STOCK PURCHASE AGREEMENT
BETWEEN
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AND
▇▇▇ ▇. ▇▇▇▇▇▇
OCTOBER 1, 1997
STOCK PURCHASE AGREEMENT
This Agreement is made as of October 1, 1997 between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(the "Purchaser") and ▇▇▇ ▇. ▇▇▇▇▇▇ (the "Seller").
Recitals
The Seller owns 510,739 shares of issued and outstanding common stock,
par value $0.001 per share (the "Common Stock"), of Rocky Mountain Internet,
Inc., a Delaware corporation ("RMII").
This Agreement contemplates a transaction in which the Purchaser will
purchase from the Seller, and the Seller will sell to the Purchaser, 150,000
shares of common stock of RMII (the "Purchased Shares") in return for cash in
the amount of $2.00 per Purchased Share.
RMII and the Purchaser have entered into a stock purchase agreement
dated October 1, 1997 (the "RMII Stock Purchase Agreement") pursuant to which
the Purchaser has agreed to purchase from RMII, and RMII has agreed to issue
and sell to the Purchaser 1,225,000 shares (the "Shares") of its common
stock, $0.001 par value per share ("Common Stock"), and common stock purchase
warrants (the "Warrants") to purchase up to 4,000,000 shares of Common Stock
for an exercise price of $1.90 per share, subject to adjustment.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
SECTION 1
Definitions
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages (including incidental and consequential
damages), dues, penalties, fines, costs, amounts paid in settlement,
Liabilities, obligations, Taxes, liens, losses, expenses (including costs of
investigation and defense), diminution in value, and fees, including court
costs and attorneys' fees and expenses; provided, however, that, regardless
of the Adverse Consequences that the Purchaser may suffer, the aggregate
Liability of the Seller pursuant to Section 9 hereof shall in no event exceed
the amount obtained by multiplying 360,739 x (times) the highest Fair Market
Value of the Common Stock during the survival period applicable to a claim or
demand made by the Purchaser for indemnification pursuant to Section 9.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of Code
Sec. 1504 or any similar group defined under a similar provision of state,
local or foreign law.
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"ANTICIPATED CLOSING DATE" means September 30, 1997.
"APPLICABLE RATE" means 8% per annum.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"BEST EFFORTS" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible.
"CLOSING" has the meaning set forth in Section 3.1 below.
"CLOSING DATE" has the meaning set forth in Section 3.1 below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" means Rocky Mountain Internet, Inc., a Delaware corporation.
"COMMON STOCK" means the common stock of the Company, $0.001 par value
per share.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Company and its Subsidiaries that is not
already generally available to the public.
"CONTROLLED GROUP OF CORPORATIONS" has the meaning set forth in Code
Sec. 1563.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan,
(b) qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan
or arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(1).
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments
(and all agencies thereof) concerning pollution or protection of the
environment, public health and safety,
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or employee health and safety, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into ambient
air, surface water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"ENVIRONMENT" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"ENVIRONMENTAL LAW" means any federal, state, local, municipal, foreign,
international, multinational, or other order, constitution, law, ordinance,
principle of common law, regulation, statute, or treaty that requires or
relates to:
(a) advising appropriate authorities, employees, and the public of intended
or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction,
that could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used so
that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for
injuries done to public assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FAIR MARKET VALUE" with respect to the Common Stock means, (a) if the
Common Stock is listed on a national securities exchange or admitted to
unlisted trading privileges on such exchange, the last reported sale price of
the Common Stock on such exchange on the day of determination; or
(b) If the Common Stock is not listed or admitted to unlisted trading
privileges, the last reported sale price or the mean of the last reported bid
and asked prices reported by the NASDAQ Stock Market, Inc.'s NASDAQ SmallCap
Market ("NASDAQ") (or, if not so quoted on NASDAQ, on the OTC Bulletin Board)
on the last business day prior to the date of determination; or
(c) If the Common Stock is not so listed or admitted to unlisted
trading privileges and prices are not reported on NASDAQ or the OTC Bulletin
Board, the Fair Market Value shall be an amount, not less than the book
value, determined in such reasonable manner as may be prescribed by the Board
of Directors of the Company.
"FIDUCIARY" has the meaning set forth in ERISA Sec. 3(21).
"FINANCIAL STATEMENT" has the meaning set forth in Section 4.8 below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"INDEMNIFIED PARTY" has the meaning set forth in Section 9.4 below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 9.4 below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) the name "Rocky
Mountain Internet, Inc.," all fictional business names, all registered and
unregistered trademarks, service marks, and applications, trade dress, logos,
and trade names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith, (c)
all copyrightable works, all copyrights, and all applications, registrations,
and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all
trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (f) all computer software
licensed or owned by the Company (including data and related
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documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"KNOWLEDGE" of a fact, matter, or circumstance means actual knowledge or
knowledge that a prudent Person occupying a position similar to that occupied
by the Person sought to be charged with Knowledge could be expected to have,
discover, or otherwise become aware of under similar circumstances.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the
Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section
4.8 below.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in Section 4.8
below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section 4.8
below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any federal, state, local,
municipal, foreign, international, multinational, or other administrative
order, constitution, law, ordinance, principle of common law, regulation,
statute, or treaty designed to provide safe and healthful working conditions
and to reduce occupational safety and health hazards, and any program,
whether governmental or private (including those promulgated or sponsored by
industry associations and insurance companies), designed to provide safe and
healthful working conditions.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, a limited liability partnership, a limited liability
limited partnership, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
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"PURCHASE PRICE" has the meaning set forth in Section 2.2 below.
"PURCHASER" has the meaning set forth in the preface above.
"RMII STOCK PURCHASE AGREEMENT" has the meaning set forth in the preface
above.
"REPORTABLE EVENT" has the meaning set forth in ERISA Sec. 4043.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes
that the taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing rental payments
under capital lease arrangements, and (d) other liens arising in the Ordinary
Course of Business and not incurred in connection with the borrowing of money.
"SELLER" has the meaning set forth in the preface above.
"SHARES" has the meaning set forth in the preface above.
"SUBSIDIARY" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has
the power to vote or direct the voting of sufficient securities to elect a
majority of the directors.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec.
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, dated on or after
December 31, 1987.
"THIRD PARTY CLAIM" has the meaning set forth in Section 9.4 below.
"WARRANTS" has the meaning set forth in the preface above.
