EXHIBIT 10.3
ASSET PURCHASE AGREEMENT
AMONG
BLUE RHINO CORPORATION
AND
BISON VALVE, L.L.C.
AND
MICHAEL A. WATERS
ASSET PURCHASE AGREEMENT
Agreement entered into on as of September 17, 1999, among Blue Rhino
Corporation, a Delaware corporation (the "Buyer"), on the one hand and Bison
Valve, L.L.C., an Illinois limited liability company ("Bison"), and Michael A.
Waters ("Waters") (collectively Bison and Waters are referred to herein as the
"Sellers"). The Buyer and the Sellers are referred to collectively herein as
the "Parties."
This Agreement contemplates a transaction in which the Buyer will purchase
certain of the assets and assume certain of the liabilities of the Sellers in
return for the cancellation of the Convertible Note, and all interest due
thereunder, cash consideration, the Buyer Warrant and the Deferred Purchase
Price payments.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
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"Accredited Investor" has the meaning set forth in Regulation D promulgated
under the Securities Act.
"Acquired Assets" means all right, title, and interest in and to (a) all
assets of Bison directly relating to or necessary for the manufacture or sale of
the OPD Valve, consisting of all tangible personal property (such as machinery,
equipment, inventories of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods, tools, jigs, molds and dies) listed
on Schedule 1(a), (b) the OPD Intellectual Property, goodwill associated
therewith, licenses and sublicenses granted and obtained with respect thereto,
and rights thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions (c) Bison's
accounts, notes, and other receivables arising from the sale of the OPD Valve,
(d) Bison's claims, deposits, prepayments, refunds, causes of action, chooses in
action, rights of recovery, rights of set off (except those which could be
asserted against any Person making a claim against Bison which claim was not
included as an Assumed Liability) and rights of recoupment, (e) Bison's
assignable approvals, permits, licenses, orders, registrations, certificates,
variances, and similar rights obtained from governments and governmental
agencies relating to the manufacture, import or sale of the OPD Valve by Bison,
and (f) books, records, ledgers, files, documents, correspondence, lists,
drawings, and specifications, creative materials, advertising and promotional
materials, studies, reports, and other printed or written materials related to
the manufacture or sale of the OPD Valve; provided, however, that the Acquired
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Assets shall not include (i) any documents relating to the organization,
maintenance, and existence of Bison as a limited liability company, (ii) any of
the rights of the Sellers under this Agreement (or under any side agreement
between any Seller on the one hand and the Buyer on the other hand entered into
on or after the date of this Agreement), (iii) any of the assets listed on
Schedule 1, (iv) assets relating to either the propane heater, cylinder or
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cylinder valve business of the Sellers or Cash on hand.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504(a) or any similar group defined under a similar provision of state,
local, or foreign law.
"Assumed Liabilities" means (a) up to $50,000 of Bison's trade accounts
payable as reflected or included on the Most Recent Balance Sheet or incurred by
Bison between the date of the Most Recent Balance Sheet and the Closing Date in
the Ordinary Course of Business, consistent with past practices of Bison and
without violation of this Agreement, that have not been satisfied or discharged
(unless with borrowed funds, in which case the loan will be assumed in place of
the account payable) on or prior to the Closing Date (b) the liabilities for
payment under and performance of all contracts included in the Acquired Assets
provided, however, that the Assumed Liabilities shall not include (i) any
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Liability of any Seller for Taxes, (ii) any Liability of any Seller for the
unpaid Taxes of any Person under Reg. Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise, (iii) any obligation of any Seller to indemnify any Person (including
any of the Seller Members) by reason of the fact that such Person was the
manager, officer, employee, or agent of Bison or was serving at the request of
any such entity as a partner, trustee, director, officer, employee, or agent of
another entity (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such indemnification is pursuant to any statute, charter
document, bylaw, agreement, or otherwise), (iv) any Liability of any Seller
arising under an Employee Benefit Plan that the Seller maintains, or (v) any
Liability arising out of product liability claims related to OPD Valves
designed, manufactured, imported or sold by any Bison, or (vi) any Liability or
obligation of any Seller under this Agreement (or under any side agreement
between any Seller on the one hand and the Buyer on the other hand entered into
on or after the date of this Agreement).
"Average Closing Price" means the average closing price for a share of the
Buyer's common stock, as listed in The Wall Street Journal, Central Edition, for
the five trading days prior to the date of this Agreement.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or reasonably could be expected to
form the basis for any specified consequence.
"Benchmark Price" has the meaning set forth in Section 2(g).
"Bison" has the meaning set forth in the preface above.
"Bison Manager" means Waters.
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"Buyer" has the meaning set forth in the preface above.
