has been and is
now being conducted and to own, lease and operate the Assets. The Company is
duly qualified to do business and is in good standing in every jurisdiction in
which the Business or the character of the Assets requires such qualification,
all of which jurisdictions are disclosed in the Disclosure Schedule. The Company
has no subsidiaries and no stock or other equity or ownership interest (whether
controlling or not) in any corporation, association, partnership, joint venture
or other entity.
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4.2 CAPITALIZATION AND SHARE OWNERSHIP. The Company's authorized
capital stock consists of 1,000 shares of common stock, par value $0 per share.
There are 100 shares of the Company's common stock presently outstanding
(previously defined as the "OJI SHARES"), which OJI Shares are owned by the
Seller free and clear of any Liens. All of the OJI Shares have been duly
authorized and validly issued, are fully paid and nonassessable, were not issued
in violation of the terms of any Contract binding upon the Company, and were
issued in compliance with all applicable charter documents of the Company and
all applicable federal and state securities or "blue sky" laws and regulations.
No equity securities of the Company, other than the OJI Shares, are issued or
outstanding. There are, and have been, no preemptive rights with respect to the
issuance of the OJI Shares. There are no existing Contracts, subscriptions,
options, warrants, calls, commitments or rights of any character to purchase or
otherwise acquire any capital stock or other securities of the Company, whether
or not presently issued or outstanding at any time, or upon the happening of any
stated event.
4.3 AUTHORITY AND BINDING EFFECT. Each of the Company and the
Seller has the full power and authority to execute, deliver and perform this
Agreement and has taken all actions necessary to secure all approvals required
in connection therewith. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated will not contravene or
violate the Articles of Incorporation or By-Laws of the Company or the Seller.
This Agreement constitutes the legal, valid and binding obligation of the
Company and the Seller, enforceable against each in accordance with its terms.
4.4 VALIDITY OF CONTEMPLATED TRANSACTIONS. Neither the execution
and delivery of this Agreement by the Company or the Seller nor the consummation
of the transactions contemplated hereby will contravene or violate any
Regulation or Court Order which is applicable to the Company or the Seller, or
will result in a Default under, or require the consent or approval of any party
to, any Contract relating to the Business or the Assets or to or by which the
Company or the Seller is a party or otherwise bound or affected, or require the
Company or the Seller to notify or obtain any License from any federal, state,
local or other court or governmental agency or body or from any other regulatory
authority.
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4.5 RESTRICTIONS. Neither the Company nor the Seller is a party to
any Contract or subject to any restriction or any Court Order or Regulation that
adversely affects the Company, the Seller, the Assets or the Business or affects
or restricts the ability of the Company or the Seller to consummate the
Acquisition.
4.6 THIRD-PARTY OPTIONS. There are no existing Contracts, options,
commitments or rights with, to or in any third party to acquire the Company, the
Seller, any of the Assets or any interest therein or in the Business.
4.7 FINANCIAL STATEMENTS. The Company has delivered to the Buyer
(1) the Company's year-end balance sheet at December 31, 2000 and each of the
two preceding fiscal year-ends, (2) its related statements of income for the
fiscal years then ended, and (3) all related notes and schedules, each of which
have been reviewed by the Company's independent auditors. All Liabilities of the
Company at December 31, 2000 required to be reflected or reserved for by cash
basis accounting are fully reflected or reserved for in the Company's
consolidated balance sheet at December 31, 2000 (the "LATEST YEAR-END BALANCE
SHEET"). December 31, 2000 is referred to as the "Latest Year-End Balance Sheet
Date" in other parts of this Agreement. The Company has also delivered to the
Buyer a copy of the unaudited balance sheet of the Company at September 30, 2001
and the related unaudited statement of income for the period from the Latest
Year-End Balance Sheet Date to September 30, 2001 (the "INTERIM FINANCIAL
STATEMENTS"). September 30, 2001 is referred to as the "Interim Balance Sheet
Date" in other parts of this Agreement. All Liabilities of the Company as of the
Interim Balance Sheet Date required to be reflected or reserved for by cash
basis accounting are fully reflected or reserved for in the Company's
consolidated balance sheet at the Interim Balance Sheet Date (the "INTERIM
BALANCE SHEET"). All of the financial statements referred to in this Section
were prepared in accordance with cash basis accounting and, subject to any
qualifications set forth in the applicable notes and schedules, fairly present
the financial position and results of operations of the Company at the dates and
for the periods covered and include all adjustments that are necessary for a
fair presentation of the information shown on the cash basis.
4.8 BOOKS OF ACCOUNT; RETURNS AND REPORTS; TAXES. The books of
account of the Company fairly reflect, in accordance with cash basis accounting
(1) all transactions relating to the Company and (2) all items of income and
expense, assets and liabilities and accruals relating to the Company. The
Company has not engaged in any transaction, maintained any bank account or used
any corporate funds except for transactions, bank accounts and funds which have
been and are reflected in the normally maintained books and records of the
Company. The Company has duly filed all federal, state and local tax reports and
returns and all other reports and returns required to be filed by it pursuant to
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any Regulation. The Company has duly made all deposits required by law to be
made with respect to employees' withholding taxes. The Company has duly paid or
accrued on its books of account all taxes, duties and charges (including
penalties and interest thereon) payable by it and the amounts established as
provisions for taxes on the Latest Year-End Balance Sheet and the Interim
Balance Sheet are sufficient for the payment of all taxes (including penalties
and interest thereon) due as a result of activities which occurred during
periods covered by the Latest Year-End Balance Sheet and the Interim Balance
Sheet, respectively. The Company has not received any notice of assessment or
deficiency or proposed assessment from or by the IRS or any other taxing
authority in connection with its tax returns or reports and there is no pending
tax examination of or tax claim asserted against the Company or any of the
Assets. There is no tax lien on any of the Assets except for liens for real
estate taxes not yet due and payable. All federal income tax returns filed by
the Company have been audited and settled through December 31, 2000, and no
agreement for the extension of time or waiver of the statute of limitations for
the assessment of any deficiency or adjustment for any year is in effect. True
and correct copies of all federal and state income tax returns filed by the
Company for the last five years have been delivered to the Buyer.
4.9 UNDISCLOSED LIABILITIES. The Company has no Liabilities except
for:
(A) those Liabilities adequately and specifically set forth
or reserved for on the Interim Balance Sheet and not heretofore paid or
discharged;
(B) those Liabilities arising in the ordinary course of its
business consistent with past practice under any Contract specifically disclosed
on the Disclosure Schedule (or not required to be disclosed because of the term
or amount involved); and
(C) those Liabilities incurred, consistent with past business
practice, in the ordinary course of its business since the Interim Balance Sheet
Date and not heretofore paid or discharged.
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4.10 ACCOUNTS RECEIVABLE. All accounts receivable as set forth on
the Interim Balance Sheet or arising since the Interim Balance Sheet Date (1)
have arisen only in the ordinary course of business consistent with past
practice for goods sold and delivered or services performed and (2) are
collectible in full at the recorded amounts thereof (free of any, and subject to
no, defenses, setoffs or counterclaims) in the ordinary course of business
(without resort to Litigation or assignment to a collection agency), but in no
event later than 90 days after the Closing Date, net of any allowance for
doubtful accounts reflected in the Interim Balance Sheet.
4.11 INVENTORY. There is no inventory.
4.12 TITLE TO ASSETS. The Company owns outright and has good and
marketable title to all of the Assets, including without limitation the assets
and properties set forth on the Interim Balance Sheet (except for such as may
have been disposed of in the ordinary course of business since the Interim
Balance Sheet Date), free and clear of all Liens, except Permitted Liens.
