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Nu Skin Enterprises Asset Purchase Agreement from RealDealDocs.com

June 6, 2008

Happy Friday everyone! To end the week I’ve brought you an Amlaw 2008 celebrated law firm’s draft of an Asset Purchase Agreement. Thank you to my friends over at RealDealDocs.com for letting me release this agreement for free. To search millions of legal docs for free, please visit www.RealDealDocs.com!

EX-10.52

                            ASSET PURCHASE AGREEMENT

                                  BY AND AMONG

                           NU SKIN ENTERPRISES, INC.,

                          NU SKIN UNITED STATES, INC.,

                                       AND

                                NU SKIN USA, INC.

                                  March 8, 1999

                            ASSET PURCHASE AGREEMENT

         This  Asset  Purchase  Agreement  (the  “Agreement”)  is  entered  into
effective  as of March  8,  1999,  by and  among Nu Skin  Enterprises,  Inc.,  a
Delaware  corporation (“Nu Skin  Enterprises”),  Nu Skin United States,  Inc., a
Delaware  corporation  (“Nu  Skin  United  States”),  and Nu Skin USA,  Inc.,  a
Delaware  corporation  (“Nu Skin USA”).  Nu Skin  Enterprises and Nu Skin United
States  are  sometimes  referred  to  herein,  collectively,  as  the  “Nu  Skin
Entities.”  Nu Skin  Enterprises,  Nu Skin  United  States,  and Nu Skin USA are
referred to herein,  collectively,  as the  “Parties”  and,  individually,  as a
“Party.”

                                    RECITALS

         WHEREAS, this Agreement contemplates a transaction in which (i) Nu Skin
United States will  purchase from Nu Skin USA certain of its assets  (defined in
this  Agreement  as the  “Non-Securities  Acquired  Assets”) in exchange for the
assumption  by Nu Skin  United  States of certain  of Nu Skin USA’s  liabilities
(defined in this Agreement,  collectively,  as the “Assumed Liabilities,” as set
forth in Section 2.2.1 below),  and (ii) Nu Skin  Enterprises  will purchase for
cash  from Nu Skin USA  certain  shares of Nu Skin  Enterprises’  Class A Common
Stock  (defined  in this  Agreement  as the  “Class A  Shares,”  as set forth in
Section 2.1.2 below) owned by Nu Skin USA.

         NOW THEREFORE,  in  consideration of the mutual premises and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows.

1.       Definitions.

         “Acquired Assets” has the meaning set forth in Section 2.1.3 below.

         “Acquired Contracts” has the meaning set forth in Section 2.1.1 below.

         “Affiliates”  means (a) Merasoft LLC, a Utah limited liability company;
(b) Scrub Oak Ltd., a Utah limited  partnership;  (c) Aspen  Investments Ltd., a
Utah limited partnership, and (d) any other affiliated entity other than Nu Skin
Enterprises and its subsidiaries.

         “Affiliated  Group”  means any  affiliated  group within the meaning of
Code Section 1504(a).

         “Assumed Liabilities” has the meaning set forth in Section 2.2.1 below.

         “Basis”  means  any  past or  present  fact,  situation,  circumstance,
status,  condition,  activity,  practice,  plan,  occurrence,  event,  incident,
action,  failure to act, or  transaction  that forms or could form the basis for
any specified consequence.

         “Bill of Sale and Assignment”  means the Bill of Sale and Assignment in
the form attached hereto as Exhibit “D”.
<PAGE>
         “Cash” means cash and cash equivalents (including marketable securities
and short -term  investments)  calculated in accordance with generally  accepted
accounting principles applied on a consistent basis.

         “Class A Common  Stock”  has the  meaning  set forth in  Section  2.1.2
below.

         “Class A Purchase  Price” has the  meaning  set forth in Section  2.2.2
below.

         “Class A Shares” has the meaning set forth in Section 2.1.2 below.

         “Closing” has the meaning set forth in Section 2.3 below.

         “Closing  Date Balance  Sheet” has the meaning set forth in Section 3.2
below.

         “COBRA”  means the  requirements  of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B.

         “Code” means the Internal Revenue Code of 1986, as amended.

         “Controlled Group” has the meaning set forth in Code Section 1563.

         “Damages” has the meaning set forth in Section 5.1 below.

         “Disclosure Schedule” has the meaning set forth in Section 3 below.

         “Employee   Benefit   Plan”  means  any  (a)   non-qualified   deferred
compensation  or  retirement  plan  or   arrangement,   (b)  qualified   defined
contribution  retirement plan or arrangement that is an Employee Pension Benefit
Plan, (c) qualified  defined benefit  retirement plan or arrangement  that is an
Employee  Pension  Benefit Plan  (including  any  Multi-employer  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 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.
<PAGE>
         “ERISA” means the Employee  Retirement  Income Security Act of 1974, as
amended.

         “ERISA  Affiliate”  means  each  entity  that is  treated  as a  single
employer with Nu Skin USA for purposes of Code Section 414.

         “Escrow” has the meaning set forth in Section 3.2 below.

         “Escrow Agent” means U.S. Bank National Association, a national banking
association.

         “Escrow  Agreement”  means  the  Escrow  Agreement  dated of even  date
herewith  entered  into by an  among  Nu Skin  Enterprises,  Nu  Skin  USA,  the
stockholders who executed the signature page thereto, and the Escrow Agent.

         “Escrow Amount” has the meaning set forth in Section 3 below.

         “Excluded Assets” has the meaning set forth in Section 2.1.1 below.

         “Existing Agreements” has the meaning set forth in Section 2.2.1 below.

         “Fiduciary” has the meaning set forth in ERISA Section 3(21).

         “Indemnification   Limitation   Agreement”  means  the  Indemnification
Limitation  Agreement  entered  into by and among Nu Skin  Enterprises,  Nu Skin
United  States,  Nu Skin USA,  Big Planet,  Inc.,  a Utah  corporation,  and the
individuals  indicated therein,  the form of which is attached hereto as Exhibit
“F”.

         “Indemnitees” has the meaning set forth in Section 5.1 below.

         “Instrument  of  Assumption”  means the Instrument of Assumption in the
form attached hereto as Exhibit “E”.

         “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 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),   (e)  all  computer  software   (including  data  and  related
documentation),  (f) all  other  proprietary  rights,  and (g)  all  copies  and
tangible embodiments thereof (in whatever form or medium).

         “Knowledge” means actual knowledge after reasonable investigation.
<PAGE>
         “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.

         “Multi-employer Plan” has the meaning set forth in ERISA Section 3(37).

         “NSE Indemnitees” has the meaning set forth in Section 7.1 below.

         “NSUSA Indemnitees” has the meaning set forth in Section 7.2 below.

         “Net Liabilities” means the excess of the Assumed  Liabilities over the
book value of the  Non-Securities  Acquired  Assets,  as determined from Nu Skin
USA’s Closing Date Balance Sheet.

         “Non-Securities  Acquired  Assets” has the meaning set forth in Section
2.1.1 below.

         “Nu Skin Enterprises” has the meaning set forth in the preface above.

         “Nu Skin Entities” has the meaning set forth in the preface above.

         “Nu  Skin USA  Intellectual  Property”  has the  meaning  set  forth in
Section 5.8.1 below.

         “Nu Skin  International”  means  Nu Skin  International,  Inc.,  a Utah
corporation.

         “Nu Skin United States” has the meaning set forth in the preface above.

         “Nu Skin USA” has the meaning set forth in the preface above.

         “Ordinary  Course of Business”  means the  ordinary  course of business
consistent with past custom and practice (including with respect to quantity and
frequency).

         “Parties” and “Party” have the meanings 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,  an  association,  a joint stock  company,  a trust, a joint
venture,  an  unincorporated  organization,  or a  governmental  entity  (or any
department, agency, or political subdivision thereof).

