STOCK PURCHASE AGREEMENT
by and between
NMC CORP.,
and
UNITED STATES LEAD TESTING & REMOVAL SERVICE, INC.
Dated as of June 30, 1997
TABLE OF CONTENTS
ARTICLE 1....................................................................-1-
PURCHASE AND SALE OF SHARES...........................................-1-
1.1 Purchase of Shares.............................................-1-
1.2 Purchase Price.................................................-1-
1.3 Closing; Deliveries............................................-2-
1.4 Closing Date...................................................-2-
ARTICLE 2....................................................................-2-
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................-2-
2.1 Organization and Qualification.................................-2-
2.2 Capitalization; Ownership......................................-2-
2.3 Subsidiaries and Affiliates....................................-3-
2.4 Options or Other Rights........................................-3-
2.5 Validity and Execution of Agreement............................-3-
2.6 No Conflict....................................................-3-
2.7 Books and Records..............................................-3-
2.8 Certificate of Incorporation and By-Laws.......................-3-
2.9 Financial Statements...........................................-4-
2.10 Undisclosed Liabilities........................................-4-
2.11 No Material Adverse Change.....................................-4-
2.12 Tax Matters....................................................-4-
2.13 Litigation.....................................................-5-
2.14 Contracts and Other Agreements.................................-5-
2.15 Real Estate....................................................-7-
2.16 Transactions with Affiliates...................................-7-
2.17 Accounts Receivable; Inventory and Accounts Payable............-8-
2.18 Compensation Arrangements; Officers, Directors and Employees...-8-
2.19 ERISA..........................................................-8-
2.21 Tangible Property.............................................-10-
2.22 Intangible Property...........................................-11-
2.23 Environmental Matters.........................................-11-
2.24 Employee Relations............................................-12-
2.25 Insurance.....................................................-12-
2.26 Licenses and Permits..........................................-12-
2.27 Compliance with Laws..........................................-13-
2.28 Banks and Proxies.............................................-13-
2.29 Brokers.......................................................-13-
2.30 Disclosure....................................................-13-
ARTICLE 3...................................................................-13-
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................-13-
3.1 Validity and Execution of Agreement...........................-13-
3.2 No Conflict...................................................-14-
3.3 Brokers.......................................................-14-
3.4 Disclosure....................................................-14-
3.5 Investment Intent.............................................-14-
ARTICLE 4...................................................................-14-
PRE-CLOSING COVENANTS................................................-14-
4.1 Corporate Examinations and Investigations.....................-14-
4.2 Conduct of Business...........................................-15-
4.3 Preservation of Business......................................-15-
4.4 Other Agreements..............................................-15-
4.5 Agreements with Creditors.....................................-16-
ARTICLE 5...................................................................-16-
CONDITIONS PRECEDENT TO THE CLOSING..................................-16-
5.1 Conditions Precedent to the Obligations of the Purchaser to
Complete the Closing.................................................-16-
5.2 Conditions Precedent to the Obligations of the Company to Complete
the Closing..........................................................-17-
ARTICLE 6...................................................................-17-
POST-CLOSING COVENANTS...............................................-17-
6.1 Further Information...........................................-17-
6.2 Record Retention..............................................-18-
6.3 Transfer Taxes................................................-18-
6.4 Post-Closing Assistance.......................................-18-
6.5 Corporate Governance..........................................-18-
6.6 Option........................................................-19-
6.7 Use of Proceeds...............................................-19-
ARTICLE 7...................................................................-19-
SURVIVAL; INDEMNIFICATION............................................-19-
7.1 Survival of Representations and Warranties....................-19-
7.2 Company's Indemnity...........................................-19-
7.3 Purchaser's Indemnity.........................................-20-
7.4 Method of Asserting Claims....................................-20-
7.5 General Provisions............................................-22-
ARTICLE 8...................................................................-22-
TERMINATION OF AGREEMENT.............................................-22-
8.1 Termination...................................................-22-
8.2 Survival After Termination....................................-23-
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ARTICLE 9...................................................................-23-
MISCELLANEOUS........................................................-23-
9.1 Certain Definitions...........................................-23-
9.2 Expenses......................................................-27-
9.3 Further Assurances............................................-27-
9.4 Notices.......................................................-27-
9.5 Publicity.....................................................-28-
9.6 Entire Agreement..............................................-28-
9.7 Waivers and Amendments........................................-28-
9.8 Governing Law.................................................-29-
9.9 Binding Effect; No Assignment.................................-29-
9.10 Variations in Pronouns........................................-29-
9.11 Counterparts..................................................-29-
9.12 Exhibits and Schedules........................................-29-
9.13 Effect of Disclosure on Schedules.............................-29-
9.14 Headings......................................................-29-
9.15 Severability of Provisions....................................-29-
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EXHIBITS
EXHIBIT A-1 Opinion of Counsel to the Company
EXHIBIT A-2 Opinion of Counsel to the Purchaser
EXHIBIT B-1 Closing Certificate of the Company
EXHIBIT B-2 Closing Certificate of the Purchaser
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STOCK PURCHASE AGREEMENT, dated as of June 30, 1997, by and among
NMC CORP., a Delaware corporation having an address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Purchaser") and UNITED STATES LEAD TESTING & REMOVAL
SERVICE, INC., a New York corporation having an address at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company") and with respect to Article 7,
▇▇▇▇▇▇ ▇▇▇▇▇ having an address at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇ having an address at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ having an address at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
WHEREAS, the Company wishes to sell, and the Purchaser wishes to
purchase, the Shares, as hereinafter defined, on the terms and subject to the
conditions hereinafter set forth;
WHEREAS, capitalized terms used herein which are otherwise not
defined shall have the meanings set forth in Section 9.1 hereof;
NOW, THEREFORE, in consideration of the mutual terms, conditions
and other agreements set forth herein, the Purchaser and the Company hereby
agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 Purchase of Shares. On the terms and subject to the conditions set
forth in this Agreement, the Company agrees to sell to the Purchaser, and the
Purchaser agrees to purchase from the Company, ____________ of the shares of the
Company's Common Stock, .001 par value, free and clear of all Liens, which
shares represent 80% of the Common Stock outstanding, assuming the exercise of
all outstanding options, warrants and conversion rights.
1.2 Purchase Price. The purchase price (the "Purchase Price") for the
Shares shall be $2,000,000. The Purchase Price shall be payable as follows:
$500,000 on the Closing Date and the balance of $1,500,000 (the "Escrow Funds")
shall be placed in escrow with Lane & ▇▇▇▇▇▇▇▇▇▇ LLP (the "Escrow Agent"),
pursuant to a separate escrow agreement (the "Escrow Agreement"). The Escrow
Agreement shall provide that the Escrow Funds shall be released as follows:
$600,000 shall be released from the Escrow Funds three months from the Closing
Date, $500,000 shall be released from the Escrow Funds six months from the
Closing Date and $400,000 shall be released from the Escrow Funds, (x) upon the
earlier of nine months from the Closing Date or (y) when such amount is required
to be advanced by the Company pursuant to the Preferred Alliance Agreement
between the Company and HFS Incorporated provided that (i) the Company's results
of operations are in accordance with the Company's financial projections annexed
hereto as Schedule 1.2, as reasonably determined by they Purchaser and (ii)
the Company's Liabilities, as hereinafter defined, as of the Closing Date do not
exceed $200,000. In the event that the balance of the Purchase Price is not
delivered to the Company from the Escrow Funds, as a result of the Company's
failure to meet the requirements of the proviso in the preceding sentence, then
the Company shall have the right to redeem the Shares from the Purchaser at an
amount equal to the Purchase Price paid to the Company plus interest at the
prime rate of Citibank, N.A. plus 2% upon ten (10) days written notice for a
period of one year from the Closing Date.
(a) Bridge Loan. The Purchaser agrees to lend the Purchaser
$50,000, in accordance with the promissory note (the "Note") annexed hereto as
Schedule 1.2(a). Upon the closing of the transactions contemplated hereby the
principal amount and the accrued interest on the Note shall be credited against
the portion of the Purchase Price payable on the Closing Date.
1.3 Closing; Deliveries. At the Closing
(a) The Purchaser shall deliver to the Company (i) the aggregate
Purchase Price, (ii) a written consent, effective on the Closing Date, by the
Purchaser electing as directors and officers of the Company those persons
designated by the Company and the Purchaser pursuant to Section 6.5, and (iii)
the certificates, opinions and other agreements and instruments contemplated by
Section 5.1.
(b) The Company shall deliver to the Purchaser (i) a certificate
or certificates evidencing the Shares and (ii) the certificates, opinions and
other agreements and instruments contemplated by Section 5.2.