4.13 ALL TANGIBLE ASSETS. The Disclosure Schedule sets forth
accurate lists and summary descriptions of all tangible Assets where the value
of an individual item exceeds $500 or where an aggregate of similar items
exceeds $500, and of all leases, Licenses and other Contracts to which the
Company is a party or is otherwise bound which relate in whole or in part to
such Assets. In the Disclosure Schedule, the Assets listed have been grouped by
type and assigned location. The Assets listed on the Disclosure Schedule
constitute substantially all of the tangible assets used in or necessary to the
conduct of the Business.
4.14 CONDITION OF ASSETS. All tangible assets and properties that
are part of the Assets are in good operating condition and repair and are usable
in the ordinary course of the Business consistent with past practice and conform
in all material respects to all applicable Regulations relating to their
construction, use and operation. There are no developments materially affecting
any such Asset which might curtail the present or future use thereof for the
purpose for which it was acquired. Except pursuant to leases described on the
Disclosure Schedule, no person other than the Company owns any vehicles,
equipment or other tangible Assets situated on the facilities used by the
Company in the Business (other than immaterial items of personal property owned
by the Company's employees) or necessary to the operation of the Business.
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4.15 CONTRACTS.
(A) The Disclosure Schedule sets forth complete and accurate
lists or descriptions of:
(1) all Employee Benefit Plans; and
(2) all consents or approvals required under any
Contracts that are necessary for the Company to complete the Acquisition or to
avoid a Default under such Contracts.
(B) None of the Assets is leased by the Company from any
third party, whether affiliated or unaffiliated with the Company.
(C) The Company is not a party to any:
(1) Contract with any present or former employee or
consultant;
(2) Contract limiting or restraining it from engaging or
competing in any lines or business with any person, firm, corporation or other
entity; or
(3) any material Contract not otherwise disclosed
herein.
(D) All of the Contracts (including all Customer Contracts)
to which the Company is party or by which it or any of the Assets is bound or
affected are valid, binding and enforceable in accordance with their terms. The
Company has fulfilled, or taken all action necessary to enable it to fulfill
when due, all of its obligations under each of such Contracts. All parties to
such Contracts have complied in all material respects with the provisions
thereof, no party is in Default thereunder and no notice of any claim of Default
has been given to the Company. There are no provisions of, or developments
materially affecting, any such Contract which might prevent the Company from
realizing the benefits thereof whether before or after the completion of the
Acquisition. With respect to any of such Contracts that are leases, the Company
has not received any notice of cancellation or termination under any option or
right reserved to the lessor, or any notice of Default, thereunder.
4.16 EMPLOYEES. The Disclosure Schedule sets forth the names
and current annual salary rates or current hourly wages of all present employees
of the Company, together with the average number of hours worked per week, the
date of the last salary increase, the date of commencement of employment of each
employee with the Company, and a summary of salary, bonuses and other
compensation, if any, paid or payable to each of such persons for or in respect
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of that portion of the 2001 calendar year ending on the Interim Balance Sheet
Date. The Disclosure Schedule also sets forth the earnings for each of such
employees as reflected on Form W-2 for the 2000 calendar year.
4.17 LICENSES. The Disclosure Schedule sets forth a complete
list of all Licenses used in the operation of the Business or otherwise held by
the Company. The Company owns, possesses or lawfully uses in the operation of
its Business all Licenses which are necessary to conduct the Business as now or
previously conducted or to the ownership of the Assets, free and clear of all
Liens. The Company is not in Default, nor has it received any notice of any
claim of Default, with respect to any such License. Except as otherwise governed
by law, all such Licenses are renewable by their terms or in the ordinary course
of business without the need to comply with any special qualification procedures
or to pay any amounts other than routine filing fees and will not be adversely
affected by the completion of the Acquisition. No present or former shareholder,
director, officer or employee of the Company, any affiliates of any of them, or
any other person, firm, corporation or other entity owns or has any proprietary,
financial or other interest (direct or indirect) in any License which the
Company owns, possesses or uses.
4.18 COMPLIANCE WITH REGULATIONS AND COURT ORDERS. The
Company is not in violation of any Court Order or Regulation, and the Assets
have not been used or operated by the Company or any other person or entity in
violation of any Regulation or Court Order. All Court Orders to which the
Company is a party or subject are listed in the Disclosure Schedule. The Company
has made all filings or notifications required to be made by them under any
Regulations applicable to the Company, the Business or the Assets. None of the
Company nor any officer, employee or agent of, nor any consultant to, the
Company has unlawfully offered, paid, or agreed to pay, directly or indirectly,
any money or anything of value to, or for the benefit of, any individual who is
or was a candidate for public office, or an official or employee of any
governmental or regulatory body or authority or an officer or employee of any
client, customer or supplier of the Company.
4.19 CLAIMS. There is no Litigation pending or threatened
against the Company, the Business or the Assets. No claim has been asserted and
no event has occurred that might result in Litigation against the Company, the
Business or the Assets. To the best of the Company's and the Seller's knowledge,
there is no reasonable basis for any such claim. All pending or threatened
Litigation is fully covered by insurance.
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4.20 INSURANCE. The Disclosure Schedule contains a true and
complete description of the insurance coverage applicable to the Company, the
Business and the Assets for the past three years, including amounts and lines of
coverage, loss experience history by line of coverage for the past five years,
and a description of all claims in excess of $10,000 for the past five years.
All insurance coverage applicable to the Company, the Business and the Assets is
in full force and effect, is valid, binding and enforceable in accordance with
its terms against the respective insurers, insures the Company in reasonably
sufficient amounts against all risks usually insured against by persons
operating similar businesses or properties in the localities where such
businesses or properties are located and has been issued by insurers of
recognized responsibility. There is no Default under any such coverage nor has
there been any failure to give notice or present any claim under any such
coverage in a due and timely fashion. There are no outstanding unpaid premiums
except in the ordinary course of business and no notice of cancellation or
nonrenewal of any such coverage has been received. There are no provisions in
such insurance policies for retroactive or retrospective premium adjustments.
Neither the Company nor the Seller knows or has reason to know of the occurrence
of any event which reasonably might form the basis of any claim against the
Company, the Business or the Assets or which might materially increase the
insurance premiums payable for any such coverage.
4.21 LABOR MATTERS. The Company has no collective bargaining
agreements with any labor union or other representative of employees. No strike,
slowdown, picketing or work stoppage by any union or other group of employees
against the Company, or the Assets wherever located, and no secondary boycott
with respect to their products, lockout by them of any of their employees or any
other labor trouble or other occurrence, event or condition of a similar
character, has occurred or been threatened.
4.22 PENSION PLANS; EMPLOYEE BENEFIT PLANS.
(A) DISCLOSURE. Except as disclosed in the Disclosure
Schedule, there are no Employee Benefit Plans. No Employee Benefit Plan
disclosed is a Pension Plan.
(B) DISCLOSED PLANS. With respect to any such Employee
Benefit Plans disclosed, the Company has made all contributions thereto which it
has accrued on its financial statements and other books and records as a
liability and the Company has delivered to the Buyer copies of (1) all documents
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governing such Plans, and all amendments thereto, (2) all reports filed by the
Company or Plan officials with respect to such Plans with the United States
Department of Labor, the IRS and any other federal or state regulatory agency,
(3) all summary plan descriptions, notices and other reporting and disclosure
material furnished to participants in any of such Plans, (4) all actuarial,
accounting and financial reports prepared with respect to any of such Plans, and
(5) all currently effective IRS ruling or determination letters on any of such
Plans.