         “Prohibited Transaction” has the meaning set forth in ERISA Section 406
and Code Section 4975.

         “Purchase Price” has the meaning set forth in Section 2.2.3 below.

         “Reportable Event” has the meaning set forth in ERISA Section 4043.

         “Security  Interest”  means any mortgage,  pledge,  lien,  encumbrance,
charge, or other security  interest,  other than (a) mechanic’s,  materialmen’s,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through  appropriate  proceedings,  (c)
purchase  money liens and liens  securing  rental  payments  under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
<PAGE>
         “Tax”  means any  federal,  state,  local,  or  foreign  income,  gross
receipts,  license, payroll,  employment,  excise, severance, stamp, occupation,
premium,  windfall  profits,  environmental  (including taxes under Code 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.

2.       Basic Transaction.

         2.1      Purchase of the Acquired Assets.

                  2.1.1  Purchase  of the  Non-Securities  Acquired  Assets.  In
exchange  for the  assignment  and  assumption  by Nu Skin United  States of the
Assumed  Liabilities,  on and  subject  to the  terms  and  conditions  of  this
Agreement,  Nu Skin United  States  agrees to purchase  and acquire from Nu Skin
USA, and Nu Skin USA agrees to sell, transfer, convey, assign, and deliver to Nu
Skin United  States,  all of its right,  title and interest in and to all of the
assets of Nu Skin USA  (except  for the  excluded  assets  listed on Exhibit “A”
attached  hereto and the  contracts  not expressly  assumed  (collectively,  the
“Excluded  Assets”  and except for the Class A Shares,  which are  addressed  in
Section 2.1.2 below), of whatever kind or nature whatsoever,  including, but not
limited  to,  (a)  all  leasehold  improvements,  (b)  all  equipment,  (c)  all
inventory,  (d) the name “Nu Skin  USA”  and all  derivations  thereof,  (e) all
intellectual  property  used by Nu Skin USA in its business that is not licensed
to it by Nu Skin  International,  (f) all  promotional  and marketing  materials
related  to Nu  Skin  USA’s  business,  and  (g) the  contracts  and  agreements
specifically  listed on Exhibit “B” attached  hereto,  each of which is directly
related to Nu Skin USA’s business of network  marketing Nu Skin  International’s
personal care and nutritional products (collectively, the “Acquired Contracts”).
No other  contracts  or  agreements  of Nu Skin  USA  other  than  the  Acquired
Contracts  are  being  acquired  by Nu  Skin  United  States  (nor  is  Nu  Skin
Enterprises  acquiring any of Nu Skin USA’s contracts or agreements  pursuant to
this Agreement).  Furthermore,  the Parties understand and agree that neither Nu
Skin Enterprises nor Nu Skin United States is hereby acquiring any liability to,
for, or in connection with Big Planet, Inc. The Parties specifically  understand
and agree that all of Nu Skin USA’s  operating  assets are being  acquired by Nu
Skin United States pursuant to this Agreement,  except for the Excluded  Assets.
The assets being purchased and acquired by Nu Skin United States,  as identified
in  this  Section  2.1.1,   are  referred  to  herein,   collectively,   as  the
“Non-Securities Acquired Assets.”

                  2.1.2  Purchase  of the Class A Shares.  On and subject to the
terms and conditions of this Agreement,  Nu Skin Enterprises  agrees to purchase
at the  Closing  from Nu Skin USA,  and Nu Skin USA  agrees  to sell,  transfer,
convey, assign, and deliver to Nu Skin Enterprises,  in exchange for the Class A
Purchase Price (as that term is defined in Section 2.2.2 below),  all of Nu Skin
USA’s right,  title,  and interest in and to the six hundred twenty thousand one
hundred  fifty-eight  (620,158)  shares  of Nu Skin  Enterprises  Class A Common
Stock, $0.001 par value per share (“Class A Common Stock”), owned by Nu Skin USA
(the “Class A Shares”).
<PAGE>
                  2.1.3  Acquired Assets. The Non-Securities Acquired Assets and
the  Class  A  Shares  are  referred  to  herein, collectively, as the “Acquired
Assets.”

         2.2      Purchase Price Determination.

                  2.2.1 Purchase Price for the  Non-Securities  Acquired Assets.
On and subject to the terms and conditions of this Agreement and in exchange for
the Non-Securities  Acquired Assets, at the Closing Nu Skin United States agrees
to assume and become solely  responsible  for the categories of liabilities  and
the contractual obligations of Nu Skin USA specifically set forth on Exhibit “C”
attached hereto  (collectively,  the “Assumed  Liabilities”).  Under the heading
“Contractual  Obligations  Assumed by Nu Skin  United  States”  in  Exhibit  “C”
attached  hereto,  the  Parties  have  specifically  listed  each  contract  and
agreement  that is being  assumed  by Nu Skin  United  States  pursuant  to this
Agreement  (which  contractual  obligations are deemed to be part of the Assumed
Liabilities),  and no other  contractual  obligation  of Nu Skin USA of any type
whatsoever  is being  assumed by Nu Skin  United  States  except as so listed in
Exhibit “C” attached hereto.  Notwithstanding  the provisions of this Agreement,
the  Parties   hereby   acknowledge   and  reaffirm  (a)  the  Tax  Sharing  and
Indemnification  Agreement dated December 31, 1997 and entered into by and among
Nu Skin International,  Nu Skin USA, and their respective shareholders,  (b) the
Assumption of Liabilities  and  Indemnification  Agreement dated effective as of
December  31, 1997 and entered  into by and  between Nu Skin  International  and
252nd  Shelf  Corporation,  a Delaware  corporation  (now known as “Nu Skin USA,
Inc.”),  and (c) the Employee Benefits  Allocation  Agreement  (undated) entered
into by and between Nu Skin  International  and Nu Skin USA  (collectively,  the
“Existing Agreements”), and specifically acknowledge and agree that the Existing
Agreements  are not  included  within  the  Assumed  Liabilities.  The  Existing
Agreements shall remain in full force and effect as originally  executed and are
not being  terminated,  modified,  or amended  by this  Agreement.  The  Parties
understand and agree that, except for the Assumed  Liabilities,  neither Nu Skin
United States nor Nu Skin Enterprises (or any of their respective affiliates) is
or will become liable or responsible for any other Liabilities or obligations of
Nu Skin USA pursuant to this Agreement.  As set forth above,  the purchase price
for the Non-Securities Acquired Assets shall be the assumption by Nu Skin United
States of the Assumed  Liabilities.  The aggregate purchase price for all of the
Non-Securities  Acquired  Assets is  referred  to herein as the  “Non-Securities
Purchase Price.”

                  2.2.2  Purchase  Price for the Class A  Shares.  The  purchase
price for the  Class A Shares  shall be Eight  Million  Six  Hundred  Eighty-Two
Thousand Two Hundred Twelve Dollars ($8,682,212) (the “Class A Purchase Price”).
The Class A Purchase Price will be paid by Nu Skin  Enterprises by wire transfer
or delivery of other  immediately  available funds to Nu Skin USA at the Closing
as follows:  (a) Five Million Six Hundred Eighty-Two Thousand Two Hundred Twelve
($5,682,212)  to Nu Skin USA and (b) Three Million Dollars  ($3,000,000)  (which
amount is defined in Section 3 below as the “Escrow Amount”) to the Escrow Agent
pursuant to the Escrow Agreement.