1.4 Closing Date. The consummation of the purchase and sale of the
Shares (the "Closing") shall be held at 10:00 a.m. at the offices of Lane &
▇▇▇▇▇▇▇▇▇▇ LLP, New York, New York, on August 31, 1997, or such other time and
date as shall be mutually agreed to by the parties (such date and time of the
Closing being herein referred to as the "Closing Date"); provided, however, that
the Closing Date shall not be later than August 31, 1997 without the consent of
the Purchaser.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows:
2.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has all requisite corporate power and authority to (a) own, lease
and operate its properties and assets as they are now owned, leased and operated
and (b) carry on its business as now presently conducted and as proposed to be
conducted. The Company is duly qualified to do business in
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each jurisdiction in which the nature of its business or properties makes such
qualification necessary.
2.2 Capitalization; Ownership. The authorized capitalization of the
Company consists of 10,000,000 shares of common stock, par value $.001 per
share, of which 4,856,001 shares are issued and outstanding.
2.3 Subsidiaries and Affiliates. Except as described on Schedule 2.3,
the Company does not own, directly or indirectly, any capital stock of, or any
other interest in, any other Person.
2.4 Options or Other Rights. Except as described on Schedule 2.4, no
options, warrants, calls, commitments or other rights to acquire, sell or issue
shares of capital stock or other equity interests of the Company, whether upon
conversion of other securities or otherwise, are outstanding and there is no
agreement or understanding with respect to the voting of such capital stock or
other equity interests.
2.5 Validity and Execution of Agreement. The Company has the full legal
right, capacity and power required to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder. This Agreement has
been duly executed and delivered by the Company and constitutes the valid and
binding obligation of the Company enforceable in accordance with its terms,
subject to the qualifications that enforcement of the rights and remedies
created hereby is subject to (a) bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and (b) general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
2.6 No Conflict. Neither the execution and delivery of this Agreement by
the Company nor the performance by the Company of the transactions contemplated
hereby will: (a) violate or conflict with any of the provisions of the
Certificate of Incorporation or By-Laws of the Company; (b) violate, conflict
with, result in the acceleration of, or entitle any party to accelerate the
maturity or the cancellation of the performance of any obligation under, or
result in the creation or imposition of any Lien in or upon any of the
properties or assets of the Company or constitute a default (or an event which
might, with the passage of time or the giving of notice, or both, constitute a
default) under any mortgage, indenture, deed of trust, lease, contract, loan or
credit agreement, license or other instrument to which the Company is a party or
by which it or any of its respective properties or assets may be bound or
affected; or (c) violate or conflict with any provision of any Law or Order
applicable to the Company or require any consent or approval of or filing or
notice with any Governmental or Regulatory Body.
2.7 Books and Records. Each of the Books and Records of the Company as
supplied to the Purchaser is true, correct, complete and current in all material
respects and, as applicable, accurately reflects all actions taken by the
shareholders and the board of directors of the
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Company, and all signatures contained therein are the true signatures of the
Persons whose signatures they purport to be.
2.8 Certificate of Incorporation and By-Laws. The Company has heretofore
delivered to the Purchaser true, correct and complete copies of the Certificate
of Incorporation (certified by the Secretary of State of New York and By-Laws
(certified by the secretary of the Company) of the Company as in full force and
effect on the date hereof.
2.9 Financial Statements.
(a) The audited statements of income of the Company for the year
ended December 31, 1995, and the audited balance sheet of the Company as of
December 31, 1996, and the related audited statements of income for the year
then ended (the "1996 Financial Statements"), true and complete copies of which
shall be delivered to the Purchaser prior to the Closing Date, present fairly,
in all material respects, the financial position of the Company as at such date
and the results of operations of the Company for the years then ended, in
accordance with GAAP consistently applied for the periods covered thereby.
(b) The unaudited balance sheet of the Company as of June 30,
1997 and the related statements of income for the period then ended (the
"Interim Financial Statements"), true and complete copies of which have
heretofore been delivered to the Purchaser, present fairly, in all material
respects, the financial position of the Company as of such date and the results
of operations of the Company for the period then ended, in each case in
accordance with GAAP consistently applied for the three-month period covered
thereby.
2.10 Undisclosed Liabilities. The Company does not have any material
direct or indirect indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, fixed or unfixed, ▇▇▇▇▇▇ or inchoate, liquidated
or unliquidated, secured or unsecured, accrued, absolute, contingent or
otherwise (all of the foregoing being collectively referred to as "Liabilities"
and individually as a "Liability"), of a kind required by GAAP to be set forth
on a financial statement that is not fully and adequately reflected or reserved
against on the Interim Financial Statements. The Company does not have any
Liabilities, whether or not of a kind required by GAAP to be set forth on a
financial statement, other than (a) Liabilities incurred since March 31, 1997 in
the ordinary course of business (none of which is a Liability for breach of
contract, breach of warranty, tort, infringement, or a pending claim or
lawsuit), and fully reflected as Liabilities on the Company's Books and Records,
none of which individually or in the aggregate, is material to the business,
operations, income, condition (financial or otherwise), assets or properties of
the Company or (b) Liabilities disclosed and reflected as liabilities on the
Interim Financial Statements.
2.11 No Material Adverse Change. Since December 31, 1996, there has been
no material adverse change in the business, operations, income or condition
(financial or otherwise), assets or properties of the Company, nor is any such
change threatened, nor has there been any
-4-
damage, destruction or loss which could reasonably be expected to have a
Material Adverse Effect on the Company, whether or not covered by insurance.
2.12 Tax Matters. Except as set forth in Schedule 2.12, all Tax Returns,
reports and declarations of estimated tax or estimated tax deposit forms
required to be filed by the Company have been duly and timely filed; the Company
has paid all Taxes which have become due whether pursuant to such returns or any
assessment received by it or otherwise, and has paid all installments of
estimated Taxes due; and all Taxes which the Company is required by law to
withhold or to collect have been duly withheld and collected, and have been paid
over to the proper Governmental or Regulatory Body. Except as set forth in
Schedule 2.12, there are no tax liens upon any of the assets or properties of
the Company except for liens for Taxes not yet due. No property of the Company
is property that the Purchaser will be required to treat as being owned by
another Person pursuant the provision of Code Section 168(f)(8) (as in effect
prior to its amendment by the Tax Reform Act of 1986) or is "tax-exempt use
property" within the meaning of Code Section 168. Except as described in
Schedule 2.12, the Company is not a party to any express tax settlement
agreement, arrangement, policy or guideline, formal or informal (a "Settlement
Agreement") and the Company does not have any obligation to make payments under
any Settlement Agreement.
2.13 Litigation. Except as set forth in Schedule 2.13, there are no
outstanding Orders by which the Company, or any of its securities, assets,
properties or businesses are bound, and there is no Action or Proceeding pending
or, to the knowledge of the Company, threatened (whether or not the defense
thereof or liabilities in respect thereof are covered by insurance) against or
affecting the Company or any of its assets, properties or businesses, nor are
there any facts which are likely to give rise to any such Action or Proceeding
which if adversely decided, would have a Material Adverse Effect on the Company.
2.14 Contracts and Other Agreements. Schedule 2.14 sets forth all of the
following types of contracts and other agreements (whether written or oral,
express or implied) to which the Company is a party or by or to which the
Company, or its assets, properties or businesses, is bound or subject
(collectively, the "Material Contracts"):
(a) franchise agreements;
(b) contracts and other agreements with any current or former
officer, director, employee, consultant, agent, other
representative of the Company or any affiliate of the
Company;
(c) contracts and other agreements with any labor union or
association representing any employee;
(d) contracts and other agreements for the sale of any of its
assets or properties or for the grant to any Person of any
preferential rights to
-5-
purchase any of their assets or properties, in each case
in an amount exceeding $5,000;
(e) joint venture and partnership agreements;
(f) material contracts under which the Company agrees to
indemnify any Person;
(g) any take or pay or requirements contracts or agreements or
any other contracts or agreements requiring the Company to
pay regardless of whether products or services are
received, in each case in an amount exceeding $5,000;
(h) contracts and other agreements not cancelable without
penalty by the Company on ninety (90) or fewer days'
notice calling for an aggregate purchase price or payments
to or from the Company in any one year of more than $5,000
in any one case (or in the aggregate, in the case of any
related series of contracts and other agreements);
(i) contracts and other agreements with clients, customers or
any other Person for the sharing of fees, the rebating of
charges or purchase price or other similar arrangements,
in each case involving an amount in excess of $5,000;
(j) contracts and other agreements containing obligations or
liabilities of any kind to holders of any securities
issued by the Company to register any of such securities
under any federal or state securities laws;
(k) contracts and other agreements containing covenants of the
Company or any officer or employee of the Company
pertaining to the right to compete or not compete in any
line of business or similarly restricting their ability to
conduct business with any Person or in any geographical
area or covenants of any other Person not to compete with
the Company in any line of business or restricting its
ability to conduct business or in any geographical area;
(l) contracts and other agreements relating to the acquisition
by the Company of any operating business or the capital
stock of any other Person;
(m) contracts and other agreements not cancelable without
penalty by the Company on ninety (90) or fewer days'
notice requiring the payment by or to the Company of a
royalty, override or similar commission or fee of more
than $5,000 per annum;
-6-
(n) contracts and other agreements not cancelable without
penalty by the Company on ninety (90) or fewer days'
notice relating to the sale or marketing of any products
sold, distributed or marketed by the Company and involving
an amount in excess of $5,000;
(o) contracts and other agreements relating to the borrowing
of money, creation of Liens, or the guarantee of the
payment of liabilities or performance of obligations to
the Company by any other Person;
(p) any stockholder agreement, registration rights agreement
or any arrangement relating to or affecting the ownership
of the common stock or other equity interests of the
Company;
(q) contracts and other agreements relating to data processing
or the provision of other services which are not
cancelable without penalty in ninety (90) or fewer days'
notice; and
(r) any other contract and other agreement relating to the
business of the Company and all any other contract and
other agreement made outside the ordinary course of
business relating to the Company in each case involving an
amount in excess of $5,000.