(C) COMPLIANCE WITH LAW. The provisions of each Employee
Benefit Plan and the administration of each Employee Benefit Plan are and have
been in all material respects in compliance with all applicable Regulations, and
neither the Company nor the Seller has received or is aware of any claim or
notice alleging to the contrary with respect to any Employee Benefit Plan.
(D) TAX OR CIVIL LIABILITY. The Company has not
participated in any conduct, and will not participate in any conduct to the
Closing Date or thereafter, that could result in the imposition upon the Company
or the Buyer of either excise tax under section 4975 (relating to prohibited
transactions) of the Code, or civil liability under section 502(i) of ERISA
(also relating to prohibited transactions).
(E) CLAIMS LIABILITY. There is no action, claim or
demand of any kind (other than routine claims for benefits) which has been
brought or, to the knowledge of the Company or the Seller, threatened, against
any Employee Benefit Plan or the assets thereof, or against any fiduciary of any
such Plan.
(F) FIDUCIARY APPOINTMENTS AND CONDUCT. There has not
occurred any circumstances by reason of which the Company or the Buyer may be
liable for (1) appointment by the Company of any person or entity as a fiduciary
with respect to any Employee Benefit Plan where such person or entity was
legally disqualified from serving in such capacity, (2) failure by the Company
to monitor the performance of its appointees as fiduciaries with respect to any
Employee Benefit Plan or failure of the Company timely to replace any such
fiduciary whose performance failed to meet the standards imposed by ERISA with
respect to fiduciary duties, or (3) action taken by a fiduciary with respect to
any Employee Benefit Plan upon the direction of, or with the acquiescence of,
the Company.
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(G) MULTIEMPLOYER PLANS. The Company does not maintain
or participate in, nor has it ever maintained or participated in, any
"multiemployer plans" as defined in Section 3(37) of ERISA.
(H) CONTROLLED GROUPS. The Company is not presently or
potentially liable with respect to any employee benefit plan sponsored by any
entity which, together with the Company, is a member of a controlled group of
corporations within the meaning of Section 414(b) of the Code, a group of trades
or businesses under common control within the meaning of section 414(c) of the
Code, or an affiliated service group within the meaning of section 414(m) of the
Code, whether such plan is a single employer plan, a multiple employer plan or a
multiemployer plan. Liability to which reference is made herein includes, but is
not limited to, liability for the underfunding of such plan, whether or not such
plan is terminated; liability for unamortized funding deficiencies (whether or
not waived); liability to or on account of any multiemployer plan under any
circumstances; penalties, late payment fees or taxes with respect to any plan or
the administration of any plan; or liability with respect to fiduciary conduct
in connection with any such plan.
(I) REPORTING AND DISCLOSURE. The Company has filed or
caused to be filed on a timely basis each and every return, report, statement,
notice, declaration and other documents required by any governmental agency with
respect to each Employee Benefit Plan.
(J) PARTICIPANT AND BENEFICIARY NOTIFICATIONS. The
Company has delivered or caused to be delivered to every participant,
beneficiary and other party entitled to such material, all plan descriptions,
returns, reports, schedules, notices, statements and similar materials.
4.23 TRANSACTIONS WITH AFFILIATES. No shareholder or director
or officer of the Company, or any member of his or her immediate family or any
other of its, his or her affiliates, owns or has an ownership interest in any
corporation or other entity that is or was during the last three years a party
to, or in any property which is or was during the last three years the subject
of, Contracts, business arrangements or relationships of any kind with the
Company. All disclosed transactions between the Company and any shareholder or
any affiliate have been on substantially the same terms and conditions as
similar transactions between non-affiliated parties and are properly recorded on
the books and records of the Company.
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4.24 DELIVERY OF DOCUMENTS. The Company has delivered to the
Buyer true, correct and complete copies of the Company's charter documents and
By-Laws and all written Contracts and other documents and summaries of any
material oral Contracts (including all amendments, supplements, modifications or
waivers currently in effect) described in this Agreement or in the Disclosure
Schedule.
4.25 NO MATERIAL ADVERSE DEVELOPMENTS. Since the Interim
Balance Sheet Date, there has been no actual or threatened change in the
Business or, to the best of the Company's and the Seller's knowledge, any event,
condition or state of facts, in either case that is or might be material and
adverse to the Company or the Assets.
4.26 MATERIAL TRANSACTIONS. Since the Interim Balance Sheet
Date, the Business has been operated in the manner described in SECTION 6 and
the Company has not taken any action that would have been prohibited by SECTION
6 had that Section been effective since the Interim Balance Sheet Date.
4.27 CORPORATE RECORDS. The minute books of the Company are
current and contain correct and complete copies of all charter documents of the
Company, including all amendments thereto and restatements thereof, and of all
minutes of meetings, resolutions and other actions and proceedings of its
shareholders and board of directors and all committees thereof, duly signed by
the Secretary or an Assistant Secretary, and the stock record book of the
Company is also current, correct and complete and reflects the issuance of all
of the OJI Shares to the Seller.
4.28 FULL DISCLOSURE. There are and will be no materially
misleading misstatements in any of the representations and warranties made by
the Company or the Seller in this Agreement or in any of the certificates and
instruments delivered or to be delivered by the Company or the Seller pursuant
to this Agreement, including (without limitation) in the Disclosure Schedule,
and the Company and the Sellers have not omitted to state any fact necessary to
make such representations and warranties not materially misleading. The Company
and the Seller are unaware of any fact or event that could materially and
adversely affect the Company's prospects.
4.29 SELLER REPRESENTATIONS. The Seller hereby represents and
warrants to, and agrees with, the Buyer that:
(A) PURCHASE FOR OWN ACCOUNT. The Valesc Stock to be
acquired by the Seller hereunder will be acquired for investment for the
Seller's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof, and the Seller has no present intention
of selling, granting any participation in, or otherwise distributing the same.
14
(B) DISCLOSURE OF INFORMATION. The Seller believes it
has received or has had full access to all the information it considers
necessary or appropriate to make an informed investment decision with respect to
the Valesc Stock to be acquired by the Seller under this Agreement. The Seller
further has had an opportunity to ask questions and receive answers from the
Buyer to obtain additional information (to the extent the Buyer possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Seller or to which the
Seller had access. The foregoing, however, does not in any way limit or modify
the representations and warranties made by the Buyer in SECTION 5. The Seller
has not relied on any oral representation made by the Buyer or any officer,
director or employee of the Buyer.
(C) INVESTMENT EXPERIENCE. The Seller understands that
the purchase of the Valesc Stock involves substantial risk. The Seller (i) has
experience as an investor in securities of companies in the development stage
and acknowledges that the Seller can bear the economic risk of the Seller's
investment in the Valesc Stock and has such knowledge and experience in
financial or business matters that the Seller is capable of evaluating the
merits and risks of this investment in the Valesc Stock and protecting its own
interests in connection with this investment and/or (ii) has a preexisting
business relationship with the Buyer and certain of its officers, directors or
controlling persons of a nature and duration that enables the Seller to be aware
of the character, business acumen and financial circumstances of such persons.
(D) ACCREDITED INVESTOR STATUS. The Seller is an
"accredited investor" within the meaning of Regulation D promulgated under the
Securities Act of 1933, as amended (the "1933 ACT").