                  2.2.3  Purchase Price. The Non-Securities Purchase  Price  and
the  Class  A  Purchase  Price  are  referred  to  herein,  collectively, as the
“Purchase Price.”
<PAGE>
                  2.2.4  Allocation of Purchase Price.  The Purchase Price shall
be  allocated  among  the  Acquired  Assets  as of the  date of the  Closing  in
accordance with Exhibit “H” attached hereto.  Any subsequent  adjustments to the
sum of the Purchase  Price shall be reflected in the  allocation  hereunder in a
manner consistent with Treasury  Regulation  Section  1.1060-1T(f).  For all Tax
purposes,  the Parties  agree to report the  transactions  contemplated  in this
Agreement in a manner consistent with the terms of this Agreement, including the
allocation set forth in Exhibit “H” attached hereto,  and that none of them will
take any position  inconsistent  therewith in any Tax return,  Tax refund claim,
litigation, or otherwise.

3. The Escrow Amount; Purchase Price Adjustments;  Net Liabilities. As set forth
in Section  2.2.2 above,  upon the  execution  of this  Agreement by each of the
Parties, Nu Skin Enterprises will deliver Three Million Dollars  ($3,000,000) of
the Class A Purchase Price (the “Escrow Amount”) to the Escrow Agent for deposit
into the  Escrow  pursuant  to the terms of the Escrow  Agreement.  As set forth
below in this Section 3 and in the Escrow Agreement, the Purchase Price shall be
subject to downward  adjustment  on a dollar for dollar  basis to the extent the
Net  Liabilities  of Nu Skin USA, as indicated in the Closing Date Balance Sheet
(as that term is defined in Section  3.2 below)  exceeded  One  Million  Dollars
($1,000,000).  Such downward  adjustment  shall be effected by  disbursements of
funds from the Escrow Amount in accordance with the Escrow Agreement. As further
provided in the Escrow Agreement,  the Purchase Price may further be adjusted by
the amount of any adjustments  provided for in the Foreign Entity Stock Purchase
Agreement(s) (as such term is defined in the Escrow Agreement).  If any conflict
exists between this Agreement and the Escrow Agreement  regarding the adjustment
of the  Purchase  Price  by  disbursements  from  the  Escrow  Amount  or  other
disbursements from the Escrow, the Escrow Agreement shall govern and control.
<PAGE>
         3.1 Draft Closing Date Balance Sheet.  Within sixty (60) days after the
date of the Closing, Nu Skin USA will prepare and deliver to Nu Skin Enterprises
and the Escrow Agent a draft  unaudited  consolidated  balance sheet (the “Draft
Closing  Date  Balance  Sheet”)  of Nu Skin  USA as of the  date of the  Closing
(determined on a pro forma basis as though the Parties had not  consummated  the
transactions contemplated by this Agreement). Nu Skin USA will prepare the Draft
Closing Date Balance  Sheet in accordance  with  generally  accepted  accounting
principles  applied on a basis  consistent with the preparation of Nu Skin USA’s
December 31, 1998 balance sheet;  provided,  however, that assets,  liabilities,
gains,  losses,  revenues,  and expenses in interim periods or as of dates other
than  year-end  (which  normally  are  determined  through  the  application  of
so-called interim accounting conventions or procedures) will be determined,  for
purposes of the Draft Closing Date Balance  Sheet,  through full  application of
the procedures used in preparing Nu Skin USA’s December 31, 1998 balance sheet.

         3.2 Objections to Draft Closing Date Balance Sheet; Appointment of “Big
5”  Accounting  Firm.  If Nu Skin  Enterprises  has any  objections to the Draft
Closing Date Balance Sheet, it shall deliver a detailed statement describing its
objections  to Nu Skin USA and the Escrow  Agent  within  thirty (30) days after
receiving the Draft Closing Date Balance Sheet. Nu Skin  Enterprises and Nu Skin
USA will then use reasonable efforts to resolve any such objections  themselves.
If Nu Skin  Enterprises  and Nu Skin USA do not agree on a final  resolution  of
such  objections  within  thirty  (30) days after Nu Skin USA  receives  Nu Skin
Enterprises’s  statement  describing its objections,  Nu Skin Enterprises  shall
appoint one of the so-called  “Big 5” national  accounting  firms to resolve any
remaining objections to the Draft Closing Date Balance Sheet; provided, however,
that the “Big 5” accounting  firm so appointed shall not at that time be engaged
by Nu Skin  Enterprises  to  provide  it with  auditing  services  (the “‘Big 5’
Accountant”).  The appointment of the “Big 5” Accountant by Nu Skin Enterprises,
as provided by this Section 3.2, and the  determinations  and conclusions of the
“Big 5” Accountant  pursuant  hereto,  shall be conclusive  and binding upon the
Parties.  Nu Skin USA will  revise the Draft  Closing  Date  Balance  Sheet,  as
appropriate,  to reflect the  resolution of any objections  thereto  pursuant to
this Section 3.2. For purposes of this Agreement, the term “Closing Date Balance
Sheet”  shall  mean the Draft  Closing  Date  Balance  Sheet  together  with any
revisions made thereto by Nu Skin USA pursuant to this Section 3.2. In the event
Nu Skin  Enterprises  and Nu Skin USA submit any  unresolved  objections  to the
Draft Closing Balance Sheet to the “Big 5” Accountant for resolution as provided
above in this  Section  3.2,  Nu Skin  Enterprises  and Nu Skin  USA will  share
equally the fees and expenses of the “Big 5” Accountant.
<PAGE>
         3.3 Work  Papers.  Nu Skin USA will make the work  papers  and  back-up
materials used in preparing the Draft Closing Date Balance Sheet available to Nu
Skin  Enterprises  and its  representatives  and to the  “Big 5”  Accountant  at
reasonable  times  and  upon  reasonable  notice  at any  time  during  (i)  the
preparation  by Nu Skin USA of the Draft  Closing Date Balance  Sheet,  (ii) the
review by Nu Skin Enterprises and its  representatives of the Draft Closing Date
Balance Sheet,  (iii) the discussion by Nu Skin  Enterprises  and Nu Skin USA of
any objections Nu Skin Enterprises may have thereto,  and (iv) the resolution by
the “Big 5”  Accountant of any  unresolved  objections to the Draft Closing Date
Balance Sheet as set forth in Section 3.2 above.

         3.4 Adjustment to Escrow Amount.  As set forth in the Escrow Agreement,
if the Net  Liabilities  are more than One  Million  Dollars  ($1,000,000),  the
Escrow Agent will promptly return to Nu Skin Enterprises the amount by which the
Net Liabilities exceeded One Million Dollars ($1,000,000) in accordance with the
provisions of the Escrow Agreement.  Any such amount payable by the Escrow Agent
to Nu Skin Enterprises  pursuant to this Section 3.4 shall be paid by the Escrow
Agent  pursuant  to the  terms  of  the  Escrow  Agreement.  There  shall  be no
adjustment to the Escrow Amount for any amount by which the Net  Liabilities are
less than One Million Dollars ($1,000,000).

4. Closing; Closing Deliveries.  The closing of the transactions contemplated by
this Agreement (the  “Closing”)  shall take place  effective as set forth in the
preface above. At the Closing, each Party shall make the following deliveries:

         4.1      Nu Skin USA Deliveries.

                  4.1.1 At the  Closing,  Nu Skin USA  will  deliver  to Nu Skin
Enterprises the following certificates, instruments, and documents:

                             4.1.1.1 the original certificate(s)  evidencing the
Class A Shares properly endorsed for transfer or accompanied by a stock power(s)
executed in blank and properly guaranteed with a Medallion guarantee;

                             4.1.1.2  an   originally   executed   copy  of  the
Indemnification Limitation Agreement;

                             4.1.1.3 a legal opinion of Holland & Hart,  L.L.P.,
counsel  to Nu Skin  USA,  substantially  in the form of  Exhibit  “G”  attached
hereto; and

                             4.1.1.5 such other  documents and instruments as Nu
Skin Enterprises or its counsel reasonably may request.
<PAGE>
                  4.1.2 At the  Closing,  Nu Skin USA  will  deliver  to Nu Skin
United States the following certificates, instruments, and documents:

                             4.1.2.1 a Bill of Sale and Assignment substantially
in the form of Exhibit “D” attached hereto; and

                             4.1.2.2 such other  documents and instruments as Nu
Skin Enterprises or its counsel reasonably may request.