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SECTION 2
Purchase and Sale of Purchased Shares
2.1 BASIC TRANSACTION. On and subject to the terms and conditions of
this Agreement, the Purchaser agrees to purchase from the Seller, and the
Seller agrees to sell to the Purchaser, the Purchased Shares for the
consideration specified below in this Section 2.
2.2 PURCHASE PRICE. The Purchaser agrees to pay to the Seller at the
Closing $2.00 per Purchased Share (the "Purchase Price"), in certified or
official bank check or by wire transfer of funds.
2.3 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Minor & ▇▇▇▇▇,
P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 9:30
a.m., local time on the second business day following the satisfaction or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to
actions the respective Parties will take at the Closing itself) or such other
date as the Seller and the Purchaser shall agree (the date of the Closing is
hereinafter referred to as the "Closing Date").
2.4 DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will
deliver to the Purchaser stock certificates representing all of the Purchased
Shares owned by the Seller, endorsed in blank or accompanied by duly executed
assignment documents, with signature Medallion guaranteed, and (ii) the
Purchaser will deliver to the Seller the consideration specified in Section
2.2 above.
SECTION 3
Representations and Warranties Concerning the Transaction
3.1 REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER. The Seller
represents and warrants to the Purchaser that the statements contained in
this Section 3.1 are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3.1) with respect to himself, except as set
forth in Annex I attached hereto.
(a) AUTHORITY. The Seller has full power and authority to execute and
deliver this Agreement and to perform his obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Seller, enforceable in accordance with its terms and conditions, except as
such enforcement may be limited by the application of bankruptcy,
insolvency, reorganization, and other laws of general applicability
relating to creditors' rights.
(b) AUTHORIZATION OF TRANSACTION. The Seller need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or
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governmental agency in order to consummate the transactions contemplated
by this Agreement.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Seller is subject;
or (B) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the
Seller is a party or by which he is bound or to which any of his assets is
subject.
(d) BROKERS' FEES. The Seller has no Liability or obligation to pay
any fees or commissions to any broker, finder, or similar agent with
respect to the transactions contemplated by this Agreement for which the
Purchaser could become liable or obligated.
(e) OWNERSHIP OF PURCHASED SHARES. The Seller holds of record and
owns beneficially the 510,739 shares of Common Stock, free and clear of any
restrictions on transfer (other than any restrictions under the Securities
Act and state securities laws), Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. The Seller is not a party to any option, warrant, purchase right,
or other contract or commitment that could require the Seller to sell,
transfer, or otherwise dispose of any capital stock of RMII (other than
this Agreement). The Seller is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any capital
stock of RMII.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Seller that the statements contained in this
Section 3.2 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.2), except as set forth in Annex II attached hereto.
(a) AUTHORITY. The Purchaser has full power and authority to execute
and deliver this Agreement and to perform his obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms and conditions, except
as such enforcement may be limited by the application of bankruptcy,
insolvency, reorganization, and other laws of general applicability
relating to creditors' rights.
(b) BROKERS' FEES. The Purchaser has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Seller could
become liable or obligated.
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SECTION 4
Representations and Warranties Concerning the Company
The Seller represents and warrants to the Purchaser that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 4), except as set forth in the
disclosure schedule delivered by the Company to the Purchaser on the date
hereof and initialed by the Parties (the "Disclosure Schedule"). Nothing in
the Disclosure Schedule shall be deemed adequate to disclose an exception to
a representation or warranty made herein, however, unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4.
4.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of the
Company and its Subsidiaries is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Company and its Subsidiaries is duly authorized
to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. Each of the Company and
its Subsidiaries has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on the businesses in which it
is engaged and in which it presently proposes to engage and to own and use
the properties owned and used by it. Section 4.1 of the Disclosure Schedule
lists the directors and officers of each of the Company and its Subsidiaries.
The Company has delivered to the Purchaser correct and complete copies of
the charter and bylaws of each of the Company and its Subsidiaries (as
amended to date) pursuant to the RMII Stock Purchase Agreement. The portions
of the minute books containing the records of meetings of the stockholders,
the board of directors, and any committees of the board of directors for the
period during which the Seller has been the president and chief executive
officer of RMII, contain a complete summary of all meetings of directors and
shareholders since the time of incorporation and reflect all transactions
referred to in such minutes accurately in all material respects. To the
Knowledge of the Seller, the stock certificate books and the stock record
books of each of the Company and its Subsidiaries are correct and complete.
To the Knowledge of the Seller, none of the Company and its Subsidiaries is
in default under or in violation of any provision of its charter or bylaws.
4.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 10,000,000 shares of Common Stock, par value $0.001 per share, of
which 5,390,729 shares are issued and outstanding, and 1,000,000 shares of
Preferred Stock, par value $0.001 per share, of which 250,000 shares have
been designated "Series A Convertible Preferred Stock" (herein, "Series A
Preferred") and of which 92,500 shares are issued and outstanding. The
outstanding shares have been duly authorized and validly issued, and are
fully paid and nonassessable. The Company has reserved 92,500 shares of its
Common Stock for issuance upon conversion of the Series A Preferred, 552,300
shares of Common Stock for issuance to employees, consultants, or directors
under stock plans or arrangements approved by the Board of Directors, and
2,231,983 shares for issuance upon conversion of outstanding common stock
purchase warrants, options (other than
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options granted to employees, consultants, or directors under stock plans or
arrangements approved by the Board of Directors), and other derivative
securities, and pursuant to antidilution provisions of currently outstanding
securities (including derivative securities). Options to purchase 514,437
shares of Common Stock are issued and outstanding under the Company's 1996
Employees' Stock Option Plan. Options to purchase 4,500 shares of Common
Stock are issued and outstanding under the Company's 1996 Non-Employees
Directors' Stock Option Plan. Options to purchase 40,370 shares of Common
Stock are issued and outstanding under the Company's 1997 Non-Qualified Stock
Option Plan. All outstanding securities of the Company were issued in
substantial compliance with applicable federal and state securities laws.
Section 4.2(a) of the Disclosure Schedule is a shareholders' list containing
the names and stock ownership of all record holders of the Company's Common
Stock as of September 30, 1997. To the Knowledge of the Seller, Section
4.2(b) of the Disclosure Schedule lists all authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue, sell,
or otherwise cause to become outstanding any of its capital stock and the
record owners of all such authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts
or commitments that are outstanding. To the Knowledge of the Seller, Section
4.2(c) of the Disclosure Schedule lists all outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Company and all outstanding awards thereunder. Except as set
forth in this Agreement, the Company is not under any obligation to register
any of its currently outstanding securities or any of its securities that may
hereafter be issued. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock
of the Company.
