EXHIBIT 2.10
Annex 1
INNOVATIVE VALVE TECHNOLOGIES, INC.
UNIFORM PROVISIONS
FOR
BUSINESS COMBINATIONS
TABLE OF CONTENTS
Page
ARTICLE I REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Section 1.01. Ownership and Status of Company Capital Stock...........1
Section 1.02. Power of the Stockholder; Approval of the Acquisition...1
Section 1.03. No Conflicts or Litigation..............................2
Section 1.04. No Brokers..............................................2
Section 1.05. Preemptive and Other Rights; Waiver.....................2
Section 1.06. Control of Related Businesses...........................2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
Section 2.01. Organization............................................3
Section 2.02. Qualification...........................................3
Section 2.03. Authorization; Enforceability; Absence of Conflicts;
Required Consents.......................................3
Section 2.04. Charter Documents and Records; No Violation.............4
Section 2.05. No Defaults.............................................5
Section 2.06. Company Subsidiaries....................................5
Section 2.07. Controlling Affiliates..................................5
Section 2.08. Capital Stock of the Company
and the Company Subsidiaries............................6
Section 2.09. Transactions in Capital Stock...........................6
Section 2.10. No Bonus Shares.........................................6
Section 2.11. Predecessor Status; etc.................................6
Section 2.12. Related Party Agreements................................6
Section 2.13. Litigation..............................................7
Section 2.14. Financial Statements; Disclosure........................7
Section 2.15. Compliance With Laws....................................7
Section 2.16. Certain Environmental Matters...........................8
Section 2.17. Liabilities and Obligations.............................9
Section 2.18. Receivables.............................................9
Section 2.19. Owned and Leased Real Properties........................9
Section 2.20. Other Tangible Assets..................................10
Section 2.21. Proprietary Rights.....................................11
Section 2.22. Relations With Governments, etc........................11
Section 2.23. Commitments............................................11
Section 2.24. Capital Expenditures...................................13
Section 2.25. Inventories............................................13
Section 2.26. Insurance..............................................13
Section 2.27. Employee Matters.......................................13
Section 2.28. Compliance With ERISA, etc.............................16
Section 2.29. Taxes..................................................18
Section 2.30. Government Contracts...................................19
Section 2.31. Absence of Changes.....................................20
Section 2.32. Bank Relations; Powers of Attorney.....................21
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVATEC AND NEWCO
Section 3.01. Organization; Power....................................22
Section 3.02. Authorization; Enforceability; Absence of Conflicts;
Required Consents......................................22
Section 3.03. Charter Documents......................................23
Section 3.04. Capital Stock of INVATEC and Newco.....................23
Section 3.05. Subsidiaries...........................................24
Section 3.06. Compliance With Laws; No Litigation....................24
Section 3.07. No Brokers.............................................24
ARTICLE IV COVENANTS EXTENDING TO THE EFFECTIVE TIME
Section 4.01. Access and Cooperation; Due Diligence..................24
Section 4.02. Conduct of Business Pending the Effective Time.........25
Section 4.03. Prohibited Activities..................................26
Section 4.04. No Shop; Release of Directors..........................28
Section 4.05. Notice to Bargaining Agents............................28
Section 4.06. Notification of Certain Matters........................28
Section 4.07. Supplemental Information...............................29
Section 4.08. Cooperation in Connection With the IPO.................30
Section 4.09. Additional Financial Statements........................30
Section 4.10. Termination of Plans...................................30
Section 4.11. Disposition of Unwanted Assets.........................30
Section 4.12. HSR Act Matters........................................31
ARTICLE V THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 5.01. Conditions to the Obligations of Each Party............31
Section 5.02. Conditions to the Obligations
of the Company and the Stockholders....................32
Section 5.03. Conditions to the Obligations of INVATEC and Newco.....34
ARTICLE VI COVENANTS FOLLOWING THE EFFECTIVE TIME
Section 6.01. Disclosure.............................................35
Section 6.02. Preparation and Filing of Tax Returns..................35
Section 6.03. Directors..............................................35
Section 6.04. Removal of Guaranties..................................36
Section 6.05. Survival of Representations and Warranties.............36
Section 6.06. Limitations on Damage Claims...........................36
ARTICLE VII INDEMNIFICATION
Section 7.01. In Respect of Representations and Warranties...........37
Section 7.02. Indemnification of INVATEC Indemnified Parties.........38
Section 7.03. Indemnification of Stockholder Indemnified Parties.....39
Section 7.04. Conditions of Indemnification..........................39
Section 7.05. Remedies Not Exclusive.................................41
Section 7.06. Limitations on Indemnification.........................41
ARTICLE VIII LIMITATIONS ON COMPETITION
Section 8.01. Prohibited Activities...................................42
Section 8.02. Damages.................................................43
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Section 8.03. Reasonable Restraint....................................43
Section 8.04. Severability; Reformation...............................43
Section 8.05. Independent Covenant....................................43
Section 8.06. Materiality.............................................44
ARTICLE IX DEFINITIONS
Section 9.01. Defined Terms..........................................44
Section 9.02. Other Defined Terms....................................58
Section 9.03. Other Definitional Provisions..........................58
Section 9.04. Captions...............................................59
ARTICLE X GENERAL PROVISIONS
Section 10.01. Treatment of Confidential Information.................59
Section 10.02. Brokers and Agents....................................60
Section 10.03. Assignment; No Third Party Beneficiaries..............60
Section 10.04. Entire Agreement; Amendment; Waivers..................60
Section 10.05. Expenses..............................................61
Section 10.06. Notices...............................................61
Section 10.07. Governing Law.........................................61
Section 10.08. Exercise of Rights and Remedies.......................62
Section 10.09. Time..................................................62
Section 10.10. Reformation and Severability..........................62
Section 10.11. Remedies Cumulative...................................62
Section 10.12. Release...............................................62
Section 10.13. Respecting the IPO....................................63
ARTICLE XI TERMINATION
Section 11.01. Termination of This Agreement.........................64
Section 11.02. Liabilities in Event of Termination...................64
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ARTICLE I
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Each of the Stockholders represents and warrants to INVATEC that, as
applied solely to himself, all the following representations and warranties in
this Article I are as of the date of this Agreement, and will be, as amended or
supplemented pursuant to Section 4.07, on the Closing Date and immediately prior
to the Effective Time, true and correct:
Section 1.01. OWNERSHIP AND STATUS OF COMPANY CAPITAL STOCK. The
Stockholder is the record and beneficial owner (or, if the Stockholder is a
trust or the estate of a deceased natural person, the legal owner) of the number
of shares of Company Capital Stock set forth, by each class, and by each series
in each class, thereof, opposite the Stockholder's name in Section 1.01 of the
Disclosure Statement, free and clear of all Liens, except for the Liens set
forth in Section 1.01 of the Disclosure Statement, all of which will be released
at or before the Effective Time.
Section 1.02. POWER OF THE STOCKHOLDER; APPROVAL OF THE ACQUISITION.
(a) The Stockholder has the full power, legal capacity and authority to execute
and deliver this Agreement and each other Transaction Document to which the
Stockholder is a party and to perform the Stockholder's obligations in this
Agreement and in all other Transaction Documents to which the Stockholder is a
party. This Agreement constitutes, and each such other Transaction Document,
when executed in the Stockholder's individual capacity and delivered by the
Stockholder, will constitute, the legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as that enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law). If the Stockholder is an Entity, the Stockholder has
obtained, in accordance with all applicable Governmental Requirements and its
Charter Documents, all approvals and the taking of all actions necessary for the
authorization, execution, delivery and performance by the Stockholder of this
Agreement and the other Transaction Documents to which the Stockholder is a
party. If the Stockholder is acting otherwise than in his individual capacity
(whether as an executor or a guardian or in any other fiduciary or
representative capacity), all actions on the part of the Stockholder and all
other Persons (including any court) necessary for the authorization, execution,
delivery and performance by the Stockholder of this Agreement and the other
Transaction Documents to which the Stockholder is a party have been duly taken.
(b) The Stockholder, acting in each capacity in which he is
entitled, by reason of the Company's Charter Documents or the Governmental
Requirements of the Company's Organization State or for any other reason, to
vote to approve or disapprove the consummation of the Acquisition, has voted all
the shares of Company Capital Stock owned by him and entitled to a vote or votes
on that matter, in any one or more of the manners prescribed or permitted by the
Company's Charter Documents or the Governmental Requirements of the Company's
Organization State, whichever are controlling, to approve this Agreement and the
consummation of the Acquisition and the other transactions contemplated hereby.
Section 1.03. NO CONFLICTS OR LITIGATION. The execution, delivery
and performance in accordance with their respective terms by the Stockholder of
this Agreement and the other
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Transaction Documents to which the Stockholder is a party do not and will not
(a) violate or conflict with any Governmental Requirement, (b) breach or
constitute a default under any agreement or instrument to which the Stockholder
is a party or by which the Stockholder or any of the shares of Company Capital
Stock owned by the Stockholder is bound, (c) result in the creation or
imposition of, or afford any Person the right to obtain, any Lien upon any of
the shares of Company Capital Stock owned by the Stockholder (or upon any
revenues, income or profits of the Stockholder therefrom) or (d) if the
Stockholder is an Entity, violate the Stockholder's Charter Documents. No
Litigation is pending or, to the knowledge of the Stockholder, threatened to
which the Stockholder is or may become a party which (a) questions or involves
the validity or enforceability of any of the Stockholder's obligations under any
Transaction Document or (b) seeks (or reasonably may be expected to seek) (i) to
prevent or delay the consummation by the Stockholder of the transactions
contemplated by this Agreement to be consummated by the Stockholder or (ii)
damages in connection with any consummation by the Stockholder of the
transactions contemplated by this Agreement.
Section 1.04. NO BROKERS. The Stockholder has not, directly or
indirectly, in connection with this Agreement or the transactions contemplated
hereby (a) employed any broker, finder or agent or (b) agreed to pay or incurred
any obligation to pay any broker's or finder's fee, any sales commission or any
similar form of compensation.
Section 1.05. PREEMPTIVE AND OTHER RIGHTS; WAIVER. Except for the
right of the Stockholder to receive shares of INVATEC Common Stock as a result
of the Acquisition or to acquire INVATEC Common Stock pursuant to any written
option granted by INVATEC to the Stockholder, the Stockholder either (a) does
not own or otherwise have any statutory or contractual preemptive or other right
of any kind (including any right of first offer or refusal) to acquire any
shares of Company Capital Stock or INVATEC Common Stock or (b) hereby
irrevocably waives each right of that type the Stockholder does own or otherwise
has.
Section 1.06. CONTROL OF RELATED BUSINESSES. Except as set forth in
Section 1.06 of the Disclosure Statement, the Stockholder is not, alone or with
one or more other Persons, the controlling Affiliate of any Entity, business or
trade (other than the Company and the Company Subsidiaries, if the Stockholder
is an Affiliate of the Company) that (a) is engaged in any line of business
which is the same as or similar to any line of business in which the Company or
any Company Subsidiary is engaged or (b) is, or has within the three-year period
ending on the date of this Agreement, engaged in any transaction with the
Company or any Company Subsidiary, except for transactions in the ordinary
course of business of the Company or that Company Subsidiary.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF
THE COMPANY AND THE STOCKHOLDERS
The Company and each Stockholder jointly and severally represent and
warrant to, and agree with, INVATEC that all the following representations and
warranties in this Article II are as of the date of this Agreement, and will be,
as amended or supplemented pursuant to Section 4.07, on the Closing Date and
immediately prior to the Effective Time, true and correct:
Section 2.01. ORGANIZATION. Section 2.01 of the Disclosure Statement
sets forth the Organization State of each of the Company and the Company
Subsidiaries. Each of the Company and the Company Subsidiaries (a) is a
corporation duly organized, validly existing and in good standing under the laws
of its Organization State, (b) has all requisite corporate power and authority
under those laws and its Charter Documents to own or lease and to operate its
properties and to carry on its business as now conducted and (c) is duly
qualified and in good standing as a foreign corporation in all jurisdictions in
which it owns or leases property or in which the carrying on of its business as
now conducted so requires except where the failure to be so qualified, singly or
in the aggregate, would not have a Material Adverse Effect.
Section 2.02. QUALIFICATION. Section 2.02 of the Disclosure
Statement lists all the jurisdictions in which each of the Company and the
Company Subsidiaries is authorized or qualified to own or lease and to operate
its properties or to carry on its business as now conducted, and neither the
Company nor any Company Subsidiary owns, leases or operates any properties, or
carries on any business, that is Material to the Acquired Business in any
jurisdiction not listed in that Section.
Section 2.03. AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS;
REQUIRED CONSENTS. (a) The execution, delivery and performance by the Company of
this Agreement and each other Transaction Document to which it is a party, and
the effectuation of the Acquisition and the other transactions contemplated
hereby and thereby, are within its corporate or other power under its Charter
Documents and the applicable Governmental Requirements of its Organization State
and have been duly authorized by all proceedings, including actions permitted to
be taken in lieu of proceedings, required under its Charter Documents and those
Governmental Requirements.
(b) This Agreement has been, and each of the other Transaction
Documents to which the Company is a party, when executed and delivered to
INVATEC (or, in the case of the Certificates of Merger, if any, the applicable
Governmental Authorities) will have been, duly executed and delivered by the
Company and is, or when so executed and delivered will be, the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as that enforceability may be (i) limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and (ii) subject to
general principles of equity (regardless of whether that enforceability is
considered in a proceeding in equity or at law).
(c) The execution, delivery and performance in accordance with their
respective terms by the Company of the Transaction Documents to which it is a
party have not and will not (i) violate, breach or constitute a default under
(A) the Charter Documents of any of the Company
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and the Company Subsidiaries, (B) any Governmental Requirement applicable to any
of the Company and the Company Subsidiaries or (C) any Material Agreement of the
Company (except as set forth in Section 2.03 of the Disclosure Statement), (ii)
result in the acceleration or mandatory prepayment of any Indebtedness, or any
Guaranty not constituting Indebtedness, of any of the Company and the Company
Subsidiaries or afford any holder of any of that Indebtedness, or any
beneficiary of any of those Guaranties, the right to require any of the Company
and the Company Subsidiaries to redeem, purchase or otherwise acquire, reacquire
or repay any of that Indebtedness, or to perform any of those Guaranties, (iii)
cause or result in the imposition of, or afford any Person the right to obtain,
any Lien upon any property or assets of any of the Company and the Company
Subsidiaries (or upon revenues, income or profits of any of the Company and the
Company Subsidiaries therefrom) or (iv) except as set forth in Section 2.03 of
the Disclosure Statement, result in the revocation, cancellation, suspension or
material modification, in any single case or in the aggregate, of any
Governmental Approval possessed by any of the Company and the Company
Subsidiaries at the date hereof and necessary for the ownership or lease or the
operation of its properties or the carrying on of its business as now conducted,
including any necessary Governmental Approval under each applicable
Environmental Law.
(d) Except for (i) the filing of the Certificates of Merger, if any,
with the applicable Governmental Authorities, (ii) filings of the Registration
Statement under the Securities Act and the SEC order declaring the Registration
Statement effective under the Securities Act and (iii) as may be required by the
HSR Act or the applicable state securities or blue sky laws, no Governmental
Approvals are required to be obtained, and no reports or notices to or filings
with any Governmental Authority are required to be made, by any of the Company
and the Company Subsidiaries for the execution, delivery or performance by the
Company of the Transaction Documents to which it is a party, the enforcement
against the Company of its obligations thereunder or the effectuation of the
Acquisition and the other transactions contemplated thereby.
Section 2.04. CHARTER DOCUMENTS AND RECORDS; NO VIOLATION. The
Company has caused true, complete and correct copies of the Charter Documents,
each as in effect on the date hereof, and the minute books and similar corporate
or other Entity records of each of the Company and the Company Subsidiaries to
be delivered or otherwise made available to INVATEC. No breach or violation of
any Charter Document of any of the Company and the Company Subsidiaries has
occurred and is continuing.
Section 2.05. NO DEFAULTS. Except as disclosed in Section 2.05 of
the Disclosure Statement, no condition or state of facts exists, or, with the
giving of notice or the lapse of time or both, would exist, which (a) entitles
any holder of any outstanding Indebtedness, or any Guaranty not constituting
Indebtedness, of any of the Company and the Company Subsidiaries, or a
representative of that holder, to accelerate the maturity, or require a
mandatory prepayment, of that Indebtedness or Guaranty, or affords that holder
or its representative, or any beneficiary of that Guaranty, the right to require
any of the Company and the Company Subsidiaries to redeem, purchase or otherwise
acquire, reacquire or repay any of that Indebtedness, or to perform that
Guaranty in whole or in part, (b) entitles any Person to obtain any Lien (other
than a Permitted Lien) upon any properties or assets constituting any part of
the Acquired Business (or upon any revenues, income or profits of any of the
Company and the Company Subsidiaries therefrom) or (c) constitutes a violation
or breach of, or a default under, any Material Agreement of the Company by any
of the Company and the Company Subsidiaries.
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Section 2.06. COMPANY SUBSIDIARIES. Section 2.01 of the Disclosure
Statement either (a) sets forth the form of organization, legal name, each
assumed name and Organization State of each Company Subsidiary or (b) correctly
states no Entity is a Company Subsidiary. Except as disclosed in Section 2.06 of
the Disclosure Statement, each Company Subsidiary is a Wholly Owned Subsidiary.
In the case of any Company Subsidiary that is not a Wholly Owned Subsidiary,
Section 2.06 of the Disclosure Statement sets forth, by each class and each
series within each class, the number of outstanding shares (or other percentage
ownership interests) of Capital Stock of the Company Subsidiary, (a) the
Company's aggregate direct and indirect ownership of those shares (or interests)
and (b) the name and address of record and percentage ownership of those shares
(or interests) of each holder of record thereof other than the Company or a
Company Subsidiary. No Lien exists on any outstanding share of Capital Stock of
any Company Subsidiary which is owned directly or indirectly by the Company
other than (a) the Liens, if any, described in Section 2.06 of the Disclosure
Statement, all of which will be released at or before the Effective Time, and
(b) Permitted Liens. Except as set forth in Section 2.06 of the Disclosure
Statement, the Company does not own, of record or beneficially, directly or
indirectly through any Person, and does not control, directly or indirectly
through any Person or otherwise, any Capital Stock or Derivative Securities of
any Entity other than a Company Subsidiary.
Section 2.07. CONTROLLING AFFILIATES. Section 2.07 of the Disclosure
Statement sets forth the name of each Person who at the time the Acquisition was
submitted for vote or consent to the Stockholders, is, was or will be an
Affiliate of the Company by reason of that Person's control of the Company.
Section 2.08. CAPITAL STOCK OF THE COMPANY AND THE COMPANY
SUBSIDIARIES. Section 2.08 of the Disclosure Statement sets forth, by each class
and by each series within each class, the total number of shares of authorized
Company Capital Stock and the total number of such shares that have been issued
and are now outstanding. Except as set forth in Section 2.08 of the Disclosure
Statement: (a) no shares of Company Capital Stock are held by the Company or any
Company Subsidiary as treasury shares; and (b) no outstanding options, warrants
or rights to acquire Capital Stock of the Company or any Company Subsidiary
exist. All the issued and outstanding shares of Capital Stock of each of the
Company and the Company Subsidiaries (a) have been duly authorized and validly
issued in accordance with the applicable Governmental Requirements of their
issuer's Organization State and Charter Documents and (b) are fully paid and
nonassessable. Neither the Company nor any Company Subsidiary has issued or sold
any shares of its outstanding Capital Stock in breach or violation of (a) any
applicable statutory or contractual preemptive rights, or any other rights of
any kind (including any rights of first offer or refusal), of any Person or (b)
the terms of any of its Derivative Securities which then were outstanding. No
Person has, otherwise than solely by reason of that Person's right, if any, to
vote shares of the Capital Stock of the Company or any Company Subsidiary it
holds (to the extent those shares afford the holder thereof any voting rights)
any right to vote on any matter with the holders of Capital Stock of the Company
or any Company Subsidiary.