         4.2      Nu Skin Enterprises Deliveries.

                  4.2.1 At the Closing,  Nu Skin  Enterprises will deliver to Nu
Skin USA the following certificates, instruments, and documents:

                             4.2.1.1 Five Million Six Hundred Eighty-Two Thouand
One Hundred  Ninety-Eight  Million Dollars  ($5,682,198) of the Class A Purchase
Price, as indicated in Section 2.2.2 above; and

                             4.2.1.2 such other  documents and instruments as Nu
Skin USA or its counsel reasonably may request.

                  4.2.1 At the Closing,  Nu Skin Enterprises will deliver to the
Escrow Agent the following certificates, instruments, and documents:

                             4.2.1.1 Three Million  Dollars  ($3,000,000) of the
Class A Purchase Price, as indicated in Section 2.2.2 above; and

                             4.2.1.2 such other  documents and instruments as Nu
Skin USA or its counsel reasonably may request.

         4.3      Nu Skin United States Deliveries.

                  4.3.1 At the Closing, Nu Skin United States will deliver to Nu
Skin USA the following certificates, instruments, and documents:

                             4.3.1.1  an   originally   executed   copy  of  the
Instrument  of  Assumption  substantially  in the form of Exhibit  “E”  attached
hereto; and

                             4.3.1.2 such other  documents and instruments as Nu
Skin USA or its counsel reasonably may request.

5.  Representations  and  Warranties of Nu Skin USA. Nu Skin USA  represents and
warrants to each of the Nu Skin Entities that the  statements  contained in this
Section 5 are correct and complete as of the effective  date of this  Agreement,
except  as set  forth in Nu Skin  USA’s  disclosure  schedule  attached  to this
Agreement  and  initialed  by  the  Parties  (the  “Disclosure  Schedule”).  The
Disclosure Schedule will be arranged in paragraphs corresponding to the numbered
paragraphs contained in this Section 5.
<PAGE>
         5.1  Organization  of Nu Skin USA.  Nu Skin USA is a  corporation  duly
organized, validly existing, and in good standing under the laws of the State of
Delaware,  and to our knowledge,  is duly qualified to do business in all states
where its activities or assets would require such qualification.

         5.2  Authorization  of  Transaction.  Nu Skin  USA has full  power  and
authority  (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations  hereunder.  Without  limiting the
generality  of the  foregoing,  the Board of Directors  of Nu Skin USA,  and, if
required,  Nu Skin  USA’s  stockholders,  have duly  authorized  the  execution,
delivery,  and  performance  of this  Agreement by Nu Skin USA.  This  Agreement
constitutes the valid and legally binding obligation of Nu Skin USA, enforceable
in accordance with its terms and conditions.

         5.3  Non-contravention.  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), 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 Nu Skin USA is subject or any provision
of the  charter  or bylaws  of Nu Skin USA 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 Nu Skin USA is a party or by which it is bound or to which
any of its  assets is  subject  (or  result in the  imposition  of any  Security
Interest upon any of its assets). Nu Skin USA is not required to give any notice
to, make any filing with, or obtain any authorization,  consent,  or approval of
any government or governmental agency in order for the Parties to consummate the
transactions  contemplated  by this  Agreement  (including the  assignments  and
assumptions referred to in Section 2 above).

         5.4 Brokers’  Fees.  Nu Skin USA has no Liability or  obligation to pay
any fees or  commissions  to any broker,  finder,  or agent with  respect to the
transactions  contemplated  by this  Agreement  for which  either of the Nu Skin
Entities could become liable or obligated.

         5.5 Title to Acquired Assets. Nu Skin USA has good and marketable title
to, or a valid leasehold interest in, the Acquired Assets, free and clear of all
Security  Interests or  restrictions  on  transfer,  except  restrictions  under
applicable federal and state securities laws, rules, and regulations.

         5.6 Undisclosed  Liabilities;  Subsequent  Events. Nu Skin USA does not
have any  Liability  (and there is no Basis for any  present  or future  action,
suit, proceeding,  hearing,  investigation,  charge, complaint, claim, or demand
against any of them giving rise to any  Liability),  except for (i)  Liabilities
set forth on the face of Nu Skin USA’s  December 31, 1998 balance  sheet (rather
than in any notes thereto) and (ii)  Liabilities that have arisen after December
31, 1998 in the Ordinary Course of Business (none of which results from,  arises
out of,  relates  to,  is in the  nature  of,  or was  caused  by any  breach of
contract,  breach of warranty, tort,  infringement,  or violation of law). Since
December  31,  1998,  there  has not been any  material  adverse  change  in the
business,  financial  condition,  operations,  results of operations,  or future
prospects of Nu Skin USA.  Without  limiting the  generality  of the  foregoing,
since that date:

                  5.6.1  Nu Skin  USA  has not  sold,  leased,  transferred,  or
assigned  any of its  assets,  tangible  or  intangible,  other  than for a fair
consideration in the Ordinary Course of Business;

                  5.6.2 Nu Skin USA has not issued any note, bond, or other debt
security or created,  incurred,  assumed,  or guaranteed  any  indebtedness  for
borrowed money or capitalized lease  obligations  either involving more than Ten
Thousand  Dollars  ($10,000)  singly or Ten  Thousand  Dollars  ($10,000) in the
aggregate;
<PAGE>
                  5.6.3 Nu Skin USA has not delayed or postponed  the payment of
accounts payable and other liabilities or incurred any accounts payable or other
liabilities outside the Ordinary Course of Business;

                  5.6.4 Nu Skin USA has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property or the Nu Skin USA
Intellectual Property;

                  5.6.5 Nu Skin USA has not  experienced  any  material  damage,
destruction, or loss (whether or not covered by insurance) to its property;

                  5.6.6 Nu Skin USA has not made any loan to,  or  entered  into
any other  transaction  with,  any of its  directors,  officers,  and  employees
outside the Ordinary Course of Business;

                  5.6.7  Nu Skin  USA  has  not  made  or  pledged  to make  any
charitable  or  other  capital  contribution  outside  the  Ordinary  Course  of
Business;

                  5.6.8 there has not been any other material occurrence, event,
incident,  action, failure to act, or transaction outside the Ordinary Course of
Business involving Nu Skin USA; and

                  5.6.9 Nu Skin USA has not committed to any of the foregoing.

         5.7 Legal Compliance.  Except for any failures to comply that would not
have a material adverse effect on the business of the Nu Skin Entities, taken as
a whole, Nu Skin USA and its predecessors have complied with all applicable laws
(including rules,  regulations,  codes, plans, injunctions,  judgments,  orders,
decrees,  rulings, and charges thereunder) of federal, state, local, and foreign
governments  (and  all  agencies  thereof),  and no  action,  suit,  proceeding,
hearing,  investigation,  charge,  complaint,  claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
<PAGE>
         5.8      Intellectual Property.

                  5.8.1 Nu Skin USA Intellectual  Property.  Nu Skin USA owns or
has the right to use pursuant to license,  sublicense,  agreement, or permission
all Intellectual  Property not owned or licensed to it by Nu Skin  International
that is necessary or  desirable  for the  operation of its business as presently
conducted and as presently proposed to be conducted (collectively,  the “Nu Skin
USA Intellectual  Property”).  Each such item of Intellectual  Property owned or
used by Nu Skin USA immediately  prior to the Closing will be owned or available
for use by the Nu Skin Entities on identical  terms and  conditions  immediately
subsequent  to the Closing.  Nu Skin USA has taken all  necessary  and desirable
action to maintain and protect each such item of  Intellectual  Property that it
owns or uses.