4.3 AUTHORIZATION. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution,
delivery and performance of the RMII Stock Purchase Agreement by the Company,
the authorization, sale, issuance and delivery of the Shares, the Warrants,
and the shares of Common Stock issuable upon exercise of the Warrants, and
the performance of all of the Company's obligations hereunder has been taken
or will be taken prior to the Closing. To the Knowledge of the Seller, the
Company need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency
in order to consummate the transactions contemplated by this Agreement. To
the Knowledge of the Seller, the RMII Stock Purchase Agreement, when executed
and delivered by the Company, shall constitute a valid and binding obligation
of the Company, enforceable in accordance with its terms, except as such
enforcement may be limited by the application of bankruptcy, insolvency,
reorganization, and other laws of general applicability relating to
creditors' rights. The Purchased Shares are not subject to any preemptive
rights or rights of first refusal.
4.4 NONCONTRAVENTION. Neither the execution and the delivery of the RMII
Stock Purchase Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which any of
the Company and its Subsidiaries is subject or any provision of the charter
or bylaws of any of the Company and its Subsidiaries or (ii) conflict with,
result in a breach of, constitute a default under, result in the
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acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which any of the Company and its
Subsidiaries is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). To the Knowledge of the Seller, none of the Company and its
Subsidiaries needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by the RMII
Stock Purchase Agreement.
4.5 BROKERS' FEES. To the Knowledge of the Seller, none of the Company and
its Subsidiaries has any Liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions contemplated by
the RMII Stock Purchase Agreement.
4.6 TITLE TO ASSETS. To the Knowledge of the Seller, the Company and its
Subsidiaries have good and marketable title to, or a valid leasehold interest
in, the properties and assets used by them, located on their premises, or shown
on the Most Recent Balance Sheet or acquired after the date thereof, free and
clear of all Security Interests, except for properties and assets disposed of in
the Ordinary Course of Business since the date of the Most Recent Balance Sheet.
4.7 SUBSIDIARIES. Section 4.7 of the Disclosure Schedule sets forth for
each Subsidiary of the Company (i) its name and jurisdiction of incorporation,
(ii) the number of shares of authorized capital stock of each class of its
capital stock, (iii) the number of issued and outstanding shares of each class
of its capital stock, the names of the holders thereof, and the number of shares
held by each such holder, and (iv) the number of shares of its capital stock
held in treasury. One of the Company and its Subsidiaries holds of record and
owns beneficially all of the outstanding shares of each Subsidiary of the
Company, free and clear of any restrictions on transfer (other than restrictions
under the Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities, claims,
and demands. There are no outstanding or authorized options, warrants, purchase
rights, conversion rights, exchange rights, or other contracts or commitments
that could require any of the Company's Subsidiaries to sell, transfer, or
otherwise dispose of any capital stock or that could require any Subsidiary of
the Company to issue, sell, or otherwise cause to become outstanding any of its
own capital stock. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of any capital stock of any Subsidiary
of the Company. None of the Company and its Subsidiaries controls directly or
indirectly or has any direct or indirect equity participation in any
corporation, partnership, trust, or other business association that is not a
Subsidiary of the Company.
4.8 FINANCIAL STATEMENTS. Disclosed in Section 4.8 of the Disclosure
Schedule are the following financial statements (collectively the "Financial
Statements"): (i) audited balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal years ended
December 31, 1994, 1995, and 1996 (the "Most Recent Fiscal Year End") for the
Company and its Subsidiaries; and (ii) unaudited balance sheets and statements
of income, changes in stockholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the 8 months ended August 31, 1997 (the
"Most Recent Fiscal Month End") for the
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Company and its Subsidiaries. To the Knowledge of the Seller, the Financial
Statements (including the notes thereto) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of the Company and its Subsidiaries as of
such dates and the results of operations of the Company and its Subsidiaries for
such periods, are correct and complete, and are consistent with the books and
records of the Company and its Subsidiaries (which books and records are correct
and complete); provided, however, that the Most Recent Financial Statements are
subject to normal year-end adjustments (which will not be material individually
or in the aggregate) and lack footnotes and other presentation items.
4.9 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except as disclosed
in Section 4.9 of the Disclosure Schedule since the Most Recent Fiscal Year End,
there has not been any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of any of the
Company and its Subsidiaries. Without limiting the generality of the foregoing,
since that date, except as disclosed in Section 4.9 of the Disclosure Schedule:
(a) none of the Company and its Subsidiaries has sold, leased,
transferred, or assigned any of its assets, tangible or intangible, other
than for a fair consideration in the Ordinary Course of Business;
(b) none of the Company and its Subsidiaries has entered into any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either involving more than $5,000 or
outside the Ordinary Course of Business;
(c) to the Knowledge of the Seller, no party (including any of the
Company and its Subsidiaries) has accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than $5,000 to
which any of the Company and its Subsidiaries is a party or by which any of
them is bound;
(d) To the Knowledge of the Seller, Company and its Subsidiaries has
imposed any Security Interest upon any of its assets, tangible or
intangible;
(e) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has made any capital expenditure (or series of related capital
expenditures) either involving more than $5,000 or outside the Ordinary
Course of Business;
(f) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions) either involving more
than $5,000 or outside the Ordinary Course of Business;
(g) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed
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any indebtedness for borrowed money or capitalized lease obligation either
involving more than $3,000 singly or $5,000 in the aggregate;
(h) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has canceled, compromised, waived, or released any right or
claim (or series of related rights and claims) either involving more than
$5,000 or outside the Ordinary Course of Business;
(i) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has granted any license or sublicense of any rights under or
with respect to any Intellectual Property;
(j) there has been no change made or authorized in the charter or
bylaws of any of the Company and its Subsidiaries;
(k) none of the Company and its Subsidiaries has issued, sold, or
otherwise disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
(l) none of the Company and its Subsidiaries has declared, set aside,
or paid any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(m) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has experienced any damage, destruction, or loss (whether or
not covered by insurance) to its property;
(n) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has made any loan to, or entered into any other transaction
with, any of its directors, officers, and employees other than travel
advances and office advances made in the Ordinary Course of Business;
(o) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(p) none of the Company and its Subsidiaries has granted any increase
in the base compensation of any of its directors, officers, and employees
outside the Ordinary Course of Business;
(q) none of the Company and its Subsidiaries has adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with respect
to any other Employee Benefit Plan);
-13-
(r) none of the Company and its Subsidiaries has made any other change
in employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;
(s) none of the Company and its Subsidiaries has made or pledged to
make any charitable or other capital contribution outside the Ordinary
Course of Business;
(t) there has not been any other material occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of
Business involving any of the Company and its Subsidiaries; and
(u) none of the Company and its Subsidiaries has committed to any of
the foregoing.