(E) RESTRICTED SECURITIES. The Seller understands that
the Valesc Stock is characterized as "restricted securities" under the 1933 Act
inasmuch as it is being acquired from the Buyer in a transaction not involving a
public offering and that under the 1933 Act and applicable regulations
thereunder these securities may be resold without registration under the 1933
Act only in certain limited circumstances. In this connection, the Seller
represents that the Seller is familiar with Rule 144 of the U.S. Securities and
Exchange Commission (the "SEC"), as presently in effect, and understands the
resale limitations imposed thereby and by the 1933 Act. The Seller understands
that the Buyer is under no obligation to register any of the securities sold
hereunder. The Seller understands that no public market now exists for the
Valesc Stock and that it is uncertain whether a public market will ever exist
for such stock.
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(F) FURTHER LIMITATIONS ON DISPOSITION. Without in any
way limiting the representations set forth above, the Seller further agrees not
to make any disposition of all or any portion of the Valesc Stock except:
(1) pursuant to a registration statement under the
1933 Act covering such disposition; or
(2) pursuant to an exemption from registration
under the 1933 Act, including, without limitation, Rule 144 or
Rule 144A.
(G) LEGEND. It is understood that the stock certificate
evidencing the Valesc Stock will bear the legend set forth below:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE, OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").
THESE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED
OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
The legend set forth above shall be removed by the Buyer from any stock
certificate evidencing Valesc Stock upon delivery to the Buyer of an opinion by
counsel, reasonably satisfactory to the Buyer, that a registration statement
under applicable securities laws is at that time in effect with respect to the
legended security or that such security can be freely transferred in a public
sale without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the Buyer issued the Valesc Stock.
(h) NO RELIANCE ON ORAL STATEMENTS. The Seller, in
purchasing the Valesc Stock, is not relying on any oral representations,
promises or statements made by the Buyer, or any officer, director or employee
of the Buyer.
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(I) TRANSFEREE UNDERTAKING. In connection with any
disposition of all or any portion of the Valesc Stock permitted pursuant to this
Agreement, the Seller shall obtain an undertaking from each offeree or purchaser
of the such stock pursuant to which the offeree or purchaser shall represent and
warrant the following:
(1) it understands that the stock has not been
registered under the 1933 Act and that, if in the future it
decides to offer, sell, pledge or otherwise transfer such stock,
such stock may be offered, sold, pledged or otherwise transferred
only (i) to a person whom the seller reasonably believes is a
qualified institutional buyer in a transaction meeting the
requirements of Rule 144A, (ii) pursuant to an exemption from
registration under the 1933 Act provided by Rule 144, if
available, or (iii) pursuant to a registration statement under
the 1933 Act covering such disposition, in all cases in
accordance with all applicable securities laws of any state of
the United States.
(2) it understands that the stock will contain
a legend to the following effect unless the Buyer determines such
legend is not necessary under applicable laws:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED, AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER SUCH ACT IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, OR (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT PROVIDED BY RULE 144, IF AVAILABLE, IN EACH
CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR CANADIAN PROVINCE.
(3) If the transferee is a qualified
institutional buyer as defined in Rule 144A of the 1933 Act, that
it is aware that the sale to it is being made in reliance on Rule
144A and it is acquiring the stock for its own account or for the
account of a qualified institutional buyer.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller that:
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5.1 ORGANIZATION AND STANDING. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware, having all requisite corporate power and authority to perform its
obligations under this Agreement.
5.2 AUTHORITY AND BINDING EFFECT. The Buyer has the corporate
power and authority to execute, deliver and perform this Agreement and has taken
all actions necessary to secure all approvals required in connection therewith.
The execution, delivery and performance of this Agreement by the Buyer has been
duly authorized by all necessary corporation action. This Agreement constitutes
the legal, valid and binding obligation of the Buyer, enforceable against it in
accordance with its terms.
5.3 VALID ISSUANCE OF STOCK.
(A) The Valesc Stock, when issued and paid for as
provided in this Agreement, will be duly authorized and validly issued, fully
paid and nonassessable.
(B) Based in part on the representations made by
the Seller in SECTION 4.29 hereof and in the Investment Letter attached as
EXHIBIT A hereto (the "INVESTMENT LETTER"), the offer and sale of the Valesc
Stock to the Seller in accordance with this Agreement and assuming no change in
currently applicable law or the Certificate of Incorporation of the Buyer, no
transfer of the stock by the owner thereof and no commission or other
remuneration is paid or given, directly or indirectly, for soliciting the
issuance of the stock, the issuance of the Valesc Stock to the Seller will be
exempt from the registration and prospectus delivery requirements of the 1933
Act.
6. CONDUCT OF BUSINESS PENDING CLOSING
Until the Closing Date, except as may be approved by the Buyer in
writing or as otherwise expressly provided in this Agreement, the Seller and the
Company shall cause the Company to:
(A) operate the Business only in the ordinary course and in
substantially the same manner as it has been operated in the past and not sell
any of the Assets except for inventory in the ordinary course of business;
(B) not issue, repurchase or redeem or commit to issue,
repurchase or redeem, any shares of its capital stock, any options or other
rights to acquire such stock or any securities convertible into or exchangeable
for such stock;
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(C) not declare or pay any dividend on, or make any other
distribution with respect to, the OJI Shares;
(D) not (1) incur any amount of long or short-term debt for
money borrowed, (2) guarantee or agree to guarantee the obligations of others,
(3) indemnify or agree to indemnify others, or (4) incur any other Liabilities
other than those incurred in the ordinary course of business consistent with
past practice;
(E) keep in full force and effect insurance covering the
Company, the Assets and the Business comparable in amount and scope of coverage
to that now maintained;
(F) maintain the tangible Assets in good condition and
working order, ordinary wear and tear excepted;
(G) use its best efforts to retain the Company's employees
and maintain the Business so that such employees will remain available to the
Company on and after the Closing Date and to maintain existing relationships
with suppliers, customers and others having business dealings with the Company
and otherwise to preserve the goodwill of the Business so that such
relationships and goodwill will be preserved on and after the Closing Date;
(H) not amend its Articles of Incorporation or By-Laws;
(I) not merge with or into any other corporation or sell,
assign, transfer, pledge or encumber any part of the Assets or agree to do any
of the foregoing;
(J) not enter into any Contract that is material, nor permit
any amendment or termination of any material Contract;
(K) not waive any rights of value or rights that would
otherwise accrue to the Company after the Closing Date;
(L) not increase the salaries of, or make any bonus or
similar payments to or establish or modify any Employee Benefit Plans for, any
of the Company's directors, officers or employees or enter into or modify any
employment, consulting or similar Contracts with any such persons or agree to do
any of the foregoing;
(M) continue to maintain all Employee Benefit Plans in
accordance with applicable Regulations, and ensure that no Employee Benefit
Plan, nor any trust related thereto, shall be amended or terminated prior to the
Closing Date, except for any such amendment as may be required to comply with
applicable Regulations;
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(N) collect its accounts receivable in the ordinary course of
business consistent with past practice;
(O) pay its accounts payable in the ordinary course of
business consistent with past practice and not fail to pay or discharge when due
any Liabilities;
(P) use its best efforts to help the Buyer complete the
Acquisition and obtain the satisfaction of the conditions specified in SECTION
9;
(Q) promptly notify the Buyer of any Default, the threat or
commencement of any Litigation, or any development that occurs before the
Closing that could in any way materially affect the Company, the Assets or the
Business;
(R) use its best efforts to obtain any consents or approvals
required under any Contracts (including Customer Contracts) or otherwise that
are necessary to complete the Acquisition or to avoid a Default under any such
Contracts;
(S) comply with all Regulations applicable to it and to the
conduct of its business;
(T) provide the Buyer with such financial and other reports
of the Business as may be reasonably requested;
(U) not make any capital expenditures in excess of $500;
(V) (1) give to the Buyer's officers, employees, counsel,
accountants and other representatives free and full access to and the right to
inspect, during normal business hours, all of the Assets, records, Contracts
(including Customer Contracts) and other documents relating to the Business, (2)
permit them to consult with the officers, employees, accountants, counsel and
agents of the Company for the purpose of making such investigation of the
Company, the Business and the Assets as the Buyer shall desire to make, provided
that such investigation shall not unreasonably interfere with the Company's
business operations, and (3) furnish to the Buyer all such documents and copies
of documents and records and information with respect to the Company's affairs
and copies of any working papers relating thereto as the Buyer shall from time
to time reasonably request; and
20
(W) promptly disclose to the Buyer in writing any information
set forth in the Disclosure Schedule hereto which no longer is correct and any
information of the nature of that set forth in the Disclosure Schedule which
arises after the date hereof and which would have been required to be included
in the Disclosure Schedule if such information had obtained on the date hereof.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All of the representations, warranties, covenants and agreements made
by each party in this Agreement or in any attachment, Exhibit, the Disclosure
Schedule, certificate, document or list delivered by any such party pursuant
hereto or in connection with the Acquisition shall survive the Closing and each
party hereto shall be entitled to rely upon the representations and warranties
of the other party set forth in this Agreement.