Section 2.09. TRANSACTIONS IN CAPITAL STOCK. Except as set forth in
Section 2.09 of the Disclosure Statement: (a) the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire or reacquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof; and (b) no transaction has been
effected, and no action in contemplation of the transactions described in this
Agreement has been taken, respecting the equity ownership of either the Company
or any Company Subsidiary.
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Section 2.10. NO BONUS SHARES. Except as set forth in Section 2.10
of the Disclosure Statement, no outstanding share of Capital Stock of the
Company was issued for less than the fair market value thereof at the time of
issuance or was issued in exchange for any consideration other than cash.
Section 2.11. PREDECESSOR STATUS; ETC. Except as disclosed in
Section 2.11 of the Disclosure Statement, the Company has not been a Subsidiary
or division of another corporation during the past five years.
Section 2.12. RELATED PARTY AGREEMENTS. Except as set forth in
Section 2.12 of the Disclosure Statement, each Related Party Agreement in effect
on the date hereof will have been terminated as of the Closing Date, and no
Related Party Agreement will exist then or thereafter to and including the
Effective Time.
Section 2.13. LITIGATION. Except as disclosed in Section 2.13 of the
Disclosure Statement, no Litigation is pending or, to the knowledge of the
Company or any Stockholder, threatened to which the Company or any Company
Subsidiary is or may become a party.
Section 2.14. FINANCIAL STATEMENTS; DISCLOSURE. (a) FINANCIAL
STATEMENTS. (i) The Financial Statements (including in each case the related
schedules and notes) delivered to INVATEC present fairly, in all material
respects, the financial position of the Acquired Business at the respective
dates of the balance sheets included therein and the results of operations and
cash flows of the Acquired Business and stockholders' or other owners' equity
for the respective periods set forth therein and have been prepared in
accordance with GAAP. As of the date of any balance sheet included in those
Financial Statements, neither the Company nor any Company Subsidiary then had
any outstanding Indebtedness to any Person or any liabilities of any kind
(including contingent obligations, tax assessments or unusual forward or
long-term commitments), or any unrealized or anticipated loss, which in the
aggregate then were Material to the Acquired Business and required to be
reflected in those Financial Statements or in the notes related thereto in
accordance with GAAP which were not so reflected.
(ii) Since the Current Balance Sheet Date, no change has occurred in
the business, operations, properties or assets, liabilities, condition
(financial or other) or results of operations of the Company or any Company
Subsidiary that could reasonably be expected, either alone or together with all
other such changes, to have a Material Adverse Effect.
(b) DISCLOSURE. (i) As of the date hereof, all Information that has
been furnished to INVATEC by or on behalf of the Company prior to the date of
this Agreement in connection with the transactions contemplated hereby is, taken
together, true and correct in all material respects and does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially misleading in
light of the circumstances under which those statements were made.
(ii) All Information that is furnished to INVATEC after the date
hereof from time to time prior to the Effective Time by or on behalf of the
Company in connection with or pursuant to this Agreement, any other Transaction
Document or the transactions contemplated hereby or thereby will be, when made
available and taken together, true and correct in all material respects (other
than financial budgets and projections) and will not contain any untrue
statement of a material
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fact or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which those statements are made.
Section 2.15. COMPLIANCE WITH LAWS. (a) Except as disclosed in
Section 2.15 of the Disclosure Statement: (i) each of the Company and the
Company Subsidiaries possesses, or, if required by the applicable Environmental
Laws (including those relating to the maintenance, repair or servicing of
industrial valves or other process-system components or equipment containing
volatile organic compounds, hazardous air pollutants or Solid Wastes, Hazardous
Wastes or Hazardous Substances), one or more of its employees as required by
those Environmental Laws possesses, all necessary certifications and licenses
and similar Governmental Approvals required for the conduct of its business; and
(ii) each of the Company and the Company Subsidiaries and such one or more of
its employees are in compliance in all material respects with the terms and
conditions of all Governmental Approvals necessary for the ownership or lease
and the operation of its properties (including all the facilities and sites it
owns or holds under any lease) and the carrying on of its business as now
conducted. The Company has provided INVATEC with a complete written list of all
the Governmental Approvals so possessed (other than permits for particular jobs
for customers at their facilities). All the Governmental Approvals so listed are
valid and in full force and effect, and, except as disclosed in Section 2.15 of
the Disclosure Statement, neither the Company nor any Company Subsidiary has
received, nor to the knowledge of any Stockholder has any employee of either
received, any notice from any Governmental Authority of its intention to cancel,
terminate or not renew any of those Governmental Approvals.
(b) Except as disclosed in Section 2.15 of the Disclosure Statement,
each of the Company and the Company Subsidiaries: (i) has been and continues to
be in compliance in all material respects with all Governmental Requirements
applicable to it or any of its presently or previously owned or operated
properties (including all the facilities and sites now or previously owned or
held by it under any lease), businesses or operations, including all applicable
Governmental Requirements under ERISA and Environmental Laws; and (ii)(A)
neither the Company nor any Company Subsidiary has received, nor to the
knowledge of the Company has any employee of either received, any notice from
any Governmental Authority which asserts, or raises the possibility of assertion
of, any noncompliance with any of those Governmental Requirements and, (B) to
the knowledge of each of the Company, the Company Subsidiaries and the
Stockholders, no condition or state of facts exists which would provide a valid
basis for any such assertion.
Section 2.16. CERTAIN ENVIRONMENTAL MATTERS. Except as disclosed in
Section 2.16 of the Disclosure Statement: (a) to the knowledge of the Company,
the Company and each Company Subsidiary have complied, and remain in compliance,
in all material respects with the provisions of all Environmental Laws
applicable to any of them or any of their respective presently owned or operated
facilities, sites or other properties, businesses and operations and which
relate to the reporting by the Company and each Company Subsidiary of all sites
presently owned or operated by any of them where Solid Wastes, Hazardous Wastes
or Hazardous Substances have been treated, stored, disposed of or otherwise
handled; (b) no release (as defined in those Environmental Laws) at, from, in or
on any site owned or operated by the Company or any Company Subsidiary has
occurred which, if all relevant facts were known to the relevant Governmental
Authorities, reasonably could be expected to require remediation to avoid deed
record notices, restrictions, liabilities or other consequences that would not
be applicable if that release had not occurred; (c) neither the Company nor any
Company Subsidiary (or any agent or contractor of either) has transported or
arranged for the transportation of any Solid Wastes, Hazardous Wastes or
Hazardous
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Substances to, or disposed or arranged for the disposition of any Solid Wastes,
Hazardous Wastes or Hazardous Substances at, any off-site location that could
lead to any claim against the Company, any Company Subsidiary, INVATEC or any
Subsidiary of INVATEC, as a potentially responsible party or otherwise, for any
clean-up costs, remedial work, damage to natural resources, personal injury or
property damage, including any claim under CERCLA; and (d) no storage tanks
exist on or under any of the properties owned or operated by the Company or any
Company Subsidiary from which any Solid Wastes, Hazardous Wastes or Hazardous
Substances have been released into the surrounding environment. The Company has
provided INVATEC with copies (or if not available, accurate written summaries)
of all environmental investigations, studies, audits, reviews and other analyses
conducted by or on behalf, or which otherwise are in the actual or constructive
possession, of the Company or any Company Subsidiary respecting any facility,
site or other property presently owned or operated by the Company and each
Company Subsidiary.
Section 2.17. LIABILITIES AND OBLIGATIONS. Section 2.17 of the
Disclosure Statement lists or describes all present liabilities, of every kind,
character and description and whether accrued, absolute, fixed, contingent or
otherwise, of each of the Company and the Company Subsidiaries which (a) exceed
or reasonably could be expected to exceed $10,000 and (b) (i) had been incurred
prior to the Current Balance Sheet Date, but are not reflected on the Current
Balance Sheet, or (ii) were incurred after the Current Balance Sheet Date
otherwise than in the ordinary course of business, and consistent with the past
practice, of that Entity. That Section also lists and describes, for each of the
Company and the Company Subsidiaries: (a) each of its outstanding secured and
unsecured Guaranties not constituting its Indebtedness and, for each of those
Guaranties, whether any Stockholder or Related Person or Affiliate of any
Stockholder is a Person whose obligation is covered by that Guaranty, and (b)
for each of the items listed under clause (a) of this sentence, (i) if that item
is secured by any property or asset of the Company or any Company Subsidiary,
the nature of that security, and (ii) if that item is covered in whole or in
part by a Guaranty of any Stockholder or any Related Person or Affiliate of any
Stockholder, the name of the guarantor.
Section 2.18. RECEIVABLES. Except as set forth in Section 2.18 of
the Disclosure Statement, all the accounts and notes or other advances
receivable of the Company and the Company Subsidiaries reflected on the Current
Balance Sheet were collected, or are valid and enforceable claims arising in the
ordinary course of business and, in the good faith belief of the Company's
management, collectible, in the aggregate respective amounts so reflected, net
of the reserves, if any, reflected in the Current Balance Sheet.
Section 2.19. OWNED AND LEASED REAL PROPERTIES. (a) Section 2.19 of
the Disclosure Statement lists and correctly describes in all material respects:
(i) all real properties owned by any of the Company and the Company Subsidiaries
and, for each of those properties, the address thereof, the type and approximate
square footage of each structure located thereon and the use thereof in the
business of the Company and the Company Subsidiaries; (ii) all real properties
of which any of the Company and the Company Subsidiaries is the lessee and, for
each of those properties, the address thereof, the type and approximate square
footage of each structure located thereon the Company or a Company Subsidiary is
leasing and the expiration date of its lease and the use thereof in the business
of the Company and the Company Subsidiaries; and (iii) in the case of each real
property listed as being owned, whether it was previously owned, and in the case
of each real property listed as being leased, whether it is presently owned, by
any Stockholder or any of his Related Persons or Affiliates (other than the
Company or the Company Subsidiaries, if the Stockholder is an Affiliate of the
Company).
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(b) The Company has provided INVATEC with true, complete and correct
copies of all title reports and insurance policies relating to any of the real
properties listed as being owned or leased in Section 2.19 of the Disclosure
Statement. Except as set forth in that Section or those reports and policies,
and except for Permitted Liens, the Company or a Company Subsidiary owns in fee,
and has good, valid and marketable title to, free and clear of all Liens, each
property listed in that Section as being owned.
(c) The Company has provided INVATEC with true, correct and complete
copies of all leases under which the Company or a Company Subsidiary is leasing
each of the properties listed in Section 2.19 of the Disclosure Statement as
being leased and, except as set forth in Section 2.19 of the Disclosure
Statement, (i) each of those leases is, to the knowledge of the Company, valid
and binding on the lessor party thereto, and (ii) the lessee party thereto has
not sublet any of the leased space to any Person other than the Company or a
Company Subsidiary.
(d) The fixed assets of each of the Company and the Company
Subsidiaries are affixed only to one or more of the real properties listed in
Section 2.19 of the Disclosure Statement and, except as set forth in that
Section, are well-maintained and adequate for the purposes for which they
presently are being used or held for use, ordinary wear and tear excepted.
Section 2.20. OTHER TANGIBLE ASSETS. (a) Section 2.20 of the
Disclosure Statement discloses all leases, including Capital Leases, that are
Material to the Company under which the Company or a Company Subsidiary is
leasing its property, plant and equipment and other tangible assets other than
real properties. Except as set forth in that Section, (i) each of those leases
is, to the knowledge of the Company, valid and binding on the lessor party
thereto and (ii) the lessee party thereto has not sublet any of the leased
property to any Person other than the Company or a Company Subsidiary.
(b) Except as set forth in Section 2.20 of the Disclosure Statement,
all the property, plant and equipment of the Company and the Company
Subsidiaries are in good working order and condition, ordinary wear and tear
excepted, and adequate for the purposes for which they presently are being used
or held for use.
Section 2.21. PROPRIETARY RIGHTS. Except as set forth in Section
2.21 of the Disclosure Statement, each of the Company and the Company
Subsidiaries owns, free and clear of all Liens other than Permitted Liens, or
has the legal right to use all Proprietary Rights that are necessary to the
conduct of its business as now conducted, in each case free of any claims or
infringements known to the Company or any Stockholder. Section 2.21 of the
Disclosure Statement (a) lists these Proprietary Rights and (b) indicates those
owned by the Company or any Company Subsidiary and, for those not listed as so
owned, the agreement or other arrangement pursuant to which they are possessed.
Except as set forth in that Section, (a) no consent of any Person will be
required for the use of any of these Proprietary Rights by INVATEC or any
Subsidiary of INVATEC following the Effective Time and (b) no governmental
registration of any of these Proprietary Rights has lapsed or expired or been
canceled, abandoned, opposed or the subject of any reexamination request.
Section 2.22. RELATIONS WITH GOVERNMENTS, ETC. Neither the Company
nor any Company Subsidiary has made, offered or agreed to offer anything of
value to any governmental official, political party or candidate for government
office which would cause the Company or any
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Company Subsidiary to be in violation of the Foreign Corrupt Practices Act of
1977 or any Governmental Requirement to a similar effect.
Section 2.23. COMMITMENTS. (a) Except as set forth in Section 2.23
of the Disclosure Statement, the Company has provided INVATEC with a complete
list of, or made available to INVATEC copies of, each of the following (each a
"Company Commitment") to which any of the Company and the Company Subsidiaries
is a party or by which any of its properties is bound and which presently
remains executory in whole or in any part:
(i) each partnership, joint venture or cost sharing agreement;
(ii) each guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(iii) each instrument, agreement or other obligation evidencing or
relating to Indebtedness of any of the Company and the Company
Subsidiaries or to money lent or to be lent to another Person involving
more than $25,000;
(iv) each contract to purchase or sell real property;
(v) each agreement with dealers or sales or commission agents,
public relations or advertising agencies, accountants or attorneys (other
than in connection with this Agreement and the transactions contemplated
hereby) involving total payments within any 12-month period in excess of
$10,000 and which is not terminable without penalty and on no more than 30
days' prior notice;
(vi) each agreement for the acquisition or provision of services,
supplies, equipment, inventory, fixtures or other property involving more
than $25,000 in the aggregate;
(vi) each Related Party Agreement involving total payments within
any 12-month period in excess of $10,000 and which is not terminable
without penalty on no more than 30 days' prior notice;
(vii) each contract containing any noncompetition agreement,
covenant or undertaking;
(viii)each agreement providing for the purchase from a supplier of
all or substantially all the requirements of the Company or any Company
Subsidiary a particular product or service; or
(ix) each other agreement or commitment not made in the ordinary
course of business which is Material to the Acquired Business.
True, correct and complete copies of all written Company Commitments have
heretofore been delivered or made available to INVATEC. Except as set forth in
Section 2.23 of the Disclosure Statement: (i) there are no existing or asserted
defaults, events of default or events, occurrences, acts or omissions that, with
the giving of notice or lapse of time or both, would constitute defaults or
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events of default under any Company Commitment Material to the Company by any of
the Company and the Company Subsidiaries or, to the knowledge of the Company,
any other party thereto; and (ii) no penalties have been incurred, nor are
amendments pending, with respect to the Company Commitments Material to the
Acquired Business. The Company Commitments are in full force and effect and are
valid and enforceable obligations of the Company or the Company Subsidiaries
parties thereto and, to the knowledge of the Company, the other parties thereto
in accordance with their respective terms, except as that enforceability may be
(A) limited by any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and (B)
subject to general principles of equity (regardless of whether that
enforceability is considered in a proceeding in equity or at law), and no
defenses, off-sets or counterclaims have been asserted or, to the knowledge of
the Company, may be made by any party thereto (other than by the Company or a
Company Subsidiary), nor has the Company or a Company Subsidiary, as the case
may be, waived any rights thereunder, except as described in Section 2.23 of the
Disclosure Statement.
(b) Except as disclosed in Section 2.23 of the Disclosure Statement
or contemplated hereby or by any other Transaction Document to which the Company
or any Company Subsidiary or Stockholder is a party, neither the Company nor any
Company Subsidiary or Stockholder has knowledge of any plan or intention of any
other party to any Company Commitment that is Material to the Acquired Business
to exercise any right to cancel or terminate that Company Commitment, and
neither the Company nor that Company Subsidiary or any Stockholder has knowledge
of any condition or state of facts which would justify the exercise of such a
right.
Section 2.24. CAPITAL EXPENDITURES. Section 2.24 of the Disclosure
Statement sets forth the total amount of capital expenditures currently budgeted
to be incurred by the Company and the Company Subsidiaries in excess of $25,000
in the aggregate during the balance of the Company's current fiscal year.
Section 2.25. INVENTORIES. Except as set forth in Section 2.25 of
the Disclosure Statement: (a) all inventories, net of reserves determined in
accordance with GAAP, of each of the Company and the Company Subsidiaries which
are classified as such on the Current Balance Sheet are, to the knowledge of the
Company, merchantable and salable or usable in the ordinary course of business
of the Acquired Business; and (b) the Acquired Business does not depend on any
single vendor for its inventories the loss of which could have a Material
Adverse Effect.
Section 2.26. INSURANCE. Except as set forth in Section 2.26 of the
Disclosure Statement: (a) the Company has provided INVATEC with: (i) a list as
of the Current Balance Sheet Date of all insurance policies then carried by each
of the Company and the Company Subsidiaries; (ii) a list of all insurance loss
runs and worker's compensation claims received for the most recently ended three
policy years; and (iii) true, complete and correct copies of all insurance
policies carried by each of the Company and the Company Subsidiaries which are
in effect, all of which (A) have been issued by insurers of recognized
responsibility and (B) currently are, and will remain without interruption
through the IPO Closing Date, in full force and effect; (b) no insurance carried
by the Company or any Company Subsidiary has been canceled by the insurer during
the past five years, and neither the Company nor any Company Subsidiary has ever
been denied coverage; and (c) neither the Company nor any Company Subsidiary or
Stockholder has received any notice or other communication from any issuer of
any such insurance policy of any material increase in any deductibles, retained
amounts or the premiums payable thereunder, and, to the knowledge of the
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Company and the Stockholders, no such increase in deductibles, retainages or
premiums is threatened.
Section 2.27. EMPLOYEE MATTERS. (a) CASH COMPENSATION. The Company
has provided INVATEC with a complete written list of the names, titles and rates
of annual Cash Compensation, at the Current Balance Sheet Date (and the portions
thereof attributable to salary or the equivalent, fixed bonuses, discretionary
bonuses and other Cash Compensation, respectively) of key employees (including
all employees who are officers or directors), nonemployee officers, nonemployee
directors and key consultants and independent contractors of each of the Company
and the Company Subsidiaries.