True and complete copies of all of the Material Contracts have been
delivered to Purchaser. All of the Material Contracts are valid, subsisting, in
full force and effect and binding upon the Company and, to the knowledge of the
Company, the other parties thereto in accordance with their terms, subject to
the qualifications that enforcement of the rights and remedies created thereby
is subject to (i) bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of creditors and
(ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), and the Company has satisfied
in full or provided for all of its liabilities and obligations thereunder
requiring performance prior to the date hereof in all material respects, and is
not in default under any of them, nor, to the knowledge of the Company, does any
condition exist that with notice or lapse of time or both would constitute such
a default. To the knowledge of the Company, no other party to any such Material
Contract is in default thereunder, nor does any condition exist that with notice
or lapse of time or both would constitute such a default. Except as set forth on
Schedule 2.14 under the heading "Required Consents/Contracts," no approval or
consent of any Person is needed for any of the Material Contracts to continue to
be in full force and effect, and all of the Company's rights under such Material
Contracts will be in full force and effect following consummation of the
transactions contemplated by this Agreement.
2.15 Real Estate. The Company does not own, beneficially or of record,
any real property. Schedule 2.15 sets forth a true, correct and complete list
and description of (and the Purchaser has received true and complete copies) of
all real property leased by the Company.
-7-
The Company is the lessee under the leases or holder of the options, as the case
may be, of each of the items disclosed on Schedule 2.15. Except as set forth in
Schedule 2.15, there is no default by the Company under any of such real
property leases, nor, to the knowledge of the Company, are there any facts or
circumstances which, with the passage of time or giving of notice, or both,
would constitute a default by the Company under any of the real property leases
or give any of the landlords thereunder the right to terminate any such real
property leases.
2.16 Transactions with Affiliates. Except as disclosed on Schedule 2.16,
no director, officer, shareholder or Affiliate of the Company or Affiliate of
such director, officer or shareholder has: (a) borrowed money from or loaned
money to the Company which remains outstanding; (b) had any contractual or other
claim, express or implied, of any kind whatsoever against the Company; (c) had
any interest in any property or assets used by the Company in the business of
the Company; (d) engaged in any other transaction with the Company or (e) owned,
directly or indirectly, any interest in (except not more than five percent (5%)
stockholdings for investment purposes in securities of publicly held and traded
companies), or served as an officer, director, employee or consultant of or
otherwise receives remuneration from, any Person which is, or has engaged in
business as, a competitor, lessor, lessee, customer or supplier of the Company.
2.17 Accounts Receivable; Inventory and Accounts Payable. All accounts
receivable reflected on the balance sheet of the Company included in the 1996
Financial Statements, and all accounts receivable arising subsequent to December
31, 1996, (a) have arisen from bona fide sales transactions in the ordinary
course of business on ordinary trade terms and (b) have been collected or are
collectible in the ordinary course of business in the aggregate recorded amounts
thereof in accordance with their terms without valid set-off or counterclaim.
The Company has made payments on accounts payable and other current obligations
arising subsequent to December 31, 1996, in accordance with past practice of the
business of the Company.
2.18 Compensation Arrangements; Officers, Directors and Employees.
Schedule 2.18 sets forth: (a) the name of all present officers, directors and
employees of the Company and current annual salary, including any promised,
expected or customary bonus or such other amount, and (b) the names and titles
of all directors and officers of the Company. The Company has not made a
commitment or agreement (verbally or in writing) to increase the compensation or
to modify the conditions or terms of employment of any Person listed on Schedule
2.18. To the knowledge of the Company, none of such Persons has made a threat to
the Company to terminate such Person's relationship with the Company.
2.19 ERISA. Except as set forth on Schedule 2.19, there are no Plans
maintained for the benefit of, or covering, any employee, former employee,
independent contractor or former independent contractor of the Company, or their
dependents or their beneficiaries, or otherwise, now or heretofore contributed
to by the Company, and no such Plan is or has ever been subject to ERISA.
-8-
2.20 Operations. Except as expressly authorized by this Agreement, from
December 31, 1996 through the date hereof, the Company has not, and from the
date hereof through the Closing Date, shall not have, without the prior written
consent of the Purchaser:
(a) amended its Certificate of Incorporation or By-Laws or
merged with or into or consolidated with any other Person,
or changed or agreed to rearrange in any manner the
character of the business of the Company, except to
increase the number of authorized shares of Common Stock;
(b) issued, sold or purchased options or rights to subscribe
to, or entered into any contracts or commitments to issue,
sell or purchase, any shares of its capital stock or other
equity interests;
(c) entered into, amended or terminated any (i) employment
agreement or collective bargaining agreement, (ii)
adopted, entered into or amended any arrangement which is,
or would be, a Plan or (iii) made any change in any
actuarial methods or assumptions used in funding any Plan
or in the assumptions or factors used in determining
benefit equivalences thereunder;
(d) issued any note, bond or other debt security, created,
incurred or assumed any indebtedness for borrowed money
other than in the ordinary course of business in
connection with trade payables, or guaranteed any
indebtedness for borrowed money or any capitalized lease
obligation;
(e) declared, set aside or paid any dividends or declared or
made any other distributions of any kind to the
shareholders, or made any direct or indirect redemption,
retirement, purchase or other acquisition of any shares of
its capital stock or other equity interests;
(f) knowingly waived any right of material value to the
business of the Company;
(g) made any change in its accounting methods or practices or
made any changes in depreciation or amortization policies
or rates adopted by it or made any material write-down of
inventory or material write-off as uncollectible of
accounts receivable;
(h) made any wage or salary increase or other compensation
payable or to become payable or bonus, or increase in any
other direct or indirect compensation, for or to any of
its officers, directors, employees, consultants, agents or
other representatives, or any accrual for or commitment or
agreement to make or pay the same, other than increases
made in the ordinary course consistent with past practice;
-9-
(i) entered into any transactions with any of its Affiliates,
shareholders, officers, directors, employees, consultants,
agents or other representatives (other than employment
arrangements made in the ordinary course of business
consistent with past practice), or any Affiliate of any
shareholder, officer, director, consultant, employee,
agent or other representative;
(j) made any payment or commitment to pay any severance or
termination pay to any Person or any of its officers,
directors, employees, consultants, agents or other
representatives, other than payments or commitments to pay
such Persons or their officers, directors, employees in
the ordinary course of business;
(k) except in the ordinary course of business, (i) entered
into any lease (as lessor or lessee), (ii) sold, abandoned
or made any other disposition of any of its assets or
properties other than in the ordinary course of business
consistent with past practice; (iii) granted or suffered
any Lien on any of its assets or properties other than
sales of inventory in the ordinary course of business; or
(iv) entered into or amended any material contract or
other agreement to which it is a party, or by or to which
it or its assets or properties are bound or subject, or
pursuant to which it agrees to indemnify any Person or to
refrain from competing with any Person, in each case or
type required to be disclosed pursuant to Section 2.14
hereof;
(l) except in the ordinary course of business, incurred or
assumed any debt, obligation or liability (whether
absolute or contingent and whether or not currently due
and payable);
(m) except for inventory or equipment acquired in the ordinary
course of business, made any acquisition of all or any
part of the assets, properties, capital stock or business
of any other Person;
(n) except in the ordinary course of business, paid, directly
or indirectly, any of its Liabilities before the same
became due in accordance with their terms or otherwise
than in the ordinary course of business, except to obtain
the benefit of discounts available for early payment;
(o) except in the ordinary course of business, created,
incurred or assumed any indebtedness for borrowed money,
or guaranteed any indebtedness for borrowed money or any
capitalized lease obligation, in each case in excess of
$5,000 individually or in the aggregate;
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(p) except in the ordinary course of business, made any
capital expenditures or commitments for capital
expenditures in aggregate amount exceeding $5,000; or
(q) except in the ordinary course of business, terminated,
failed to renew, amended or entered into any contract or
other agreement of a type required to be disclosed
pursuant to Section 2.14.