                  5.8.2 No  Interference.  None of the Nu Skin USA  Intellectual
Property has interfered with, infringed upon, or misappropriated,  and currently
does not interfere with,  infringe upon,  misappropriate,  or otherwise conflict
with any  Intellectual  Property  rights of any third  parties,  and none of the
directors and officers  (and  employees  with  responsibility  for  Intellectual
Property  matters)  of Nu Skin USA have ever  received  any  charge,  complaint,
claim,   demand,  or  notice  alleging  any  such  interference,   infringement,
misappropriation,  or  violation  (including  any  claim  that Nu Skin  USA must
license or  refrain  from using any  Intellectual  Property  rights of any third
party). In addition,  to the Knowledge of any of the directors and officers (and
employees with responsibility for Intellectual Property matters) of Nu Skin USA,
(a) no third party has ever interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any  Intellectual  Property  rights of Nu Skin
<PAGE>
USA, including, but not limited to, the Intellectual Property rights licenced to
it by Nu Skin International,  (b) no third party is currently  interfering with,
infringing   upon,   misappropriating,   or  otherwise   conflicting   with  any
Intellectual Property rights of Nu Skin USA, including,  but not limited to, the
Intellectual  Property rights licenced to it by Nu Skin  International,  and (c)
none of the Intellectual Property owned by or licensed to Nu Skin USA by Nu Skin
International  infringes the Intellectual  Property rights of any third-party or
any of the Nu Skin Intellectual Property.

                  5.8.3   Intellectual   Property   Owned   or   Licensed   from
Third-Parties.  Section 5.8.3 of the Disclosure Schedule identifies each item of
Intellectual  Property (other than  Intellectual  Property that is or previously
was licensed from Nu Skin  International)  owned by,  licensed to, or used by Nu
Skin USA in its  business  and,  except as  identified  on Section  5.8.3 of the
Disclosure  Schedule,  Nu Skin  USA  does not  own,  license,  or use any  other
Intellectual Property in its business.  Section 5.8.3 of the Disclosure Schedule
also identifies each pending  application or registration with respect to any of
the Intellectual Property identified on Section 5.8.3 of the Disclosure Schedule
and  identifies  each  license,  agreement,  or other  permission  that has been
granted to Nu Skin USA with respect to any of its  Intellectual  Property (other
than  Intellectual  Property  that is or  previously  was licenced  from Nu Skin
International).  Nu Skin USA has delivered to the Nu Skin  Entities  correct and
complete copies of all documentation  evidencing all such Intellectual  Property
and all such applications,  registrations, licenses, agreements, and permissions
(as amended to date) and has made available to the Nu Skin Entities  correct and
complete  copies of all other  written  documentation  evidencing  ownership and
prosecution (if  applicable) of each such item.  Section 5.8.3 of the Disclosure
Schedule also identifies  each trade name or  unregistered  trademark used by Nu
Skin USA in connection with any of its businesses.  With respect to each item of
Intellectual  Property  required  to be  identified  in  Section  5.8.3  of  the
Disclosure Schedule:

                             5.8.3.1 Nu Skin USA possesses all right, title, and
interest in and to the item,  free and clear of any  Security  Interest or other
restriction (other than any license regarding such Intellectual  Property from a
third-party);

                             5.8.3.2 the item is not subject to any  outstanding
injunction, judgment, order, decree, ruling, or charge;

                             5.8.3.3  no  action,  suit,  proceeding,   hearing,
investigation,  charge,  complaint,  claim,  or  demand  is  pending  or, to the
Knowledge  of  any  of  the   directors  and  officers   (and   employees   with
responsibility for Intellectual  Property matters) of Nu Skin USA, is threatened
that challenges the legality, validity, enforceability, use, or ownership of the
item; and

                             5.8.3.4 Nu Skin USA has never  agreed to  indemnify
any Person for or against any interference,  infringement,  misappropriation, or
other conflict with respect to the item.

                  5.8.4 No Intellectual  Property Licensed to Third-Parties.  Nu
Skin USA  does not  license  or  sublicense  any  Intellectual  Property  to any
third-party.
<PAGE>
                  5.8.5 No Knowledge of Obsolescence.  None of the directors and
officers (and employees with  responsibility for Intellectual  Property matters)
of Nu Skin USA has any Knowledge of any new products, inventions, procedures, or
methods of  manufacturing  or  processing  that any  competitors  or other third
parties have  developed that  reasonably  could be expected to supersede or make
obsolete any product or process of Nu Skin USA.

         5.9  Tangible  Assets.  Nu Skin USA owns or leases all of the  tangible
assets  used in its  business.  Each such  tangible  asset is free from  defects
(patent and latent),  has been  maintained  in accordance  with normal  industry
practice,  is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used.

         5.10 Inventory.  All of the inventory is  merchantable  and fit for the
purpose for which it was procured or manufactured,  and none of the inventory is
slow-moving, obsolete, damaged, or defective.

         5.11  Acquired  Contracts.  Nu Skin USA has delivered to Nu Skin United
States a correct  and  complete  copy of each of the  Acquired  Contracts.  With
respect to each Acquired Contract:  (i) the agreement is legal, valid,  binding,
enforceable,  and in full force and effect;  (ii) the agreement will continue to
be legal, valid, binding, enforceable, and in full force and effect on identical
terms  following  the  consummation  of  the  transactions  contemplated  hereby
(including  the  assignments  and  assumptions  referred to in Section 2 above);
(iii) no party is in breach or  default,  and no event  has  occurred  that with
notice  or  lapse of time  would  constitute  a breach  or  default,  or  permit
termination, modification, or acceleration, under any of the Acquired Contracts;
and (iv) no party has repudiated any provision of any of the Acquired Contracts.

         5.12 Insurance. Each of Nu Skin USA’s insurance policies: (i) is legal,
valid, binding, enforceable, and in full force and effect; (ii) 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);
(iii) is not in default,  nor is any party thereto in breach thereof  (including
with respect to the payment of premiums or the giving of notices),  and no event
has occurred that,  with notice or the lapse of time,  would  constitute  such a
breach or default, or permit termination,  modification, or acceleration,  under
the policy; and (iv) has never been repudiated by any party thereto. Nu Skin USA
has been  covered  during the past one (1) year by insurance in scope and amount
customary and  reasonable  for the businesses in which it has engaged during the
aforementioned period.

         5.13  Litigation.  Section 5.13 of the  Disclosure  Schedule sets forth
each instance in which Nu Skin USA (i) is subject to any outstanding injunction,
judgment,  order,  decree,  ruling,  or  charge  or (ii) is a party  or,  to the
Knowledge  of  any  of  the   directors  and  officers   (and   employees   with
responsibility for litigation  matters) of Nu Skin USA, is threatened to be made
a party to any action,  suit,  proceeding,  hearing, or investigation of, in, or
before any court or  quasi-judicial  or  administrative  agency of any  federal,
state,  local, or foreign  jurisdiction  or before any  arbitrator.  None of the
actions, suits,  proceedings,  hearings, and investigations set forth in Section
5.13 of the Disclosure  Schedule could result in any material  adverse change in
the business, financial condition,  operations, results of operations, or future
prospects of Nu Skin USA. None of the directors and officers (and employees with
responsibility for litigation  matters) of Nu Skin USA has any reason to believe
that any such action, suit, proceeding, hearing, or investigation may be brought
or threatened against Nu Skin USA.
<PAGE>
         5.14 Product  Warranty.  Nu Skin USA has not made any  warranties  with
respect to any product sold or distributed by it other than the  warranties,  if
any, allowed under the applicable license agreement with Nu Skin  International.
Nu Skin USA does not have any  Liability  (and there is no Basis for any present
or future action, suit, proceeding, hearing,  investigation,  charge, complaint,
claim,  or demand  against  it giving  rise to any  Liability)  for  damages  in
connection  with any products it has sold or distributed  that were not acquired
from Nu Skin International.  In addition, as to products acquired by Nu Skin USA
from  Nu  Skin  International,  to the  Knowledge  of any of the  directors  and
officers (and employees with  responsibility for product warranty matters) of Nu
Skin USA, Nu Skin USA does not have any Liability (and there is no Basis for any
present or future action,  suit,  proceeding,  hearing,  investigation,  charge,
complaint, claim, or demand against it giving rise to any Liability) for damages
in connection with any such Nu Skin  International  product.  No product sold or
distributed by Nu Skin USA is subject to any guaranty or other indemnity.