8. INDEMNIFICATION
8.1 INDEMNIFICATION OBLIGATIONS.
(A) The Seller and the Company, jointly and
severally (together one "INDEMNIFYING party"), shall indemnify and hold harmless
the Buyer, and the Buyer (another "INDEMNIFYING PARTY") shall indemnify and hold
harmless the Seller and the Company, from, against and in respect of any and all
damages, losses, deficiencies, liabilities, costs and expenses resulting from,
relating to or arising out of any (1) misrepresentation, (2) breach of warranty
or (3) non-fulfillment of any agreement or covenant on the part of such
indemnifying party or parties hereunder.
(B) Notwithstanding anything herein to the
contrary, the Seller and the Company, jointly and severally, shall also
indemnify and hold harmless the Buyer and each person who controls the Buyer
within the meaning of the 1933 Act, and each officer and director of the Buyer
and any such controlling person, at all times after the date hereof from and
against:
(1) any claim by any former shareholder of the
Company, including shareholders of Seller, involving the
transactions contemplated hereby or any prior transaction
involving any shares of capital stock of the Company or any
predecessor corporation; and
(2) without limiting the generality of
anything contained in this Section, any and all damages, losses,
deficiencies, liabilities, costs and expenses of, or claims
21
against, the Buyer, resulting from, relating to or arising out of
the business, operations or assets of the Company prior to the
Closing Date or the actions or omissions of the Company's
officers, directors, shareholders, employees or agents prior to
the Closing Date (including, without limitation, any liability
relating to, and any claim which arises out of or is based upon,
negligence, strict liability, or any express or implied
representation, warranty, agreement or guarantee made by or on
behalf of the Company, or alleged to have been made by or on
behalf of the Company, or which is imposed or asserted to be
imposed on the Company by operation of law, in connection with
any product designed, used, rented, sold, manufactured, shipped
or installed by or on behalf of the Company, or for any service
performed by or on behalf of the Company, in any case prior to
the Closing Date and irrespective of the date that any claim,
suit or other cause of action related to any of the foregoing is
filed or otherwise instituted against the Company; provided,
however, that the foregoing shall not apply to the Liabilities of
the Company disclosed on the Disclosure Schedule or referred to
in SECTION 4.9); and
(3) any and all costs, judgments, claims,
actions at law or in equity, interest charges and reasonable
attorneys' fees with respect to any cause of action or
proceeding, by any participant or dependent or beneficiary of any
participant, arising out of or by reason of the sponsorship by
the Company of any Employee Benefit Plan or Pension Plan prior to
the Closing Date.
(C) Each indemnifying party or parties hereto will
indemnify and hold harmless the indemnified party or parties hereto from,
against and in respect of any and all actions, suits, proceedings, demands,
assessments, judgments, costs (including attorneys' fees) and legal and other
expenses incident to any of the foregoing or to the enforcement of this Section.
8.2 METHOD OF ASSERTING CLAIMS, ETC. All claims for
indemnification under this Section shall be asserted and resolved as follows:
(A) In the event that any claim or demand for which
the Seller, shareholders of Seller or the Company would be liable to the Buyer
hereunder is asserted against or sought to be collected by a third party, the
22
Buyer shall promptly notify the Seller, acting for itself and as a
representative of its shareholders and the Company, of such claim or demand,
specifying the nature of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim or demand) (the "CLAIM NOTICE").
The Seller and shareholders of Seller shall have 10 days from its receipt of the
Claim Notice (the "NOTICE PERIOD") to notify the Buyer (1) whether or not the
Seller, Seller's shareholders or the Company dispute their liability to the
Buyer hereunder with respect to such claim or demand, and (2) if they do not
dispute such liability, whether or not they desire, at their sole cost and
expense, to defend the Buyer against such claim or demand; provided, however,
that the Buyer is hereby authorized prior to and during the Notice Period to
file any motion, answer or other pleading which it shall deem necessary or
appropriate to protect its interests. In the event that the Seller notifies the
Buyer within the Notice Period that the Seller, Seller's shareholders or the
Company does not dispute such liability and desires to defend against such claim
or demand, then except as hereinafter provided, the Seller shall have the right
to defend by appropriate proceedings, which proceedings shall be promptly
settled or prosecuted to a final conclusion in such a manner as to avoid any
risk of the Buyer becoming subject to liability for any other matter. If the
Buyer desires to participate in, but not control, any such defense or settlement
it may do so at its sole cost and expense. If, in the reasonable opinion of the
Buyer, any such claim or demand involves an issue or matter which could have a
materially adverse effect on the business, operations, assets, properties or
prospects of the Business or any division of the Buyer or an affiliate of the
Buyer, the Buyer shall have the right to control the defense or settlement of
any such claim or demand, and its reasonable costs and expenses thereof shall be
included as part of the indemnification obligations of the Buyer hereunder. If
the Seller disputes its, its shareholders or the Company's liability with
respect to such claim or demand or elects not to defend against such claim or
demand, whether by not giving timely notice as provided above or otherwise, then
the amount of any such claim or demand, or, if the same be contested by the
Seller or by the Buyer (but the Buyer shall not have any obligation to contest
any such claim or demand), then that portion thereof as to which such defense is
unsuccessful, shall be conclusively deemed to be a liability of the Seller, if
applicable, Seller's shareholders, and the Company hereunder (subject, if the
Seller has timely disputed liability, to a determination that the disputed
liability is covered by these indemnification provisions).
23
(B) In the event that the Buyer should have a claim
against the Seller or the Company hereunder which does not involve a claim or
demand being asserted against or sought to be collected from it by a third
party, the Buyer shall promptly send a Claim Notice with respect to such claim
to the Seller. If the Seller does not notify the Buyer within the Notice Period
that it disputes such claim, the amount of such claim shall be conclusively
deemed a liability of the Seller and the Company hereunder.
(C) All claims for indemnification made by the
Seller or the Company under this Agreement shall be asserted and resolved under
the procedures set forth above in this Section by substituting, as appropriate,
"the Buyer" for "the Seller and the Company".
(D) Nothing herein shall be deemed to prevent any
indemnified party from making a claim hereunder for potential or contingent
claims or demands provided the Claim Notice sets forth the specific basis for
any such potential or contingent claim or demand and the estimated amount
thereof to the extent then feasible and the indemnified party has reasonable
grounds to believe that such a claim or demand will be made.