2.21 Tangible Property. Schedule 2.21 sets forth a true, complete and
correct list of all categories of tangible personal property with an aggregate
value in excess of $5,000, which is material to the business of the Company
(other than inventory), including, without limitation, equipment, furniture,
leasehold improvements, fixtures, vehicles, structures, any related capitalized
items and other similar tangible property, in each case owned or leased by the
Company and material to the business of the Company (collectively, the "Tangible
Property") together with a description of all material leases or subleases of
Tangible Property to which the Company is the lessor, sublessor, lessee or
sublessee and all options to purchase or sell the underlying property. The
Tangible Property is in good operating condition, subject to continued repair
and replacement in accordance with past practice, and the Company has not
received notice that any of the Tangible Property is in violation of any
existing Law or Order. During the past three (3) years there has not been any
material interruption of the operations of the Company due to inadequate
maintenance of the Tangible Property. Except as set forth on Schedule 2.21 under
the heading "Required Consents/Tangible Property," no approval or consent of any
Person is needed so that the interest of the Company in the Tangible Property
shall continue to be in full force and effect and enforceable by the Purchaser
following the transactions contemplated by this Agreement.
2.22 Intangible Property. Schedule 2.22 sets forth a list of all
Intangible Property of the Company which is material to the business of the
Company (other than trade secrets, know-how and goodwill attendant to the
Intangible Property and other intellectual property rights not reducible to
schedule form), true and complete copies of which have been delivered or made
available to the Purchaser. None of the Intangible Property infringes upon the
rights of any other Person in any material respect or, to the knowledge of the
Company, is so infringed upon by any other Person or its property and the
Company has not received any notice of any claim of any other Person relating to
any of the Intangible Property or any process or confidential information of the
Company and does not know of any basis for any such charge or claim. Except for
the Intangible Property, no other material intellectual property or intangible
property rights are required for the Company to conduct the business of the
Company in the ordinary course consistent with past practice. Except as
separately identified on Schedule 2.22 under the heading "Required
Consents/Intangible Property," no approval or consent of any Person is needed so
that the interest of the Company in the Intangible Property shall continue to be
in full force and effect and enforceable by the Company following the
transactions contemplated by this Agreement.
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2.23 Environmental Matters. There have not been any activities on or at
the Company's facilities at any time during which such facilities were occupied
by the Company or any Affiliate or, to the knowledge of the Company, at any time
prior thereto involving the use, generation, Treatment, Storage, or Disposal of
any Hazardous Substances or Petroleum Products in violation of applicable
Environmental Laws, or any Release or threatened Release from any such
facilities of any Hazardous Substances or Petroleum Products. The Company is now
and has been at all times in material compliance with all Environmental Laws;
there are no pending environmental litigation, enforcement actions,
administrative orders or notices of violation brought under any Environmental
Law concerning the Company's facilities and it does not know of any threats of
such litigation, enforcement actions, administrative orders or notices of
violation; the Company has not received any request for information, notice of
claim, demand or other notification that it may be potentially responsible for
any threatened or actual Release of Hazardous Substances or Petroleum Products
on any of its facilities at any time during which such facilities were leased or
occupied by the Company or any Affiliate or, to the knowledge of the Company, at
any time prior thereto; and the Company has all material permits, licenses,
orders, approvals, authorizations, concessions or franchises of every
governmental authority having jurisdiction under an Environmental Law required
to conduct its business substantially as it is currently being conducted. All
such permits, licenses, orders, approvals, authorizations, concessions and
franchises are in full force and effect, and, to the knowledge of the Company,
there is no state of facts or event which could reasonably be expected to form
the basis for any revocation or non-renewal of any such permit or authorization.
2.24 Employee Relations. The Company is not a party to, and there does
not otherwise exist, any agreement with any labor organization, collective
bargaining or similar agreement with respect to employees of the Company. There
are no material complaints, grievances or arbitrations, employment-related
litigation, administrative proceedings or controversies either pending or, to
the knowledge of the Company, threatened, involving any employee, applicant for
employment, or former employee of the Company against the Company. During the
past five (5) years, the Company has not suffered or sustained any labor dispute
resulting in any work stoppage and no such work stoppage is, to the knowledge of
the Company, threatened. To the knowledge of the Company, there are no attempts
presently being made to organize any employees employed by the Company.
2.25 Insurance. Schedule 2.25(a) sets forth a list and brief description
(specifying the insurer, the policy number or covering note number with respect
to binders and the amount of any deductible, describing the pending claims if
such claims exceed applicable policy limits, setting forth the aggregate amount
paid out under each such policy through the date hereof and the aggregate limit,
if any, of the insurer's liability thereunder) of all policies or binders of
fire, liability, errors and omissions, workers' compensation, vehicular,
unemployment and other insurance held by or on behalf of the Company. The
Company is not in default with respect to any material provision contained in
any such policy or binder and has not failed to give any notice or present any
claim under any such policy or binder in due and timely fashion. There are no
outstanding unpaid claims under any such policy or binder which have gone unpaid
for more than forty-five (45) days or as to which the carrier has disclaimed
liability. The Company
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has not received any notice of cancellation or non-renewal of any such policy or
binder. The Company has not received any notice from any of its insurance
carriers that any insurance premiums will be materially increased in the future
or that any insurance coverage listed on Schedule 2.25(a) will not be available
in the future on substantially the same terms as now in effect.
2.26 Licenses and Permits. Schedule 2.26 sets forth a list of the
material government permits, licenses, registrations and other consents and
authorizations (federal, state, local and foreign) of any Governmental or
Regulatory Body (collectively, "Permits") which the Company has obtained in
connection with its assets, properties and business. Except as set forth on
Schedule 2.26 under the heading "Required Consents/Permits," no material Permit
is required to be obtained by the Company in connection with its properties or
the business of the Company as presently conducted. The Company has not received
any notice of any claim of revocation of any such Permit and has no knowledge of
any event which would be likely to give rise to such a claim.
2.27 Compliance with Laws. The Company (a) is in compliance in all
material respects with all, and not in violation in any material respect of any,
and has not received any claim or notice that it is not in compliance in any
material respect with, or that its is in violation in any material respect of,
any Law or Order to which the Company or any of its businesses, operations,
assets or properties (including the use and occupancy thereof) are subject and
(b) has not failed in any material respect to obtain or to adhere to the
requirements of any permit, license, registration and other consent or
authorization of any Governmental or Regulatory Body necessary in connection
with its assets, properties or business.
2.28 Banks and Proxies. Schedule 2.28 sets forth (a) the name of each
bank, trust company, securities or other broker or other financial institution
with which the Company has an account, credit line or safe deposit box or vault,
or otherwise maintains relations; (b) the name of each person authorized by the
Company to draw thereon or to have access to any safe deposit box or vault; (c)
the purpose of each such account, safe deposit box or vault; and (d) the names
of all persons authorized by proxies, powers of attorney or other instruments to
act on behalf of the Company in matters concerning the business of the Company.
All such accounts, credit lines, safe deposit boxes and vaults are maintained by
the Company for normal business purposes, and no such proxies, powers of
attorney or other like instruments are irrevocable.
2.29 Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by the Company directly
with the Purchaser, without the intervention of any other Person on behalf of
the Company in such manner as to give rise to any valid claim by any Person
against the Company or the Purchaser for a finder's fee, brokerage commission or
similar payment.
2.30 Disclosure. To the knowledge of the Company, neither this
Agreement, nor any Schedule or Exhibit to this Agreement, contains an untrue
statement of a material fact or omits a material fact necessary to make the
statements contained herein or therein not misleading.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
3.1 Validity and Execution of Agreement. The Purchaser has the full
legal right and power required to enter into, execute and deliver this Agreement
and to perform fully its obligations hereunder. This Agreement has been duly
executed and delivered by the Purchaser and constitutes the valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms, subject to the qualifications that enforcement of the rights and
remedies created hereby is subject to (a) bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and (b) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
3.2 No Conflict. Neither the execution and delivery of this Agreement by
the Purchaser nor the performance by the Purchaser of the transactions
contemplated hereby will: (a) violate or conflict with any provisions of any Law
or Order applicable to the Purchaser; or (c) require any consent or approval by
or filing or notice with any Governmental or Regulatory Body.
3.3 Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by the Purchaser directly
with the Company without the intervention of any other Person on behalf of the
Purchaser in such manner as to give rise to any valid claim by any Person
against the Company for a finder's fee, brokerage commission or similar payment.
3.4 Disclosure. To the knowledge of the Purchaser, none of the
representations, warranties or covenants contained in this Agreement, nor in any
Schedule or Exhibit hereto, made by the Purchaser, contains any untrue statement
of a material fact or omits a material fact necessary to make the statements
contained herein or therein not misleading.
3.5 Investment Intent. The Purchaser is acquiring the Shares for its own
account, and not with any present intention of distributing or selling the
Shares or any part thereof. The Shares shall be subject to the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT
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THAT THE PROPOSED TRANSACTION WILL BE EXEMPT FROM
REGISTRATION.