4.10 UNDISCLOSED LIABILITIES. To the Knowledge of the Seller, none of the
Company and its Subsidiaries has any Liability (and there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to any Liability),
except for (i) Liabilities set forth on the face of the Most Recent Balance
Sheet and (ii) Liabilities that have arisen after the Most Recent Fiscal Month
End in the Ordinary Course of Business (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of law).
4.11 LEGAL COMPLIANCE. To the Knowledge of the Seller, each of the Company,
its Subsidiaries, and their respective predecessors and Affiliates has
substantially complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against any of
them alleging any failure so to comply.
4.12 TAX MATTERS.
(a) To the Knowledge of the Seller, each of the Company and its
Subsidiaries has filed all Tax Returns that it was required to file. To the
Knowledge of the Seller, all such Tax Returns were correct and complete in
all respects. To the Knowledge of the Seller, all Taxes owed by any of the
Company and its Subsidiaries (whether or not shown on any Tax Return) have
been paid. None of the Company and its Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return.
No claim has ever been made by an authority in a jurisdiction where any of
the Company and its Subsidiaries does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of any of the Company and its Subsidiaries
that arose in connection with any failure (or alleged failure) to pay any
Tax.
-14-
(b) To the Knowledge of the Seller, each of the Company and its
Subsidiaries has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(c) The Seller does not expect any authority to assess any additional
Taxes for any period for which Tax Returns have been filed. To the
Knowledge of the Seller, there is no dispute or claim concerning any Tax
Liability of any of the Company and its Subsidiaries either (A) claimed or
raised by any authority in writing or (B) as to which the Seller has
Knowledge based upon personal contact with any agent of such authority. To
the Knowledge of the Seller, Section 4.12 of the Disclosure Schedule lists
all federal, state, local, and foreign income Tax Returns filed with
respect to any of the Company and its Subsidiaries for taxable periods
ended on or after December 31, 1992, indicates those Tax Returns that have
been audited, and indicates those Tax Returns that currently are the
subject of audit. The Company has delivered to the Purchaser correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by any of the
Company and its Subsidiaries since December 31, 1993.
(d) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has filed a consent under Code Section 341(f) concerning
collapsible corporations. To the Knowledge of the Seller, none of the
Company and its Subsidiaries has made any payments, is obligated to make
any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. To the Knowledge of the Seller, none
of the Company and its Subsidiaries has been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). To the
Knowledge of the Seller, none of the Company and its Subsidiaries is a
party to any Tax allocation or sharing agreement. To the Knowledge of the
Seller, none of the Company and its Subsidiaries (A) has been a member of
an Affiliated Group filing a consolidated federal income Tax Return (other
than a group the common parent of which was the Company) or (B) has any
Liability for the Taxes of any Person (other than any of the Company and
its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor,
by contract, or otherwise.
(f) To the Knowledge of the Seller, the unpaid Taxes of the Company
and its Subsidiaries (A) did not, as of the Most Recent Fiscal Month End,
exceed the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the Most Recent
-15-
Balance Sheet (rather than in any notes thereto) and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company and its
Subsidiaries in filing their Tax Returns.
4.13. SECURITIES ACT AND EXCHANGE ACT FILINGS. Section 4.13 of the
Disclosure Schedule lists all registration statements (including amendments
thereto) filed with the Securities and Exchange Commission under the Securities
Act or the Securities Exchange Act and all reports (including amendments
thereto) filed with the Securities and Exchange Commission under the Securities
Exchange Act. The Company has delivered to the Purchaser correct and complete
copies of all such registration statements and reports. To the Knowledge of the
Seller, such registration statements and reports do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements contained therein not misleading.
4.14 REAL PROPERTY.
(a) Neither the Company nor any of its Subsidiaries owns any real
property.
(b) Section 4.14(b) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to any of the Company and its
Subsidiaries. To the Knowledge of the Seller, the Company has delivered to
the Purchaser correct and complete copies of the leases and subleases
listed in Section 4.14(b) of the Disclosure Schedule (as amended to date).
To the Knowledge of the Seller, with respect to each lease and sublease
listed in Section 4.14(b) of the Disclosure Schedule:
(1) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(2) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby;
(3) the Company is not and, to the Knowledge of the Seller, no
other party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(4) the Company has not and, to the Knowledge of the Seller, no
other party to the lease or sublease has repudiated any provision
thereof;
(5) to the Knowledge of the Seller, there are no disputes, oral
agreements, or forbearance programs in effect as to the lease or
sublease;
(6) with respect to each sublease, the representations and
warranties set forth in subsections (1) through (5) above are true and
correct with respect to the underlying lease;
-16-
(7) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has assigned, transferred, conveyed, mortgaged, deeded in
trust, or encumbered any interest in the leasehold or subleasehold;
and
(10) to the Knowledge of the Seller, the owner of the facility
leased or subleased has good and marketable title to the parcel of
real property, free and clear of any Security Interest, easement,
covenant, or other restriction, except for installments of special
easements not yet delinquent and recorded easements, covenants, and
other restrictions which do not impair the current use, occupancy, or
value, or the marketability of title, of the property subject thereto.
4.15 INTELLECTUAL PROPERTY.
(a) To the Knowledge of the Seller, the Company and its Subsidiaries
own or have the right to use pursuant to license, sublicense, agreement, or
permission all Intellectual Property necessary or desirable for the
operation of the businesses of the Company and its Subsidiaries as
presently conducted and as presently proposed to be conducted. To the
Knowledge of the Seller, each item of Intellectual Property owned or used
by any of the Company and its Subsidiaries immediately prior to the Closing
hereunder will be owned or available for use by the Company or the
Subsidiary on identical terms and conditions immediately subsequent to the
Closing hereunder. To the Knowledge of the Seller, each of the Company and
its Subsidiaries has taken all necessary and desirable action to maintain
and protect each item of Intellectual Property that it owns or uses.