         5.15 Product  Liability.  Other than products sold to Nu Skin USA by Nu
Skin  International,  to the Knowledge of any of the directors or officers of Nu
Skin USA, Nu Skin USA does not have any Liability (and there is no Basis for any
present or future action,  suit,  proceeding,  hearing,  investigation,  charge,
complaint, claim, or demand against it giving rise to any Liability) arising out
of any  injury  to  individuals  or  property  as a  result  of  the  ownership,
possession, or use of any product sold or distributed by Nu Skin USA.

         5.16  Employees.  To the  Knowledge of any of the directors or officers
(and employees with  responsibility  for employment  matters) of Nu Skin USA, no
executive,  key  employee,  or group of  employees  has any  plans to  terminate
employment  with Nu Skin  USA.  Nu Skin  USA is not a party  to or  bound by any
collective bargaining agreement, nor has it experienced any strikes, grievances,
claims of unfair labor practices,  or other collective  bargaining disputes.  Nu
Skin USA has not committed any unfair labor  practice.  None of the directors or
officers (and employees with  responsibility for employment  matters) of Nu Skin
USA have any  Knowledge of any  organizational  effort  presently  being made or
threatened  by or on behalf of any labor union with  respect to  employees of Nu
Skin USA or of any violation of any anti-discrimination or harassment laws.

         5.17     Employee Benefits.

                  5.17.1  Section  5.17 of the  Disclosure  Schedule  lists each
Employee  Benefit Plan that Nu Skin USA maintains or to which it  contributes or
has any obligation to contribute.

                  5.17.2  Each such  Employee  Benefit  Plan  (and each  related
trust,  insurance  contract,  or fund)  complies in form and in operation in all
respects  with the  applicable  requirements  of  ERISA,  the  Code,  and  other
applicable laws.

                  5.17.3 All required reports and  descriptions  (including Form
5500  Annual  Reports,  summary  annual  reports,  PBGC-1’s,  and  summary  plan
descriptions) have been timely filed and distributed  appropriately with respect
to each such Employee Benefit Plan. The requirements of COBRA have been met with
respect to each such Employee  Benefit Plan that is an Employee  Welfare Benefit
Plan.

                  5.17.4 All contributions (including all employer contributions
and employee salary reduction contributions) that are due have been paid to each
such  Employee  Benefit  Plan that is an Employee  Pension  Benefit Plan and all
contributions  for any period  ending on or before the date of the Closing  that
are not yet due have been paid to each such  Employee  Pension  Benefit  Plan or
accrued in  accordance  with the past custom and  practice  of Nu Skin USA.  All
premiums or other  payments for all periods  ending on or before the date of the
Closing have been paid with respect to each such  Employee  Benefit Plan that is
an Employee Welfare Benefit Plan.
<PAGE>
                  5.17.5 With respect to each Employee Benefit Plan that Nu Skin
USA or any ERISA  Affiliate  maintains or ever has maintained or to which any of
them contributes, ever has contributed, or ever has been required to contribute:

                             5.17.5.1 There have been no Prohibited Transactions
with respect to any such  Employee  Benefit Plan. No Fiduciary has any Liability
for breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any such Employee Benefit
Plan. No action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than routine  claims for benefits) is pending or, to the Knowledge of any
of the directors and officers (and  employees with  responsibility  for employee
benefits matters) of Nu Skin USA, threatened. None of the directors and officers
(and employees with responsibility for employee benefits matters) of Nu Skin USA
has any Knowledge of any Basis for any such action, suit,  proceeding,  hearing,
or investigation.

                  5.17.6 Nu Skin USA does not maintain  and does not  contribute
to, nor has it ever  maintained or contributed  to, or ever has been required to
contribute to, any Employee Welfare Benefit Plan providing  medical,  health, or
life insurance or other  welfare-type  benefits for current or future retired or
terminated  employees,  their  spouses,  or  their  dependents  (other  than  in
accordance with Code Section 4980B).

         5.18     Environmental, Health, and Safety Matters.

                  5.18.1 Nu Skin USA and its predecessors  have complied and are
in compliance with all Environmental, Health, and Safety Requirements.

                  5.18.2 Without limiting the generality of the foregoing,  each
of Nu Skin USA and its  predecessors  have obtained and complied with, and is in
compliance  with,  all  permits,  licenses  and  other  authorizations  that are
required  pursuant to  Environmental,  Health,  and Safety  Requirements for the
occupation of its facilities and the operation of its business.

                  5.18.3  Neither Nu Skin USA nor any of its  predecessors  have
received any written or oral notice,  report or other information  regarding any
actual or alleged violation of Environmental,  Health, and Safety  Requirements,
or any Liability or potential Liability (whether accrued, absolute,  contingent,
unliquidated or otherwise), including any investigatory,  remedial or corrective
obligations,   relating  to  any  of  them  or  its  facilities   arising  under
Environmental, Health, and Safety Requirements.

                  5.18.4  Neither Nu Skin USA nor any of its  predecessors  have
either  expressly or by operation of law,  assumed or undertaken  any liability,
including, without limitation, any obligation for corrective or remedial action,
of any other Person relating to Environmental, Health, and Safety Requirements.
<PAGE>
         5.19 Disclosure.  The representations and warranties  contained in this
Section 5 do not  contain  any untrue  statement  of a material  fact or omit to
state  any  material  fact  necessary  in  order  to  make  the  statements  and
information contained in this Section 5 not misleading.

6.  Representations and Warranties of the Nu Skin Entities.  Each of the Nu Skin
Entities represents and warrants to Nu Skin USA that the statements contained in
this  Section  6 are  correct  and  complete  as of the  effective  date of this
Agreement.

         6.1 Organization of the Nu Skin Entities.  Each of the Nu Skin Entities
is a corporation duly organized,  validly  existing,  and in good standing under
the laws of the jurisdiction of its incorporation.

         6.2  Authorization  of  Transaction.  Both of the Nu Skin Entities have
full power and  authority  (including  full  corporate  power and  authority) to
execute and deliver this  Agreement  and to perform its  respective  obligations
hereunder.  This Agreement  constitutes the valid and legally binding obligation
of each of the Nu Skin Entities,  enforceable  in accordance  with its terms and
conditions.

         6.3  Non-contravention.  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), 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 either of the Nu Skin Entities 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  either  of the Nu Skin  Entities  is a party or by which
either of them is bound or to which any of their  respective  assets is subject.
Neither of the Nu Skin  Entities  needs to give any  notice to,  make any filing
with, or obtain any  authorization,  consent,  or approval of any  government or
governmental  agency in order for the  Parties to  consummate  the  transactions
contemplated  by this  Agreement  (including  the  assignments  and  assumptions
referred to in Section 2 above).

         6.4 Brokers’ Fees. Neither of the Nu Skin Entities has any Liability or
obligation to pay any fees or commissions to any broker,  finder,  or agent with
respect to the transactions contemplated by this Agreement for which Nu Skin USA
could become liable or obligated.