8.3 PAYMENT.
(A) In the event that any party is required to make
any payment under this Section, such party shall promptly pay the indemnified
party the amount so determined. If there should be a dispute as to the amount or
manner of determination of any indemnity obligation owed under this Section, the
party from which indemnification is due shall nevertheless pay when due such
portion, if any, of the obligation as shall not be subject to dispute. The
difference, if any, between the amount of the obligation ultimately determined
as properly payable under this Section and the portion, if any, theretofore paid
shall bear interest as provided in paragraph (C) below. Upon the payment in full
of any claim, either by setoff or otherwise, the party or entity making payment
shall be subrogated to the rights of the indemnified party against any person,
firm, corporation or other entity with respect to the subject matter of such
claim.
(B) If all or part of any indemnification
obligation under this Agreement is not paid when due, then the indemnifying
party or parties shall pay the indemnified party or parties interest on the
unpaid amount of the obligation for each day from the date the amount became due
until payment in full, payable on demand, at the fluctuating rate per annum
which at all times shall be the lowest rate of interest generally charged from
time to time by major banks as their "prime rate."
24
8.4 SERVICE OF PROCESS, CONSENT TO JURISDICTION, ETC.
(A) Each of the Seller, Seller's shareholders and
the Company irrevocably consents to the service of any process, pleading,
notices or other papers by the mailing of copies thereof by registered,
certified or first class mail, postage prepaid, to the Seller at such person's
address set forth herein, or by any other method provided or permitted under New
York law.
(B) Each of the Seller and the Company irrevocably
and unconditionally (1) agrees that any suit, action or other legal proceeding
arising out of this Agreement may be brought in the United States District Court
for the Southern District of New York or, if such court does not have
jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in the County of New York; (2) consents to the jurisdiction of any
such court in any such suit, action or proceeding; and (3) waives any objection
which such party may have to the laying of venue of any such suit, action or
proceeding in any such court.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
Subject to waiver as set forth in SECTION 11.10, the obligations of the
Buyer under this Agreement are subject to the fulfillment prior to or at the
Closing of each of the following conditions:
9.1 REPRESENTATIONS TRUE AT CLOSING. The representations and
warranties of the Seller and the Company set forth in this Agreement shall be
true and correct on the Closing Date with the same effect as if made at that
time.
9.2 PERFORMANCE BY THE SELLER AND THE COMPANY. The Seller and
the Company shall have performed and satisfied all agreements and conditions
which each of them is required by this Agreement to perform or satisfy prior to
or on the Closing Date.
9.3 CERTIFICATES. The Buyer shall have received certificates
from each of the Seller and the Company dated the Closing Date certifying in
such detail as the Buyer may reasonably request that each of the conditions
described in SECTIONS 9.1 AND 9.2 has been fulfilled.
9.4 FORM AND CONTENT OF DOCUMENTS. The form and content of
all documents, certificates and other instruments to be delivered by the Seller
and the Company shall be reasonably satisfactory to the Buyer.
25
9.5 LITIGATION AFFECTING CLOSING. No Court Order shall have
been issued or entered which would be violated by the completion of the
Acquisition. No person who or which is not a party to this Agreement shall have
commenced or threatened to commence any Litigation seeking to restrain or
prohibit, or to obtain substantial damages in connection with, this Agreement or
the transactions contemplated by this Agreement and no Litigation shall be
pending against the Company.
9.6 MATERIAL ADVERSE CHANGES. From the date hereof to the
Closing Date, neither the Company, the Business nor the Assets shall have been
materially adversely affected in any way, including, without limitation, by
fire, casualty, act of God or otherwise. There shall be no conditions existing
or threatened with respect to the Company, the Business or the Assets that might
be expected to have a material adverse effect on any of them.
9.7 REGULATORY COMPLIANCE AND APPROVALS. The Buyer shall be
satisfied that all approvals required under any Regulations to carry out the
Acquisition shall have been obtained and that the parties shall have complied
with all Regulations applicable to the Acquisition.
9.8 CONSENTS. The Seller and the Company shall have delivered
to the Buyer all consents required to be obtained in connection with the
Acquisition in order to avoid a Default under any Contract (including any
Customer Contract) to or by which the Company is a party or may be bound. Each
of the foregoing must be free from burdensome restrictions and conditions not
applicable to the Company prior to the date of this Agreement.
9.9 BUYER REVIEW. The Buyer shall have completed and be
satisfied with its confidential and nondisclosed review of the business,
management, finances, and supplier and customer relations of the Company.
9.10 CONSENTS AND APPROVALS. The Seller and the Company shall
have obtained all consents and approvals necessary to complete the Acquisition
and related transactions.
9.11 INVESTMENT LETTER. The Seller shall have executed and
delivered the Investment Letter.
26
9.12 LOCK-UP LETTER. The Seller shall have executed and
delivered a lock-up letter in the form attached hereto as EXHIBIT B.
9.13 EMPLOYMENT AGREEMENT. The President of the Company,
▇▇▇▇▇ ▇▇▇▇▇, shall have executed and delivered an employment agreement in the
form attached hereto as EXHIBIT C.
9.14 ANCILLARY DOCUMENTS. Each entity other than the Buyer
which is a party to any of the Ancillary Documents shall have executed and
delivered such of the Ancillary Documents as it is a party thereto.
9.15 OFFICER'S CERTIFICATE. The Buyer shall have received a
certificate from an officer of the Company, dated the Closing Date and in form
and substance reasonably satisfactory to counsel for the Buyer, certifying that
the OJI Shares have been duly authorized and validly issued, are fully paid and
nonassessable, were not issued in violation of the terms of any Contract binding
upon the Company, and were issued in compliance with all applicable charter
documents of the Company.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER AND THE
COMPANY
Subject to waiver as set forth in SECTION 11.10, the obligations of
the Shareholders under this Agreement are subject to the fulfillment prior to or
at the Closing of each of the following conditions:
10.1 BUYER REPRESENTATIONS TRUE AT CLOSING. The
representations and warranties of the Buyer set forth in SECTION 5 shall be true
and correct on the Closing Date with the same effect as if made at that time.
10.2 PERFORMANCE BY THE BUYER. The Buyer shall have performed
and satisfied all agreements and conditions which it is required by this
Agreement to perform or satisfy prior to or on the Closing Date.
10.3 OFFICER'S CERTIFICATE. The Seller shall have received a
certificate from an appropriate officer of the Buyer dated the Closing Date
certifying in such detail as the Seller may reasonably request that each of the
conditions described in SECTIONS 10.1 AND 10.2 has been fulfilled.
27
10.4 INCUMBENCY CERTIFICATE. The Seller shall have received a
certificate of the Secretary or an Assistant Secretary of the Buyer dated the
Closing Date certifying to the incumbency of the officers of the Buyer signing
for it and as to the authenticity of their signatures.
10.5 FORM AND CONTENT OF DOCUMENTS. The form and content of
all documents, certificates and other instruments to be delivered by the Buyer
shall be reasonably satisfactory to the Seller.
10.6 OPINION OF COUNSEL. The Shareholders shall have received
the written opinion dated the Closing Date of ▇▇▇▇▇ & Associates, P.C., counsel
for the Buyer, in form and substance reasonably satisfactory to the Seller.
10.7 ANCILLARY DOCUMENTS. The Buyer shall have executed and
delivered each of the Ancillary Documents to which it is a party.