(b) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and, to the Knowledge of the Seller, none of the Company and its
Subsidiaries has ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that any of the Company and its Subsidiaries
must license or refrain from using any Intellectual Property rights of any
third party). To the Knowledge of the Seller, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of any of the Company and
its Subsidiaries.
(c) Section 4.15(c) of the Disclosure Schedule identifies each patent
or registration which has been issued to any of the Company and its
Subsidiaries with respect to any of its Intellectual Property, identifies
each pending patent application or application for registration which any
of the Company and its Subsidiaries has made with respect to any of its
Intellectual Property, and identifies each license, agreement, or other
permission which any of the Company and its Subsidiaries has granted to any
third party with respect to any of its Intellectual Property (together with
any exceptions). The Company has delivered to the Purchaser correct and
complete copies of all such patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and has made
-17-
available to the Purchaser correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of each
such item. Section 4.15(c) of the Disclosure Schedule also identifies each
trade name or unregistered trademark used by any of the Company and its
Subsidiaries in connection with any of its businesses. With respect to each
item of Intellectual Property required to be identified in Section 4.15(c)
of the Disclosure Schedule:
(1) the Company and its Subsidiaries possess all right, title,
and interest in and to the item, free and clear of any Security
Interest, license, or other restriction;
(2) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(3) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of the
Seller, threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(4) none of the Company and its Subsidiaries has ever agreed to
indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(d) To the Knowledge of the Seller, Section 4.15(d) of the Disclosure
Schedule identifies each item of Intellectual Property that any third party
owns and that any of the Company and its Subsidiaries uses pursuant to
license, sublicense, agreement, or permission. The Company has delivered
to the Purchaser correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified in
Section 4.15(d) of the Disclosure Schedule:
(1) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
(2) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the Closing;
(3) to the Knowledge of the Seller, no party to the license,
sublicense, agreement, or permission is in breach or default, and no
event has occurred which with notice or lapse of time would constitute
a breach or default or permit termination, modification, or
acceleration thereunder;
(4) to the Knowledge of the Seller, no party to the license,
sublicense, agreement, or permission has repudiated any provision
thereof;
-18-
(5) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are true and
correct with respect to the underlying license;
(6) to the Knowledge of the Seller, the underlying item of
Intellectual Property is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(7) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of the
Seller, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property; and
(8) none of the Company and its Subsidiaries has granted any
sublicense or similar right with respect to the license, sublicense,
agreement, or permission.
(e) To the Knowledge of the Seller, the continued operation of the
business of the Company and its Subsidiaries will not interfere with,
infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties.
4.16 TANGIBLE ASSETS. To the Knowledge of the Seller, the Company and its
Subsidiaries own or lease all buildings, machinery, equipment, and other
tangible assets necessary for the conduct of their businesses as presently
conducted and as presently proposed to be conducted. To the Knowledge of the
Seller, each such tangible asset is free from defects (patent and latent), has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used and presently is
proposed to be used.
4.17 INVENTORY. To the Knowledge of the Seller, the inventory of the
Company and its Subsidiaries consists of raw materials and supplies,
manufactured and purchased parts, goods in process, and finished goods, all of
which is merchantable and fit for the purpose for which it was procured or
manufactured, and none of which is slow-moving, obsolete, damaged, or defective,
subject only to the reserve for inventory writedown set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Company and its Subsidiaries.
4.18 CONTRACTS. To the Knowledge of the Seller, Section 4.18 of the
Disclosure Schedule lists the following contracts and other agreements to which
any of the Company and its Subsidiaries is a party:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $5,000 per annum;
-19-
(b) any agreement (or group of related agreements) for the purchase or
sale of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of
which will extend over a period of more than one year, result in a material
loss to any of the Company and its Subsidiaries, or involve consideration
in excess of $5,000;
(iii) any agreement concerning a partnership, joint venture,
collaborative agreements and arrangements, and all similar entities and
ventures in which the Company has an interest or to which the Company is a
party;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $10,000 or under
which it has imposed a Security Interest on any of its assets, tangible or
intangible;
(v) any material agreement concerning confidentiality or
noncompetition;
(vi) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(vii) any collective bargaining agreement;
(viii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $5,000 or providing severance benefits;
(ix) any agreement under which it has advanced or loaned any amount to
any of its directors, officers, and employees outside the Ordinary Course
of Business;
(x) any agreement under which the consequences of a default or
termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of any of
the Company and its Subsidiaries; or
(xi) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000.
To the Knowledge of the Seller, with respect to each such agreement: (A)
the agreement is legal, valid, binding, enforceable, and in full force and
effect; (B) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) no party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement.
-20-
4.19 NOTES AND ACCOUNTS RECEIVABLE. To the Knowledge of the Seller, all
notes and accounts receivable of the Company and its Subsidiaries are
reflected properly on their books and records, are valid receivables subject
to no setoffs or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject
only to the reserve for bad debts set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) as adjusted for the passage
of time through the Closing Date in accordance with the past custom and
practice of the Company and its Subsidiaries.
4.20 POWERS OF ATTORNEY. To the Knowledge of the Seller, there are no
outstanding powers of attorney executed on behalf of any of the Company and
its Subsidiaries.
4.21 INSURANCE. To the Knowledge of the Seller, Section 4.21 of the
Disclosure Schedule sets forth the following information with respect to each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements) to which
any of the Company and its Subsidiaries has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past 3 years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) to the Knowledge of the
Seller, the policy is legal, valid, binding, enforceable, and in full force
and effect; (B) to the Knowledge of the Seller, the policy will continue to
be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither any of the Company and its Subsidiaries nor, to the
Knowledge of the Seller, any other party to the policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (D) to the Knowledge of
the Seller, no party to the policy has repudiated any provision thereof.
During the period of time that the Seller has been the president and chief
executive officer of RMII, each of the Company and its Subsidiaries has been
covered during the past 3 years by insurance in scope and amount customary
and reasonable for the businesses in which it has engaged during the
aforementioned period. To the Knowledge of the
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Seller, Section 4.21 of the Disclosure Schedule describes any self-insurance
arrangements affecting any of the Company and its Subsidiaries.
4.22 LITIGATION. To the Knowledge of the Seller, Section 4.22 of the
Disclosure Schedule sets forth each instance in which any of the Company and
its Subsidiaries (i) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (ii) to the Knowledge of the Seller, is a
party or is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator. With the exception of threatened legal action by
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ against the Company, none of the actions, suits, proceedings,
hearings, and investigations set forth in Section 4.22 of the Disclosure
Schedule could result in any material adverse change in the business,
financial condition, operations, results of operations, or future prospects
of any of the Company and its Subsidiaries.