(b) EMPLOYMENT AGREEMENTS. Section 2.27 of the Disclosure Statement
lists all Employment Agreements remaining executory in whole or in part on the
date hereof, and the Company has provided INVATEC with true, complete and
correct copies of all those Employment Agreements. Neither the Company nor any
Company Subsidiary is a party to any oral Employment Agreement.
(c) OTHER COMPENSATION PLANS. Section 2.27 of the Disclosure
Statement lists all Other Compensation Plans either remaining executory at the
date hereof or to become effective after the date hereof. The Company has
provided INVATEC with, or made available to INVATEC, a true, correct and
complete copy of each of those Other Compensation Plans that is in writing and
an accurate written description of each of those Other Compensation Plans that
is not written. Except as set forth in Section 2.27 of the Disclosure Statement,
each of the Other Compensation Plans, including each that is a Welfare Plan, may
be unilaterally amended or terminated by the Company or any Company Subsidiary
without liability to any of them, except as to benefits accrued thereunder prior
to that amendment or termination.
(d) ERISA BENEFIT PLANS. Section 2.27 of the Disclosure Statement
(i) lists each ERISA Pension Benefit Plan (A)(1) the funding requirements of
which (under Section 301 of ERISA or Section 412 of the Code) are, or at any
time during the six-year period ending on the date hereof were, in whole or in
part, the responsibility of the Company or any Company Subsidiary or (2)
respecting which the Company or any Company Subsidiary is, or at any time during
that period was, a "contributing sponsor" or an "employer" as defined in
Sections 4001(a)(13) and 3(5), respectively, of ERISA (each plan described in
this clause (A) being a "Company ERISA Pension Plan"), (B) each other ERISA
Pension Benefit Plan respecting which an ERISA Affiliate is, or at any time
during that period was, such a "contributing sponsor" or "employer" (each plan
described in this clause (B) being an "ERISA Affiliate Pension Plan") and (C)
each other ERISA Employee Benefit Plan that is being, or at any time during that
period was, sponsored, maintained or contributed to by the Company or any
Company Subsidiary (each plan described in this clause (C) and each Company
ERISA Pension Plan being a "Company ERISA Benefit Plan"), (ii) states the
termination date of each Company ERISA Benefit Plan and ERISA Affiliate Pension
Plan that has been terminated and (iii) identifies for each ERISA Affiliate
Pension Plan the relevant ERISA Affiliates. The Company has provided INVATEC
with (i) true, complete and correct copies of (A) each Company ERISA Benefit
Plan and ERISA Affiliate Pension Plan, (B) each trust agreement related thereto
and (C) all amendments to those plans and trust agreements. Except as set forth
in Section 2.27 of the Disclosure Statement, (i) neither the Company nor any
Company Subsidiary is, or at any time during the six-year period ended on the
date hereof was, a member of any ERISA Group that currently includes, or
included when the Company or a Company Subsidiary was a member, among its
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members any Person other than the Company and the Company Subsidiaries and (ii)
no Person is an ERISA Affiliate of the Company or any Company Subsidiary (other
than the Company or any Company Subsidiary in the case of any other Company
Subsidiary or any Company Subsidiary in the case of the Company, if the Company
and the Company Subsidiaries comprise an ERISA Group).
(e) EMPLOYEE POLICIES AND PROCEDURES. Section 2.27 of the Disclosure
Statement lists all Employee Policies and Procedures. The Company has provided
INVATEC with a copy of all written Employee Policies and Procedures and a
written description of all unwritten Employee Policies and Procedures that in
the aggregate are Material to the Company.
(f) UNWRITTEN AMENDMENTS. Except as described in Section 2.27 of the
Disclosure Statement, no unwritten amendments have been made, whether by oral
communication, pattern of conduct or otherwise, with respect to any of the
Employment Agreements, Other Compensation Plans or Employee Policies and
Procedures which in the aggregate are Material to the Company.
(g) LABOR COMPLIANCE. (a)(i) each of the Company and the Company
Subsidiaries has been and is in compliance with all applicable Governmental
Requirements respecting employment and employment practices, terms and
conditions of employment and wages and hours, and (ii) neither the Company nor
any Company Subsidiary is liable for any arrears of wages or penalties for
failure to comply with any of the foregoing, and (b) neither the Company nor any
Company Subsidiary has engaged in any unfair labor practice or discriminated on
the basis of race, color, religion, sex, national origin, age, disability or
handicap in its employment conditions or practices. Except as set forth in
Section 2.27 of the Disclosure Statement, there are no (i) unfair labor practice
charges or complaints or racial, color, religious, sex, national origin, age,
disability or handicap discrimination charges or complaints pending or, to the
knowledge of the Company, threatened against the Company or any of the Company
Subsidiaries before any Governmental Authority (nor, to the knowledge of the
Company, does any valid basis therefor exist) or (ii) existing or, to the
knowledge of the Company, threatened labor strikes, disputes, grievances,
controversies or other labor troubles affecting the Company or any of the
Company Subsidiaries (nor, to the knowledge of the Company, does any valid basis
therefor exist).
(h) UNIONS. Neither the Company nor any Company Subsidiary or ERISA
Affiliate has ever been a party to any agreement with any union, labor
organization or collective bargaining unit. No employees of the Company and the
Company Subsidiaries are represented by any union, labor organization or
collective bargaining unit. Except as set forth in Section 2.27 of the
Disclosure Statement, to the knowledge of the Company, none of the employees of
the Company and the Company Subsidiaries has threatened to organize or join a
union, labor organization or collective bargaining unit.
(i) NO ALIENS. To the knowledge of the Company, all employees of
each of the Company and the Company Subsidiaries are citizens of, or are
authorized in accordance with federal immigration laws to be employed in, the
United States.
(j) CHANGE OF CONTROL BENEFITS. Except as set forth in Section 2.27
of the Disclosure Statement, neither the Company nor any of the Company
Subsidiaries is a party to any agreement, or has established any policy,
practice or program, requiring it to make a payment or
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provide any other form of compensation or benefit or vesting rights to any
person performing services for the Company or any of the Company Subsidiaries
which would not be payable or provided in the absence of this Agreement or the
consummation of the transactions contemplated by this Agreement, including any
parachute payment under Section 280G of the Code.
(k) RETIREES. Except as described in Section 2.27 of the Disclosure
Statement, neither the Company nor any of the Company Subsidiaries has any
obligation or commitment to provide medical, dental or life insurance benefits
to or on behalf of any of its employees who may retire or any of its former
employees who have retired except as may be required pursuant to the
continuation of coverage provisions of Section 4980B of the Code and the
applicable parallel provisions of ERISA.
Section 2.28. COMPLIANCE WITH ERISA, ETC. (a) COMPLIANCE. Each of
the Company ERISA Benefit Plans and Other Compensation Plans (each, a "Plan")
(i) is in substantial compliance with all applicable provisions of ERISA, as
well as with all other applicable Governmental Requirements, and (ii) has been
administered, operated and managed in accordance with its governing documents.
(b) QUALIFICATION. All Plans that are intended to qualify under
Section 401(a) of the Code (the "Qualified Plans") are so qualified and have
been determined by the IRS to be so qualified (or application for determination
letters have been timely submitted to the IRS). The Company has provided INVATEC
with true, complete and correct copies of the current plan determination
letters, most recent actuarial valuation reports, if any, most recent Form 5500,
or, as applicable, Form 5500-C/R, filed with respect to each such Qualified Plan
and most recent trustee or custodian report. To the extent that any Qualified
Plans have not been amended to comply with applicable Governmental Requirements,
the remedial amendment period permitting retroactive amendment of these
Qualified Plans has not expired and will not expire within 120 days after the
Effective Time. All reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including annual reports, summary annual reports, actuarial reports, PBGC-1
Forms, audits or Returns) have been timely filed or distributed.
(c) NO PROHIBITED TRANSACTIONS, ETC. None of the Stockholders, any
Plan or the Company or any Company Subsidiary has engaged in any Prohibited
Transaction. No Plan has incurred an accumulated funding deficiency, as defined
in Section 412(a) of the Code and Section 302(a) of ERISA, and no circumstances
exist pursuant to which the Company or any Company Subsidiary could have any
direct or indirect liability whatsoever (including being subject to any
statutory Lien to secure payment of any such liability), to the PBGC under Title
IV of ERISA or to the IRS for any excise tax or penalty with respect to any Plan
now or hereafter maintained or contributed to by the Company or any of its ERISA
Affiliates. Further:
(i) there have been no terminations, partial terminations or
discontinuances of contributions to any Qualified Plan without a
determination by the IRS that such action does not adversely affect the
tax-qualified status of that plan;
(ii) no Termination Event has occurred;
(iii) no Reportable Event has occurred with respect to any Plan
which was not properly reported;
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(iv) the valuation of assets of any Qualified Plan, as of the
Effective Time, shall equal or exceed the actuarial present value of all
"benefit liabilities" (within the meaning of Section 4001(a)(16) of ERISA)
under that plan in accordance with the assumptions contained in the
regulations of the PBGC governing the funding of terminated defined
benefit plans;
(v) with respect to Plans qualifying as "group health plans" under
Section 4980B of the Code or Section 607(l) or 609 of ERISA and related
regulations (relating to the benefit continuation rights imposed by
"COBRA" or qualified medical child support orders), the Company and each
Company Subsidiary and the Stockholders have complied (and at the
Effective Time will have complied) in all material respects with all
reporting, disclosure, notice, election and other benefit continuation and
coverage requirements imposed thereunder as and when applicable to those
plans, and neither the Company nor any Company Subsidiary has incurred (or
will incur) any direct or indirect liability or is (or will be) subject to
any loss, assessment, excise tax penalty, loss of federal income tax
deduction or other sanction, arising on account of or in respect of any
direct or indirect failure by the Company, any Company Subsidiary or any
Stockholder, at any time prior to the Effective Time, to comply with any
such federal or state benefit continuation or coverage requirement, which
is capable of being assessed or asserted before or after the Effective
Time directly or indirectly against the Company, any Company Subsidiary,
any Stockholder, INVATEC or any Subsidiary of INVATEC with respect to any
of those group health plans;
(vi) the Financial Statements as of the Current Balance Sheet Date
reflect the approximate total pension, medical and other benefit liability
for all Plans, and no material funding changes or irregularities are
reflected thereon which would cause those Financial Statements to be not
representative of prior periods; and
(vii) neither the Company nor any Company Subsidiary has incurred
liability under Section 4062 of ERISA.
(d) MULTIEMPLOYER PLANS. Except as set forth in Section 2.28 of the
Disclosure Statement, neither the Company nor any Company Subsidiary, and no
ERISA Affiliate of any of them, is, or at any time during the six-year period
ended on the date hereof was, obligated to contribute to a Multiemployer Plan.
Neither the Company nor any Company Subsidiary, and no ERISA Affiliate of any of
them, has made a complete or partial withdrawal from a Multiemployer Plan so as
to incur withdrawal liability as defined in Section 4201 of ERISA. Section 2.28
of the Disclosure Statement lists for each Multiemployer Plan the Company's best
estimate of the amount of withdrawal liability that would be incurred if the
Company and each of the its ERISA Affiliates were to make a complete withdrawal
from such Multiemployer Plan as of the Effective Time. Except as set forth in
that Section, the aggregate amount of such withdrawal liability if the Company
and each of its ERISA Affiliates were to make a complete withdrawal from each
such Multiemployer Plan would not exceed $25,000.
(e) CLAIMS AND LITIGATION. Except as set forth in Section 2.28 of
the Disclosure Statement, no Litigation or claims (other than routine claims for
benefits) are pending or, to the knowledge of the Company, threatened against,
or with respect to, any of the Plans or with respect to any fiduciary,
administrator or sponsor thereof (in their capacities as such), or any
party-in-interest thereof.
-15-
(f) EXCISE TAXES, DAMAGES AND PENALTIES. No act, omission or
transaction has occurred which would result in the imposition on the Company or
any Company Subsidiary of (i) breach of fiduciary duty liability damages under
Section 409 of ERISA, (ii) a civil penalty assessed pursuant to subsection (c),
(i) or (l) of Section 502 of ERISA or (iii) any excise tax under applicable
provisions of the Code with respect to any Plan.
(g) VEBA WELFARE TRUST. Any trust funding a Plan, which is intended
to be exempt from federal income taxation pursuant to Section 501(c)(9) of the
Code, satisfies the requirements of that section and has received a favorable
determination letter from the IRS regarding that exempt status and has not,
since receipt of the most recent favorable determination letter, been amended or
operated in a way that would adversely affect that exempt status.
Section 2.29. TAXES. (a) Each of the following representations and
warranties in this Section 2.29 is qualified to the extent set forth in Section
2.29 of the Disclosure Statement.
(b) All Returns required to be filed with respect to any Tax for
which any of the Company and the Company Subsidiaries is liable have been duly
and timely filed with the appropriate Taxing Authority, each such Return is
true, correct and complete in all respects Material to the Company (and, in the
case of a Return filed by a Company Subsidiary, the Company Subsidiary), each
Tax shown to be payable on each such Return has been paid, each Tax payable by
the Company or a Company Subsidiary by assessment has been timely paid in the
amount assessed and adequate reserves have been established on the consolidated
books of the Company and the Company Subsidiaries for all Taxes for which any of
the Company and the Company Subsidiaries is liable, but the payment of which is
not yet due. Neither the Company nor any Company Subsidiary is, or ever has
been, liable for any Tax payable by reason of the income or property of a Person
other than the Company or a Company Subsidiary. Each of the Company and the
Company Subsidiaries has timely filed true, correct and complete declarations of
estimated Tax in each jurisdiction in which any such declaration is required to
be filed by it. No Liens for Taxes exist upon the assets of the Company or any
Company Subsidiary except Liens for Taxes which are not yet due. Neither the
Company nor any Company Subsidiary is, or ever has been, subject to Tax in any
jurisdiction outside of the United States. No Litigation with respect to any Tax
for which the Company or any Company Subsidiary is asserted to be liable is
pending or, to the knowledge of the Company or any Stockholder, threatened and
no basis which the Company or any Stockholder believes to be valid exists on
which any claim for any such Tax can be asserted against the Company or any
Company Subsidiary. There are no requests for rulings or determinations in
respect of any Taxes pending between the Company or any Company Subsidiary and
any Taxing Authority. No extension of any period during which any Tax may be
assessed or collected and for which the Company or any Company Subsidiary is or
may be liable has been granted to any Taxing Authority. Neither the Company nor
any Company Subsidiary is or has been a party to any tax allocation or sharing
agreement. All amounts required to be withheld by any of the Company and the
Company Subsidiaries and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper Taxing Authority. The Company and
each Company Subsidiary have made all deposits required by law to be made with
respect to employees' withholding and other employment taxes.
(c) Neither the Company or any Company Subsidiary nor any
Stockholder is a "foreign person," as that term is referred to in Section
1445(f)(3) of the Code.
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(d) The Company has not filed a consent pursuant to Section 341(f)
of the Code or any comparable provision of any other tax statute and has not
agreed to have Section 341(f)(2) of the Code or any comparable provision of any
other tax statute apply to any disposition of an asset. The Company has not
made, is not obligated to make and is not a party to any agreement that could
require it to make any payment that is not deductible under Section 280G of the
Code. No asset of the Company or of any Company Subsidiary is subject to any
provision of applicable law which eliminates or reduces the allowance for
depreciation or amortization in respect of that asset below the allowance
generally available to an asset of its type. No accounting method changes of the
Company or of any Company Subsidiary exist or are proposed or threatened which
could give rise to an adjustment under Section 481 of the Code. If the Company
or any predecessor corporation at any time has filed an election to be an S
corporation, within the meaning of Section 1361(a)(1) of the Code or any
predecessor provision or comparable provisions of state laws, the Company and
any predecessor corporation have at all times met all requirements for such
election, and such election has at all times been and is presently valid and in
full force and effect.
Section 2.30. GOVERNMENT CONTRACTS. Except as set forth in Section
2.30 of the Disclosure Statement, neither the Company nor any Company Subsidiary
is a party to any governmental contract subject to price redetermination or
renegotiation.
Section 2.31. ABSENCE OF CHANGES. Since the Current Balance Sheet
Date, except as set forth in Section 2.31 of the Disclosure Statement, none of
the following has occurred with respect to the Company or any Company
Subsidiary:
(a) any circumstance, condition, event or state of facts (either
singly or in the aggregate), other than conditions generally affecting
Valve Repair and Distribution Services Business, which has caused, is
causing or will cause a Material Adverse Effect;
(b) any change in its authorized Capital Stock or in any of its
outstanding Capital Stock or Derivative Securities;
(c) any Restricted Payment, except any declaration or payment of
dividends by any Company Subsidiary solely to the Company;
(d) any increase in, or any commitment or promise to increase, the
rates of Cash Compensation as of the date hereof, or the amounts or other
benefits paid or payable under any Company ERISA Pension Benefit Plan or
Other Compensation Plan, except for ordinary and customary bonuses and
salary increases for employees (other than the Stockholders or their
Immediate Family Members) at the times and in the amounts consistent with
its past practice;
(e) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, that will have a Material
Adverse Effect on the Surviving Corporation following the Effective Time;
(f) any distribution, sale or transfer of, or any Company Commitment
to distribute, sell or transfer, any of its assets or properties of any
kind which singly is or in the aggregate are Material to the Acquired
Business, other than distributions, sales or transfers
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in the ordinary course of its business and consistent with its past
practices to Persons other than the Stockholders and their Immediate
Family Members and Affiliates;
(g) any cancellation, or agreement to cancel, any Indebtedness,
obligation or other liability owing to it, including any Indebtedness,
obligation or other liability of any Stockholder or any Related Person or
Affiliate thereof, provided that it may negotiate and adjust bills in the
course of good faith disputes with customers in a manner consistent with
past practice, if all those adjustments are included in the Supplemental
Information provided INVATEC pursuant to Section 4.07;
(h) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets, property
or rights or requiring consent of any Person to the transfer and
assignment of any such assets, property or rights;
(i) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of its business consistent with its past practices;
(j) any waiver of any of its rights or claims that singly is or in
the aggregate are Material to the Acquired Business;
(k) any transaction by it outside the ordinary course of its
business or not consistent with its past practices;
(l) any incurrence by it of any Indebtedness or any Guaranty not
constituting its Indebtedness, or any Company Commitment to incur any
Indebtedness or any such Guaranty;
(m) any investment in the Capital Stock, Derivative Securities or
Indebtedness of any Person other than a Permitted Investment;
(n) except in accordance with the Company's consolidated capital
expenditure budget for the Company's current fiscal year, any capital
expenditure or series of related capital expenditures by the Company and
the Company Subsidiaries collectively in excess of $25,000, or commitments
by the Company and the Company Subsidiaries to make capital expenditures
totaling in excess of $25,000; or
(o) any cancellation or termination of a Material Agreement of the
Acquired Business.