"Buyer Warrant" means a warrant, in the form attached hereto as Exhibit A,
to acquire 100,000 shares of the Common Stock, at an exercise price equal to the
Average Closing Price as of the Closing Date.
"Cash" means cash and cash equivalents (including marketable securities and
short term investments) calculated in accordance with GAAP applied on a basis
consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Buyer's Common Stock, par value $.001 per share.
"Convertible Note" means the Convertible Note, dated as of February 12,
1998, issued by Bison payable to the Buyer.
"Cost of Goods Sold" has the meaning set forth in Section 2(g)(i).
"Deferred Purchase Price" has the meaning set forth in Section 2(g).
"Deferred Payment Term" has the meaning set forth in Section 2(g)(i).
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit
Plan or material fringe benefit or other retirement, bonus, or incentive plan or
program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Section
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section
3(1).
"Environmental, Health, and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
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environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Fair Market Value" has the meaning set forth in Section 2(g)(i).
"Financial Statement" has the meaning set forth in Section 3(g) below.
"First Patent Application" means patent application number 09/039,663 filed
with the United States Patent and Trademark Office on March 16, 1998 and
including the results of any amendments, continuations, continuation in part,
divisionals, re-examinations, re-issues similar procedures
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Gross Profits" has the meaning set forth in Section 2(g)(i).
"Indemnification Agreement" means the Indemnification Agreement among the
Buyer, Bison and Waters entered into concurrently herewith and attached hereto
as Exhibit B.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Intellectual Property Assignment" means the Intellectual Property
Assignment attached hereto as Exhibit C-2.
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"Knowledge" means actual knowledge of Waters.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"License Agreement" means the License Agreement, dated as of February 12,
1998, by and between Waters and Bison, attached hereto as Exhibit B.
"Most Recent Balance Sheet" means the balance sheet contained within the
Financial Statements.
"Most Recent Fiscal Quarter End" has the meaning set forth in Section 3(g)
below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"New License Agreement" means the License Agreement, dated of even date
herewith between the Buyer and Waters, attached hereto as Exhibit D.
"OPD Intellectual Property" means all Intellectual Property related to the
OPD Valve but shall not include any Intellectual Property relating to either the
propane heater, cylinder or cylinder valve (other than the OPD Valve) businesses
of the Sellers.
"OPD Valve" means the invention that is the subject of the License
Agreement.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"OPD Patent" means any patent which may be issued in the future with
respect to the OPD Valve as applied for in the Patent Applicaitons.
"Patent Applications" means the First Patent Application and the Second
Patent Application.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, a limited
liability company, a legal entity, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization, or a governmental entity
(or any department, agency, or political subdivision thereof).
"Purchase Price" has the meaning set forth in Section 2(c) below.
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"Second Patent Application" means patent application number 09/362,791
filed with the United States Patent and Trademark Office on July 28, 1999 and
including the results of any amendments, continuations, continuation in part,
divisionals, re-examinations, re-issues similar procedures
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest.
"Subsidiary" means any corporation or other Person with respect to which a
specified Person (or a Subsidiary thereof) owns more than eighty percent (80%)
of the equity interests.
"Sellers" has the meaning set forth in the preface above.
"Seller LLC Agreement" means the Operating Agreement of the Bison, dated as
of February 12, 1998.
"Seller Member" means any person who or which is a member of Bison.
"Seller Membership Interest" means the membership interests of Bison.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
environmental (including taxes under Code Section 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Trademark Assignment" means the Trademark Assignment in the for attached
hereto as Exhibit C-1.
"Waters" has the meaning set forth in the preface above.
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2. Basic Transaction.
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(a) Purchase and Sale of Assets. On and subject to the terms and
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conditions of this Agreement, the Buyer agrees to purchase from the Sellers, and
the Sellers agree to sell, transfer, convey, and deliver to the Buyer, all of
the Acquired Assets at the Closing for the consideration specified below in this
Section 2.
(b) Assumption of Liabilities. On and subject to the terms and conditions
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of this Agreement, the Buyer agrees to assume and become responsible for all of
the Assumed Liabilities at the Closing. The Buyer will not assume or have any
responsibility, however, with respect to any other obligation or Liability of
the Sellers not included within the definition of Assumed Liabilities.
(c) Purchase Price. The Purchase price shall consist of (i) the
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cancellation of the Convertible Note and any accrued and unpaid interest due
thereunder, (ii) the payment of $1,123,000 in cash and (iii) the Buyer Warrant,
(iv) the assumption of the Assumed Liabilities and (v) the Deferred Purchase
Price payments payable to Waters.