ARTICLE 4
PRE-CLOSING COVENANTS
The Company and the Purchaser hereby covenant and agree as follows:
4.1 Corporate Examinations and Investigations. At or prior to the
Closing Date, the Purchaser shall be entitled to make such investigation of the
assets, properties, business and operations of the Company and such examination
of the books, records, Tax Returns, financial condition and operations of the
Company as the Purchaser may wish. Any such investigation and examination shall
be conducted at reasonable times and under reasonable circumstances and the
Company shall cooperate fully therein. In order that the Purchaser may have full
opportunity to make such a business, accounting and legal review, examination or
investigation as they may wish of the business and affairs of the Company, the
Company shall furnish to the Purchaser during such period all such information
and copies of such documents concerning the affairs of the Company as the
Purchaser may reasonably request and cause the Company's officers, employees,
consultants, agents, accountants and attorneys to cooperate fully with the
Purchaser in connection with such review and examination and to make full
disclosure to the Purchaser of all material facts affecting the financial
condition and business operations of the Company. Until the Closing and if the
Closing shall not occur, thereafter, the Purchaser and its Affiliates shall keep
confidential and shall not use in any manner inconsistent with the transactions
contemplated by this Agreement and after termination of this Agreement, the
Purchaser and its Affiliates shall not disclose, nor use for their own benefit,
any information or documents obtained from the Company concerning its assets,
properties, business and operations, unless (a) readily ascertainable from
public or published information, or trade sources, (b) received from a third
party not under an obligation to the Company to keep such information
confidential or (c) required by any Law or Order. In the event this transaction
does not close for any reason, the Purchaser and its Affiliates shall return or
destroy all such confidential information and compilations thereof as is
practicable, and shall certify such destruction or return to the Company.
4.2 Conduct of Business. From the date hereof through the Closing Date,
the business of the Company shall be conducted in the ordinary course in the
same manner as it has been conducted since December 31, 1996.
4.3 Preservation of Business. From the date hereof through the Closing
Date, the Company shall (i) preserve intact the business, assets, properties and
organizations of the Company; (ii) keep available the services of the present
officers, employees, consultants and agents of the Company; and (iii) maintain
the present suppliers and customers and preserve the goodwill of the Company.
-15-
4.4 Other Agreements. The Company agrees to take, or cause to be taken,
all actions and to do, or cause to be done, all things reasonably necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement, including, without limitation,
the obtaining of all necessary waivers, consents and approvals and the effecting
of all necessary registrations and filings, including, but not limited to,
submissions of information requested by Governmental or Regulatory Bodies and
any other Persons required to be obtained by them for the consummation of the
closing and the continuance in full force and effect of the permits, contracts
and other agreements set forth on the Schedules to this Agreement.
4.5 Agreements with Creditors. The Company shall enter into agreements
with its creditors prior to the Closing Date, such that the Liabilities of the
Company on the Closing Date shall not exceed $200,000.
ARTICLE 5
CONDITIONS PRECEDENT TO THE CLOSING
5.1 Conditions Precedent to the Obligations of the Purchaser to Complete
the Closing. The obligations of the Purchaser to enter into and complete the
Closing are subject to the fulfillment of the following conditions, any one or
more of which may be waived by the Purchaser:
(a) Opinion of Counsel. ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates shall have
delivered the opinion of counsel to the Company, substantially in the form of
Exhibit A-1 hereto.
(b) Closing Certificate of the Company. The Company shall have
delivered to the Purchaser a certificate signed by an authorized officer of the
Company, dated the Closing Date, substantially in the form of Exhibit B-1
hereto.
(c) Issuance of Shares. The Company shall have executed and
delivered to the Purchaser a certificate or certificates evidencing the Shares
being acquired by the Purchaser.
(d) No Litigation. No Action or Proceeding shall be pending in
which it is sought to restrain or prohibit the consummation of the transactions
contemplated hereby. No order which restrains or prohibits the transactions
contemplated hereby shall be in effect and no Governmental or Regulatory Body
shall be seeking such an Order or threatening to do so.
(e) Required Consents. Each of the Required Consents shall have
been obtained.
-16-
(f) Approval of Documents. The form and substance of all legal
proceedings, documents, or papers used or delivered hereunder by the Company
shall be reasonably satisfactory to the Purchaser.
(g) Agreements with Creditors. The Company shall have entered
into the agreements provided for in Section 4.5.
(h) Employment Agreements. The Company shall have entered into
employment agreements satisfactory to the Purchaser with each of ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ the business terms of which are set forth
on Schedule 5.1(h).
(i) The Company shall have delivered the 1996 Financial
Statements to the Purchaser and the Purchaser shall be satisfied with the 1996
Financial Statements.
5.2 Conditions Precedent to the Obligations of the Company to Complete
the Closing. The obligations of the Company to enter into and complete the
Closing are subject to the fulfillment on or prior to the Closing Date, of the
following conditions, any one or more of which may be waived by the Company:
(a) Opinion of Counsel. Lane & ▇▇▇▇▇▇▇▇▇▇ LLP shall have
delivered the opinion of counsel to the Purchaser, substantially in the form of
Exhibit A-2 hereto.
(b) Closing Certificate of the Purchaser. The Purchaser shall
have delivered to the Company a certificate signed by the Purchaser, dated the
Closing Date, substantially in the form of Exhibit B-2 hereto.
(c) Delivery of Purchase Price. The Purchaser shall have
delivered to the Company the portion of the Purchase Price set forth in Section
1.3 hereof.
(d) No Litigation. No Action or Proceeding shall be pending in
which it is sought to restrain or prohibit the consummation of the transactions
contemplated hereby. No order which restrains or prohibits the transactions
contemplated hereby shall be in effect and no Governmental or Regulatory Body
shall be seeking such an Order or threatening to do so.
(e) Approval of Documents. The form and substance of all legal
proceedings, documents, or papers used or delivered hereunder by the Purchaser
shall be reasonably satisfactory to the Company.
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ARTICLE 6
POST-CLOSING COVENANTS
The parties covenant to take the following actions after the Closing
Date:
6.1 Further Information. Following the Closing, each party will afford
to the other party, its counsel and its accountants, during normal business
hours, reasonable access to the books, records and other data of the Company
relating to the business of the Company in their possession with respect to
periods prior to the Closing and the right to make copies and extracts
therefrom, to the extent that such access may be reasonably required by the
requesting party (a) to facilitate the investigation, litigation and final
disposition of any claims which may have been or may be made against any party
or its Affiliates and (b) for any other reasonable business purpose.
6.2 Record Retention. Each party agrees that for a period of not less
than five (5) years following the Closing Date, such party shall not destroy or
otherwise dispose of any of the Books and Records of the Company relating to the
business of the Company in his or its possession with respect to periods prior
to the Closing Date. Each party shall have the right to destroy all or part of
such Books and Records after the fifth anniversary of the Closing Date or, at an
earlier time by giving each other party hereto thirty (30) days prior written
notice of such intended disposition and by offering to deliver to the other
party or parties, at the other party's or parties' expense, custody of such
Books and Records as such party may intend to destroy.
6.3 Transfer Taxes. The Company agrees to pay all sales, use, transfer,
real property transfer, recording, gains, stock transfer and other similar Taxes
and fees ("Transfer Taxes") arising out of or in connection with the
transactions effected pursuant to this Agreement, and shall indemnify, defend
and hold the Purchaser harmless with respect to such Transfer Taxes. The Company
and the Purchaser shall cooperate in filing all necessary documentation and Tax
Returns with respect to such Transfer Taxes.
6.4 Post-Closing Assistance. The Company, on the one hand, and the
Purchaser, on the other hand, will provide each other with such assistance as
may reasonably be requested in connection with the preparation of any Tax
Return, any audit or other examination by any taxing authority, or any judicial
or administrative proceedings relating to liability for Taxes, and each will
retain and provide the requesting party with any records or information that may
be reasonably relevant to such return, audit or examination, proceedings or
determination. The party requesting assistance shall reimburse the other party
for reasonable out-of-pocket expenses (other than salaries or wages of any
employees of the Company) incurred in providing such assistance. Any information
obtained pursuant to this Section 6.4 or pursuant to any other Section hereof
providing for the sharing of information or the review of any Tax Return or
other schedule relating to Taxes shall be kept confidential by the parties
hereto.
-18-
6.5 Corporate Governance.
(a) For a period of three years the stockholders of the Company
shall have the right to designate three members of the Board of Directors and
the Purchaser shall have the right to designate four members of the Board of
Directors. Each of the Purchaser and such stockholders shall take such action as
may be necessary to accomplish the purposes of this paragraph.
(b) The Company shall not, without the consent of the Purchaser:
(i) sell, transfer, assign or convey, or enter into any
agreement or commitment to sell, transfer, convey or assign all or substantially
all of the assets of the Company, in any transaction or series of related
transactions;
(ii) except for the purchase and sale of assets of the
Company in the
ordinary course of business, the sale, exchange, lease, mortgage, assignment,
pledge or other transfer for the purpose of providing security of, or granting a
security interest in, any of the assets of the Company; or
(iii) incur, renew, refinance or make nonscheduled
payments or other
similar optional discharge of indebtedness for borrowed money in excess of the
aggregate amount of $5,000 during any calendar year by the Company other than in
the ordinary course of business.