Section 2.32. BANK RELATIONS; POWERS OF ATTORNEY. The Company has
provided INVATEC with an accurate, complete written statement setting
forth:
(a) the name of each financial institution in which the Company or
any Company Subsidiary has borrowing or investment arrangements, deposit
or checking accounts or safe deposit boxes;
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(b) the types of those arrangements and accounts, including, as
applicable, names in which accounts or boxes are held, the account or box
numbers and the name of each Person authorized to draw thereon or have
access thereto; and
(c) the name of each Person holding a general or special power of
attorney from the Company or any Company Subsidiary and a description of
the terms of each such power.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVATEC AND NEWCO
INVATEC and Newco jointly and severally represent and warrant to the
Company and each Stockholder that all the following representations and
warranties in this Article III are as of the date of this Agreement, and will be
on the Closing Date and immediately prior to the Effective Time, true and
correct:
Section 3.01. ORGANIZATION; POWER. Each of INVATEC and Newco is a
corporation duly organized, validly existing and in good standing under the laws
of its Organization State, and each of INVATEC and Newco has all requisite
corporate power and authority under the laws of its Organization State and its
Charter Documents to own or lease and to operate its properties presently and
following the Effective Time and to carry on its business as now conducted and
as proposed to be conducted following the Effective Time.
Section 3.02. AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS;
REQUIRED CONSENTS. (a) The execution, delivery and performance by each of
INVATEC and Newco of this Agreement and each other Transaction Document to which
it is a party, and the effectuation of the Acquisition and the other
transactions contemplated hereby and thereby, are within its corporate power
under its Charter Documents and the applicable Governmental Requirements of its
Organization State and have been duly authorized by all proceedings, including
actions permitted to be taken in lieu of proceedings, required under its Charter
Documents and the applicable Governmental Requirements of its Organization
State.
(b) This Agreement has been, and each of the other Transaction
Documents to which either of INVATEC or Newco is a party, when executed and
delivered to the other parties thereto (or, in the case of the Certificates of
Merger, if any, the applicable Governmental Authorities), will have been, duly
executed and delivered by it and is, or when so executed and delivered will be,
its legal, valid and binding obligation, enforceable against it in accordance
with its terms, except as that enforceability may be (i) limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and (ii) subject to
general principles of equity (regardless of whether that enforceability is
considered in a proceeding in equity or at law).
(c) The execution, delivery and performance in accordance with their
respective terms by each of INVATEC and Newco of the Transaction Documents to
which it is a party have not and will not (i) violate, breach or constitute a
default under (A) the Charter Documents of INVATEC or Newco, (B) any
Governmental Requirement applicable to INVATEC or Newco or (C) any Material
Agreement of INVATEC or Newco, (ii) result in the acceleration or mandatory
prepayment of any Indebtedness, or any Guaranty not constituting Indebtedness,
of INVATEC or
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Newco or afford any holder of any of that Indebtedness, or any beneficiary of
any of those Guaranties, the right to require INVATEC or Newco to redeem,
purchase or otherwise acquire, reacquire or repay any of that Indebtedness, or
to perform any of those Guaranties, (iii) cause or result in the imposition of,
or afford any Person the right to obtain, any Lien upon any property or assets
of INVATEC or Newco (or upon any revenues, income or profits of either INVATEC
or Newco therefrom), other than negative pledge covenants of INVATEC respecting
its assets, or (iv) result in the revocation, cancellation, suspension or
material modification, in any single case or in the aggregate, of any
Governmental Approval possessed by INVATEC or Newco at the date hereof and
necessary for the ownership or lease and the operation of its properties or the
carrying on of its business as now conducted, including any necessary
Governmental Approval under each applicable Environmental Law.
(d) Except for (i) the filing of the Certificates of Merger, if any,
with the applicable Governmental Authorities, (ii) filings of the Registration
Statement under the Securities Act and the SEC order declaring the Registration
Statement effective under the Securities Act and (iii) as may be required by the
HSR Act or the applicable state securities or blue sky laws, no Governmental
Approvals are required to be obtained, and no reports or notices to or filings
with any Governmental Authority are required to be made, by INVATEC or Newco for
the execution, delivery or performance by INVATEC or Newco of the Transaction
Documents to which it is a party, the enforcement against INVATEC or Newco, as
the case may be, of its obligations thereunder or the effectuation of the
Acquisition and the other transactions contemplated thereby.
Section 3.03. CHARTER DOCUMENTS. INVATEC has delivered to the
Company true, complete and correct copies of the Charter Documents of each of
INVATEC and Newco. No breach or violation of any Charter Document of either
INVATEC or Newco has occurred and is continuing.
Section 3.04. CAPITAL STOCK OF INVATEC AND NEWCO. (a) Immediately
prior to the Effective Time, (i) the authorized Capital Stock of INVATEC will be
comprised of (A) 30,000,000 shares of INVATEC Common Stock, $.001 par value per
share, and (B) 5,000,000 shares of preferred stock, $.001 par value per share,
(ii) before giving effect to the Acquisition and the merger or other acquisition
transactions contemplated by the Other Agreements, (A) the number of shares of
INVATEC Common Stock then issued and outstanding will be as set forth in the
Registration Statement when it becomes effective under the Securities Act, (B)
no shares of the INVATEC preferred stock then will be issued or outstanding and
(C) INVATEC will have reserved for issuance pursuant to compensation plans or
the exercise of Derivative Securities the number of shares of INVATEC Common
Stock set forth in the Registration Statement when it becomes effective under
the Securities Act.
(b) The authorized Capital Stock of Newco is comprised of 1,000
shares of Newco Common Stock, all of which shares are issued, outstanding and
owned, of record and beneficially, by INVATEC.
(c) All shares of INVATEC Common Stock and Newco Common Stock
outstanding immediately prior to the Effective Time, and all shares of INVATEC
Common Stock to be issued pursuant to Paragraph 2, when issued, (i) will have
been duly authorized and validly issued in accordance with the DGCL and their
issuer's Charter Documents and (ii) will be fully paid and nonassessable. None
of the shares of INVATEC Common Stock to be issued pursuant to Paragraph 2 will,
when issued, have been issued in breach or violation of (i) any applicable
statutory
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or contractual preemptive rights, or any other rights of any kind (including any
rights of first offer or refusal), of any Person or (ii) the terms of any of its
Derivative Securities then outstanding.
Section 3.05. SUBSIDIARIES. Immediately prior to the IPO Closing
Date, (a) INVATEC will have no Subsidiaries other than those listed in Exhibit
21 to the Registration Statement, (b) Newco will have no Subsidiaries and (c)
neither INVATEC nor Newco will own, of record or beneficially, directly or
indirectly through any Person or otherwise (except pursuant hereto or to the
Other Agreements), any Capital Stock or Derivative Securities of any Entity not
described in this Section 3.05 as a Subsidiary of INVATEC (in the case of
INVATEC) or any Entity (in the case of Newco).
Section 3.06. COMPLIANCE WITH LAWS; NO LITIGATION. Each of INVATEC
and Newco is in compliance with all Governmental Requirements applicable to it
(except to the extent that such any noncompliance would not be reasonably
anticipated to result in a Material Adverse Event), and no Litigation is pending
or, to the knowledge of INVATEC, threatened to which INVATEC or Newco is or may
become a party which (a) questions or involves the validity or enforceability of
any obligation of INVATEC or Newco under any Transaction Document, (b) seeks (or
reasonably may be expected to seek) (i) to prevent or delay consummation by
INVATEC or Newco of the transactions contemplated by this Agreement to be
consummated by INVATEC or Newco, as the case may be, or (ii) damages from
INVATEC or Newco in connection with any such consummation.
Section 3.07. NO BROKERS. Except as set forth on Schedule 3.07,
INVATEC has not, directly or indirectly, in connection with this Agreement or
the transactions contemplated hereby (a) employed any broker, finder or agent or
(b) agreed to pay or incurred any obligation to pay any broker's or finder's
fee, any sales commission or any similar form of compensation.
ARTICLE IV
COVENANTS EXTENDING TO THE EFFECTIVE TIME
Section 4.01. ACCESS AND COOPERATION; DUE DILIGENCE. (a) From the
date hereof and until the Effective Time, the Company will (i) afford to the
Representatives of INVATEC and each Other Acquired Business reasonable access to
all the key employees, sites, properties, books and records of each of the
Company and the Company Subsidiaries, (ii) provide INVATEC with such additional
financial and operating data and other information relating to the business and
properties of each of the Company and the Company Subsidiaries as INVATEC or any
Other Acquired Business may from time to time reasonably request and (iii)
cooperate with INVATEC and each Other Acquired Business and their respective
Representatives in the preparation of any documents or other material that may
be required in connection with any Transaction Documents or any Other
Transaction Documents. Each Stockholder and the Company will treat all
Confidential Information obtained by them in connection with the negotiation and
performance of this Agreement or the due diligence investigations conducted with
respect to each Other Acquired Business as confidential in accordance with the
provisions of Section 10.01. In addition, INVATEC will cause each Other Acquired
Business to enter into a provision similar to this Section 4.01 in order to
require each Other Acquired Business to keep confidential any Confidential
Information respecting any of the Company and the Company Subsidiaries obtained
by that Other Acquired Business.
-21-
(b) Each of the Company and the Stockholders will use its best
efforts to secure, as soon as practicable after the date hereof, all approvals
or consents of third Persons as may be necessary to consummate the transactions
contemplated hereby.
(c) From the date hereof and until the Effective Time, INVATEC and
Newco will (i) afford to the Representatives of the Company and the Stockholders
access to all sites, properties, books and records of INVATEC and Newco, (ii)
provide the Company with such additional financial and operating data and other
information relating to the business and properties of INVATEC and Newco as the
Company or any Stockholder may from time to time reasonably request and (iii)
cooperate with the Company and the Stockholders and their respective
Representatives in the preparation of any documents or other material which may
be required in connection with any Transaction Documents.
(d) If this Agreement is terminated pursuant to Section 11.01,
INVATEC promptly will return all written Confidential Information of the Company
it then possesses to the Company.
Section 4.02. CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME. From
the date hereof and until the Effective Time, the Company will, and will cause
each Company Subsidiary to, except as and only to the extent set forth in
Section 4.02 of the Disclosure Statement:
(a) carry on its businesses in substantially the same manner as it
has heretofore and not introduce any new methods of management, operation
or accounting that in the aggregate are Material to the Company;
(b) maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(c) perform all its obligations under agreements relating to or
affecting its assets, properties and other rights;
(d) keep in full force and effect without interruption all its
present insurance policies or other comparable insurance coverage;
(e) use reasonable commercial efforts to (i) maintain and preserve
its business organization intact, (ii) retain its present employees and
(iii) maintain its relationships with suppliers, customers and others
having business relations with it;
(f) comply with all applicable Governmental Requirements; and
(g) except as required or expressly permitted by this Agreement,
maintain the instruments and agreements governing its outstanding
Indebtedness and leases on their present terms and not enter into new or
amended Indebtedness or lease instruments or agreements involving amounts
over $10,000 in any single case or $100,000 in the aggregate, without the
prior written consent of INVATEC (which consent will not be unreasonably
withheld).
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Section 4.03. PROHIBITED ACTIVITIES. From the date hereof and until
the Effective Time, without the prior written consent of INVATEC or unless as
required or expressly permitted by this Agreement, the Company will not, and
will not permit any Company Subsidiary to, except as and only to the extent set
forth in Section 4.03 of the Disclosure Statement:
(a) make any change in its Charter Documents;
(b) issue any of its Capital Stock or issue or otherwise create any
of its Derivative Securities;
(c) make any Restricted Payment;
(d) make any investments (other than Permitted Investments) in the
Capital Stock, Derivative Securities or Indebtedness of any Person;
(e) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures in a single transaction or
a series of related transactions involving an aggregate amount of more
than $25,000 otherwise than in the ordinary course of its business and
consistent with its past practice;
(f) increase or commit or promise to increase the Cash Compensation
payable or to become payable to any officer, director, stockholder,
employee or agent, consultant or independent contractor of any of the
Company and the Company Subsidiaries or make any discretionary bonus or
management fee payment to any such Person, except bonuses or salary
increases to employees (other than the Stockholders or their Immediate
Family Members) at the times and in the amounts consistent with its past
practice;
(g) create, assume or permit to be created or imposed any Liens
(other than Permitted Liens) upon any of its assets or properties, whether
now owned or hereafter acquired, except for purchase money Liens incurred
in connection with the acquisition of equipment with an aggregate cost not
in excess of $25,000 and necessary or desirable for the conduct of the
business of any of the Company and the Company Subsidiaries;
(h) (i) adopt, establish, amend or terminate any ERISA Employee
Benefit Plan, or any Other Compensation Plan or Employee Policies and
Procedures or (ii) take any discretionary action, or omit to take any
contractually required action, if that action or omission could either (A)
deplete the assets of any ERISA Employee Benefit Plan or any Other
Compensation Plan or (B) increase the liabilities or obligations under any
such plan;
(i) sell, assign, lease or otherwise transfer or dispose of any of
its owned or leased property or equipment otherwise than in the ordinary
course of its business and consistent with its past practice;
(j) negotiate for the acquisition of any business or the start-up of
any new business;
(k) merge, consolidate or effect a share exchange with, or agree to
merge, consolidate or effect a share exchange with, any other Entity;
-23-
(l) waive any of its rights or claims that in the aggregate are
Material to the Acquired Business, provided that it may negotiate and
adjust bills in the course of good faith disputes with customers in a
manner consistent with past practice, but such adjustments will not be
deemed to be included in Section 4.07 of the Disclosure Statement unless
specifically listed in the Supplemental Information;
(m) commit breaches that in the aggregate are Material to the
Company of or amend or terminate any Material Agreement of the Company or
any of its Governmental Approvals; or
(n) enter into any other transaction (i) outside the ordinary course
of its business, (ii) inconsistent with its past practice or (iii)
prohibited hereby.
Section 4.04. NO SHOP; RELEASE OF DIRECTORS. (a) Each of the Company
and the Stockholders agrees that, from the date hereof and until the first to
occur of the Effective Time or the termination of this Agreement in accordance
with Article XI, neither the Company nor any Stockholder, nor any of their
respective officers and directors shall, and the Company and each Stockholder
will direct and use their best efforts to cause each of their respective
Representatives not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer
(including any proposal or offer to the Stockholders) with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or any equity securities of, the
Company (any such proposal or offer being an "Acquisition Proposal") or engage
in any activities, discussions or negotiations concerning, or provide any
Confidential Information respecting, the Acquired Business, any Other Acquired
Business or INVATEC to, or have any discussions with, any Person relating to an
Acquisition Proposal or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal. The Company and each Stockholder will: (i)
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and each will take the steps necessary to inform the
Persons referred to in the first sentence of this Section 4.04(a) of the
obligations undertaken in this Section 4.04(a); and (ii) notify INVATEC
immediately if any such inquiries or proposals are received by, any such
information is requested from or any such discussions or negotiations are sought
to be initiated or continued with the Company or any Stockholder.
(b) Each of the Company and the Stockholders hereby (i) waives every
right, if any, the Governmental Requirements of the Company's Organization State
afford the Company or Stockholders to require the Company's directors (or their
equivalents if the Company is not a corporation), in the exercise of their
fiduciary duties in their capacity as such, to engage in any of the activities
prohibited by this Section 4.04 and (ii) releases each such person from any and
all liability he might otherwise have to the Company or any Stockholders but for
this release.
Section 4.05. NOTICE TO BARGAINING AGENTS. Prior to the IPO Closing
Date, the Company will (a) satisfy any requirement for notice of the
transactions contemplated by this Agreement under applicable collective
bargaining agreements and (b) provide INVATEC with proof that any required
notice has been sent.
Section 4.06. NOTIFICATION OF CERTAIN MATTERS. The Stockholders and
the Company shall give prompt notice to INVATEC of (a) the existence or
occurrence of each condition or state
-24-
of facts which will or reasonably could be expected to cause any representation
or warranty of the Company or any Stockholder contained herein to be untrue or
incorrect in any material respect at or prior to the Closing or on the IPO
Closing Date and (b) any material failure of any Stockholder or the Company to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by that Person hereunder. INVATEC shall give prompt notice to the
Company of (a) the existence or occurrence of each condition or state of facts
which will or reasonably could be expected to cause any representation or
warranty of INVATEC or Newco contained herein to be untrue or inaccurate at or
prior to the Closing or on the IPO Closing Date and (b) any material failure of
INVATEC or Newco to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder. The delivery of any notice
pursuant to this Section 4.06 shall not be deemed to (a) modify the
representations or warranties herein of the party delivering that notice, or any
other party, which modification may be made only pursuant to Section 4.07, (b)
modify the conditions set forth or referred to in Article V or (c) limit or
otherwise affect the remedies available hereunder to the party receiving that
notice.
Section 4.07. SUPPLEMENTAL INFORMATION. Each of the Company and the
Stockholders agrees that, with respect to the representations and warranties of
that party contained in this Agreement, that party will have the continuing
obligation (except to the extent otherwise provided in Section 4.07) until the
Effective Time to provide INVATEC promptly with such additional supplemental
Information (collectively, the "Supplemental Information"), in the form of (a)
amendments to then existing Schedules or Sections of the Disclosure Statement or
(b) additional Schedules or Sections of the Disclosure Statement, as would be
necessary, in the light of the circumstances, conditions, events and states of
facts then known to the Company or any Stockholder, to make each of those
representations and warranties true and correct as of the Closing and on the IPO
Closing Date. For purposes only of determining whether the conditions to the
obligations of INVATEC and Newco which are specified in Section 5.03 have been
satisfied, the Schedules and the Disclosure Statement as of the Closing and on
the IPO Closing Date shall be deemed to be the Schedules and the Disclosure
Statement as of the date hereof as amended or supplemented by the Supplemental
Information provided to INVATEC prior to the Effective Time pursuant to this
Section 4.07; provided, however, that if the Supplemental Information so
provided discloses the existence of circumstances, conditions, events or states
of facts which, in any combination thereof, (a) have had a Material Adverse
Effect that was not reflected in the determination of the Ceiling Amount or, in
the sole judgment of INVATEC (which shall be conclusive for purposes of this
Section 4.07 and Article IX, but not for any purpose of Sections 6.05 or 7.06),
(b) are having or will have a Material Adverse Effect, INVATEC will be entitled
to terminate this Agreement pursuant to Section 11.01(a)(iv); and provided,
further, that if INVATEC is entitled to terminate this Agreement pursuant to
Section 11.01(a)(iv), but elects not to do so, it will be entitled to treat as
INVATEC Indemnified Losses or INVATEC Unindemnified Losses (which treatment will
not prejudice the right of any Stockholder under Section 6.05 or Article VII, as
applicable, to contest Damage Claims made by INVATEC in respect of those INVATEC
Indemnified Losses or INVATEC Unindemnified Losses), as applicable, all Damages
to the Acquired Business which are attributable to the circumstances,
conditions, events and states of facts first disclosed herein after the date
hereof in the Supplemental Information. INVATEC will provide the Company with
copies of the Registration Statement, including all pre-effective amendments
thereto, promptly after the filing thereof with the SEC under the Securities
Act.
Section 4.08. COOPERATION IN CONNECTION WITH THE IPO. The Company
and the Stockholders will (a) provide INVATEC and the Underwriter with all the
Information concerning
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the Company or any of the Stockholders which is reasonably requested by INVATEC
and the Underwriter from time to time in connection with effecting the IPO and
(b) cooperate with INVATEC and the Underwriter and their respective
Representatives in the preparation and amendment of the Registration Statement
(including the Financial Statements) and in responding to the comments of the
SEC staff, if any, with respect thereto, to the extent that any of the foregoing
concern or reasonably relate to the Company or any Stockholder. The Company and
each Stockholder agree promptly to (a) advise INVATEC if, at any time during the
period in which a prospectus relating to the IPO is required to be delivered
under the Securities Act, any information contained in the then current
Registration Statement prospectus concerning the Company or the Stockholders
becomes incorrect or incomplete in any material respect and (b) provide INVATEC
with the information needed to correct or complete that information.