(d) The Closing. The closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place at the offices of Pedersen & Houpt in
Chicago, Illinois, commencing at 11:00 a.m. local time on or before September
30, 1999 or such other date as the Parties may mutually determine (the "Closing
Date").
(e) Deliveries at the Closing. At the Closing,
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(i) Sellers shall deliver to the Buyer:
(A) the various certificates, instruments, and documents referred
to in Section 6(a) below and;
(B) a Trademark Assignment in the form attached hereto as Exhibit
C-1,
(C) an Intellectual Property Assignment in the form attached
hereto as Exhibit C-2;
(D) an Assignment and Assumption Agreement the form attached
hereto as Exhibit C-3;
(E) a termination of the License Agreement;
(F) the New License Agreement;
(G) copies of all necessary third-party consents; and
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(H) such other instruments of sale, transfer, conveyance, and
assignment as the Buyer and its counsel reasonably may request,
including an Amendment of Bison's Articles of Organization to
effectuate a change of name which shall be filed by the Bison
within 15 days of the Closing Date.
(ii) the Buyer will deliver to the Sellers:
(A) the various certificates, instruments, and documents referred
to in Section 6(b) below;
(B) the Convertible Note marked "canceled and paid in full";
(C) Cash in the amount of $1,123,000 payable by wire transfer or
delivery of other immediately available funds:
(D) the fully executed Buyer Warrant;
(E) the Assignment and Assumption Agreement in the form attached
hereto as Exhibit C-3;
(F) the New License Agreement; and
(G) such other instruments of assumption as the Sellers and its
counsel reasonably may request.
(f) Allocation. The Parties agree to allocate the Purchase Price (and all
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other capitalizable costs) among the Acquired Assets for all purposes (including
financial accounting and tax purposes) in accordance with the allocation
schedule attached hereto as Exhibit E.
(g) Deferred Purchase Price.
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(i) The "Deferred Purchase Price " shall mean payments from the Buyer
to Waters pursuant to the Schedule of Deferred Payments within thirty (30)
days of the close of each and every calendar quarter for the life of the OPD
Patent or twenty-two years, whichever is less (the "Deferred Payment Term")
except that Buyer shall make Deferred Purchase Price payments to Waters for
the last quarter of the year within ninety (90) days of the close of each and
every calendar year of the Deferred Payment Term, at which time adjustments,
if any, to Gross Profit and payments will be made based on fiscal year end
audited financial statements of the Buyer. The Schedule of Deferred Payments
in Section 2(g)(ii) below is based on the Benchmark Price at open market (the
"Fair Market Value") of the OPD Valve and the gross profits from sales of the
OPD Valve (the "Gross Profits"). For purposes of this Agreement, "Benchmark
Price" shall mean the price at which the OPD Valves are sold, unless
otherwise agreed by the parties in good faith. In the event OPD
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Valves are sold as a component of other products sold by the Buyer, the
Benchmark Price for such OPD Valves shall equal the Benchmark Price
determined by reference to the average sales price for OPD Valves over the
previous ninety (90) days in sales which the OPD Valves were not sold as a
component of another product. For purposes of this Agreement, Gross Profits
shall mean the profit from sales of OPD Valves at Fair Market Value minus
all Costs of Goods Sold. For purposes of this Agreement, "Costs of Goods
Sold" shall mean cost of material, direct labor, subcontract production,
warranty on a cash basis including only the cost of and freight for
replacement units, duty, freight in, shop supplies, and shipping supplies
and production machinery depreciation and production tooling depreciation,
as determined in accordance with generally accepted accounting principles
consistently applied. Buyer's Deferred Purchase Price payments to Waters
shall be accompanied by a report setting forth, Fair Market Value, Gross
Profit, and sales of the OPD Valves for the appropriate period(s). Buyer
will keep records showing the products sold or otherwise disposed of during
the Term in such detail as to enable the amounts payable hereunder to be
easily determined. Buyer shall also permit its books and records to be
examined by Waters up to twice annually to the extent necessary to verify
the sales, Gross Profit, Fair Market Value, Cost of Goods Sold, and
payments provided for herein. Such examination shall be made during normal
business hours, at times convenient to Waters and Buyer.
(ii) Schedule of Deferred Payments
Deferred Purchase Price payments to be made on behalf of OPD
Valves shall be made according to the following schedule:
(A) If Gross Profits are greater than or equal to seventy percent
(70%) of the Fair Market Value sales of the OPD Valves, then the
Deferred Purchase Price payments shall be twelve and one-half percent
(12.5%) of the Fair Market Value sales of the OPD Valves.
(B) If Gross Profits are greater than or equal to sixty percent
(60%) but less than seventy percent (70%) of the Fair Market Value
sales of the OPD Valves, then the Deferred Purchase Price payments
shall be ten percent (10%) of the Fair Market Value sales of the OPD
Valves.