6.6 Option. The Company shall grant options to purchase shares of Common
Stock to each of the stockholders of record of the Company on July __, 1997. The
number of Options granted to the stockholders of the Company shall be equal to
29% of the number of shares of common stock issued and outstanding immediately
after the Closing Date. Each stockholder of the Company shall be issued the
number of Options equal to aggregate number of Options to be issued multiplied
by a fraction the numerator of which is the number of shares of Common Stock
held by such stockholder and the denominator of which is the number of shares of
Common Stock outstanding immediately preceding the Closing. The Options shall be
exercisable commencing thirty (30) days after the period in which the Company
has net earnings before income taxes of at least $10,000,000 in any fiscal year
or portion thereof (the "Applicable Period"), as determined by the Company's
independent certified public accountants, and provided that the Company shall
have redeemed the number of shares of Common Stock held by the Purchaser equal
to the aggregate number of Options granted to the Company's stockholders. The
Purchaser's shares of Common Stock shall be redeemable by the Company at an
aggregate purchase price of $2,000,000 plus interest at the prime rate of
Citibank, N.A. plus 2%. The shares of Common Stock to be redeemed by the Company
shall not be redeemed until after the Company has distributed dividends to its
stockholders with respect to the Applicable Period. The Options shall expire ten
years from the Closing Date. Prior to the Closing Date, the Company shall adopt
an Incentive Stock Option Plan which shall be approved by the Purchaser. The
Options to be granted to each of ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and
-19-
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as stockholders of the Company, shall be incentive stock
options to the extent permitted under applicable law.
6.7 Use of Proceeds. The Company shall utilize the Purchase Price in
accordance with Schedule 6.7.
ARTICLE 7
SURVIVAL; INDEMNIFICATION
7.1 Survival of Representations and Warranties. The representations and
warranties of the Company and the Purchaser contained in this Agreement will
survive the Closing.
7.2 Company's Indemnity.
(a) ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company Stockholders") agree to indemnify the Purchaser and hold the Purchaser
and the Purchaser's Affiliates harmless against and in respect of any and all
damages, losses, claims, penalties, liabilities, costs and expenses (including,
without limitation, all fines, interest, reasonable legal fees and expenses and
amounts paid in settlement), that arise from or relate or are attributable to
(and without giving effect to any tax benefit to the indemnified party) (a) any
misrepresentation by the Company or breach of a warranty by the Company in this
Agreement, (b) any breach of any covenant or agreement on the part of the
Company in this Agreement, or (c) the failure of the Company to reduce the
Liabilities of the Company on the Closing Date to $200,000.
(b) The liability of each of the Company Stockholders under
Section 7.2(a) shall not exceed the lesser of (A) the sum of the fair market
value of the securities of the Company held by such Company Stockholder and the
proceeds received by such Company Stockholder from the sale of the Company's
securities after the date hereof; and (B) the sum of the fair market value of
the securities of the Company held by such Company Stockholder and the proceeds
received by such Company Stockholder from the sale of the Company's securities
after the date hereof, divided by the liability of the Company's Stockholders
under Section 7.2(a).
(c) Notwithstanding anything contained in Section 7.2(b) to the
contrary, in the event that the Liabilities of the Company on the Closing Date
exceed $200,000, except as otherwise agreed in writing by the Purchaser, then in
the event that the Company Stockholders are entitled to a dividend or other
distribution from the Company, then such dividend or other distribution shall be
contributed by such Company Stockholder to the Company to the extent of the
difference between the Liabilities on the Closing Date and $200,000 and the
liability of the Company Stockholders shall be limited to the amount of such
dividends or other distributions.
-20-
7.3 Purchaser's Indemnity. The Purchaser shall indemnify
the Company and hold the Company and the Company's Affiliates harmless against
and in respect of any and all damages, losses, claims, penalties, liabilities,
costs and expenses (including, without limitation, all fines, interest,
reasonable legal fees and expenses and amounts paid in settlement), that arise
from or relate or are attributable to (and without giving effect to any tax
benefit to the indemnified party) (a) any misrepresentation by the Purchaser or
breach of any warranty by the Purchaser in this Agreement, (b) any breach of any
covenant or agreement on the part of the Purchaser in this Agreement, and (c)
all obligations and liabilities arising from the conduct of the business of the
Company following the Closing.
7.4 Method of Asserting Claims. The party making a claim under this
Article 7 is referred to as the "Indemnified Party" and the party against whom
such claims are asserted under this Article 7 is referred to as the
"Indemnifying Party". All claims by any Indemnified Party under this Article 7
shall be asserted and resolved as follows:
(a) In the event that an Indemnified Party becomes aware of a
claim for which an Indemnifying Party would be liable to an Indemnified Party
hereunder, said Indemnified Party shall with reasonable promptness notify in
writing the Indemnifying Party of such claim, identifying the representation or
warranty on which such claim is based, the basis for such claim or demand, and
the amount or the estimated amount thereof to the extent then determinable
(which estimate shall not be conclusive of the final amount of such claim and
demand; the "Claim Notice"); provided, however, that any failure to give such
Claim Notice will not be deemed a waiver of any rights of the Indemnified Party
except to the extent the rights of the Indemnifying Party are actually
prejudiced by such failure. If the basis of such claim is a claim or demand by a
third party, the Indemnifying Party, upon request of the Indemnified Party,
shall retain counsel (who shall be reasonably acceptable to the Indemnified
Party) to represent the Indemnified Party and shall pay the reasonable fees and
disbursements of such counsel with regard thereto; provided, however, that any
Indemnified Party is hereby authorized prior to the date on which it receives
written notice from the Indemnifying Party designating such counsel, to retain
counsel, whose fees and expenses shall be at the expense of the Indemnifying
Party, to file any motion, answer or other pleading and take such other action
which it reasonably shall deem necessary to protect its interests or those of
the Indemnifying Party until the date on which the Indemnified Party receives
such notice from the Indemnifying Party. After the Indemnifying Party shall
retain such counsel, the Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (x) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (y) the
named parties of any such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party shall not, in
connection with any proceedings or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one such firm for the
Indemnified Party (except to the extent the Indemnified Party retained counsel
to protect its (or the Indemnifying Party's) rights prior to the
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selection of counsel by the Indemnifying Party). If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand which the
Indemnifying Party defends. A claim or demand may not be settled by either party
without the prior written consent of the other party (which consent will not be
unreasonably withheld) unless, as part of such settlement, the Indemnified Party
shall receive a full and unconditional release reasonably satisfactory to the
Indemnifying Party.
(b) In the event any Indemnified Party shall have a claim against
any Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to the
Indemnifying Party.
(c) After delivery of a Claim Notice, so long as any right to
indemnification exists pursuant to this Article 7, the affected parties each
agree to retain all Books and Records related to such Claim Notice. In each
instance, the Indemnified Party shall have the right to be kept fully informed
by the Indemnifying Party and its legal counsel with respect to any legal
proceedings. Any information or documents made available to any party hereunder
and designated as confidential by the party providing such information or
documents and which is not otherwise generally available to the public and not
already within the knowledge of the party to whom the information is provided
(unless otherwise covered by the confidentiality provisions of any other
agreement among the parties hereto, or any of them), and except as may be
required by applicable law, shall not be disclosed to any third Person (except
for the representatives of the party being provided with the information, in
which event the party being provided with the information shall request its
representatives not to disclose any such information which it otherwise required
hereunder to be kept confidential).
7.5 General Provisions. The following general provisions shall apply to
any claim for indemnification under this Section 7:
(a) The amount of any claim subject to indemnification shall be
determined after taking into account the present value of any tax benefits (net
of tax detriments) accruing to the Indemnified Party or any Affiliate as a
result of such claim.
(b) Except as otherwise set forth in this Section 7.5(b), the
Purchaser and the Company hereby agree that after the Closing, with respect to
any breach, violation or non-fulfillment of or default in the performance of any
representation, warranty or covenant of this Agreement for which a right to
claim indemnification is provided in this Section 7, a claim or an action under
and pursuant to the terms, conditions and limitations of this Section 7 shall be
its sole and exclusive right and remedy, and that neither the Purchaser nor the
Company shall have any other claim, cause of action, right, or remedy for such
breach, violation, non-fulfillment or default based upon this Agreement, any
provision of any federal or state securities or other statute, law, rule or
regulation or based upon any other cause of action arising at law or in equity;
provided, however, that if for any reason a court of competent jurisdiction
shall refuse to enforce this provision, and shall permit the Purchaser or the
Company to assert
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any action based other than upon the right to claim indemnification as provided
in this Section 7, the Purchaser and the Company agree that the amount of such
other claim shall be subject to and limited by the provisions of this Section 7.
The provisions of this Section 7.5(b) shall not preclude the prosecution of any
action or proceeding based on fraud that, if found to exist, would be sufficient
to give rise to the right of rescission with respect to the transactions
contemplated hereby.