Section 4.09. ADDITIONAL FINANCIAL STATEMENTS. The Company will
furnish to INVATEC:
(a) as soon as available and in any event within 30 days after the
end of each of the Company's fiscal quarters which ends prior to the IPO Pricing
Date, an unaudited balance sheet of the Acquired Business as of the end of that
fiscal quarter and the related statements of income or operations, cash flows
and stockholders' or other owners' equity for that fiscal quarter and for the
period of the Company's fiscal year ended with that quarter, in each case (i)
setting forth in comparative form the figures for the corresponding portion of
the Company's previous fiscal year and (ii) prepared in accordance with GAAP
applied on basis consistent (A) throughout the periods indicated (excepting
footnotes) and (B) with the basis on which the Initial Financial Statements
including the Current Balance Sheet were prepared; and
(b) if requested by INVATEC in connection with any amendment of the
Registration Statement and promptly following any such request, such summary
operating or other financial information of the Acquired Business as of the end
of either the first or second fiscal month in any of the Company's fiscal
quarters as INVATEC may request.
Section 4.10. TERMINATION OF PLANS. If requested by INVATEC, the
Company will, or will cause the applicable Company Subsidiary to, if permitted
by all applicable Governmental Requirements to do so, terminate each Plan
identified in Section 2.27(c) or (d) of the Disclosure Statement as a "Plan To
Be Terminated" prior to the Effective Time.
Section 4.11. DISPOSITION OF UNWANTED ASSETS. At or prior to the
Closing, the Company will make all arrangements and take all such actions as are
necessary and satisfactory to INVATEC to dispose, prior to the Effective Time,
of those assets of it or of one or more of the Company or the Company
Subsidiaries which are listed in Section 4.11 of the Disclosure Statement.
Section 4.12. HSR ACT MATTERS. If INVATEC shall determine that
filings pursuant to and under the HSR Act are necessary or appropriate in
connection with the effectuation of the Acquisition or the consummation of the
acquisitions contemplated by the Other Agreements, and advises the Company in
writing of that determination, the Company promptly will compile and file (or
will cause its "ultimate parent entity" (as determined for purposes of the HSR
Act) to file) under the HSR Act such information respecting it as the HSR Act
requires of an Entity to be acquired, and the expiration or termination of the
applicable waiting period and any extension thereof under the HSR Act shall be
deemed a condition precedent set forth in Section 5.01(b).
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ARTICLE V
THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 5.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. (a) The
obligation of each party hereto to take the actions contemplated to be taken by
that party at the Closing is subject to the satisfaction on or before the
Closing Date of each of the following conditions or waiver pursuant to Section
10.04.
(i) NO LITIGATION. No Litigation shall be pending on the Closing
Date to restrain, prohibit or otherwise interfere with, or to obtain
material damages or other relief from INVATEC or any Subsidiary of INVATEC
in connection with, the consummation of the Acquisition or the IPO;
(ii) GOVERNMENTAL APPROVALS. All Governmental Approvals (other than
the acceptance for filing of the Certificates of Merger) required to be
obtained by any of the Company, INVATEC and any Subsidiary of INVATEC in
connection with the consummation of the Acquisition and the IPO shall have
been obtained; and
(iii) THE REGISTRATION STATEMENT. (A) The Registration Statement, as
amended to cover the offering, issuance and sale by INVATEC of such number
of shares of INVATEC Common Stock at the IPO Price (which need not be set
forth in the Registration Statement when it becomes effective under the
Securities Act) as shall yield aggregate cash proceeds to INVATEC from
that sale (net of the Underwriter's discount or commissions) in at least
the amount (the "Minimum Cash Amount") that is sufficient, when added to
the funds, if any, available from other sources (if any, and as set forth
in the Registration Statement when it becomes effective under the
Securities Act) (the "Other Financing Sources") to enable INVATEC to pay
or otherwise deliver on the IPO Closing Date (1) the total cash portion of
the Acquisition Consideration then to be delivered pursuant to Paragraph
2; (2) the total cash portion of the acquisition consideration then to be
delivered pursuant to the Other Agreements as a result of the consummation
of the acquisition transactions contemplated thereby and (3) the total
amount of Indebtedness of the Company and each Other Acquired Business and
INVATEC which the Registration Statement discloses at the time it becomes
effective under the Securities Act will be repaid with proceeds received
by INVATEC from the IPO and the Other Financing Sources, shall have been
declared effective under the Securities Act by the SEC; (B) no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC, and the SEC shall not have initiated or threatened to
initiate Litigation for that purpose; and (C) the Underwriter shall have
agreed in writing (the "Underwriting Agreement," which term includes the
related pricing agreement, if any) to purchase from INVATEC on a firm
commitment basis for resale to the public initially at the IPO Price,
subject to the conditions set forth in the Underwriting Agreement, such
number of shares of INVATEC Common Stock covered by the Registration
Statement as, when multiplied by the price per share of INVATEC Common
Stock to be paid by the Underwriter to INVATEC pursuant to the
Underwriting Agreement, shall equal at least the Minimum Cash Amount.
(b) The obligation of each party hereto with respect to the actions
to be taken on the IPO Closing Date is subject to the satisfaction on that date
of each of the following conditions:
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(i) NO LITIGATION. No Litigation shall be pending on the IPO Closing
Date to restrain, prohibit or otherwise interfere with, or to obtain
material damages or other relief from INVATEC or any Subsidiary of INVATEC
in connection with, the consummation of the Acquisition or the IPO;
(ii) GOVERNMENTAL APPROVALS. All Governmental Approvals required to
be obtained by the Company, INVATEC and Newco in connection with the
consummation of the Acquisition and the IPO shall have been obtained;
(iii) CLOSING OF THE IPO. INVATEC shall have issued and sold shares
of INVATEC Common Stock to the Underwriter in accordance with the
Underwriting Agreement for initial resale at the IPO Price and received
payment therefor in an amount at least equal to the amount by which (A)
the Minimum Cash Amount exceeds (B) the aggregate amount of funds actually
received on the IPO Closing Date, if any, from any one or more of the
Other Financing Sources.
Section 5.02. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE
STOCKHOLDERS. The obligations of the Company and each Stockholder with respect
to actions to be taken by them at or before the Closing Date and the actions to
be taken on the IPO Closing Date are subject to the satisfaction, or the written
waiver by the Company on behalf of itself and each Stockholder pursuant to
Section 10.04 on or before the Closing Date of (i) all the conditions set forth
in Section 5.01(a) and (ii) all the following conditions:
(A) REPRESENTATIONS AND WARRANTIES. All the representations and
warranties of INVATEC and Newco in Article III shall be true and correct
as of the Closing as though made at that time;
(B) DELIVERY OF DOCUMENTS. INVATEC shall have delivered to the
Company, with copies for each Stockholder:
(1) an INVATEC officer's certificate respecting the
representations and warranties of INVATEC and Newco in Article III
and compliance with the covenants of INVATEC and Newco in Article IV
and in the form thereof attached as an exhibit to the Closing
Memorandum;
(2) opinions dated the IPO Closing Date and addressed to the
Company and the Stockholders from Counsel for INVATEC and Newco
substantially in the forms thereof attached as exhibits to the
Closing Memorandum;
(3) a certificate of the secretary or any assistant secretary
of INVATEC in the form thereof (without attachments thereto)
attached as an exhibit to the Closing Memorandum and respecting, and
to which is attached: (a) the Charter Documents of each of INVATEC
and Newco (certified by the Secretary of State of or other
appropriate Governmental Authority of its Organization State in the
case of its articles or certificate of incorporation included
therein); (b) the resolutions of the boards of directors of INVATEC
and Newco respecting the Transaction Documents and the transactions
contemplated thereby; (c) a certificate respecting the incumbency
and true signatures of the INVATEC and Newco officers who execute
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the Transaction Documents on behalf of INVATEC and Newco,
respectively; (d) a specimen certificate evidencing shares of
INVATEC Common Stock; (e) the prospectus included in the
Registration Statement when it became effective; and (f) a facsimile
copy of the Underwriting Agreement as executed and delivered by
INVATEC and the Underwriter;
(4) the Registration Rights Agreement duly executed and
delivered by INVATEC; and
(5) for each of INVATEC and Newco, a certificate, dated as of
a Current Date, duly issued by the appropriate Governmental
Authorities in its Organization State showing it to be in existence
or good standing and authorized to do business in that State.
Section 5.03. CONDITIONS TO THE OBLIGATIONS OF INVATEC AND NEWCO.
(a) The obligations of INVATEC and Newco with respect to actions to be taken by
them at or before the Closing are subject to the satisfaction, or the waiver by
INVATEC pursuant to Section 10.04, on or before the Closing Date of (i) all the
conditions set forth in Section 5.01(a) and (ii) all the following conditions:
(A) REPRESENTATIONS AND WARRANTIES. All the representations and
warranties of the Stockholders and the Company in Articles I and II and in
the Special Provisions, if any, shall be true and correct as of the
Closing as though made at that time;
(B) DELIVERY OF DOCUMENTS. The Stockholders and the Company shall
have delivered to INVATEC:
(1) a Company officer's certificate, signed by a Responsible
Officer, respecting the representations and warranties of the
Stockholders and the Company in Articles I and II and in the Special
Provisions, if any, and compliance with the covenants of the
Stockholders and the Company in Article IV and in the form thereof
attached as an exhibit to the Closing Memorandum;
(2) opinions dated the IPO Closing Date and addressed to
INVATEC from Counsel for the Company and the Stockholders
substantially in the form thereof attached as exhibits to the
Closing Memorandum;
(3) a certificate of the secretary or any assistant secretary
of the Company in the form thereof (without attachments thereto)
attached as an exhibit to the Closing Memorandum and respecting, and
to which is attached: (a) the Charter Documents of the Company; (b)
the resolutions of the board of directors of the Company respecting
the Transaction Documents and the transactions contemplated thereby;
and (c) a certificate respecting the incumbency and true signatures
of the Responsible Officers who execute the Transaction Documents on
behalf of the Company;
(4) from each Stockholder, a certificate to the effect that no
withholding is required under Section 1445 of the Code and in the
form of thereof attached as an
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exhibit to the Closing Memorandum with the blanks appropriately
filled, duly executed and delivered by that Stockholder;
(5) From each officer and director of the Company and each
Company Subsidiary, if any, a notice of resignation in the form
thereof attached as an exhibit to the Closing Memorandum; and
(6) for each of the Company and the Company Subsidiaries, a
certificate, dated as of a Current Date, duly issued by the
appropriate Governmental Authorities in its Organization State and
in each other jurisdiction listed for it in Section 2.02 of the
Disclosure Statement, showing it to be in good standing and
authorized to do business in its Organization State and those other
jurisdictions and that all state franchise and/or income tax returns
and taxes due by it in its Organization State and those other
jurisdictions for all periods prior to the Closing have been filed
and paid.
(b) The obligations of INVATEC and Newco with respect to the actions
to be taken on the IPO Closing Date are subject to the satisfaction on that date
of (i) all the conditions set forth in Section 5.01(b), if any, and (ii) the
condition that all the representations and warranties of the Stockholders and
the Company in Articles I and II and the Special Provisions, if any, shall be
true and correct as of the IPO Closing Date as though made on that date.
ARTICLE VI
COVENANTS FOLLOWING THE EFFECTIVE TIME
Section 6.01. DISCLOSURE. If, subsequent to the IPO Pricing Date and
prior to the 25th day after the date of the Final Prospectus, any Stockholder
becomes aware of any fact or circumstance which would change (or, if after the
Effective Time, would have changed) a representation or warranty of the Company
or any Stockholder in this Agreement or would affect any document delivered
pursuant hereto in any material respect, that Stockholder will promptly give
notice of that fact or circumstance to INVATEC.
Section 6.02. PREPARATION AND FILING OF TAX RETURNS. Each party
hereto will, and will cause its Affiliates to, provide to each of the other
parties hereto such cooperation and information as any of them reasonably may
request in filing any Return, amended Return or claim for refund, determining a
liability for Taxes or a right to refund of Taxes or in conducting any audit or
other proceeding in respect of Taxes. This cooperation and information shall
include providing copies of all relevant portions of the relevant Returns,
together with such accompanying schedules and work papers, documents relating to
rulings or other determinations by Taxing Authorities and records concerning the
ownership and Tax bases of property as are relevant which a party possesses.
Each party will make its employees, if any, reasonably available on a mutually
convenient basis at its cost to provide an explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file Returns pursuant to this Agreement shall bear all costs attributable to
the preparation and filing of those Returns.
Section 6.03. DIRECTORS. INVATEC will cause such corporate
proceedings as on its part will be necessary to cause each of the persons, if
any, who are named in the Final Prospectus
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as persons who will become members of the board of directors of INVATEC
following the Effective Time to be appointed to that board when that prospectus
so provides.
Section 6.04. REMOVAL OF GUARANTIES. INVATEC will use its reasonable
efforts to ensure that, within 90 days after the Effective Time, either (a) the
Stockholder Guaranties, if any, listed in Section 6.04 of the Disclosure
Statement are terminated or (b) the Indebtedness to which those Guaranties
relate is retired; provided, however, that if INVATEC is unable to effect the
termination of any of those Guaranties or the retirement of any of that
Indebtedness, INVATEC will indemnify and hold harmless each Stockholder from and
against any liabilities, claims, demands, judgments, losses, costs, damages or
expenses whatsoever (including reasonable attorneys' fees) that such Stockholder
may sustain, suffer or incur and that result from or arise out of or relate to
that Guaranty or that Indebtedness, as the case may be.
Section 6.05. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. (a)
Notwithstanding any investigation at any time made by or on behalf of any party
hereto, the representations and warranties set forth in Articles I, II and III
and in any certificate delivered in connection herewith with respect to any of
those representations and warranties will survive the closing and the Effective
Time until the day that is two years from the Effective Time, whereupon they
will terminate and expire, except as follows: (i) the representations and
warranties of the Stockholders which relate expressly or by necessary
implication to Taxes, ERISA or the Governmental Requirements referred to in
clause (iii) of Section 7.02(a) will survive until the expiration of the
applicable statutes of limitations (including all periods of extension and
tolling); (ii) the representations and warranties of the Stockholders which
relate expressly or by necessary implication to the environment or Environmental
Laws will survive indefinitely; and (iii) the representations and warranties of
the Company will terminate and expire at the Effective Time.
(b) After a representation and warranty has expired, as provided in
Section 6.05(a), no Damage Claim constituting an INVATEC Indemnified Loss will
or may be made or prosecuted through Litigation or otherwise, by any Person who
would have been entitled to Damages on the basis of that representation and
warranty prior to its termination and expiration, provided that: (i) the amount
of that claim, if against any Stockholder, shall be taken into account in
determining whether the aggregate amount of all claims against that Stockholder
has exceeded that Stockholder's Pro Rata Share of the Threshold Amount for
purposes of Section 6.06; and (ii) in the case of each representation and
warranty that will terminate and expire as provided in this Section 6.05, no
Damage Claim presented in writing for Damages to the Person or Persons from
which or whom those damages are sought on the basis of that representation and
warranty prior to its termination and expiration will be affected in any way by
that termination and expiration.
Section 6.06. LIMITATIONS ON DAMAGE CLAIMS. (a) In the event INVATEC
should have any Damage Claim hereunder following the Effective Time against any
Stockholder which does not involve an INVATEC Indemnified Loss (each such Damage
Claim not involving an INVATEC Indemnified Loss being an "INVATEC Unindemnified
Loss"), that Stockholder will not be liable to INVATEC on account of that
INVATEC Unindemnified Loss unless the liability of that Stockholder in respect
of that INVATEC Unindemnified Loss, when aggregated with the liability of all
Stockholders in respect of the sum of (i) all INVATEC Unindemnified Losses and
(ii) all INVATEC Indemnified Losses under Section 7.02(a), exceeds, and only to
the extent the aggregate amount of all those INVATEC Unindemnified Losses and
INVATEC Indemnified Losses does exceed, the Threshold Amount. In no event shall
(i) the aggregate joint and several liability of the
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Stockholders under this Agreement, including Section 7.02(a), exceed the Ceiling
Amount or (ii) the aggregate liability of each Stockholder under this Agreement,
including Sections 7.02(a) and 7.02(b), exceed that Stockholder's Pro Rata Share
of the Ceiling Amount. For purposes of determining the amount of INVATEC
Unindemnified Losses and INVATEC Indemnified Losses, no effect will be given to
any resulting Tax benefit to INVATEC or any other INVATEC Indemnified Party.
(b) In the event any Stockholder should have any Damage Claim
hereunder following the Effective Time against INVATEC which does not involve a
Stockholder Indemnified Loss (each such Damage Claim not involving a Stockholder
Indemnified Loss being a "Stockholder Unindemnified Loss"), INVATEC will not be
liable to that Stockholder on account of that Stockholder Unindemnified Loss
unless the liability of INVATEC on account of that Stockholder Unindemnified
Loss, when aggregated with the liability of INVATEC in respect of the sum of (i)
all Stockholder Unindemnified Losses for which it has become liable and (ii) all
Stockholder Indemnified Losses for which it has become liable, exceeds, and only
to the extent the aggregate amount of all those Stockholder Unindemnified Losses
and Stockholder Indemnified Losses does exceed, the Threshold Amount. In no
event shall INVATEC be liable under this Agreement, including Section 7.03, for
any amount in excess of the Ceiling Amount. For purposes of determining the
amount of Stockholder Unindemnified Losses and Stockholder Indemnified Losses,
no effect will be given to any resulting Tax benefit to any Stockholder
Indemnified Party.
(c) Neither any INVATEC Unindemnified Loss nor any Stockholder
Unindemnified Loss shall include any consequential, exemplary, punitive or
treble damage (including any loss of earnings or profits), and INVATEC hereby
releases each Stockholder, and each Stockholder hereby releases INVATEC, in each
case to the fullest extent permitted by applicable law, from liability for any
such excluded Damage.
ARTICLE VII
INDEMNIFICATION
Section 7.01. IN RESPECT OF REPRESENTATIONS AND WARRANTIES. After a
representation and warranty has terminated and expired as provided in Section
6.05, no indemnification will or may be sought pursuant to this Article VII on
the basis of that representation and warranty by any Person who would have been
entitled pursuant to this Article VII to indemnification on the basis of that
representation and warranty prior to its termination and expiration, provided
that: (a) the amount of that claim, if against any Stockholder, shall be taken
into account in determining whether the aggregate amount of all claims against
that Stockholder has exceeded that Stockholder's Pro Rata Share of the Threshold
Amount for purposes of Section 7.06; and (b) in the case of each representation
and warranty that will terminate and expire as provided in Section 6.05, no
claim presented in writing for indemnification pursuant to this Article VII on
the basis of that representation and warranty prior to its termination and
expiration will be affected in any way by that termination and expiration.