(C) If Gross Profits are greater than or equal to fifty percent
(50%) but less than sixty percent (60%) of the Fair Market Value sales
of the OPD Valves, then the Deferred Purchase Price payments shall be
seven and one-half percent (7.5%) of the Fair Market Value sales of
the OPD Valves.
(D) If Gross Profits are greater than or equal to forty percent
(40%) but less than fifty percent (50%) of the Fair Market Value sales
of the OPD Valves, then the Deferred Purchase Price payments shall be
five percent (5%) of the Fair Market
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Value sales of the OPD Valves.
(E) If Gross Profits are less than forty percent (40%) of the
Fair Market Value sales of the OPD Valves, then the Deferred Purchase
Price payments shall be two and one-half percent (2.5%) of the Fair
Market Value sales of the OPD Valves.
3. Representations and Warranties of the Sellers. Bison represents and
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warrants to the Buyer that the statements that are made by Bison contained in
this Section 3 are correct and complete as applied to Bison as of the date of
this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 3), except as set forth in the disclosure
schedule accompanying this Agreement and initialed by the Parties (the
"Disclosure Schedule"). Waters represents and warrants that the statements that
are made by Waters in this Section 3 are correct ad complete as applied to
Waters as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement) except as set forth on the
Disclosure Schedule The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
3.
(a) Organization of the Seller. Bison represents that it is a limited
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liability company, duly organized, validly existing, and in good standing under
the laws of the State of Illinois.
(b) Authorization of Transaction. (i) Bison represents that it has full
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power and authority (including full company power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the Seller Members and the Bison
Manager have duly authorized the execution, delivery, and performance of this
Agreement by Bison. This Agreement constitutes the valid and legally binding
obligation of Bison, enforceable in accordance with its terms and conditions and
(ii) Waters represents that he has full power and authority to execute and
deliver this Agreement and to perform his obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Waters, enforceable in
accordance with its terms and conditions.
(c) Non-contravention. Sellers represent that neither the execution and
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the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred to in
Section 2 above), will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any Seller is subject or any
provision of the Seller LLC Agreements or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which any Seller is a party or by which any Seller is bound or to
which any of the Acquired Assets is subject (or result in the imposition of any
Security Interest upon any of the Acquired Assets). With the exception of the
filing of the Trademark Assignment and Intellectual Property Assignment
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with the United States Patent and Trademark Office, the Sellers have not and are
not required to (i) give any notice to, (ii) make any filing with or (iii)
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement (including the assignments and assumptions referred to in Section
2 above).
(d) Brokers' Fees. The Sellers have not engaged nor authorized any broker,
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investment banker or third party to act on the Sellers' behalf, either directly
or indirectly, as a broker, finder or advisor in connection with the transaction
contemplated hereby.
(e) Title to Assets. Bison and Waters each have good and marketable title
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to the Acquired Assets to be transferred by each hereunder, free and clear of
all Security Interests and any restrictions on transfer.
(f) Subsidiaries. [Intentionally Omitted]
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(g) Financial Statements. Bison and Waters represent that attached hereto
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as Exhibit F are unaudited balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal quarter ended June
30, 1999 (the "Most Recent Fiscal Quarter End") for Bison (the "Financial
Statements"). The Financial Statements (including any notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, subject only to normal year end adjustments and notes,
present fairly the financial condition of Bison as of such dates and the results
of operations of the Bison for such periods as limited by the notes therein, are
materially correct and complete, and are consistent with the books and records
of Bison (which books and records are materially correct and, except as noted
therein complete).
(h) Events Subsequent to Most Recent Fiscal Quarter End. Since the Most
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Recent Fiscal Quarter End:
(i) no Seller has sold, leased, transferred, or assigned any of the
Acquired Assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) no Seller has entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
affecting the Acquired Assets either involving more than $22,000 or outside
the Ordinary Course of Business;
(iii) no party (including any Seller) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or series
of related agreements, contracts, leases, and licenses) involving more than
$22,000 to which any Seller is a party or by which it is bound;
(iv) no Seller has imposed any Security Interest upon any of the
Acquired Assets;
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(v) no Seller has canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) affecting the
Acquired Assets either involving more than $22,000 or outside the Ordinary
Course of Business;
(vi) no Seller has granted any license or sublicense of any rights
under or with respect to any of the Intellectual Property included in the
Acquired Assets except for the License Agreement and the Manufacturing
Agreement with Achiever Industries, Ltd.;
(vii) there has been no change made or authorized in the Seller LLC
Agreements;
(viii) Bison has not issued, sold, or otherwise disposed of any of
its equity, or granted any options, warrants, or other rights to purchase
or obtain (including upon conversion, exchange, or exercise) any of its
equity;
(ix) Bison has not has declared, set aside, or made any
distribution with respect to its equity (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any of its equity except
distributions of proceeds from the transactions pursuant to this Agreement;
(x) no Seller has experienced any damage, destruction, or loss
(whether or not covered by insurance) to any of the Acquired Assets; and
(xi) no Seller has committed to do any of the foregoing and to the
best of each Seller's knowledge, none of the foregoing is reasonably likely
to occur in the foreseeable future.