11. MISCELLANEOUS
11.1 NONCOMPETITION. From the Closing Date until the end of
the third year following the Closing Date (the "NONCOMPETE PERIOD"), the Seller,
unless acting in accordance with the Buyer's prior written consent, will not
(directly or indirectly) own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as an officer, director, employee, principal, agent,
representative, consultant, investor, owner, partner, manager, joint venturer or
otherwise with, or permit its name to be used by or in connection with, or
lease, sell or permit to use any real property or interest therein owned by the
Seller to, any business or enterprise engaged in the sale or distribution of
medical products similar to those offered by the Company in any geographic
region within 750 miles of the Company's head office; provided, however, that
the provisions of this Section shall not be deemed to prohibit the ownership by
the Seller of not more than 5% of any class of securities of any corporation
having a class of securities registered pursuant to the Securities Exchange Act
of 1934. The Seller acknowledges that (1) the provisions of this Section are
reasonable and necessary to protect the legitimate interests of the Buyer, (2)
any violation of this Section will result in irreparable injury to the Buyer and
the Company and that damages at law would not be reasonable or adequate
compensation to the Buyer and the Company for a violation of this Section, and
(3) the Buyer and the Company shall be entitled to have the provisions of this
Section specifically enforced by preliminary and permanent injunctive relief
without the necessity of proving actual damages and without posting bond or
other security as well as to an equitable accounting of all earnings, profits
28
and other benefits arising out of any violation of this Section, including,
without limitation, future earnings estimated upon a basis of three years as the
average tenure of a customer with the Company. In the event that the provisions
of this Section should ever be deemed to exceed the time, geographic, product or
any other limitations permitted by applicable law, then such provisions shall be
deemed reformed to the maximum permitted by applicable law.
11.2 NONSOLICITATION. The Seller agrees that, for the
Noncompete Period, it will not (directly or indirectly) call on or solicit for
the purpose of doing business or divert or take away from the Company or the
Buyer the business of (including, without limitation, by divulging to any
competitor or potential competitor of the Company or the Buyer the name of) any
person, firm, corporation or other entity who or which at the Closing Date was,
or at any time during the three years preceding the Closing Date had been, a
customer of the Company or whose identity is known to the Seller at the Closing
Date as one whom the Company intends to solicit within the succeeding year.
Nothing contained in this Section shall be deemed to limit or impair, or be
limited or impaired by, the provisions of SECTION 11.1.
11.3 HIRING OF THE COMPANY'S EMPLOYEES. During the Noncompete
Period, the Seller will not (directly or indirectly) hire or offer employment to
any employee of the Company whose employment is continued by the Company or the
Buyer after the Closing Date unless the Company or the Buyer first terminates
the employment of such employee. Nothing contained in this Section shall affect
or be deemed to affect in any manner any other provision of this Agreement.
11.4 CONFIDENTIALITY. The Seller acknowledges that the Buyer
and the Company could be irreparably damaged if confidential information
concerning their business and affairs were disclosed to or utilized on behalf of
any person. The Seller covenants and agrees to and with the Buyer that, except
as otherwise provided in this Agreement, it will not, at any time, directly or
indirectly, without the prior written consent of the Buyer, divulge, or permit
any of its partners, shareholders, directors, officers, employees or agents to
divulge to any person any non-public information concerning the business or
financial or other affairs, or any of the methods of doing business used by the
Buyer or the Company, nor release any information provided pursuant to or
concerning this Agreement, or the transactions contemplated by this Agreement,
if such release is intended for, or may result in, its public dissemination. The
foregoing requirements of confidentiality shall not apply to information: (i)
that is now or in the future becomes freely available to the public through no
fault of or action by the using or disclosing party; (ii) that is in the
possession of the using or disclosing party prior to the time such information
was obtained from the Buyer or the Company or that is independently acquired by
the using or disclosing party without the aid, application or use of such other
information; (iii) that is obtained by the using or disclosing party in good
29
faith without knowledge of any breach of a secrecy arrangement from a third
party; (iv) that is required to be disclosed by applicable law or order of
government agency or self-regulatory body; or (v) that is disclosed in
connection with any bona-fide offer to purchase any shares in the Buyer or the
Company; provided that the proposed transferor obtains an undertaking from the
proposed transferee to keep such information confidential in accordance with the
provision of this Section prior to such disclosure.
11.5 PAYMENT OF EXPENSES. Each of the parties hereto will pay
all legal, accounting and other fees and expenses which such party incurs in
connection with this Agreement and the transactions contemplated hereby.
However, if this Agreement is terminated pursuant to SECTION 11.7 or if the
failure to satisfy a condition of Closing arises out of the breach, existing at
the time of the execution of this Agreement, of a representation or warranty
contained in this Agreement, the party terminating this Agreement shall be
entitled to receive from the breaching party or parties the expenses of the
terminating party incurred between the date of this Agreement and the date of
termination.
11.6 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time on or prior to the Closing Date by mutual consent of the
Seller and the Buyer.
11.7 TERMINATION FOR BREACH. The Buyer may terminate its
obligations under this Agreement at any time prior to the Closing Date if the
Seller or the Company shall have breached any of their representations,
warranties or other obligations under this Agreement in any material respect.
The Seller and the Company may likewise terminate their obligations under this
Agreement at any time prior to the Closing Date if the Buyer shall have breached
any of its representations, warranties or other obligations under this Agreement
in any material respect. Such termination may be effected by written notice from
either the Seller or the Buyer, as appropriate, citing the reasons for
termination and shall not subject the terminating party to any liability for any
valid termination.
11.8 BROKERS' AND FINDERS' FEES. The Seller and the Company
as a group and the Buyer each represents and warrants to the other that all
negotiations relative to this Agreement have been carried on by them directly
without the intervention of any person, firm, corporation or other entity who or
which may be entitled to any brokerage fee or other commission in respect of the
execution of this Agreement or the consummation of the transactions contemplated
hereby, and each of them shall indemnify and hold the other or any affiliate of
them harmless against any and all claims, losses, liabilities or expenses which
may be asserted against any of them as a result of any dealings, arrangements or
agreements by the indemnifying party with any such person, firm, corporation or
other entity.
30
11.9 ASSIGNMENT AND BINDING EFFECT. This Agreement may not be
assigned prior to the Closing by any party hereto without the prior written
consent of the other parties. Subject to the foregoing, all of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the heirs, executors, legal representatives, successors
and assigns of the parties hereto.
11.10 WAIVER. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof by a written
instrument executed by such party.
11.11 NOTICES. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder will be
in writing and will be effective and deemed to provide such party sufficient
notice under this Agreement on the earliest of the following: (i) at the time of
personal delivery, if delivery is in person; (ii) at the time of transmission by
facsimile, addressed to the other party at its facsimile number specified herein
(or hereafter modified by subsequent notice to the parties hereto), with
confirmation of receipt made by both telephone and printed confirmation sheet
verifying successful transmission of the facsimile; (iii) one (1) business day
after deposit with an express overnight courier for deliveries within a country,
or three (3) business days after such deposit for international deliveries or
(iv) three (3) business days after deposit in mail by certified mail (return
receipt requested) or equivalent for deliveries within a country.
All notices for international delivery will be sent by facsimile or by
express courier. All notices not delivered personally or by facsimile will be
sent with postage and/or other charges prepaid and properly addressed to the
party to be notified at the address or facsimile number indicated for such
party:
31
In the case of the Buyer:
Valesc Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
With required copies to:
▇▇▇▇▇ & Associates, P.C.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
In the case of the Seller, Seller's shareholders or the Company:
SMT Enterprises Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Any party hereto (and such party's permitted assigns) may by
notice so given change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given in the manner set forth above.