Section 7.02. INDEMNIFICATION OF INVATEC INDEMNIFIED PARTIES. (a)
Subject to the applicable provisions of Sections 7.01 and 7.06, the Stockholders
covenant and agree that they, jointly and severally, will indemnify each INVATEC
Indemnified Party against, and hold each INVATEC Indemnified Party harmless from
and in respect of, all Third Party Claims that arise from,
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are based on or relate or otherwise are attributable to (i) any breach of the
representations and warranties of the Stockholders or the Company set forth
herein (other than in Article I) or in certificates delivered in connection
herewith (other than in respect of certificates relating only to the
representations and warranties in Article I), (ii) any nonfulfillment of any
joint and several covenant or agreement on the part of the Stockholders or the
Company under this Agreement or (iii) any liability under the Securities Act,
the Exchange Act or other applicable Governmental Requirement which arises out
of or is based on (A) any untrue statement or alleged untrue statement of a
material fact relating to the Company and the Company Subsidiaries, or any of
them, which is (1) provided to INVATEC or its counsel by the Company or the
Stockholders and (2) contained in any preliminary prospectus relating to the
IPO, the Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, and not corrected by the Stockholder or
the Company after the Company or such Stockholder has been given a reasonable
opportunity to review such preliminary prospectus or other documentation, or (B)
any omission or alleged omission to state therein a material fact relating to
the Company and the Company Subsidiaries, or any of them, required to be stated
therein or necessary to make the statements therein not misleading, and not
provided to INVATEC or its counsel by the Company or the Stockholders after the
Company or the Stockholders have been given a reasonable opportunity to review
such preliminary prospectus or other documentation or furnish such information
(each such Third Party Claim and each Third Party Claim described in Section
7.02(b) being an "INVATEC Indemnified Loss").
(b) Each Stockholder, severally and not jointly with any other
Person, covenants and agrees that he will indemnify each INVATEC Indemnified
Party against, and hold each INVATEC Indemnified Party harmless from and in
respect of, all Third Party Claims that arise from, are based on or relate or
otherwise are attributable to (i) any breach of the representations and
warranties of that Stockholder solely as to that Stockholder set forth in
Article I or in certificates delivered by that Stockholder and relating to those
representations and warranties, (ii) any nonfulfillment of any several, and not
joint and several, agreement on the part of that Stockholder under this
Agreement or (iii) any liability under the Securities Act, the Exchange Act or
other applicable Governmental Requirement which arises out of or is based on (A)
any untrue statement or alleged untrue statement of a material fact relating
solely to that Stockholder which is (1) provided to INVATEC or its counsel by
that Stockholder and (2) contained in any preliminary prospectus relating to the
IPO, the Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto and not corrected by the Stockholder or
the Company after the Company or such Stockholder has been given a reasonable
opportunity to review such preliminary prospectus or other documentation, or (B)
any omission or alleged omission to state therein a material fact relating
solely to that Stockholder required to be stated therein or necessary to make
the statements therein not misleading, and not provided to INVATEC or its
counsel by that Stockholder after the Company or such Stockholder has been given
a reasonable opportunity to review such preliminary prospectus or other
documentation or furnish such information.
Section 7.03. INDEMNIFICATION OF STOCKHOLDER INDEMNIFIED PARTIES.
Subject to the provisions of Sections 7.01 and 7.06, INVATEC covenants and
agrees that it will indemnify each Stockholder Indemnified Party against, and
hold each Stockholder Indemnified Party harmless from and in respect of, all
Third Party Claims that arise from, are based on or relate or otherwise are
attributable to (i) any breach by INVATEC or Newco of their representations and
warranties set forth herein or in their certificates delivered to the Company or
the Stockholders in connection herewith, (ii) any nonfulfillment of any covenant
or agreement on the part of INVATEC or Newco under this Agreement or (iii) any
liability under the Securities Act, the Exchange Act or other applicable
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Governmental Requirement which arises out of or is based on (A) any untrue
statement or alleged untrue statement of a material fact relating to INVATEC,
any Subsidiary of INVATEC or any of the Other Acquired Businesses contained in
any preliminary prospectus relating to the IPO, the Registration Statement or
any prospectus forming a part thereof, or any amendment thereof or supplement
thereto (other than matters with respect to which the Stockholders are required
to indemnify the INVATEC Indemnified Party under Section 7.02), or (B) any
omission or alleged omission to state therein a material fact relating to
INVATEC, any Subsidiary of INVATEC or any of the Other Acquired Businesses, or
any of them (other than matters with respect to which the Stockholders are
required to indemnify the INVATEC Indemnified Party under Section 7.02),
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made (each
such Third Party Claim being a "Stockholder Indemnified Loss").
Section 7.04. CONDITIONS OF INDEMNIFICATION. (a) All claims for
indemnification under this Agreement shall be asserted and resolved as follows
in this Section 7.04.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any Third Party Claim
asserted against the Indemnified Party which could give rise to a right of
indemnification under this Agreement and (ii) transmit to the Indemnifying Party
a written notice ("Claim Notice") describing in reasonable detail the nature of
the Third Party Claim, a copy of all papers served with respect to that claim
(if any), an estimate of the amount of damages attributable to the Third Party
Claim to the extent feasible (which estimate shall not be conclusive of the
final amount of that claim) and the basis for the Indemnified Party's request
for indemnification under this Agreement. Except as set forth in Section 7.01,
the failure to promptly deliver a Claim Notice shall not relieve the
Indemnifying Party of its obligations to the Indemnified Party with respect to
the related Third Party Claim except to the extent that the resulting delay is
materially prejudicial to the defense of that claim. Within 15 days after
receipt of any Claim Notice (the "Election Period"), the Indemnifying Party
shall notify the Indemnified Party (i) whether the Indemnifying Party disputes
its potential liability to the Indemnified Party under this Article VII with
respect to that Third Party Claim and (ii) if the Indemnifying Party does not
dispute its potential liability to the Indemnified Party with respect to that
Third Party Claim, whether the Indemnifying Party desires, at the sole cost and
expense of the Indemnifying Party, to defend the Indemnified Party against that
Third Party Claim.
(c) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, that Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 7.04(c) and the Indemnified
Party will furnish the Indemnifying Party with all information in its possession
with respect to that Third Party Claim and otherwise cooperate with the
Indemnifying Party in the defense of that Third Party Claim; provided, however,
that the Indemnifying Party shall not enter into any settlement with respect to
any Third Party Claim that purports to limit the activities of, or otherwise
restrict in any way, any Indemnified Party or any Affiliate of any Indemnified
Party without the prior consent of that Indemnified Party (which consent may be
withheld in the sole discretion of that Indemnified Party). The Indemnified
Party
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is hereby authorized, at the sole cost and expense of the Indemnifying Party, to
file, during the Election Period, any motion, answer or other pleadings that the
Indemnified Party shall deem necessary or appropriate to protect its interests
or those of the Indemnifying Party. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 7.04(c) and will bear its own
costs and expenses with respect to that participation; provided, however, that
if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party, and, on its written
notification of that employment, the Indemnifying Party shall not have the right
to assume or continue the defense of such action on behalf of the Indemnified
Party.
(d) If the Indemnifying Party (i) within the Election Period (A)
disputes its potential liability to the Indemnified Party under this Article
VII, (B) elects not to defend the Indemnified Party pursuant to Section 7.04(c)
or (C) fails to notify the Indemnified Party that the Indemnifying Party elects
to defend the Indemnified Party pursuant to Section 7.04(c) or (ii) elects to
defend the Indemnified Party pursuant to Section 7.04(c) but fails diligently
and promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings. Notwithstanding the foregoing, if the
Indemnifying Party has delivered a written notice to the Indemnified Party to
the effect that the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article VII and if such dispute is resolved in
favor of the Indemnifying Party, the Indemnifying Party shall not be required to
bear the costs and expenses of the Indemnified Party's defense pursuant to this
Section 7.04 or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all reasonable costs and expenses of such
litigation. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section 7.04(d), and the Indemnifying Party shall bear its own costs and
expenses with respect to such participation.
(e) Payments of all amounts owing by an Indemnifying Party pursuant
to this Article VII relating to a Third Party Claim shall be made within 30 days
after the latest of (i) the settlement of that Third Party Claim, (ii) the
expiration of the period for appeal of a final adjudication of that Third Party
Claim or (iii) the expiration of the period for appeal of a final adjudication
of the Indemnifying Party's liability to the Indemnified Party under this
Agreement in respect of that Third Party Claim.
Section 7.05. REMEDIES NOT EXCLUSIVE. The remedies provided in this
Agreement shall not be exclusive of any other rights or remedies available to
one party against any other party, either at law or in equity.
Section 7.06. LIMITATIONS ON INDEMNIFICATION. (a) Notwithstanding
the provisions of Section 7.02(a), no Stockholder shall be required to indemnify
or hold harmless any of the INVATEC Indemnified Parties on account of any
INVATEC Indemnified Loss under Section
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7.02(a) unless the liability of the Company and the Stockholders in respect of
that INVATEC Indemnified Loss, when aggregated with the liability of all
Stockholders in respect of the sum of (i) all INVATEC Unindemnified Losses and
(ii) all INVATEC Indemnified Losses under Section 7.02(a), exceeds, and only to
the extent the aggregate amount of all those INVATEC Unindemnified Losses and
INVATEC Indemnified Losses does exceed, the Threshold Amount. In no event shall
(i) the aggregate joint and several liability of the Stockholders under this
Agreement, including Section 7.02(a), exceed the Ceiling Amount or (ii) the
aggregate liability of each Stockholder under this Agreement, including Sections
7.02(a) and 7.02(b), exceed that Stockholder's Pro Rata Share of the Ceiling
Amount. For purposes of determining the amount of INVATEC Indemnified Losses, no
effect will be given to any resulting Tax benefit to any INVATEC Indemnified
Party.
(b) Notwithstanding the provisions of Section 7.03, INVATEC shall
not be required to indemnify or hold harmless any of the Stockholder Indemnified
Parties on account of any Stockholder Indemnified Loss unless the liability of
INVATEC in respect of that Stockholder Indemnified Loss, when aggregated with
the liability of INVATEC in respect of the sum of (i) all Stockholder
Unindemnified Losses and (ii) all Stockholder Indemnified Losses, exceeds, and
only to the extent the aggregate amount of all those Stockholder Unindemnified
Losses and Stockholder Indemnified Losses does exceed, the Threshold Amount. In
no event shall INVATEC be liable under this Agreement, including Section 7.03,
for any amount in excess of the Ceiling Amount. For purposes of determining the
amount of Stockholder Indemnified Losses, no effect will be given to any
resulting Tax benefit to any Stockholder Indemnified Party.
ARTICLE VIII
LIMITATIONS ON COMPETITION
Section 8.01. PROHIBITED ACTIVITIES. Each Stockholder agrees,
severally and not jointly with any other Person, that he will not, during the
period beginning on the date hereof and ending on the third anniversary of the
Closing Date, directly or indirectly, for any reason, for his own account or on
behalf of or together with any other Person:
(a) engage as an officer, director or in any other managerial
capacity or as an owner, co-owner or other investor of or in, whether as
an employee, independent contractor, consultant or advisor, or as a sales
representative or distributor of any kind, any business selling any
products or providing any services in competition with the Acquired
Business or INVATEC or any Subsidiary of INVATEC (INVATEC and its
Subsidiaries collectively being "INVATEC" for purposes of this Article
VIII) within any Territory surrounding any service facility in which the
Acquired Business was engaged in business on the date hereof or
immediately prior to the Effective Date (hereinafter the "Territory").
(b) call on any natural person who is at that time employed by the
Acquired Business or INVATEC in any managerial capacity with the purpose
or intent of attracting that person from the employ of the Acquired
Business or INVATEC, provided that the Stockholder may call on and hire
any Immediate Family Member;
(c) call on any Person that at that time is, or at any time within
one year prior to that time was, a customer of the Acquired Business or
INVATEC within any Territory (i) for the purpose of soliciting or selling
any product or service in competition with the Acquired
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Business or INVATEC in that Territory and (ii) with the knowledge of that
customer relationship; or
(d) call on any Entity which has been called on by INVATEC in
connection with a possible acquisition by INVATEC, with the knowledge of
that Entity's status as such an acquisition candidate, for the purpose of
acquiring that Entity or arranging the acquisition of that Entity by any
Person other than INVATEC.
Notwithstanding the foregoing, any Stockholder may own and hold as a passive
investment up to 5% of the outstanding capital stock of a competing Entity if
that class of capital stock is listed on a national stock exchange or included
in the Nasdaq National Market.
Section 8.02. DAMAGES. Because of the difficulty of measuring
economic losses to INVATEC as a result of any breach by a Stockholder of his
covenants in Section 8.01, and because of the immediate and irreparable damage
that could be caused to INVATEC for which it would have no other adequate
remedy, each Stockholder agrees that INVATEC may enforce the provisions of
Section 8.01 by injunctions and restraining orders against that Stockholder if
he breaches any of those provisions.
Section 8.03. REASONABLE RESTRAINT. The parties hereto each agree
that Sections 8.01 and 8.02 impose a reasonable restraint on the Stockholders in
light of the activities and business of INVATEC on the date hereof, the current
business plans of INVATEC and the investment, if any, by each Stockholder in
INVATEC as a result of the Acquisition.
Section 8.04. SEVERABILITY; REFORMATION. The covenants in this
Article VIII are severable and separate, and the unenforceability of any
specific covenant in this Article VIII is not intended by any party hereto to,
and shall not, affect the provisions of any other covenant in this Article VIII.
If any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth in Section 8.01 are unreasonable as applied
to any Stockholder, the parties hereto, including that Stockholder, acknowledge
their mutual intention and agreement that those restrictions be enforced to the
fullest extent the court deems reasonable, and thereby shall be reformed to that
extent as applied to that Stockholder and any other Stockholder similarly
situated.
Section 8.05. INDEPENDENT COVENANT. All the covenants in this
Article VIII are intended by each party hereto to, and shall, be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of any Stockholder against INVATEC,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by INVATEC of any covenant in this Article VIII. It
is specifically agreed that the period specified in Section 8.01 shall be
computed in the case of each Stockholder by excluding from that computation any
time during which that Stockholder is in violation of any provision of Section
8.01. The covenants contained in this Article VIII shall not be affected by any
breach of any other provision hereof by any party hereto.
Section 8.06. MATERIALITY. The Company and each Stockholder,
severally and not jointly with any other Person, hereby agree that this Article
VIII is a material and substantial part of the transactions contemplated hereby.
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Section 8.07. EMPLOYMENT AGREEMENTS. The provisions of this Article
8 and Section 10.01 of this Agreement are in addition to, and not in lieu of,
any provisions regarding noncompetition and Confidential Information contained
in any Employment Agreement(s) with any of Stockholders delivered in connection
with the transactions set forth or contemplated herein.
ARTICLE IX
DEFINITIONS AND DEFINITIONAL PROVISIONS
Section 9.01. DEFINED TERMS. As used in this Agreement, the
following terms have the meanings assigned to them below:
"ACQUIRED BUSINESS" has the meaning specified in Paragraph 1.
"ACQUISITION" has the meaning specified in the Preliminary
Statement.
"ACQUISITION CONSIDERATION" has the meaning specified in Paragraph
2.
"ACQUISITION PROPOSAL" has the meaning specified in Section 4.04.
"AFFILIATE" means, as to any specified Person, any other Person
that, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with the
specified Person. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through
ownership of Capital Stock of that Person, by contract or otherwise).
"AGREEMENT" means this Agreement, including all attached Schedules,
Annexes, Addenda and Exhibits, as each of the same may be amended,
modified or supplemented from time to time pursuant to the provisions
hereof or thereof.
"CAPITAL LEASE" means a lease of (or other agreement conveying the
right to use) real or personal property that is required to be classified
and accounted for as a capital lease under GAAP as in effect on the date
of this Agreement.
"CAPITAL STOCK" means, with respect to: (a) any corporation, any
share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in that corporation; and (b) any
other Entity, any share, membership or other percentage interest, unit of
participation or other equivalent (however designated) of an equity
interest in that Entity.
"CASH COMPENSATION" means, as applied to any employee, nonemployee
director or officer of, or any natural person who performs consulting or
other independent contractor services for, the Company or any Company
Subsidiary, the wages, salaries, bonuses (discretionary and formula), fees
and other cash compensation paid or payable by the Company and each
Company Subsidiary to that employee or other natural person.
"CEILING AMOUNT" has the meaning specified in Paragraph 1.
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"CERTIFICATE OF MERGER" means, if the Acquisition is effected by
means of a Merger, (a) the articles or certificate of merger respecting
that Merger which contains the information required by the laws of
Surviving Corporation's Organization State to effect that Merger and, if
the Organization State of any Entity merged into the Surviving Corporation
in that Merger is not the Organization State of the Surviving Corporation,
(b) the articles or certificate of merger respecting that Merger which
contains the information required by the laws of that merged Entity's
Organization State to effect that Merger.
"CERCLA" means the Comprehensive Environmental Response,
Conservation, and Liability Act of 1980.
"CHARTER DOCUMENTS" means, with respect to any Entity at any time,
in each case as amended, modified and supplemented at that time, the
articles or certificate of formation, incorporation or organization (or
the equivalent organizational documents) of that Entity, (b) the bylaws or
limited liability company agreement or regulations (or the equivalent
governing documents) of that Entity and (c) each document setting forth
the designation, amount and relative rights, limitations and preferences
of any class or series of that Entity's Capital Stock or of any rights in
respect of that Entity's Capital Stock.
"CLAIM NOTICE" has the meaning specified in Section 7.04.
"CLOSING" has the meaning specified in Paragraph 3.
"CLOSING DATE" has the meaning specified in Paragraph 1.
"CODE" means the Internal Revenue Code of 1986.
"COMPANY" has the meaning specified in Paragraph 1.
"COMPANY CAPITAL STOCK" has the meaning specified in Paragraph 1.
"COMPANY COMMITMENT" has the meaning specified in Section 2.23.
"COMPANY ERISA BENEFIT PLAN" has the meaning specified in Section
2.27.
"COMPANY ERISA PENSION PLAN" has the meaning specified in Section
2.27.
"COMPANY SUBSIDIARY" means at any time any Entity that is a
Subsidiary of the Company at that time.
"CONFIDENTIAL INFORMATION" means, with respect to any Person, all
trade secrets and other confidential, nonpublic and/or proprietary
information of that Person, including information derived from reports,
investigations, research, work in progress, codes, marketing and sales
programs, capital expenditure projects, cost summaries, pricing formulae,
contract analyses, financial information, projections, confidential
filings with any Governmental Authority and all other confidential,
nonpublic concepts, methods of doing business, ideas, materials or
information prepared or performed for, by or on behalf of that Person.
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"CURRENT BALANCE SHEET" has the meaning specified in Paragraph 1.
"CURRENT BALANCE SHEET DATE" has the meaning specified in Paragraph
1.
"CURRENT DATE" means any day during the 20-day period ending on the
date of the Closing.
"DAMAGE" to any specified Person means, except as otherwise provided
in Section 6.06(c), any cost, damage (including any consequential,
exemplary, punitive or treble damage) or expense (including reasonable
fees and actual disbursements by attorneys, consultants, experts or other
Representatives and Litigation costs) to, any fine of or penalty on or any
liability (including loss of earnings or profits) of any other nature of
that Person.
"DAMAGE CLAIM" means, as asserted (a) against any specified Person,
any claim, demand or Litigation made or pending against the specified
Person for Damages to any other Person, or (b) by the specified Person,
any claim or demand of the specified Person against any other Person for
Damages to the specified Person.
"DGCL" means the General Corporation Law of the State of Delaware.
"DERIVATIVE SECURITIES" of a specified Entity means any Capital
Stock, debt security or other Indebtedness of the specified Entity or any
other Person which is convertible into or exchangeable for, or any option,
warrant or other right to acquire, (a) any unissued Capital Stock of the
specified Entity or (b) any Capital Stock of the specified Entity which
has been issued and is being held by the Entity directly or indirectly as
treasury Capital Stock.