(i) Undisclosed Liabilities. Bison does not have any Liability, except for
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(i) Liabilities set forth on the face of the Most Recent Balance Sheet or in the
notes thereto; (ii) Liabilities which have arisen after the Most Recent Fiscal
Quarter End in the Ordinary Course of Business; (iii) Liabilities which are not
Assumed Liabilities and were incurred in connection with the business of Bison
other than the OPD Valve business; and (iv) Liabilities which are unknown to
Waters and Bison. Nothing in this representation shall limit the obligation of
the Sellers under the Indemnification Agreement to indemnify the Buyer for any
losses suffered by the Buyer as a result of any Liabilities of the Sellers other
than the Assumed Liabilities.
(j) Legal Compliance. The Sellers have complied with all material
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applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof) related to the
Acquired Assets the failure to comply with which would have a material adverse
affect on the business of Bison or the Acquired Assets and neither Seller has
received any notice of any action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice which has been filed or commenced
against either Seller alleging any failure so to comply.
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(k) Tax Matters.
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(i) Bison has filed or caused to be filed on a timely basis all
Tax Returns that are or were required to be filed by or with respect
to it. Bison shall make available to Buyer copies of, and Schedule
3(k) hereof contains a complete and accurate list of, all such Tax
Returns relating to income or other Taxes filed since February 12,
1998. Bison has paid all Taxes that have or may have become due
pursuant to those Tax Returns, or pursuant to any assessment received
by any Seller or any Seller Member or Manager of Bison.
(ii) No deficiency for Taxes has been claimed, proposed or
assessed against Bison. There are not pending, nor to Bison's
knowledge, threatened audits, investigations, or claims for or
relating to additional liability in respect of Taxes owed by Bison.
All Taxes that Bison is or was required by applicable legal authority
or otherwise to withhold or collect have been duly withheld or
collected and have been paid to the proper governmental body or other
Person. All Tax Returns filed by Bison are materially true, correct,
and complete. Bison has never been audited and has no knowledge of any
future IRS or other tax authority audits.
(iii) [Intentionally Omitted]
(iv) [Intentionally Omitted]
(v) [Intentionally Omitted]
(vi) [Intentionally Omitted].
(vii) [Intentionally Omitted].
(l) Real Property. [Intentionally Omitted]
-------------
(m) Intellectual Property.
---------------------
(i) To the knowledge of the Sellers, the Sellers own or have
the right to use pursuant to license, sublicense, agreement, or
permission all Intellectual Property necessary to manufacture, market,
use and/or sell the OPD Valve. Bison and Waters jointly and severally
warrant and represent that Waters with Chan Yet, owns all Intellectual
Property that is being licensed pursuant to the License Agreement,
that Waters is the sole registered applicant on the First Patent
Application and Waters and Chan Yet are the registered applicant on
the Second Patent Application.
(ii) To the knowledge of the Sellers, none of the Sellers has
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any
14
Intellectual Property rights of third parties in connection with the
manufacture, use or sale of the OPD Valve, and none of the Sellers,
Seller Members or officers (and employees with responsibility for
Intellectual Property matters) of any Seller has ever received any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including
any claim that any Seller must license or refrain from using any
Intellectual Property rights of any third party in connection with the
manufacture, use or sale of the OPD Valve). To the Knowledge of any
Seller or Seller Member and Bison Manager (and employees with
responsibility for Intellectual Property matters), no third party has
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any OPD Intellectual Property rights of any Seller
other than Intellectual Property rights of Waters which are not
related to the OPD Valve or business of Bison.
(iii) Neither Bison nor Waters has granted to any third party any
license, agreement or other permission with respect to, or any other
current or future rights in, any of its OPD Intellectual Property,
including rights in any now existing or hereafter filed or granted
domestic or foreign patent applications or patents, except those
manufacturers of OPD Valves specifically listed on Section 3(m)(iii)
of the Disclosure Schedule. Section 3(m)(iii) of the Disclosure
Schedule identifies each trade name or registered or unregistered
trademark used by Bison in connection with the OPD Valve. There are no
actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, or demands pending and, to the Knowledge of
Sellers, none are threatened which challenge the legality, validity,
enforceability, use, or ownership of the License Agreement, the
Intellectual Property licensed under the License Agreement or the
names and marks listed in Section 3(m)(iii) of the Disclosure
Schedule. No Seller has ever agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other
conflict with respect to any of the Intellectual Property.