ARTICLE 8
TERMINATION OF AGREEMENT
8.1 Termination. This Agreement may be terminated at any time prior to
the Closing as follows:
(a) by the Purchaser, on the one hand, or by the Company, on the
other hand, by written notice to the other parties hereto, in the event that the
Closing shall not have occurred on or prior to the close of business on August
31, 1997 (unless such event has been caused by a breach of this Agreement by the
party seeking such termination); or
(b) at any time on or prior to the Closing Date, by written
consent of the Purchaser and the Company.
8.2 Survival After Termination. In the event this Agreement is
terminated pursuant to Section 8.1, (a) this Agreement shall become null and
void and of no further force and effect, except for the provisions of Article 4
relating to the obligation to keep confidential certain information and (b)
there shall be no liability on the part of the Company or the Purchaser or their
respective Affiliates.
ARTICLE 9
MISCELLANEOUS
9.1 Certain Definitions. As used in this Agreement, the following terms
have the following meanings unless the context otherwise requires:
"Action or Proceeding" means any action, suit, proceeding or arbitration
by any Person or any investigation or audit by any Governmental or Regulatory
Body.
"Affiliate" with respect to any Person, means any other Person
controlling, controlled by or under common control with such Person.
"Agreement" means this Agreement.
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"Books and Records" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
conditions of (financial or other), results of operations and assets and
properties of such Person, including without limitation financial statements,
Tax Returns and related work papers and letters from accountants, budgets,
pricing guidelines, ledgers, journals, deeds, title policies, minute books,
stock certificates and books, stock transfer ledgers, contracts and other
agreements, licenses, customer lists, computer files and programs, retrieval
programs, operating data and plans and environmental studies and plans.
"Claim Notice" has the meaning specified in Section 7.4.
"Closing" has the meaning specified in Section 1.4.
"Closing Date" has the meaning specified in Section 1.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts and other agreements" means all executory contracts,
agreements, notes understandings, indentures, bonds, loans, instruments, leases,
mortgages, franchises, licenses, commitments or other legally binding
arrangements.
"Disposal" means disposal as defined by RCA and the regulations
thereunder.
"Documents and other papers" means any document, agreement, instrument,
certificate, notice, consent, affidavit, letter, telegram, telex, statement,
schedule (including any Schedule to this Agreement) or exhibit (including any
Exhibit to this Agreement).
"Environmental Laws" means any federal, state or local law, regulation,
ordinance or order pertaining to the protection of natural resources, the
environment and the health and safety of the public, including, but not limited
to, the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. ss.ss.9601 et seq., the Resource Conservation and Recovery
Act ("RCA"), as amended, 42 U.S.C. ss.ss.6901 et seq., the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. ss.ss.1801 et seq., the Federal Mine
Safety and Health Act of 1977, as amended, 30 U.S.C. ss. 801 et seq., the
Occupational Safety and Health Act, as amended, 29 U.S.C. ▇▇.▇▇. 651 et seq.,
and any other state, federal or local law, regulation, rule, ordinance or order,
currently in existence, which govern:
(a) the existence, cleanup and/or remedy of contamination on
property;
(b) the emission or discharge of Hazardous Substances into the
environment;
(c) the control of Hazardous Wastes; or
(d) the use, generation, transport, treatment, storage,
disposal, removal or recovery of Hazardous Substances,
including building materials.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means generally accepted accounting principles.
"Governmental or Regulatory Body" means any court, tribunal, arbitrator
or any government or political subdivision thereof, whether federal, state,
county, local or foreign, or any agency, authority, official or instrumentality
of any such government or political subdivision.
"Hazardous Substances" means (a) any oil, flammable substances,
explosives, radioactive materials, hazardous wastes or substances, toxic wastes
or substances or any other wastes, materials or pollutants defined as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous waste", "restricted hazardous
waste", or "toxic substances" or words of similar import under any applicable
local, state or federal law or under the regulations adopted or publications
promulgated pursuant thereto, including, but not limited to, Environmental Laws;
and (b) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority.
"Hazardous Wastes" means hazardous wastes as defined by RCA and the
regulations thereunder.
"Indemnified Party" has the meaning specified in Section 7.4.
"Intangible Property" means all intellectual property rights used or
held for use in the conduct of the business of the Company (including the
Company's goodwill therein) and all rights, privileges, claims, causes of action
and options relating or pertaining to the business of the Company or its assets
or properties, including but not limited to advertiser lists and all related
databases, patents and applications therefor, know-how, trade secrets, secret
formulas, business and marketing plans, computer software (including source
codes to the extent the Company has rights therein) and related documentation,
copyrights and applications therefor, trademarks and applications therefor,
trade names, service marks and all names and slogans used by the Company in
connection with its business and licenses relating thereto.
"Indemnifying Party" has the meaning specified in Section 7.4.
"Interim Financial Statements" has the meaning specified in Section
2.9(b)
"IRS" means the Internal Revenue Service.
"Law" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States, any foreign country
or any domestic or foreign state, county, city or other political subdivision or
of any Governmental or Regulatory Body.
"Liabilities" has the meaning specified in Section 2.10.
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"Lien" means any lien, pledge, hypothecation, mortgage, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any stockholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever, other than (i)
materialmen's, mechanics', repairmen's or other like liens arising in the
ordinary course of business for amounts either not yet due or being contested in
good faith and by appropriate proceedings so long as such proceedings shall not
involve any material danger of sale, forfeiture or loss of any part of the
Assets and shall have been disclosed to Purchase hereunder, or (ii) any lien
arising as a result of any act or omission of the Purchaser.
"Material Adverse Effect" means, in the case of any Person, any change
or changes or effect or effects that individually or in the aggregate are or may
reasonably be expected to be materially adverse to (i) the assets, properties,
business, operations, income or condition (financial or otherwise) of such
Person or (ii) the ability of such Person to perform its obligations under this
Agreement.
"Material Contracts" has the meaning specified in Section 2.14.
"1996 Financial Statements" has the meaning specified in Section 2.9(a)
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Body, in each case whether preliminary or final.
"Permits" has the meaning specified in Section 2.26.
"Person" means any individual, corporation, limited liability company,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental or Regulatory Body or other entity.
"Petroleum Products" means petroleum, gasoline, oil, fuel oil, diesel
fuel, and petroleum solvents.
"Plan" means any written or unwritten plan, fund, program,
understanding, policy, arrangement, contract or commitment, whether qualified or
not qualified for federal income tax purposes, whether formal or informal,
whether for the benefit of a single individual or more than one individual
whether or not subject to ERISA, which is in the nature of (a) an employee
pension benefit plan (as defined in ERISA ss. 3(2)), (b) an employee welfare
benefit plan (as defined in ERISA ss. 3(1)) or (c) an incentive, deferred
compensation, bonus, executive or other benefit or compensatory arrangement for
employees, former employees, independent contractors, former independent
contractors or their dependents or their beneficiaries.
"Purchase Price" has the meaning specified in Section 1.2.
"Purchaser" has the meaning specified in the first paragraph of this
Agreement.
-26-
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, placing, discharging, injecting, escaping, dumping or disposing into
the environment, whether intentional or unintentional.
"Required Consent" means any approval or consent of any Person to the
transactions contemplated by this Agreement required under (a) any Material
Contract, as set forth on Schedule 2.14 under the heading "Required
Consents/Contracts," (b) any right or interest of the Company relating to
Tangible Property, as set forth on Schedule 2.21 under the heading "Required
Consents/Intangible Property," (b) any right or interest of the Company relating
to Intangible Property, as set forth on Schedule 2.22 under the heading
"Required Consents/Intangible Property," or (d) any Permit, as set forth on
Schedule 2.25 under the heading "Required Consents/Permits."
"Tax Return" means any return, report, information return, or other
document (including any related or supporting information) filed or required to
be filed with any federal, state, local, or foreign governmental entity or other
authority in connection with the determination, assessment or collection of any
Tax (whether or not such Tax is imposed on the Company) or the administration of
any laws, regulations or administrative requirements relating to any Tax.
"Tax" and "Taxes" means all taxes, charges, fees, levies or other
assessments imposed by any federal, state, local or foreign taxing authority,
whether disputed or not, including, without limitation, income, capital,
estimated, excise, property, sales, transfer, withholding, employment, payroll,
and franchise taxes and such terms shall include any interest, penalties or
additions attributable to or imposed on or with respect to such assessments and
any expenses incurred in connection with the settlement of any tax liability.
"Transfer Taxes" has the meaning specified in Section 6.3
"Treatment" and "Storage" mean treatment and storage as defined by RCA
and the regulations thereunder.
9.2 Expenses. Each of the parties hereto shall pay his own expenses
(including, without limitation, attorney's and accountants' fees and
out-of-pocket expenses) incident to this Agreement and the transactions
contemplated hereby.
9.3 Further Assurances. At any time and from time to time after the
Closing Date at the request of the Purchaser, and without further consideration,
the Company will execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such other action as the
Purchaser may reasonably deem necessary or desirable in order to transfer,
convey and assign the Shares to the Purchaser and to assist the Purchaser in
exercising all rights with respect thereto. The parties shall use their best
efforts to fulfill or obtain the fulfillment of the conditions to the Closing,
including, without limitation, the execution and delivery of any document or
other papers, the execution and delivery of which are conditions precedent to
the Closing.