"EFFECTIVE DATE" has the meaning specified in Paragraph 1.
"EFFECTIVE TIME" has the meaning specified in Paragraph 2.
"ELECTION PERIOD" has the meaning specified in Section 7.04.
"EMPLOYEE POLICIES AND PROCEDURES" means at any time all employee
manuals and all material policies, procedures and work-related rules that
apply at that time to any employee, nonemployee director or officer of, or
any other natural person performing consulting or other independent
contractor services for, the Company or any Company Subsidiary.
"EMPLOYMENT AGREEMENT" means at any time any (a) agreement to which
the Company or any Company Subsidiary is a party which then relates to the
direct or indirect employment or engagement, or arises from the past
employment or engagement, of any natural person by the Company or any
Company Subsidiary, whether as an employee, a nonemployee officer or
director, a consultant or other independent contractor, a sales
representative or a distributor of any kind, including any employee
leasing or service agreement and any noncompetition agreement, and (b)
agreement between the Company or any Company Subsidiary and any Person
which arises from the sale of a business by that
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Person to the Company or any Company Subsidiary and limits that Person's
competition with the Company or any Company Subsidiary.
"ENTITY" means any sole proprietorship, corporation, partnership of
any kind having a separate legal status, limited liability company,
business trust, unincorporated organization or association, mutual
company, joint stock company or joint venture.
"ENVIRONMENTAL LAWS" means any and all Governmental Requirements
relating to the environment or public or worker health or safety,
including ambient air, surface water, land surface or subsurface strata,
or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes (including Solid Wastes, Hazardous Wastes or
Hazardous Substances) or noxious noise or odor into the environment, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, recycling, removal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes (including petroleum, petroleum distillates, asbestos
or asbestos-containing material, volatile organic compounds or
polychlorinated biphenyls).
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means, with respect to any specified Person at any
time, any other Person, including an Affiliate of the specified Person,
that is, or at any time within six years of that time was, a member of any
ERISA Group of which the specified Person is or was a member at the same
time.
"ERISA AFFILIATE PENSION PLAN" has the meaning specified in Section
2.25.
"ERISA EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA and includes any ERISA Pension Benefit
Plan.
"ERISA GROUP" means any "group of organizations" within the meaning
of Section 414(b), (c), (m) or (o) of the Code or any "controlled group"
as defined in Section 4001(a)(14) of ERISA.
"ERISA PENSION BENEFIT PLAN" means any "employee pension benefit
plan," as defined in Section 3(2) of ERISA, including any plan that is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code (excluding any Multiemployer Plan).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FINAL PROSPECTUS" means the prospectus included in the Registration
Statement at the time it becomes effective, except that if the prospectus
first furnished to the Underwriter after the Registration Statement
becomes effective for use in connection with the IPO differs from the
prospectus included in the Registration Statement at the time it becomes
effective (whether or not that prospectus so furnished is required to be
filed with the SEC pursuant to Securities Act Rule 424(b)), the prospectus
so first furnished is the "Final Prospectus."
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"FINANCIAL STATEMENTS" means the Initial Financial Statements and
the other financial statements of the Company and the Company
Subsidiaries, if any, delivered to INVATEC pursuant to Section 4.09 prior
to the Effective Time.
"GAAP" means, as applied to any of the Financial Statements,
generally accepted accounting principles and practices in the United
States as in effect from time to time which (a) have been concurred in by
Arthur Andersen LLP and (b) have been or are applied on a basis consistent
(except for changes concurred in by Arthur Andersen LLP) with the most
recent audited Financial Statements delivered to INVATEC prior to the
Effective Time.
"GOVERNMENTAL APPROVAL" means at any time any authorization,
consent, approval, permit, franchise, certificate, license, implementing
order or exemption of, or registration or filing with, any Governmental
Authority, including any certification or licensing of a natural person to
engage in a profession or trade or a specific regulated activity, at that
time.
"GOVERNMENTAL AUTHORITY" means (a) any national, state, county,
municipal or other government, domestic or foreign, or any agency, board,
bureau, commission, court, department or other instrumentality of any such
government, or (b) any Person having the authority under any applicable
Governmental Requirement to assess and collect Taxes for its own account.
"GOVERNMENTAL REQUIREMENT" means at any time (a) any law, statute,
code, ordinance, order, rule, regulation, judgment, decree, injunction,
writ, edict, award, authorization or other requirement of any Governmental
Authority in effect at that time or (b) any obligation included in any
certificate, certification, franchise, permit or license issued by any
Governmental Authority or resulting from binding arbitration, including
any requirement under common law, at that time.
"GUARANTY" means, for any specified Person, without duplication, any
liability, contingent or otherwise, of that Person guaranteeing or
otherwise becoming liable for any obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and
including any liability of the specified Person, direct or indirect, (a)
to purchase or pay (or advance or supply funds for the purchase or payment
of) that obligation or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of that obligation, (b) to
purchase property, securities or services for the purpose of assuring the
owner of that obligation of its payment or (c) to maintain working
capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to
pay that obligation; provided, that the term "Guaranty" does not include
endorsements for collection or deposit in the ordinary course of the
endorser's business.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"IMMEDIATE FAMILY MEMBER" of a Stockholder means at any time: (a) if
that Stockholder is a natural person, any child or grandchild (by blood or
legal adoption) or spouse of that Stockholder at that time, or any child
of that spouse; and (b) if that Stockholder is an Entity whose ultimate
beneficial owner is a natural person, or a natural person and his spouse,
any child or grandchild (by blood or legal adoption) or spouse at that
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time (if not then an ultimate beneficial owner of that Entity), or any
child of that spouse, of the ultimate beneficial owner or owners.
"INDEBTEDNESS" of any Person means, without duplication, (a) any
liability of that Person (i) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds, letters
of credit, banker's acceptances and similar instruments), for the deferred
purchase price of property or services or arising under conditional sale
or other title retention agreements, other than trade payables arising in
the ordinary course of business, (ii) evidenced by notes, bonds,
debentures or similar instruments, (iii) in respect of Capital Leases or
(iv) in respect of Interest Rate Protection Agreements, (b) any liability
secured by any Lien upon any property or assets of that Person (or upon
any revenues, income or profits of that Person therefrom), whether or not
that Person has assumed that liability or otherwise become liable for the
payment thereof, (c) any liability of others of the type described in the
preceding clause (a) or (b) in respect of which that Person has incurred,
assumed or acquired a liability by means of a Guaranty.
"INDEMNITY NOTICE" has the meaning specified in Section 7.04.
"INDEMNIFIED PARTY" has the meaning specified in Section 7.04.
"INDEMNIFYING PARTY" has the meaning specified in Section 7.04.
"INFORMATION" means written information, including (a) data,
certificates, reports and statements (excluding Financial Statements) and
(b) summaries of unwritten agreements, arrangements, contracts, plans,
policies, programs or practices or of unwritten amendments or
modifications of, supplements to or waivers under any of the foregoing
documents.
"IPO" means the first time a registration statement filed under the
Securities Act and respecting a primary offering by INVATEC to the public
of shares of INVATEC Common Stock is declared effective under the
Securities Act and the shares registered by that registration statement
are issued and sold by INVATEC (otherwise than pursuant to the exercise by
the Underwriter of any over-allotment option).
"IPO CLOSING DATE" means the date on which INVATEC first receives
payment for the shares of INVATEC Common Stock it sells to the Underwriter
in the IPO.
"IPO PRICE" means the price per share of INVATEC Common Stock which
is set forth as the "price to public" on the cover page of the Final
Prospectus.
"IPO PRICING DATE" means the date, if any, on which INVATEC and the
Underwriter agree in the Underwriting Agreement to the price per share of
INVATEC Common Stock at which the Underwriter, subject to the terms and
conditions of the Underwriting Agreement, will purchase newly issued
shares of INVATEC Common Stock from INVATEC on the IPO Closing Date.
"INVATEC COMMON STOCK" means the common stock, par value $.001 per
share, of INVATEC.
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"INVATEC INDEMNIFIED PARTY" means INVATEC and its Affiliates and
each of their respective officers, directors, employees, agents and
counsel; provided, however, that no Person who indemnifies INVATEC
Indemnified Parties in this Agreement in his capacity as a Stockholder
will be an INVATEC Indemnified Party for purposes of this Agreement,
notwithstanding that the Person is an INVATEC Indemnified Party for
purposes of one or more of the Other Agreements.
"INVATEC INDEMNIFIED LOSS" has the meaning specified in Section
7.02.
"INVATEC UNINDEMNIFIED LOSS" has the meaning specified in Section
6.06.
"INTEREST RATE PROTECTION AGREEMENT" means, for any Person, any
interest rate swap, cap or collar agreement or similar arrangement
providing for the transfer or mitigation of interest rate risks of that
Person either generally or under specific contingencies between that
Person and any other Person.
"IRS" means the Internal Revenue Service.
"LIEN" means, with respect to any property or asset of any Person
(or any revenues, income or profits of that Person therefrom) (in each
case whether the same is consensual or nonconsensual or arises by
contract, operation of law, legal process or otherwise), (a) any mortgage,
lien, security interest, pledge, attachment, levy or other charge or
encumbrance of any kind thereupon or in respect thereof or (b) any other
arrangement under which the same is transferred, sequestered or otherwise
identified with the intention of subjecting the same to, or making the
same available for, the payment or performance of any liability in
priority to the payment of the ordinary, unsecured creditors of that
Person, including any "adverse claim" (as defined in Section 8-302(b) of
each applicable Uniform Commercial Code) in the case of any Capital Stock.
For purposes of this Agreement, a Person shall be deemed to own subject to
a Lien any asset that it has acquired or holds subject to the interest of
a vendor or lessor under any conditional sale agreement, Capital Lease or
other title retention agreement relating to that asset.
"LITIGATION" means any action, case, proceeding, claim, grievance,
suit or investigation or other proceeding conducted by or pending before
any Governmental Authority or any arbitration proceeding.
"MATERIAL" means, as applied to any Entity or the Acquired Business,
material to the business, operations, property or assets, liabilities,
financial condition or results of operations of that Entity and its
Subsidiaries considered as a whole or the Acquired Business, as the case
may be.
"MATERIAL ADVERSE EFFECT" means, with respect to the consequences of
any fact or circumstance (including the occurrence or non-occurrence of
any event) to the Acquired Business, that such fact or circumstance has
caused, is causing or will cause, directly, indirectly or consequentially,
singly or in the aggregate with other facts and circumstances, any Damages
in excess of the Threshold Amount.
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"MATERIAL AGREEMENT" of any Entity means any contract or agreement
(a) to which that Entity or any of its Subsidiaries is a party, or by
which that Entity or any of its Subsidiaries is bound or to which any
property or assets of that Entity or any of its Subsidiaries is subject
and (b) which is Material to that Entity.
"MERGER" means a transaction as a result of which the Acquisition is
effected and in which either (a) Newco is merged with or into the Company
or (b) the Company is merged with or into Newco, as the case may be.
"MINIMUM CASH AMOUNT" has the meaning specified in Section 5.01.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of
ERISA.
"NEWCO" means such business corporation, if any, as shall be formed
or utilized by INVATEC for the purpose of acquiring the stock of the
Company or consummating a Merger therewith.
"NEWCO COMMON STOCK" means the common stock of Newco.
"ORGANIZATION STATE" means, as applied to (a) any corporation, its
state or other jurisdiction of incorporation, (b) any limited liability
company or limited partnership, the state or other jurisdiction under
whose laws it is organized and existing in that legal form, and (c) any
other Entity, the state or other jurisdiction whose laws govern that
Entity's internal affairs.
"OTHER ACQUIRED BUSINESS" has the meaning specified in the
Preliminary Statement.
"OTHER AGREEMENTS" has the meaning specified in the Preliminary
Statement.
"OTHER COMPENSATION PLAN" means any compensation arrangement, plan,
policy, practice or program established, maintained or sponsored by the
Company or any Company Subsidiary, or to which the Company or any Company
Subsidiary contributes, on behalf of any of its employees, nonemployee
directors or officers or other natural persons performing consulting or
other independent contractor services for the Company or any Company
Subsidiary, (a) including all such arrangements, plans, policies,
practices or programs providing for severance pay, deferred compensation,
incentive, bonus or performance awards or the actual or phantom ownership
of any Capital Stock or Derivative Securities of the Company or any
Company Subsidiary, but (b) excluding all Company ERISA Pension Benefit
Plans and Employment Agreements.
"OTHER FINANCING SOURCES" has the meaning specified in Section 5.01.
"OTHER TRANSACTION DOCUMENTS" means the Other Agreements and the
other written agreements, documents, instruments and certificates at any
time executed pursuant to or in
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connection with the Other Agreements (other than the Transaction Documents
and the Underwriting Agreement), all as amended, modified or supplemented
from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED INVESTMENTS" means: at the time of purchase or other
acquisition by the Company or any Company Subsidiary, (a) obligations
issued or guaranteed by the United States of America with a remaining
maturity not exceeding one year, (b) commercial paper with maturities of
not more than 270 days and a published rating of not less than A-1 by S&P
or P-1 by Moody's and (c) certificates of deposit and bankers' acceptances
having maturities of not more than one year of any commercial bank or
trust company if (i) that bank or trust company has a combined capital and
surplus of at least $500,000,000 and (ii) its unsecured long-term debt
obligations, or those of a holding company of which it is a subsidiary,
are rated not less than A- by S&P or A3 by Moody's.
"PERMITTED LIENS" means, as applied to the property or assets of any
Person (or any revenues, income or profits of that Person therefrom): (a)
Liens for Taxes if the same are not at the time due and delinquent; (b)
Liens of carriers, warehousemen, mechanics, laborers and materialmen for
sums not yet due; (c) Liens incurred in the ordinary course of that
Person's business in connection with worker's compensation, unemployment
insurance and other social security legislation (other than pursuant to
ERISA or Section 412(n) of the Code); (d) Liens incurred in the ordinary
course of that Person's business in connection with deposit accounts or to
secure the performance of bids, tenders, trade contracts, statutory
obligations, surety and appeal bonds, performance and return-of-money
bonds and other obligations of like nature; (e) easements, rights-of-way,
reservations, restrictions and other similar encumbrances incurred in the
ordinary course of that Person's business or existing on property and not
materially interfering with the ordinary conduct of that Person's business
or the use of that property; (f) defects or irregularities in that
Person's title to its real properties which do not materially (i) diminish
the value of the surface estate or (ii) interfere with the ordinary
conduct of that Person's business or the use of any of such properties;
(g) any interest or title of a lessor of assets being leased by any Person
pursuant to any Capital Lease disclosed in Section 2.18 of the Disclosure
Statement or any lease that, pursuant to GAAP, would be accounted for as
an operating lease; and (h) Liens securing purchase money Indebtedness
disclosed in Section 2.17 or 2.18 of the Disclosure Statement so long as
such Liens do not attach to any property or assets other than the
properties or assets purchased with the proceeds of that Indebtedness.
"PERSON" means any natural person, Entity, estate, trust, union or
employee organization or Governmental Authority or, for the purpose of the
definition of "ERISA Affiliate," any trade or business.
"PLAN" has the meaning specified in Section 2.28.
"PROHIBITED TRANSACTION" means any transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt
under Section 4975 of the Code or Section 408 of ERISA.
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"PROPRIETARY RIGHTS" means (a) patents, applications for patents and
patent rights, (b) in each case, whether registered, unregistered or under
pending registration, trademark rights, trade names, trade name rights,
corporate names, business names, trade styles or dress, service marks and
logos and other trade designations and copyrights and (c), in the case of
the Company or any Company Subsidiary, all agreements relating to the
technology, know-how or processes used in any business of the Company or
any Company Subsidiary.
"PRO RATA SHARE" has the meaning specified in Paragraph 1.
"QUALIFIED PLANS" has the meaning specified in Section 2.28.
"REGISTRATION STATEMENT" means the registration statement, including
(a) each preliminary prospectus included therein prior to the date on
which that registration statement is declared effective under the
Securities Act (including any prospectus filed with the SEC pursuant to
Securities Act Rule 424(b)), (b) the Final Prospectus and (c) any
amendments thereof and all supplements and exhibits thereto, filed by
INVATEC with the SEC to register shares of INVATEC Common Stock under the
Securities Act for public offering and sale in the IPO.
"RELATED PARTY AGREEMENT" means any contract or other agreement,
written or oral, (a) to which the Company or any Company Subsidiary is a
party or is bound or by which any property of the Company or any Company
Subsidiary is bound or may be subject and (b) (i) to which any Stockholder
or any of that Stockholder's Related Persons or Affiliates also is a
party, (ii) of which any Stockholder or any of that Stockholder's Related
Persons or Affiliates is a beneficiary or (iii) as to which any
transaction contemplated thereby properly would be characterized (without
regard to the amount involved) as a related party transaction for purposes
of applying the disclosure requirements of GAAP or the SEC applicable to
the financial statements of the Company and the Company Subsidiaries which
are included in the Registration Statement.
"RELATED PERSON" of a Stockholder means: (a) if that Stockholder is
a natural person, (i) any Immediate Family Member of that Stockholder,
(ii) any Estate of that Stockholder or any Immediate Family Member of that
Stockholder, (iii) the trustee of any inter vivos or testamentary trust of
which all the beneficiaries are Related Persons of that Stockholder and
(iv) any Entity the entire equity interest in which is owned by any one or
more of that Stockholder and Related Persons of that Stockholder; and (b)
if that Stockholder is an Entity, Estate or trust, (i) any Person who owns
an equity interest in that Stockholder on the date hereof, (ii) any Person
who would be a Related Person under clause (a) of this definition of a
natural person who is an ultimate beneficial owner of that Stockholder or
(iii) any other Entity the entire equity interest in which is owned by any
one or more of that Stockholder and Related Persons of that Stockholder.
As used in this definition, "Estate" means, as to any natural person who
has died or been adjudicated mentally incompetent by a court of competent
jurisdiction, (a) that person's estate or (b) the administrator,
conservator, executor, guardian or representative of that estate.
"REPORTABLE EVENT" means, with respect to any Company ERISA Pension
Plan, (a) the occurrence of any of the events set forth in Section 4043(b)
or (c) (other than a Reportable Event as to which the provision of 30
days' notice to the PBGC is waived under
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applicable regulations), 4062(e) or 4063(a) of ERISA with respect to that
plan, (b) any event requiring the Company or any ERISA Affiliate to
provide security to that plan under Section 401(a)(29) of the Code or (c)
any failure to make a payment required by Section 412(m) of the Code with
respect to that plan.
"REPRESENTATIVES" means, with respect to any Person, the directors,
officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other
agents of that Person, or any other representatives of that Person or of
any of those directors, officers, employees, Affiliates, accountants
(including independent certified public accountants), advisors, attorneys,
consultants or other agents.
"RCRA" means the Resource Conservation and Recovery Act of 1976.