(iv) Other than the License Agreement and computer software
which was not written for the Sellers, there is no item of
Intellectual Property that any third party owns and that Bison uses
pursuant to license, sublicense, agreement, or permission in
connection with the manufacture, use or sale of the OPD Valve.
(v) The Patent Applications include all of the patent
applications now owned or existing and filed by Assignor with respect
to the OPD Valve in the United States and in any other country. The
Sellers are not the holders of any United States or foreign patents
with respect to the OPD Valve.
(n) Tangible Assets. [Intentionally Deleted].
---------------
(o) Inventory. The inventory of Bison consists of raw materials and
---------
supplies, manufactured and purchased parts, goods in process, and finished
goods, all of which is
15
merchantable and fit for the purpose for which it was procured or manufactured,
and none of which is slow-moving, obsolete, damaged, or defective, subject only
to the reserve for inventory writedown set forth on the face of the Most Recent
Balance Sheet as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Sellers.
(p) Contracts. Section 3(p) of the Disclosure Schedule lists the
---------
following contracts and other agreements related to the OPD Valve to which Bison
is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $2,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, result in a material loss to Bison, or involve consideration in
excess of $2,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of
$2,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
and
(vi) any agreement involving any of the Seller Members and their
Affiliates (other than the Sellers).
Sellers have delivered to the Buyer a correct and complete copy of the
License Agreement. With respect to the License Agreement: (A) no party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the License Agreement; (B) no party has repudiated any
provision of the License Agreement; and (C) other than the sublicenses to the
manufacturers set forth in Schedule 3 (m)(iii); Neither Seller has granted any
sublicense or similar right with respect to the License Agreement.
(q) Notes and Accounts Receivable. [Intentionally omitted].
-----------------------------
(s) Insurance. The Sellers carry insurance, which is adequate in
---------
character and amount, with reputable insurers, covering all of the Acquired
Assets. With respect to each such insurance policy: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B)
16
the policy will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Section 2 above); (C) neither the Sellers nor any other party to
the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no party
to the policy has repudiated any provision thereof. The Sellers have been
covered since its formation by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. Section 3(s) of the Disclosure Schedule describes any self-insurance
arrangements affecting the Sellers and lists each insurance policy currently or
previously in effect with respect to the Acquired Assets.
(t) Litigation. [Intentionally Omitted].
----------
(u) Product Warranty. Each product manufactured, sold, leased, or
----------------
delivered by the Sellers has been in conformity with all applicable contractual
commitments and all express and implied warranties, and no Seller has any
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve for product
warranty claims set forth on the face of the Most Recent Balance Sheet (rather
than in any notes thereto) as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of the Sellers. No
product manufactured, sold, leased, or delivered by any Seller is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms and
conditions of sale or lease. Section 3(u) of the Disclosure Schedule includes
copies of the standard terms and conditions of sale or lease for the Sellers
(containing applicable guaranty, warranty, and indemnity provisions). The OPD
Valve has received Underwriters Laboratories' approval.
(v) Product Liability. Except as set forth on Schedule 3(v), to the
-----------------
Knowledge of Bison, Bison has no Liability (and there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against Bison giving rise to any Liability) arising
out of any injury to individuals or property as a result of the ownership,
possession, or use of the OPD Valve.
(w) Employees. [Intentionally Omitted].
---------
(x) Employee Benefits. [Intentionally Omitted].
-----------------
(y) Guaranties. [Intentionally Omitted].
----------
(z) Environmental, Health, and Safety Matters. To the best of each
-----------------------------------------
Seller's Knowledge, each Seller has materially complied and is in material
compliance with all material Environmental, Health, and Safety Requirements in
connection with the manufacture, transportation
17
and storage of the OPD Valve.
(aa) Certain Business Relationships With the Sellers. [Intentionally
-----------------------------------------------
Omitted]
(bb) Disclosure. [Intentionally Omitted.]
----------
(cc) Investment. The Seller (i) understands that the Buyer Warrant
----------
has not been, and will not be, registered under the Securities Act, or under any
state securities laws, and is being offered and sold in reliance upon federal
and state exemptions for transactions not involving any public offering, (ii) is
acquiring the Buyer Warrant solely for its own account for investment purposes,
and not with a view to the distribution thereof (except to the Seller Members),
(iii) is a sophisticated investor with knowledge and experience in business and
financial matters, (iv) has received certain information concerning the Buyer
and has had the opportunity to obtain additional information as desired in order
to evaluate the merits and the risks inherent in holding the Buyer Warrant, (v)
is able to bear the economic risk and lack of liquidity inherent in holding the
Buyer Warrant, and (vi) is an Accredited Investor.