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9.4 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
given personally, telegraphed, telexed, sent by facsimile transmission or sent
by prepaid air courier or certified, registered or express mail, postage
prepaid. Any such notice shall be deemed to have been given (a) when received,
if delivered in person, telegraphed, telexed, sent by facsimile transmission and
confirmed in writing within three (3) business days thereafter or sent by
prepaid air courier or (b) three (3) business days following the mailing
thereof, if mailed by certified first class mail, postage prepaid, return
receipt requested, in any such case as follows (or to such other address or
addresses as a party may have advised the other in the manner provided in this
Section 9.4):
If to the Company:
United States Lead Testing & Removal Service, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Associates
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
If to the Purchaser:
NMC Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
With a copy to:
Lane & ▇▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Company Stockholders:
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
9.5 Publicity. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be made without advance
approval thereof by the Purchaser and the Company, except as may be required by
applicable law.
9.6 Entire Agreement. This Agreement (including the Exhibits and
Schedules) and the agreements, certificates and other documents delivered
pursuant to this Agreement contain the entire agreement among the parties with
respect to the transactions described herein, and supersede all prior
agreements, written or oral, with respect thereto.
9.7 Waivers and Amendments. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the parties or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
9.9 Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement is not assignable by any party hereto without
the prior written consent of the other parties hereto except by operation of law
and any other purported assignment shall be null and void.
9.10 Variations in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
9.11 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
9.12 Exhibits and Schedules. The Exhibits and Schedules are a part of
this Agreement as if fully set forth herein. All references herein to Sections,
subsections, clauses, Exhibits and
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Schedules shall be deemed references to such parts of this Agreement, unless the
context shall otherwise require.
9.13 Effect of Disclosure on Schedules. Any item disclosed on any
Schedule to this Agreement shall only be deemed to be disclosed in connection
with (a) the specific representation and warranty to which such Schedule is
expressly referenced, (b) any specific representation and warranty which
expressly cross-references such Schedule and (c) any specific representation and
warranty to which any other Schedule to this Agreement is expressly referenced
if such other Schedule expressly cross-references such Schedule.
9.14 Headings. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
9.15 Severability of Provisions. If any provision or any portion of any
provision of this Agreement or the application of such provision or any portion
thereof to any Person or circumstance, shall be held invalid or unenforceable,
the remaining portion of such provision and the remaining provisions of this
Agreement, or the application of such provision or portion of such provision as
is held invalid or unenforceable to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
THE PURCHASER:
NMC CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
THE COMPANY:
UNITED STATES LEAD TESTING &
REMOVAL SERVICE, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President/CEO
As to Article 7
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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SCHEDULES
Schedule 2.3 - Stock Ownership List Intentionally Omitted
Schedule 2.16a - Outstanding Shareholder, Officer, Intentionally Omitted
Director Loans to Company
Schedule 5.1H - Employment Agreements Intentionally Omitted
Section 2.18a - Present officers, Directors and Intentionally Omitted
Employees Salaries Deferred
Section 2.26 - Federal & State Licenses, Permits, Intentionally Omitted
Registrations and Any Required Consents
Section 2.9B - Audited Financial Statements 1994 & 1995 Intentionally Omitted
Interim Financial Statements
January 1, 1996 - June 30, 1996
Section 2.4 - Outstanding Stock Options, Warrants, Intentionally Omitted
Calls, Commitments, Etc.
Section 2.14 - Stockholder Agreements, Registration Intentionally Omitted
Rights & Waivers
Section 2.14A - Franchise Agreements Intentionally Omitted
The above Schedules are available from the Company upon request
AMENDMENT TO STOCK PURCHASE AGREEMENT
AMENDMENT DATED September 12, 1997 TO THE STOCK PURCHASE
AGREEMENT (the "Agreement"), dated as of June 30, 1997, by and among
INTERNATIONAL MADISON HOLDINGS CORP. F/K/A NMC CORP., a Delaware corporation
having an address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Purchaser")
and UNITED STATES LEAD TESTING & REMOVAL SERVICE, INC., a New York corporation
having an address at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Company") and with respect to Article 7, ▇▇▇▇▇▇ ▇▇▇▇▇ having an address at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇ having an address
at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
having an address at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
WHEREAS, the parties desire to amend the Agreement; and
WHEREAS, the capitalized terms used herein which are otherwise
not defined shall have the meanings set forth in the Agreement;
NOW, THEREFORE, in consideration of the mutual terms, conditions
and other agreements set forth herein, the Purchaser and the Company hereby
agree as follows:
1. Section 1.2 of the Agreement is hereby deleted and amended to read as
follows:
Purchase Price. The purchase price (the "Purchase Price") for the Shares
shall be $2,000,000, of which $500,000 has been paid and the balance of which
shall be payable as follows: $400,000 as soon as practicable, $600,000 within
three months of the Closing Date and $500,000 within six months of the Closing
Date.
2. Section 6.6 of the Agreement is hereby deleted and amended to read as
follows:
Option. The Purchaser shall grant options to purchase shares of the
Purchaser's common stock, .06-2/3 par value (the "Purchaser's Common Stock") to
each of the stockholders of record of the Company on July 24 1997. The number of
Options granted to the stockholders of the Company shall be equal to 15% of the
number of shares of Purchaser's Common Stock issued and outstanding immediately
after the closing of the private offering of the Purchaser's securities pursuant
to the letter of intent dated August 22, 1997 between the Purchaser and ▇▇▇▇▇ &
Company Inc. (the "▇▇▇▇▇ Offering"). Each stockholder of the Company shall be
issued the number of Options equal to aggregate number of Options to be issued
multiplied by a fraction the numerator of which is the number of shares of
Common Stock held by such stockholder and the denominator of which is the number
of shares of Common Stock outstanding immediately preceding the Closing of the
Stock Purchase Agreement. The Options shall be exercisable at a purchase price
equal to 110% of the closing bid price of the Purchaser's Common Stock on the
date of the final closing of the ▇▇▇▇▇ Offering for a period of ten years from
the date hereof.
The Options shall be exercisable one-third (1/3) commencing after the
close of the fiscal year ended in 1999, an additional one-third (1/3) commencing
after the close of the fiscal year ended in 2000, and the balance commencing
after the close of the fiscal year ended in 2001, provided that the Company
achieves the pre-tax income as outlined in the tables below.
Fiscal Year Number of Options Pre-Tax Income
1999 One-Third 20,000,000
▇▇▇▇ ▇▇▇-Third 42,000,000
2001 One-Third 55,000,000
or
Cumulative
Fiscal Year Number of Options Pre-Tax Income
2000 Two-Thirds of Options 62,000,000(1)
less the number of Options
that are exercisable after 1999
2001 100% of Options 117,000,000(2)
less the number of Options
previously exercisable.
(1) Represents the pre-tax income in 1999 and 2000 (2) Represents the
pre-tax income in 1999 through 2001
The Purchaser agrees to adopt an Incentive Stock Option Plan as soon as
practicable after the Closing Date. The Options to be granted to each of ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as stockholders of the Company,
shall be incentive stock options to the extent permitted under applicable law.
3. Section 5.1(a) and Section 5.2(a) are hereby deleted.
4. The following section is added as Section 6.8:
Section 6.8 Bonus
The Purchaser shall enter into an agreement with each of ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ which shall provide that each of
▇▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ shall be entitled to a annual
bonus equal to 5% of the Company's pre-tax income, provided that the
Company's pre-tax income is equal to at least $10,000,000 in any fiscal
year of the Company from the date hereof through a period of one year
after the termination of their employment by the Company. The bonus to
such individual shall terminate upon the death or disability of such
individual.
5. The following paragraph is hereby added as Section 6.9:
Section 6.9 Anti-Dilution
On the Closing Date, the Company shall issue to the Purchaser 21,024,004
shares of Common Stock. The Purchaser acknowledges that the Company
intends to redeem 800,000 shares of Common Stock and warrants to
purchase 3,000,000 shares of Common Stock after the Closing. The
Purchaser agrees to transfer 3,200,000 shares of Common Stock to the
Company after the Closing in the event that the Company redeems such
800,000 shares of Common Stock. The Company agrees to issue additional
shares (the "Additional Shares") of Common Stock to the Purchaser upon
the exercise of options or warrants which are outstanding on the Closing
Date. The number of Additional Shares shall be equal to four times the
number of shares of Common Stock issued by the Company upon the exercise
of such options or warrants, to the extent that the number of shares of
Common Stock underlying such options and warrants have not been
previously included in the calculation of the number of shares of Common
Stock issuable to the Purchaser on the Closing Date.
6. Except as otherwise provide herein the Agreement is unmodified and in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
THE PURCHASER:
INTERNATIONAL MADISON HOLDINGS CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
THE COMPANY:
UNITED STATES LEAD TESTING & REMOVAL
SERVICE, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
As to Article 7
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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