11.12 NEW YORK LAW TO GOVERN. This Agreement and the
enforcement thereof shall be governed by and construed under the internal laws
of the State of New York. The parties hereto consent to the non-exclusive
jurisdiction of any New York State or Federal court sitting in the City of New
York and any appellate court from any thereof in any action or proceeding
arising out of or relating to this Agreement.
11.13 REMEDIES NOT EXCLUSIVE. Nothing in this Agreement shall
be deemed to limit or restrict in any manner other rights or remedies that any
party may have against any other party at law, in equity or otherwise.
11.14 NO BENEFIT TO OTHERS. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit of
the parties hereto and their heirs, executors, legal representatives, successors
and assigns, and they shall not be construed as conferring and are not intended
to confer any rights on any other persons.
32
11.15 CONTENTS OF AGREEMENT. This Agreement, together with
any documents referred to herein, sets forth the entire agreement of the parties
hereto with respect to the transactions contemplated hereby. This Agreement may
not be amended except by an instrument in writing signed by the parties hereto,
and no claimed amendment, modification, termination or waiver shall be binding
unless in writing and signed by the party against whom or which such claimed
amendment, modification, termination or waiver is sought to be enforced.
11.16 SECTION HEADINGS AND GENDER. All section headings and
the use of a particular gender are for convenience only and shall in no way
modify or restrict any of the terms or provisions hereof. Any reference in this
Agreement to a Section, Exhibit or the Disclosure Schedule shall be deemed to be
a reference to a Section, Exhibit or the Disclosure Schedule of this Agreement
unless the context otherwise expressly requires.
11.17 DISCLOSURE SCHEDULE AND EXHIBITS. All attachments,
Exhibits and the Disclosure Schedule referred to herein are intended to be and
hereby are specifically made a part of this Agreement. An item disclosed in the
Disclosure Schedule in response to one section of this Agreement shall not be
deemed disclosed in response to any other section unless otherwise specifically
provided in this Agreement.
11.18 COOPERATION. Subject to the provisions hereof, the
parties hereto shall use their best efforts to take, or cause to be taken, such
action, to execute and deliver, or cause to be executed and delivered, such
additional documents and instruments and to do, or cause to be done, all things
necessary, proper or advisable under the provisions of this Agreement and under
applicable law to consummate and make effective the transactions contemplated by
this Agreement.
11.19 SEVERABILITY. Any provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.20 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which is an original and all of which together shall
be deemed to be one and the same instrument. This Agreement shall become binding
when one or more counterparts taken together shall have been executed and
delivered by all of the parties. It shall not be necessary in making proof of
this Agreement or any counterpart hereof to produce or account for any of the
other counterparts.
33
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
VALESC INC.
By:_____________________________
Name:
Title:
SMT ENTERPRISES CORPORATION
By:_____________________________
Name:
Title:
OJI SURGICAL, INC.
By:_____________________________
Name:
Title:
34
DISCLOSURE SCHEDULE
35
EXHIBIT A
---------
INVESTMENT LETTER
December ___, 2001
Valesc Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned hereby accepts 266,000 shares of Valesc Inc.
("VALESC"), $.0001 par value per share common stock (the "STOCK"), pursuant to a
Share Purchase Agreement dated the date hereof (the "PURCHASE Agreement") and
Valesc hereby delivers the Stock pursuant to the Purchase Agreement.
In connection with the foregoing, the undersigned represents that:
1. the Stock is being purchased for investment, not for resale or
distribution and not for the purpose of effecting or causing to be effected, a
public offering of any of the Stock;
2. the Stock will not be sold, transferred, assigned or disposed of,
except in accordance with the Securities Act of 1933, as amended, and the rules
and regulations of the Securities and Exchange Commission ("SEC") promulgated
thereunder;
3. the Stock is being purchased for the sole account of the undersigned
and no other understanding exists with regard to the disposition, sale, transfer
or assignment of the Stock other than that set forth herein.
The undersigned has been advised and understands that it is the view of
the SEC that the foregoing investment representations would be inaccurate if it
merely meant that the present intention of the undersigned was to hold the Stock
for the long term capital gains period of the tax statutes, or for a deferred
sale, or for a market rise, or for sale if the market declines, or for sale
after a fixed period in the future or for sale only if the issuer fails to
operate profitably. The undersigned further understands that, in the view of the
SEC, the inability to develop a viable trading market for Valesc's common stock,
36
a change in the market value of Valesc's common stock, a change in the condition
of Valesc, a change in the conditions within the industry in which Valesc
proposes to engage or, should the Stock be pledged as security for a loan,
foreclosure or threatened foreclosure of such a loan, would not be such a change
in the circumstances as to justify sale of the Stock. The undersigned
understands that it is the view of the SEC that if there is an intention, at the
time the Stock is acquired, to resell the Stock to the public after the passing
of some more or less definitive time period, the Stock would not be truly
acquired for investment. The undersigned further understands that the foregoing
is not intended to be a complete listing of the views held by the SEC relating
to the foregoing investment representation.
The undersigned acknowledges it has been advised that the Stock has not
been registered under the Securities Act of 1933, as amended, and that none of
the Stock may be sold, transferred, assigned or disposed of, except in
accordance with such Act and the rules and regulations of the SEC promulgated
thereunder. The undersigned hereby consents that the face of the Stock to be
issued and delivered to it may contain a restrictive legend as set forth in the
Purchase Agreement.
The undersigned understands that Valesc is currently a company with no
operations and there is no assurance that its business plan will be profitable
or viable, and that the Stock being purchased involves a high degree of risk. It
is the best judgment of the undersigned that the Stock being purchased hereby is
Stock of the kind which the undersigned wishes to purchase and hold for
investment and that the nature and amount of the Stock being acquired are
consistent with the investment program of the undersigned. The undersigned
represents and warrants that the present and anticipated financial position of
the undersigned permit the undersigned to hold the Stock for investment, as
aforesaid.
37
The undersigned hereby acknowledges that neither Valesc nor any persons
or parties associated with Valesc has made any representation or warranties of
any kind, nature or description in connection with the sale or offer of the
Stock other than those set forth in the Purchase Agreement. The undersigned is
also relying on its own investigation of Valesc and its prospects and represents
that Valesc has answered all its questions and made available all information
requested.
Very truly yours,
SMT ENTERPRISES CORPORATION
By:________________________
Name:
38
EXHIBIT B
---------
LOCK-UP LETTER
--------------
December ___, 2001
Valesc Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned hereby accepts 266,000 shares of Valesc Inc.
("VALESC"), $.0001 par value per share common stock (the "STOCK"), pursuant to a
Share Purchase Agreement dated the date hereof (the "PURCHASE Agreement") and
Valesc hereby delivers the Stock pursuant to the Purchase Agreement.
The undersigned agrees to make no disposition of all or any portion of
the Stock during the one year period ending on the one year anniversary date of
this letter. Thereafter, and without in any way limiting the representations set
forth in the Purchase Agreement and otherwise in accordance with all limitations
on disposition set forth therein, the undersigned agrees that: (i) after the
first year anniversary of the date of this letter, it may dispose of up to 1/3
of the Stock; (ii) after the second year anniversary of the date of this letter,
it may dispose of an additional 1/3 of the original amount of Stock; and (iii)
after the third year anniversary of the date of this letter, it may dispose of
the remaining 1/3 of the Stock. After the first year anniversary of the date of
this letter, Valesc may, in its sole discretion, partially or fully waive the
restrictions on disposition set forth in this letter.
Very truly yours,
SMT ENTERPRISES CORPORATION
By:________________________
Name:
39
EXHIBIT C
---------