4. Representations and Warranties of the Buyer. The Buyer
-------------------------------------------
represents and warrants to the Sellers that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4).
(a) Organization of the Buyer. The Buyer is a corporation duly
-------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware.
(b) Authorization of Transaction. The Buyer has full power and
----------------------------
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
----------------
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above and
the issuance by Buyer of the Buyer Warrant and delivery of stock to Seller upon
exercise thereof), will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyer is subject or any
provision of its charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Buyer is a party or by which it is bound or to which any of its
assets is subject. The Buyer does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
18
contemplated by this Agreement (including the assignments and assumptions
referred to in Section 2 above).
(d) Brokers' Fees. The Buyer has not engaged nor authorized any
-------------
broker, investment banker or third party to act on the Buyer's behalf, either
directly or indirectly, as a broker, finder or advisor in connection with the
transaction contemplated hereby.
(e) Buyer Stock. [Intentionally Omitted].
-----------
(f) Buyer Warrant. When issued, the Buyer Warrant shall be free of
--------------
all Liabilities and shall evidence the binding agreement of Buyer, enforceable
against Buyer in accordance with its terms.
(g) Buyer Warrant Stock. Upon exercise of the Buyer Warrant and
-------------------
payment of the purchase price of the stock to be issued thereunder by the holder
of the Buyer Warrant, such stock (i) will be fully paid and non assessable (ii)
will be free from restrictions on transfer (iii) will have been transferred in a
transaction that is the subject of an effective registration statement.
5. Pre-Closing Covenants. The Parties agree as follows with respect
---------------------
to the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable best efforts
-------
to take all action and to do all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 6
below).
(b) Notices and Consents. The Sellers will give any notices to third
--------------------
parties, and the Sellers will use their reasonable best efforts to obtain any
third party consents, that the Buyer reasonably may request in connection with
the matters referred to in Section 3(c) above. Each of the Parties will give
any notices to, make any filings with, and use its reasonable best efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Section 3(c)
and Section 4(c) above.
(c) Operation of Business. Bison will not engage in any practice,
---------------------
take any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, Bison will not (i)
declare, set aside, or pay any distribution to the Seller Members, (ii)
purchase, or otherwise acquire any membership units of the Bison, (iii) modify
the terms of the License Agreement except pursuant to the written request of
Buyer to effect the Closing, or (iv) otherwise engage in any practice, take any
action, or enter into any transaction of the sort described in Section 3(h)
above.
(d) Preservation of Business. Bison will keep its business and
------------------------
properties substantially intact, including its present operations, physical
facilities, working conditions, and
19
relationships with lessors, licensors, suppliers, customers, and employees.
(e) Full Access. Bison will permit representatives of the Buyer to
-----------
have full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of Bison, to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to Bison.
(f) Notice of Developments. Each Party will give prompt written
----------------------
notice to the other Party of any material adverse development causing a breach
of any of its own representations and warranties in Section 3 and Section 4
above. No disclosure by any Party pursuant to this Section 5(f), however, shall
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(g) Exclusivity. The Sellers will not (i) solicit, initiate, or
-----------
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any membership units or other voting securities, or any
substantial portion of the assets, of Bison (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Sellers will
notify the Buyer immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
(h) Title Insurance. [Intentionally Omitted].
---------------
(i) Non-Exercise. The Buyer shall not exercise any rights or
------------
remedies, including its right to convert debt into units, under the Convertible
Note.
(j) Public Disclosures. Buyer will provide to Sellers simultaneously
-------------------
with the filing thereof copies of all filings of Buyer with the S.E.C. and all
press releases or other public disclosures of Buyer relating to this
acquisition.
6. Conditions to Obligation to Close.
----------------------------------
(a) Conditions to Obligation of the Buyer. The obligation of the
-------------------------------------
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) the Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through the
Closing;
20
(iii) the Sellers shall have procured all of the third party
consents specified in Section 5(b) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Buyer to own
the Acquired Assets and to operate the former businesses of the
Sellers;
(v) the Sellers shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified above in Section
6(a)(i)-(iv) is satisfied in all respects;
(vi) all actions to be taken by the Sellers in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
(b) Conditions to Obligation of the Sellers. The obligation of the
---------------------------------------
Sellers to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(iv) the Buyer shall have delivered to the Sellers a certificate
to the effect that each of the conditions specified above in Section
6(b)(i)-(iii) is satisfied in all respects;
21
(v) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers.