4.23 PRODUCT WARRANTY. To the Knowledge of the Seller, each product
manufactured, sold, leased, or delivered by any of the Company and its
Subsidiaries has been in conformity with all applicable contractual
commitments and all express and implied warranties, and none of the Company
and its Subsidiaries has any Liability (and, to the Knowledge of the Seller,
there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of
them giving rise to any Liability) for replacement or repair thereof or other
damages in connection therewith, subject only to the reserve for product
warranty claims set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
the Company and its Subsidiaries. To the Knowledge of the Seller, no product
manufactured, sold, leased, or delivered by any of the Company and its
Subsidiaries is subject to any guaranty, warranty, or other indemnity beyond
the applicable standard terms and conditions of sale or lease. To the
Knowledge of the Seller, Section 4.23 of the Disclosure Schedule includes
copies of the standard terms and conditions of sale or lease for each of the
Company and its Subsidiaries (containing applicable guaranty, warranty, and
indemnity provisions).
4.24 PRODUCT LIABILITY. To the Knowledge of the Seller, none of the
Company and its Subsidiaries has any Liability (and, to the Knowledge of the
Seller, there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of
them giving rise to any Liability) arising out of any injury to individuals
or property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by any of the Company and its
Subsidiaries.
4.25 EMPLOYEES. To the Knowledge of the Seller, none of the Company and
its Subsidiaries is a party to or bound by any collective bargaining
agreement, nor has any of them experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. To the
Knowledge of the Seller, none of the Company and its Subsidiaries has
committed any unfair labor practice. To the Knowledge of the Seller, no
employee of the Company is in violation of any term of any employment
agreement, patent disclosure agreement, or any other agreement relating to
the relationship of such employee with the Company or any other party because
of the nature of the business conducted or to be conducted by the Company.
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4.26 EMPLOYEE BENEFITS.
(a) To the Knowledge of the Seller, Section 4.26 of the Disclosure
Schedule lists each Employee Benefit Plan that any of the Company and its
Subsidiaries maintains or to which any of the Company and its Subsidiaries
contributes.
(1) To the Knowledge of the Seller, each such Employee Benefit
Plan (and each related trust, insurance contract, or fund) complies in
form and in operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(2) To the Knowledge of the Seller, all required reports and
descriptions (including Form 5500 Annual Reports, Summary Annual
Reports, PBGC-1's, and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee Benefit
Plan. The requirements of Part 6 of Subtitle B of Title 1 of ERISA and
of Code Section 4980B have been met with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(3) To the Knowledge of the Seller, the Company has delivered to
the Purchaser correct and complete copies of the plan documents and
summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance contracts,
and other funding agreements which implement each such Employee
Benefit Plan.
(b) To the Knowledge of the Seller, with respect to each Employee
Benefit Plan that any of the Company, its Subsidiaries, and the Controlled
Group of Corporations which includes the Company and its Subsidiaries
maintains or ever has maintained or to which any of them contributes, ever
has contributed, or ever has been required to contribute, there have been
no Prohibited Transactions with respect to any such Employee Benefit Plan.
To the Knowledge of the Seller, no Fiduciary has any Liability for breach
of fiduciary duty or any other failure to act or comply in connection with
the administration or investment of the assets of any such Employee Benefit
Plan. No action, suit, proceeding, hearing, or investigation with respect
to the administration or the investment of the assets of any such Employee
Benefit Plan (other than routine claims for benefits) is pending or
threatened. The Seller has no Knowledge of any Basis for any such action,
suit, proceeding, hearing, or investigation.
(c) To the Knowledge of the Seller, none of the Company, its
Subsidiaries, and the other members of the Controlled Group of Corporations
that includes the Company and its Subsidiaries contributes to, ever has
contributed to, or ever has been required to contribute to any
Multiemployer Plan or has any Liability (including withdrawal Liability)
under any Multiemployer Plan.
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(d) To the Knowledge of the Seller, none of the Company and its
Subsidiaries maintains or ever has maintained or contributes, ever has
contributed, or ever has been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance
with Code Section 4980B).
4.27 GUARANTIES. to the Knowledge of the Seller, none of the Company and
its Subsidiaries is a guarantor or otherwise is liable for any Liability or
obligation (including indebtedness) of any other Person.
4.28 ENVIRONMENT, HEALTH, AND SAFETY.
(a) To the Knowledge of the Seller, each of the Company, its
Subsidiaries, and their respective predecessors and Affiliates has
complied with all Environmental Laws and all Occupational Safety and
Health Laws, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply. Without limiting
the generality of the preceding sentence, to the Knowledge of the
Seller, each of the Company, its Subsidiaries, and their respective
predecessors and Affiliates has obtained and been in compliance with all
of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained
in, all Environmental Laws and all Occupational Safety and Health Laws.
(b) To the Knowledge of the Seller, none of the Company and its
Subsidiaries has any Liability (and none of the Company, its
Subsidiaries, and their respective predecessors and Affiliates has
handled or disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner
that could form the Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of the Company and its Subsidiaries giving rise to any
Liability) for damage to any site, location, or body of water (surface
or subsurface), for any illness of or personal injury to any employee or
other individual, or for any reason under any Environmental Laws and all
Occupational Safety and Health Law.
(c) To the Knowledge of the Seller, all properties and equipment
used in the business of the Company, its Subsidiaries, and their
respective predecessors and Affiliates have been free of asbestos,
PCB's, methylene chloride, trichloroethylene,
1,2-trans-dichloroethylene, dioxins, dibenzofurans, and Extremely
Hazardous Substances.
4.29 CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY AND ITS
SUBSIDIARIES. To the Knowledge of the Seller, none of the Company and its
Affiliates has been involved in any
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business arrangement or relationship with each other or with any of the
Company's Subsidiaries within the past 12 months, and none of the Company's
Affiliates owns any asset, tangible or intangible, which is used in the
business of any of the Company and its Subsidiaries.
4.30 DISCLOSURE. To the Knowledge of the Seller, the representations and
warranties contained in this Section 4 do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements and information contained in this Section 4 not misleading.