         6.5 Disclosure.  The representations  and warranties  contained in this
Section 6 do not  contain  any untrue  statement  of a material  fact or omit to
state  any  material  fact  necessary  in  order  to  make  the  statements  and
information contained in this Section 6 not misleading.

7.       Indemnification.

         7.1  Nu  Skin   USA’s   Indemnification   Obligation;   Indemnification
Limitation  Agreement.  Nu Skin USA hereby agrees to indemnify and hold harmless
each  of the Nu Skin  Entities  and  their  respective  shareholders,  officers,
directors,   employees,   agents,   representatives,   successors,  and  assigns
(collectively,  the “NSE  Indemnitees”)  at all times from and after the date of
the  Closing  against  and in  respect of any and all  Damages  (as that term is
defined  in  Section  7.3  below),  subject,  however,  to the  limitations  and
restrictions   set   forth   in  the   Indemnification   Limitation   Agreement.
Notwithstanding  the  foregoing,  the obligation of Nu Skin USA to indemnify the
NSE Indemnitees for breaches of its  representations and warranties set forth in
Section 5 hereof,  shall terminate on the second anniversary of the date of this
Agreement unless a claim for  indemnification  has been brought within such time
by any of the NSE Indemnitees.
<PAGE>
         7.2 Nu Skin Entities’  Indemnification  Obligations.  The Skin Entities
hereby agree to indemnify  and hold  harmless Nu Skin USA and its  shareholders,
officers, directors, employees, agents, representatives, successors, and assigns
(collectively,  the “NSUSA Indemnitees”) at all times from and after the date of
the  Closing  against  and in  respect of any and all  Damages  (as that term is
defined  in  Section  7.3  below);  provided,  however,  the Nu  Skin  Entities’
obligation  to  indemnify  the NSUSA  Indemnitees  for  breaches  of the Nu Skin
Entities’  representations and warranties set forth in Section 6 shall terminate
on the  second  anniversary  of the date of this  Agreement  unless a claim  for
indemnification  has  been  brought  within  such  time  by  any  of  the  NSUSA
Indemnitees.

         7.3 Damages.  “Damages”  shall  include any claims,  actions,  demands,
losses, costs, expenses,  liabilities (whether joint or several), penalties, and
damages,  including  counsel fees and expenses,  incurred in investigating or in
attempting to avoid the same or oppose the imposition  thereof  resulting to any
of the NSE Indemnitees or the NSUSA Indemnitees,  as applicable, from any of the
following: (i) any misrepresentation or breach of any representation or warranty
made by Nu Skin USA or the Nu Skin  Entities,  as  applicable,  in or under this
Agreement or any other agreement  executed in connection  with the  transactions
contemplated  hereby;  (ii) any breach or default in the  performance by Nu Skin
USA or the Nu Skin Entities, as applicable, of any of their respective covenants
to be  performed  by them under this  Agreement  or any  agreement  executed  in
connection with the transactions  contemplated hereby; (iii) with respect to the
NSE Indemnitees,  any debts, liabilities, or obligations of Nu Skin USA, whether
accrued,  absolute,  contingent,  or otherwise, due or to become due, except for
the Assumed  Liabilities;  (iv) with respect to the NSE  Indemnitees,  any claim
affecting the Acquired  Assets or any  Liability of Nu Skin USA,  other than the
Assumed Liabilities, or any expense that is allowable against or incurred by any
NSE Indemnitee because of Nu Skin USA’s  non-compliance with any applicable bulk
sales or  transfer  law;  or (v) with  respect  to the  NSUSA  Indemnitees,  any
liability accruing to any NSUSA Indemnitees relating to any Assumed Liabilities.
In addition,  Damages shall also include any amount by which the Net Liabilities
of Nu Skin USA are in excess of One Million Dollars ($1,000,000),  to the extent
the Purchase  Price has not been adjusted by the amount of such excess  pursuant
to Section 3 above.

                  7.3.1 Tax  Indemnification.  In addition to the  provisions of
Section 7.3 above, Nu Skin USA specifically  agrees to indemnify each of the NSE
Indemnitees  from and  against the  entirety of any Damages  that any of the NSE
Indemnitees  may suffer  resulting  from,  arising out of,  relating  to, in the
nature  of,  or caused  by any  Liability  of Nu Skin USA for any Tax or any Tax
Liability of Nu Skin USA that is not  specifically  included  within the Assumed
Liabilities.

        7.4 Notice of Claim.  Promptly  upon  receipt  of notice of any  demand,
assertion,  claim,  action, or proceeding (whether judicial or otherwise),  with
respect to any matter as to which Nu Skin USA has  agreed to  indemnify  the NSE
Indemnitees  under the provisions of this Section 7 or the Nu Skin Entities have
agreed to  indemnify  the NSUSA  Indemnitees  under  this  Section  7, the party
entitled to indemnification will give prompt written notice thereof to the party
owing the  indemnification,  together  with the  statement  of such  information
respecting such demand, assertion, claim, action, or proceeding as such entitled
to indemnification shall then have; provided,  however, that neither party shall
be relieved of  liability  hereunder  for failure by the other party to promptly
give such  written  notice,  unless the party  entitled to notice is  materially
prejudiced by such failure, in which case the party entitled to notice shall not
be liable for any indemnification  obligation under this Section 7 to the extent
so prejudiced.  If either party acknowledges any liability under this Section 7,
that  party  shall  contest  and  defend  by  all  appropriate  legal  or  other
proceedings any demand, assertion,  claim, action, or proceeding with respect to
which it has been called upon to indemnify any persons  under the  provisions of
<PAGE>
this Section 7; provided,  however,  that: (i) notice of intention so to contest
shall be delivered to the  appropriate  party within  twenty (20)  calendar days
after the receipt by the  indemnifying  party of notice of the assertion of such
demand,  assertion,  claim,  action, or proceeding;  (ii) the indemnifying party
will pay all costs and expenses of such contest, including,  without limitation,
all  attorneys’  and  accountants’  fees,  and the cost of any bond  required by
applicable law to be posted in connection with such contest;  (iii) such contest
shall be conducted by reputable  attorneys  employed by the  indemnifying  party
(with the reasonable  approval of the appropriate  persons being  indemnified at
the  indemnifying   party’s  sole  cost  and  expense,  but  the  persons  being
indemnified  shall have the right to participate in such  proceedings  and to be
represented by attorneys of such person’s own choosing, at its or their own cost
and expense;  (iv) if after such  opportunity,  the indemnifying  party does not
elect to assume the defense of any such proceeding, the indemnifying party shall
be bound by the results obtained by the indemnified  party,  including,  without
limitation,  any out-of-court settlement or compromise; and (v) the indemnifying
party will not settle any claim without the prior written consent of the persons
being indemnified,  unless the settlement  contains a complete and unconditional
release of such persons being  indemnified,  and the settlement does not involve
the imposition of any non-monetary relief on such persons.

8.       Miscellaneous.

         8.1   Survival  of   Representations   and   Warranties.   All  of  the
representations  and warranties of the Parties contained in this Agreement shall
survive the Closing.

         8.2 Press Releases and Public Announcements. Either Nu Skin Enterprises
or  Nu  Skin  United  States  may  issue  press  releases  or  make  any  public
announcements relating to the subject matter of this Agreement after the Closing
without the prior written  approval of the other Parties.  Nu Skin USA shall not
issue  any press  releases  or make any  public  announcements  relating  to the
subject matter of this Agreement without the prior written approval of the other
Parties.

         8.3 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.

         8.4 Entire Agreement.  This Agreement (including the documents referred
to herein)  constitutes the entire  agreement  between and among the Parties and
supersedes any prior understandings, agreements, or representations by, between,
or among the Parties, whether written or oral, to the extent they related in any
way to the subject matter hereof.