"RESTRICTED PAYMENT" means, with respect to any Entity at any time,
any of the following effected by that Entity: (a) any declaration or
payment of any dividend or other distribution, direct or indirect, on
account of any Capital Stock of that Entity or any Affiliate of that
Entity or (b) any direct or indirect redemption, retirement, purchase or
other acquisition for value of, or any direct or indirect purchase,
payment or sinking fund or similar deposit for the redemption, retirement,
purchase or other acquisition for value of, or to obtain the surrender of,
any then outstanding Capital Stock of that Entity or any Affiliate of that
Entity or any then outstanding warrants, options or other rights to
acquire or subscribe for or purchase unissued or treasury Capital Stock of
that Entity or any Affiliate of that Entity.
"RETURNS" of a Person means the returns, reports or statements
(including any information returns) any Governmental Requirement requires
to be filed by that Person for purposes of any Tax.
"SECTION 351 TRANSACTION" means, if the Acquisition is structured as
a transaction qualifying for the deferral of federal income tax under
Section 351 of the Code, that transaction.
"SECTION 368 REORGANIZATION" means, if the Acquisition is structured
as a transaction qualifying as a reorganization under Section 368 of the
Code, that transaction.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933.
"SOLID WASTES, HAZARDOUS WASTES OR HAZARDOUS SUBSTANCES" have the
meanings ascribed to those terms in CERCLA, RCRA or any other
Environmental Law applicable to the business or operations of the Company
or any Company Subsidiary which imparts a broader meaning to any of those
terms than does CERCLA or RCRA.
"SPECIAL PROVISIONS" means the Special Provisions of INVATEC, if
any, referred to in Paragraph 5 and incorporated by reference in this
Agreement.
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"S&P" means Standard and Poor's Rating Group.
"STOCKHOLDER INDEMNIFIED PARTY" means (a) each Stockholder and each
of that Stockholder's Affiliates (other than the Company or, following the
Effective Time, INVATEC or any of its Subsidiaries, if the Stockholder is
an Affiliate of INVATEC), agents and counsel and (b) prior to the
Effective Time, the Company and each of its officers, directors,
employees, agents and counsel who are not Stockholder Indemnified Parties
within the meaning of clause (a) of this definition.
"STOCKHOLDER INDEMNIFIED LOSS" has the meaning specified in Section
7.03.
"STOCKHOLDER UNINDEMNIFIED LOSS" has the meaning specified in
Section 6.06.
"STOCK PURCHASE" means a transaction as a result of which the
Acquisition is effected by means of the purchase by INVATEC or Newco from
the Stockholders of all the outstanding Company Capital Stock.
"SUBSIDIARY" of any specified Person at any time, means any Entity a
majority of the Capital Stock of which is at that time owned or
controlled, directly or indirectly, by the specified Person.
"SUPPLEMENTAL INFORMATION" has the meaning specified in Section
4.07.
"SURVIVING CORPORATION" means, if the Acquisition is effected by
means of Merger, the Company or the Person to be designated in the
Certificate of Merger as the surviving Entity of that merger.
"TAX" or "TAXES" means all net or gross income, gross receipts, net
proceeds, sales, use, ad valorem, value added, franchise, bank shares,
withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, environmental or other taxes, assessments,
duties, fees, levies or other governmental charges or assessments of any
nature whatever imposed by any Governmental Requirement, whether disputed
or not, together with any interest, penalties, additions to tax or
additional amounts with respect thereto.
"TAXING AUTHORITY" means any Governmental Authority having or
purporting to exercise jurisdiction with respect to any Tax.
"TERMINATION EVENT" means, with respect to any Company ERISA Pension
Plan, (a) any Reportable Event with respect to that plan which is likely
to result in the termination of that plan, (b) the termination of, or the
filing of a notice of intent to terminate, that plan or the treatment of
any amendment to that plan as a termination under Section 4041(c) of ERISA
or (c) the institution of proceedings to terminate, or the appointment of
a trustee to administer, that plan under Section 4042 of ERISA.
"THIRD PARTY CLAIM" means any claim asserted by any Person that or
who is not a party to this Agreement against any Indemnified Party.
"THRESHOLD AMOUNT" has the meaning specified in Paragraph 1.
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"TRANSACTION DOCUMENT" means this Agreement, the Certificates of
Merger and the other written agreements, documents, instruments and
certificates executed pursuant to or in connection with this Agreement
(other than the Other Transaction Documents and the Underwriting
Agreement), including those specified in Article V to be delivered at or
before the Closing, all as amended, modified or supplemented from time to
time.
"UNDERWRITER" means collectively (a) the investment banking firms
that prospectively may enter into the Underwriting Agreement and (b) from
and after the IPO Pricing Date, the investment banking firms parties to
the Underwriting Agreement.
"UNDERWRITING AGREEMENT" has the meaning specified in Section
5.01(a)(iii).
"VALVE REPAIR AND DISTRIBUTION SERVICES BUSINESS" means the
assembly, setting, testing or sealing, the maintenance, repair,
reconditioning or remanufacturing, or the sale or other distribution, of
industrial valves and other process-system components or equipment.
"WELFARE PLAN" means an "employee welfare benefit plan" as defined
in Section 3(1) of ERISA.
"WHOLLY OWNED SUBSIDIARY" means any corporation or other Entity all
of whose outstanding Capital Stock on a fully diluted basis is owned and
controlled, directly or indirectly through another Wholly Owned
Subsidiary, by the Company.
Section 9.02. OTHER DEFINED TERMS. Words and terms used in these
Uniform Provisions which are defined elsewhere in this Agreement are used herein
as therein defined.
Section 9.03. OTHER DEFINITIONAL PROVISIONS. (a) Except as otherwise
specified herein, all references herein to any Governmental Requirement defined
or referred to herein, including the Code, CERCLA, ERISA, the Exchange Act, RCRA
and the Securities Act, shall be deemed references to that Governmental
Requirement or any successor Governmental Requirement, as the same may have been
amended or supplemented from time to time, and any rules or regulations
promulgated thereunder.
(b) When used in this Agreement, the words "herein," "hereof" and
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any provision of this Agreement, and the words "Article," "Paragraph,"
"Section," "Preliminary Statement," "Annex," "Addendum," "Schedule" and
"Exhibit" refer to Articles, Paragraphs and Sections of, the Preliminary
Statement in, and Annexes, Addenda, Schedules and Exhibits to, this Agreement
unless otherwise specified.
(c) Whenever the context so requires, the singular number includes
the plural and vice versa, and a reference to one gender includes the other
gender and the neuter.
(d) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any description
preceding such word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
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Section 9.04. CAPTIONS. Captions to Articles, Paragraphs, Sections
and subsections of, and Annexes, Addenda, Schedules and Exhibits to, this
Agreement or any other Transaction Document are included for convenience of
reference only, and these captions shall not constitute a part of this Agreement
or any other Transaction Document for any other purpose or in any way affect the
meaning or construction of any provision of this Agreement or any other
Transaction Document.
ARTICLE X
GENERAL PROVISIONS
Section 10.01. TREATMENT OF CONFIDENTIAL INFORMATION. (a) Each of
the Company and the Stockholders, severally and not jointly with any other
Person, acknowledges that it has or may have had in the past, currently has and
in the future may have access to Confidential Information of the Company and the
Company Subsidiaries, the Other Acquired Businesses and their Subsidiaries and
INVATEC and its Subsidiaries. Each of the Company and the Stockholders,
severally and not jointly with any other Person, agrees that it will keep
confidential all such Confidential Information furnished to it and, except with
the specific prior written consent of INVATEC, will not disclose such
Confidential Information to any Person except (a) Representatives of INVATEC and
(b) its own Representatives, provided that these Representatives (other than
counsel) agree to the confidentiality provisions of this Section 10.01;
provided, however, that Confidential Information shall not include such
information as (i) becomes known to the public generally through no fault of any
Stockholder, (ii) is required to be disclosed by law or the order of any
Governmental Authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii), each Stockholder shall, if
possible, give prior written notice thereof to INVATEC and provide INVATEC with
the opportunity to contest such disclosure, or (iii) the disclosing party
reasonably believes is required to be disclosed in connection with the defense
of a lawsuit against the disclosing party. In the event of a breach or
threatened breach by any Stockholder of the provisions of this Section 11.01
with respect to any Confidential Information, INVATEC shall be entitled to an
injunction restraining such Stockholder from disclosing, in whole or in part,
that Confidential Information. Nothing herein shall be construed as prohibiting
INVATEC from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
(b) Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 10.01(a), and because
of the immediate and irreparable damage that would be caused to INVATEC for
which it would have no other adequate remedy, each of the Company and the
Stockholders agrees that INVATEC may enforce the provisions of Section 10.01(a)
by injunctions and restraining orders against each of them who breaches any of
those provisions.
(c) The obligations of the parties under this Section 10.01 shall
survive the termination of this Agreement.
Section 10.02. BROKERS AND AGENTS. The Stockholders jointly and
severally represent and warrant to INVATEC that the Company has not directly or
indirectly employed or become obligated to pay any broker or similar agent in
connection with the transactions contemplated hereby and agree, without regard
to the Threshold Amount limitations set forth in Article VII, to indemnify
INVATEC against all Damage Claims arising out of claims for any and all fees and
commissions of brokers or similar agents employed or promised payment by the
Company.
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Section 10.03. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the rights of the parties hereunder may not be assigned (except by
operation of law) and shall be binding on and inure to the benefit of the
parties hereto, the successors of INVATEC, and the heirs and legal
representatives of the Stockholders (and, in the case of any trust, the
successor trustees of that trust). Neither this Agreement nor any other
Transaction Document is intended, or shall be construed, deemed or interpreted,
to confer on any Person not a party hereto or thereto any rights or remedies
hereunder or thereunder, except as provided in Section 10.12 or Article VII or
as otherwise provided expressly herein or therein.
Section 10.04. ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Agreement
and the documents delivered pursuant hereto constitute the entire agreement and
understanding among the Stockholders, the Company, INVATEC and Newco and
supersede all prior agreements and understandings, both written and oral,
relating to the subject matter of this Agreement. This Agreement may be amended,
modified or supplemented, and any right hereunder may be waived, if, but only
if, that amendment, modification, supplement or waiver is in writing and signed
by the Stockholders entitled to receive at least 80% of the total Acquisition
Consideration, the Company and INVATEC; provided, however, that no such
amendment, modification, supplement or waiver will be effective unless it is
signed by each Stockholder affected thereby to the extent that it (a) changes
the several nature of that Stockholder's representations and warranties (to the
extent they are not already joint and several as provided in Article I and
Section 10.02), (b) reduces the amount, or changes the components, of the
Acquisition Consideration that Stockholder is entitled to receive pursuant to
Paragraph 2, or (c) amends or waives this sentence. The waiver of any of the
terms and conditions hereof shall not be construed or interpreted as, or deemed
to be, a waiver of any other term or condition hereof.
Section 10.05. EXPENSES. Whether or not the transactions
contemplated hereby are consummated, (a) INVATEC will pay the fees, expenses and
disbursements of INVATEC and its Subsidiaries and their Representatives which
are incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in the performance
of and compliance with all conditions to be performed by INVATEC under this
Agreement, and (b) if the Effective Time occurs, the Stockholders will pay from
personal funds, and not from funds of the Company or any Company Subsidiary, all
sales, use, transfer and other similar taxes and fees incurred in connection
with the transactions contemplated hereby including the fees, expenses and
disbursements of counsel for the Company and the Stockholders incurred in
connection with the subject matter of this Agreement. The Stockholders will file
all necessary documentation and Returns with respect to all sales, use, transfer
and other similar taxes and fees they are required by this Section 10.05 to pay.
In addition, each Stockholder acknowledges that he, and not the Company or
INVATEC or the Surviving Corporation, will pay all Taxes due upon receipt of the
consideration payable to that Stockholder pursuant to the transactions
contemplated by this Agreement.
Section 10.06. NOTICES. All notices required or permitted hereunder
shall be in writing, and shall be deemed to be delivered and received (a) if
personally delivered or if delivered by telex, telegram, facsimile or courier
service, when actually received by the party to whom notice is sent or (b) if
delivered by mail (whether actually received or not), at the close of business
on the third Houston, Texas business day next following the day when placed in
the mail, postage prepaid, certified or registered, addressed to the appropriate
party or parties, at the address of such party set
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forth below (or at such other address as such party may designate by written
notice to all other parties in accordance herewith):
(i) if to INVATEC or any of its Subsidiaries, addressed to it at:
Innovative Valve Technologies, Inc.
14900 Woodham, Suite A-125
Houston, Texas 77073
Attn.:William E. Haynes
Fax No.: (281) 821-1123
; and
(ii) if to the Company or any of the Stockholders, addressed to such
Person as set forth in Paragraph 7.
Section 10.07. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS WITHOUT
REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
Section 10.08. EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay or omission in the exercise of any right, power or
remedy accruing to any party hereto as a result of any breach or default
hereunder by any other party hereto shall impair any such right, power or
remedy, nor shall it be construed, deemed or interpreted as a waiver of or
acquiescence in any such breach or default, or of any similar breach or default
occurring later; nor shall any waiver of any single breach or default be
construed, deemed or interpreted as a waiver of any other breach or default
hereunder occurring before or after that waiver.
Section 10.09. TIME. Time is of the essence in the performance of
this Agreement in all respects.
Section 10.10. REFORMATION AND SEVERABILITY. If any provision of
this Agreement is invalid, illegal or unenforceable, that provision shall, to
the extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties hereto as
expressed herein, and if such a modification is not possible, that provision
shall be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
Section 10.11. REMEDIES CUMULATIVE. No right, remedy or election
given by any term of this Agreement shall be deemed exclusive, but each shall be
cumulative with all other rights, remedies and elections available at law or in
equity.
Section 10.12. RELEASE. Subject to the limitations set forth in the
last sentence in this Section 10.12, each Stockholder hereby unconditionally and
irrevocably releases and forever discharges, effective as of and forever after
the Effective Time, to the fullest extent permitted by applicable law, all past,
present and future INVATEC Indemnified Parties (including, after the Effective
Time, each of the Company and the Company Subsidiaries which is a Subsidiary of
INVATEC immediately after the Effective Time) (collectively, the "Released
Parties") from any and
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all debts, liabilities, obligations, claims, demands, actions or causes of
action, suits, judgments or controversies of any kind whatsoever (collectively,
"Pre-Acquisition Claims") against the Company and the Company Subsidiaries, if
any, or any of them that arises out of or is based on any agreement or
understanding or act or failure to act (INCLUDING ANY ACT OR FAILURE TO ACT THAT
CONSTITUTES ORDINARY OR GROSS NEGLIGENCE OR RECKLESS OR WILLFUL, WANTON
MISCONDUCT), misrepresentation, omission, transaction, fact, event or other
matter occurring prior to the Effective Time (whether based at law or in equity
or otherwise, foreseen or unforeseen, matured or unmatured, known or unknown,
accrued or not accrued) (collectively, "Pre-Acquisition Matters"), including:
(a) claims by the Stockholder with respect to repayment of loans or
indebtedness; (b) any rights, titles and interests in, to or under any
agreements, arrangements or understandings to which the Stockholder is a party;
and (c) claims by the Stockholder with respect to dividends, violation of
preemptive rights, or payment of salaries or other compensation or in any way
arising out of or in connection with the Stockholder's employment with the
Company or any Company Subsidiary, the cessation of that employment, the
Stockholder's status as an officer, director or stockholder of the Company or
otherwise (but excluding any and all claims in respect of (i) accrued and unpaid
amounts owing to the Stockholder pursuant to each Employment Agreement disclosed
in Section 2.27 to the Disclosure Statement to which the Stockholder is a party,
(ii) accrued and unpaid cash compensation owing to the Stockholder in the normal
and ordinary course of business and consistent with past practices, (iii)
benefits accrued under each Company ERISA Benefit Plan or Other Compensation
Plan, the existence of which has been disclosed in Section 2.27 to the
Disclosure Statement, and (iv) amounts or other obligations owing to the
Stockholder, directly or indirectly, pursuant to each Retained Related Party
Agreement, if any, which is disclosed in Section 2.12 to the Disclosure
Statement and to which the Stockholder, directly or indirectly, is a party). The
Stockholder further agrees not to file or bring any Litigation before any
Governmental Authority on the basis of or respecting any Pre-Acquisition Claim
concerning any Pre-Acquisition Matter against any Related Party. Each
Stockholder (a) acknowledges that he or she fully comprehends and understands
all the terms of this Section 10.12 and their legal effects and (b) expressly
represents and warrants that (i) he or she is competent to effect the release
made in this Section 10.12 knowingly and voluntarily and without reliance on any
statement or representation of any Released Party or its Representatives and
(ii) he or she had the opportunity to consult with an attorney of his or her
choice regarding this Section 10.12. This Section 10.12 shall not affect the
rights of the Stockholders under this Agreement or any other Transaction
Document.
Section 10.13. RESPECTING THE IPO. Each of the Company and the
Stockholders acknowledges and agrees that: (a) no firm commitment, binding
agreement or promise or other assurance of any kind, whether express or implied,
oral or written, exists at the date hereof that the Registration Statement will
become effective or that the IPO will occur at a particular range of prices or
occur at all; (b) neither INVATEC or any of its representatives nor any
prospective underwriters in the IPO will have any liability to the Company, the
Stockholder or any of their respective Affiliates or associates for any failure
of (i) the Registration Statement to become effective (provided, however, that
INVATEC will use its reasonable best efforts to cause the Registration Statement
to become effective prior to December 31, 1997) or (ii) the IPO to occur at a
particular price or within a particular range of prices or to occur at all; and
(c) the decision of the Stockholder to enter into this Agreement, or to vote in
favor of or consent to the Merger, has been or will be made independent of, and
without reliance on, any statements, opinions or other communications of, or due
diligence investigations that have been or will be made or performed by, any
prospective underwriter relative to INVATEC or the IPO. The Underwriter shall
have no obligation to either
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the Company or the Stockholder with respect to any disclosure contained in the
Registration Statement.
ARTICLE XI
TERMINATION
Section 11.01. TERMINATION OF THIS AGREEMENT. (a) This Agreement may
be terminated at any time prior to the Closing solely:
(i) by the mutual written consent of INVATEC and the Company;
(ii) by the Stockholders or the Company, on the one hand, or by
INVATEC, on the other hand, if the transactions contemplated by this
Agreement to take place at the Closing shall not have been consummated by
October 31, 1997, unless the failure of such transactions to be
consummated results from the willful failure of the party (or in the case
of the Stockholders and the Company, any of them) seeking to terminate
this Agreement to perform or adhere to any agreement required hereby to be
performed or adhered to by it prior to or at the Closing or thereafter on
the IPO Closing Date;
(iii) by the Stockholders or the Company, on the one hand, or by
INVATEC, on the other hand, if a material breach or default shall be made
by the other party (or in the case of the Stockholders and the Company,
any of them) in the observance or in the due and timely performance of any
of the covenants, agreements or conditions contained herein; or
(iv) by INVATEC if it is entitled to do so as provided in Section
4.07.
(b) This Agreement may be terminated after the Closing solely:
(i) by INVATEC or the Company if the Underwriting Agreement is
terminated pursuant to its terms after the Closing and prior to the
consummation of the IPO; or
(ii) automatically and without action on the part of any party
hereto if the IPO is not consummated within 15 New York City business days
after the date of the Closing.
Section 11.02. LIABILITIES IN EVENT OF TERMINATION. If this
Agreement is terminated pursuant to Section 11.01, there shall be no liability
or obligation on the part of any party hereto except (a) as provided in Section
10.05 and (b) to the extent that such liability is based on the breach by that
party of any of its representations, warranties or covenants set forth in this
Agreement.
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