7. Termination.
------------
(a) Termination of Agreement. Certain of the Parties may terminate
------------------------
this Agreement as provided below:
(i) the Buyer and the Sellers may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Sellers at any time prior to the Closing (A) in the
event any Seller has breached any material representation, warranty,
or covenant contained in this Agreement in any material respect, the
Buyer has notified the Sellers of the breach, and the breach has
continued without cure for a period of 15 days after the notice of
breach or (B) if the Closing shall not have occurred on or before
September 30, 1999 (or such later date as is necessary to allow for
the completion of any 15 day cure period provided for under subsection
(A)), by reason of the failure of any condition precedent under
Section 6(a) hereof (unless the failure results primarily from the
Buyer itself breaching any representation, warranty, or covenant
contained in this Agreement); and
(iii) the Sellers may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event
the Buyer has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the
Sellers have notified the Buyer of the breach, and the breach has
continued without cure for a period of 15 days after the notice of
breach, (B) if the trading in the stock of the Buyer is halted, an
investigation of the Buyer by the S.E.C. is commenced or the Buyers
stock is delisted or (C) if the Closing shall not have occurred on or
before September 30, 1999 (or such later date as is necessary to allow
for the completion of any 15 day cure period provided for under
subsection (A)), by reason of the failure of any condition precedent
under Section 6(b) hereof (unless the failure results primarily from
the Seller itself breaching any representation, warranty, or covenant
contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
---------------------
pursuant to Section 7(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
22
8. Miscellaneous.
--------------
(a) Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder as and to the extent provided in the
Indemnification Agreement, which provides the sole remedy of the Buyer after
Closing for any claims of breach of any representation or warranty.
(b) Press Releases and Public Announcements. No Party shall issue any
---------------------------------------
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party; provided, however, that any Party may make any public disclosure it
-----------------
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other Party
prior to making the disclosure and will, in any event, provide a copy of any
such disclosure (including transcripts of any analysts' meetings or conference
calls) within two business days of its release).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
----------------------------
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents
----------------
referred to herein and agreements executed and delivered pursuant hereto)
constitutes the entire agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(e) Succession and Assignment. This Agreement shall be binding upon
-------------------------
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that the Buyer may (i) assign
-----------------
any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(f) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given two days
after it is sent by registered or certified mail, return receipt
23
requested, postage prepaid, and on the day after it is sent by next day air
courier or ground messenger service or by telecopy and on the day of actual
delivery by personal delivery, and addressed to the intended recipient as set
forth below:
If to the Sellers: Michael A. Waters
1520 Commerce Drive
Elgin, Illinois 60123
Fax: (847) 888-1496
With a copy to the Seller's
attorneys: Vance L. Liebman, Esq.
Levin & Funkhouser, Ltd.
55 West Monroe Street, Suite 2410
Chicago, Illinois 60603
Fax: (312) 641-2640
If to the Buyer: Blue Rhino Corporation
104 Cambridge Plaza Drive
Winston-Salem, North Carolina 27104
Attention: Mark Castaneda
Fax: (336) 659-6750
With a copy to the Buyer's John H. Muehlstein, Esq.
attorneys: Pedersen & Houpt, P.C.
161 North Clark Street, Suite 3100
Chicago, Illinois 60601
Fax: (312) 641-6895
Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the domestic laws of the State of Illinois without giving
effect to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
(j) Amendments and Waivers. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
24
(k) Severability. Whenever possible, each provision of this Agreement
------------
shall be construed and interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement or the application
thereof to any party or circumstance shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition without invalidating the remainder of such provision or any other
provision of this Agreement or the application of such provision to other
parties or circumstances.
(l) Expenses. Each of the Buyer, the Sellers, and the Seller Members
--------
will bear his or its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby.
(m) Construction. The Parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
---------------------------------------
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and agrees
--------------------
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
[The next page is the Signature Page]
25
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SELLERS: BISON VALVE, L.L.C.
By /s/ Michael A. Waters
--------------------------
Name: Michael A. Waters
Title: President
/s/ Michael A. Waters
----------------------------
Michael A. Waters
BUYER: BLUE RHINO CORPORATION
By /s/ Mark Castaneda
--------------------------
Name: Mark Castaneda
Title: Chief Financial Officer
26
Exhibit List
- ------------
Exhibit A Buyer Warrant
Exhibit B Indemnification Agreement
Exhibit C-1 Assignment of Trademarks
Exhibit C-2 Assignment of Intellectual Property
Exhibit C-3 Assignment and Assumption Agreement
Exhibit D New License Agreement
Exhibit E Allocation of Purchase Price
Exhibit F Financial Statements
27