SECTION 5
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Seller with respect
to the purchase of the Purchased Shares as follows:
5.1 INVESTMENT. The Purchaser is acquiring the Purchased Shares for
investment for his own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any unregistered distribution
thereof.
5.2 RESTRICTED SECURITIES. The Purchaser understands and acknowledges
that the Purchased Shares are not being registered under the Securities Act
or relevant state securities laws, but are being offered and sold pursuant to
exemptions from such registrations, and that the Purchaser may not sell,
transfer, assign, convey, pledge, hypothecate, or otherwise dispose of any of
the Purchased Shares in any manner without first obtaining (i) an opinion of
counsel satisfactory to the Company and the Seller that such proposed
disposition or transfer lawfully may be made without the registration of the
Purchased Shares for such purpose pursuant to the Securities Act, as then
amended, and applicable state securities laws; or (ii) such registration. In
furtherance thereof, the Purchaser represents and warrants to and agrees with
the Seller that the Purchaser:
(a) has the financial ability to bear the economic risk for the
investment in the Purchased Shares, has adequate means for providing for
his current needs and contingencies, and has no need for liquidity with
respect to the investment in the Purchased Shares;
(b) has been furnished with a copy of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, Forms 10-Q for the
quarters ended March 31, 1997 and June 30, 1997, and Current Report on Form
8-K dated August 15, 1997 (collectively, the "Documents") and has evaluated
the risks of a purchase of the Shares based on the information contained
therein and in this Agreement;
(c) has been given the opportunity to ask questions of, and receive
answers from, the management of the Company concerning the terms,
conditions, and other matters pertaining to the investment in the Purchased
Shares;
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(d) has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
acquisition of the Purchased Shares and of making an informed investment
decision with respect thereto.
5.3 AUTHORIZATION. This Agreement when executed and delivered by the
Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, except as such
enforcement may be limited by the application of bankruptcy, insolvency,
reorganization, and other laws of general applicability relating to
creditors' rights.
5.4 BROKERS OR FINDERS. The Purchaser has no Liability or obligation to
pay any fees or commissions to any broker, finder, or similar agent with
respect to the transactions contemplated by this Agreement for which the
Seller could become liable or obligated.
SECTION 6
Pre-Closing Covenants
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
6.1 GENERAL. Each of the Parties will use his Best Efforts to take all
action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section
7 below).
6.2 NOTICES AND CONSENTS. Each of the Parties will give any notices to,
make any filings with, and use his Best Efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in
connection with the matters referred to in Section 3.1(b) and 3.2(b) above.
6.3 EXCLUSIVITY. The Seller will not (i) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting securities, or any
substantial portion of the assets of, RMII (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate
in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing. The
Seller will not vote his Shares in favor of any such acquisition structured
as a merger, consolidation, or share exchange. The Sellers will notify the
Purchaser immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing.
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SECTION 7
CONDITIONS TO OBLIGATION TO CLOSE
7.1 CONDITIONS TO OBLIGATION OF THE PURCHASER. The obligation of the
Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 3.1 and
Section 4 above shall be true and correct in all material respects at and
as of the Closing Date;
(b) the Seller shall have performed and complied with all of his
covenants hereunder in all material respects through the Closing;
(c) the Seller shall have procured all of the third party consents
specified in Section 6.2 above;
(d) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation, (C) affect adversely the right of
the Purchaser to own the Shares, the Warrants, or the Common Stock
underlying the Warrants, or (D) affect adversely the right of any of the
Company and its Subsidiaries to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(e) the Seller shall have delivered to the Purchaser a certificate to
the effect that each of the conditions specified above in Section
7.1(a)-(d) is satisfied in all respects;
(f) the Purchaser shall have completed and closed the transactions
contemplated in RMII Stock Purchase Agreement; and
(g) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to the Purchaser.
The Purchaser may waive any condition specified in this Section 7.1 if he
executes a writing so stating at or prior to the Closing.
7.2 CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
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(a) the representations and warranties set forth in Section 3.2 above
shall be true and correct in all material respects at and as of the Closing
Date;
(b) the Purchaser shall have performed and complied with all of his
covenants hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(d) the Purchaser shall have delivered to the Seller a certificate
to the effect that each of the conditions specified above in Section
7.2(a)-(c) is satisfied in all respects; and
(e) all actions to be taken by the Purchaser in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Seller.
The Seller may waive any condition specified in this Section 7.2 if he
executes a writing so stating at or prior to the Closing.
SECTION 8
Post-Closing Covenants
The Parties hereby covenant and agree as follows:
8.1 GENERAL. In the event that at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 9
below).
8.2 LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving any of the Company and its Subsidiaries,
the other Party will cooperate with him and his counsel in the contest or
defense, make available their personnel, and provide such testimony and
access to his books and records as shall be necessary in connection with the
contest or defense, all at the sole
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cost and expense of the contesting or defending Party (unless the contesting
or defending Party is entitled to indemnification therefor under Section 9
below).
SECTION 9
Remedies for Breaches of This Agreement
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in this Agreement
shall survive the Closing hereunder (even if the damaged Party knew or had
reason to know of any misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect for a period of three years
thereafter (subject to any applicable statutes of limitations).
9.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE PURCHASER. In the event
the Seller has breached (or in the event any third party alleges facts that,
if true, would mean the Seller has breached) any of his representations,
warranties, and covenants contained herein, and provided that the Purchaser
makes a written claim for indemnification against the Seller, then the Seller
agrees to indemnify the Purchaser from and against the entirety of any
Adverse Consequences the Purchaser may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the
Purchaser may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by
the breach (or the alleged breach). The Purchaser need not make a written
claim for indemnification against the Seller immediately upon the discovery
of the breach or alleged breach but may make such claim at any time
thereafter during the survival period for such claim (subject to any
applicable statutes of limitations) so as to preserve the Purchaser's rights
to the fullest amount of Adverse Consequences that may be recoverable
hereunder.
The Purchaser may make additional written claims for indemnification
against the Seller for additional breaches or alleged breaches and may pursue
one or more claims for indemnification simultaneously or consecutively;
provided, however, that the Purchaser may not recover from the Seller in
respect of such claims any amounts in excess of Adverse Consequences.
9.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER. In the event
the Purchaser breaches (or in the event any third party alleges facts that,
if true, would mean the Purchaser has breached) any of his representations,
warranties, and covenants contained herein, and provided that the Seller
makes a written claim for indemnification against the Purchaser, then the
Purchaser agrees to indemnify the Seller from and against the entirety of any
Adverse Consequences the Seller may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences the Seller may
suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach).
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9.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") that may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 9, then the Indemnified Party
shall promptly notify the Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of his
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party in writing within
15 days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party
from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the indemnifying
Party will have the financial resources to defend against the Third
Party Claim and fulfill his indemnification obligations hereunder, (C)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing
business interests of the Indemnified Party, and (E) the Indemnifying
Party conducts the defense of the Third Party Claim actively and
diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 9.4(b) above, (A) the
Indemnified Party may retain separate co-counsel at his sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 9.4(b) above is
or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it may
deem appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, any Indemnifying Party in connection
therewith), (B) the Indemnifying Parties will reimburse the Indemnified
Party promptly and periodically for the costs of defending against the
Third Party Claim (including attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Adverse
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Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this Section 9.
9.5 DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall take into
account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this Section 9.
All indemnification payments under this Section 8 shall be deemed adjustments
to the Purchase Price.
9.6 OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of
representation, warranty, or covenant.
SECTION 10
Termination
10.1 TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
as provided below:
(a) the Purchaser and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) the Purchaser may at his option terminate this Agreement by
giving written notice to the Sellers on or before the Closing Date if the
Purchaser is not satisfied with the results of his continuing business,
legal, and accounting due diligence regarding RMII in connection with his
proposed purchase of common stock from RMII pursuant to the RMII Stock
Purchase Agreement;
(c) the Purchaser may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event the
Seller has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Purchaser has
notified the Seller of the breach, and the breach has continued without
cure until the Anticipated Closing Date; and
(d) the Purchaser may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing if there has been any
adverse change in, or any development reasonably expected to result in a
prospective adverse change in, the condition, financial or otherwise, or in
the earnings, business affairs of business prospects of the Company,
whether or not arising in the Ordinary Course of Business.
10.2 EFFECT OF TERMINATION. If either Party terminates this Agreement
pursuant to Section 10.1 above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other
Party (except for any Liability of any Party then in breach).
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10.3 NON-PERFORMANCE. In the event of a failure of the Seller to close in
accordance with the terms hereof or in the event of a breach by the Seller of
the covenants, warranties, representations and obligations hereof, the
Purchaser may pursue any of all of the following remedies:
(a) Terminate this Agreement and be reimbursed by Seller for all of
the expenses incurred by the Purchaser in seeking to close the transaction
contemplated herein;
(b) Waive such default or breach and close the transaction
contemplated herein; and
(c) Institute an action against the Seller for specific performance.
The Seller acknowledges and agrees that the Purchaser would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, the Purchaser shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereofin any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy
to which the Purchaser may be entitled, at law or in equity.
SECTION 11
Miscellaneous
11.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the internal laws of the State of Colorado.
11.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby.
11.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties
hereto.
11.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents
delivered pursuant hereto at the Closing constitute the full and entire
understanding and agreement between the Parties with regard to the subjects
hereof and thereof, and neither Party shall be liable or bound to the other
Party in any manner by any warranties, representations, or covenants except
as specifically set forth herein or therein. Except as expressly provided
herein, neither this Agreement nor any term hereof may be amended, waived,
discharged, or terminated other than by a written instrument signed by the
Party against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
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11.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the
State of Colorado, City and County of Denver, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of
Colorado, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding
and waives any objection to venue laid therein. Process in any action or
proceeding referred to in the preceding sentence may be served on any Party
anywhere in the world. Each Party agrees that a final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit on
the judgment or in any other manner provided by law or at equity
11.6 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
Party in exercising any right, power, or privilege under this Agreement or
the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of
such right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim
or right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one Party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
Party; (b) no waiver that may be given by a Party will be applicable except
in the specific instance for which it is given; and (c) no notice to or
demand on one Party will be deemed to be a waiver of any obligation of such
Party or of the right of the Party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
11.7 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, sent by telecopier, or otherwise delivered
by hand or by a nationally-recognized overnight courier, addressed (a) if to
the Purchaser, at the Purchaser's address or telecopier number set forth
below, or at such other address or telecopier number as the Purchaser shall
have furnished to the Seller in writing, or (b) if to the Seller, one copy
should be sent to his address or telecopier number set forth below, or at
such other address or telecopier number as the Seller shall have furnished to
the Purchaser. Such notices and communications shall be sent or delivered as
follows:
If to the Seller: ▇▇▇ ▇. ▇▇▇▇▇▇
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With a Copy to:
▇▇▇▇▇ ▇▇▇▇▇, Esq.
Rothgerber, Appel, Powers & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
telephone: 303/▇▇▇-▇▇▇▇
telecopy: 303/623-9222
If to the Purchaser, to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
telephone: 303/▇▇▇-▇▇▇▇
telecopy: 303/777-4314
With a Copy to:
▇▇▇ ▇. ▇▇▇▇▇, Esq.
Minor & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
telephone: 303/▇▇▇-▇▇▇▇
telecopy: 303/320-6330
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given (x) in the case of
personal delivery or delivery by telecopier, on the date of such delivery and
verified, in the case of telecopier transmission, by confirmation of such
transmission, (y) in the case of a nationally-recognized overnight courier,
on the day such delivery is confirmed by such courier or by the recipient and
(z) in the case of mailing, on the third business day following that on which
the piece of mail containing such communication has been deposited in a
regularly maintained receptacle for the deposit of the United States mail,
addressed and mailed as aforesaid.
11.8 EXPENSES. The Seller and the Purchaser shall bear his own expenses
incurred on his behalf with respect to this Agreement and the transactions
contemplated hereby.
11.9 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed
in any number of counterparts, each of which may be executed by less than all
of the Purchasers, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument. Execution of a facsimile copy of this Agreement
by any Party and delivery of a copy this Agreement bearing the facsimile
signature of any Party shall constitute the valid and binding execution and
delivery of this Agreement, and facsimile copies of this Agreement bearing
the facsimile signature of any Party shall constitute an original document
enforceable against such Party.
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11.10 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
11.10 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing
or interpreting this Agreement.
11.11 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. The word "including" shall mean including without
limitation. The Parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any Party
has breached any representation, warranty, or covenant contained herein in
any respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative
levels of specificity) which the Party has not breached shall not detract
from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
11.12 INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.
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The foregoing Agreement is hereby executed as of the date first above
written.
PURCHASER:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SELLER:
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
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[Exhibits and Disclosure Schedule omitted]