         8.5  Assignment.  Except as  provided  below,  no Party may  assign (by
operation of law,  merger,  or  otherwise),  license,  sublicense,  or otherwise
transfer  any of its rights or  obligations  under this  Agreement  to any other
Person  without  obtaining  the prior  written  consent  of the  other  Parties;
provided,  however, that Nu Skin Enterprise and Nu Skin United States shall each
be allowed to assign  this  Agreement  or its rights and  obligations  hereunder
without any prior consent of the other Parties.

         8.6  Counterparts.  This  Agreement may be executed by facsimile and in
one or more counterparts,  each of which shall be deemed an original, but all of
which, when taken together, shall constitute one and the same instrument.
<PAGE>
         8.7 Headings.  The Section and  subsection  headings  contained in this
Agreement are inserted for convenience  only and shall not affect in any way the
meaning or interpretation of this Agreement.

         8.8  Notices.  All  notices,  requests,   demands,  claims,  and  other
communications  hereunder  shall be in  writing.  Any notice,  request,  demand,
claim, or other communication  hereunder shall be deemed duly given if given (i)
personally,  (ii) two business  days after being sent by registered or certified
mail, return receipt requested,  postage prepaid,  and addressed to the intended
recipient as set forth below,  (iii) telecopied to the intended recipient at the
telecopy set forth below, or (iv) one business day after being sent by overnight
courier and addressed to the intended recipient as set forth below:

    If to Nu Skin USA, to:             with a copy to:

    Nu Skin USA, Inc.                  Holland & Hart, L.L.P.
    75 West Center Street              215 South State Street, Suite 500
    Provo, Utah  84601                 Salt Lake City, Utah  84111
    Attention: Keith R. Halls          Attention: David R. Rudd, Esq.
    Fax No.: (801) 345-5999            Fax No.: (801) 364-9124

    If to Nu Skin Enterprises, to:     with a copy to:

    Nu Skin Enterprises, Inc.          LeBoeuf, Lamb, Greene & MacRae, L.L.P.
    75 West Center Street              1000 Kearns Building
    Provo, Utah  84601                 136 South Main Street
    Attention: M. Truman Hunt, Esq.    Salt Lake City, Utah 84101
    Fax No.: (801) 345-3099            Attention: Nolan S. Taylor, Esq.
                                       Fax No.: (801) 359-8256

    If to Nu Skin United States, to:   with a copy to:

    Nu Skin United States, Inc.        LeBoeuf, Lamb, Greene & MacRae, L.L.P.
    75 West Center Street              1000 Kearns Building
    Provo, Utah  84601                 136 South Main Street
    Attention: M. Truman Hunt, Esq.    Salt Lake City, Utah 84101
    Fax No.: (801) 345-3099            Attention: Nolan S. Taylor, Esq.
                                       Fax No.: (801) 359-8256

Any Party may send any notice,  request,  demand,  claim, or other communication
hereunder  to the  intended  recipient  at the address set forth above using any
other means (including  messenger service,  telex,  ordinary mail, or electronic
mail), but no such notice, request,  demand, claim, or other communication shall
be deemed to have been duly given  unless and until it  actually  is received by
the  intended  recipient.  Any Party may  change the  address to which  notices,
requests,  demands,  claims,  and  other  communications  hereunder  are  to  be
delivered by giving the other Parties notice in the manner herein set forth.

         8.9 Governing Law. This Agreement shall be governed by and construed in
accordance  with the domestic laws of the State of Utah without giving effect to
any choice or conflict of law provision or rule (whether of the State of Utah or
any other  jurisdiction)  that would  cause the  application  of the laws of any
jurisdiction other than the State of Utah.
<PAGE>
         8.10  Amendments  and Waivers.  No  amendment of any  provision of this
Agreement  shall be valid unless the same shall be in writing and signed by each
of the  Parties.  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.

         8.11  Severability.  Any term or  provision of this  Agreement  that is
invalid or unenforceable  in any situation in any jurisdiction  shall not affect
the validity or  enforceability  of the remaining terms and provisions hereof or
the validity or  enforceability  of the offending term or provision in any other
situation or in any other jurisdiction.

         8.12  Expenses.  Each of the Nu Skin Entities and Nu Skin USA will bear
its own costs and  expenses  (including  legal fees and  expenses)  incurred  in
connection with this Agreement and the transactions contemplated hereby.

         8.13  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.  Nothing  in the
Disclosure  Schedule  shall be deemed  adequate to disclose  an  exception  to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception  with  particularity  and describes the relevant  facts in detail.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed  adequate to disclose
an  exception  to  a   representation   or  warranty  made  herein  (unless  the
representation or warranty has to do with the existence of the document or other
item  itself).  The  Parties  intend  that each  representation,  warranty,  and
covenant contained herein shall have independent significance.  If any Party has
breached  any  representation,  warranty,  or covenant  contained  herein in any
respect,  the fact  that  there  exists  another  representation,  warranty,  or
covenant relating to the same subject matter  (regardless of the relative levels
of  specificity)  that the Party has not  breached  shall  not  detract  from or
mitigate  the fact that the  Party is in  breach  of the  first  representation,
warranty, or covenant.

         8.14  Incorporation  of Recitals,  Exhibits,  and Schedules.  The above
Recitals  and all  Exhibits  and  Schedules  identified  in this  Agreement  are
incorporated herein by reference and made a part hereof.

         8.15 Specific Performance.  Each of the Parties acknowledges and agrees
that the other  Parties  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 Parties 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  (subject  to the  provisions  set forth in Section  8.16
below),  in addition to any other remedy to which it may be entitled,  at law or
in equity.
<PAGE>
         8.16  Submission to  Jurisdiction.  Each of the Parties  submits to the
exclusive  jurisdiction  of any state or federal court sitting in Salt Lake City
or Provo,  Utah, in any action or proceeding  arising out of or relating to this
Agreement  and agrees  that all  claims in  respect of the action or  proceeding
shall be heard and determined only in any such court. Each Party also agrees not
to bring any action or proceeding  arising out of or relating to this  Agreement
in any other court. Each of the Parties waives any defense of inconvenient forum
to the  maintenance  of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with respect
thereto.  Any  Party  may make  service  on the  other  Parties  by  sending  or
delivering  a copy of the  process  to the Party or  Parties to be served at the
address  and in the manner  provided  for the  giving of notices in Section  8.8
above.  Nothing in this  Section  8.16,  however,  shall affect the right of any
Party to serve legal process in any other manner  permitted by law or in equity.
Each Party agrees that a final  judgment in any action or  proceeding so brought
shall be conclusive  and may be enforced by suit on the judgment or in any other
manner provided by law or in equity.

         8.17 Bulk Sales and Transfer  Laws. Nu Skin United States  acknowledges
that Nu Skin USA will  not  comply  with  the  provisions  of any bulk  sales or
transfer laws of any state or jurisdiction  in connection with the  transactions
contemplated by this Agreement.
<PAGE>
         IN WITNESS  WHEREOF,  the Parties  have  executed  this Asset  Purchase
Agreement effective as of the date first above written.

                                   NU SKIN ENTERPRISES, INC.

                                   By:      /s/ Corey B. Lindley
                                   Name:    Corey B. Lindley
                                   Its:     Vice President

                                   NU SKIN UNITED STATES, INC.

                                   By:      /s/ Corey B. Lindley
                                   Name:    Corey B. Lindley
                                   Its:     Vice President

                                   NU SKIN USA, INC.

                                   By:      /s/ Keith Halls
                                   Name:    Keith Halls
                                   Its:     Vice President
<PAGE>
                                   EXHIBIT “A”

                                 EXCLUDED ASSETS

         1.       All of Nu  Skin  USA’s  accounts  receivable  from  any of the
                  Affiliates,  as  indicated on the face of its January 31, 1999
                  balance sheet.

         2.       All of Nu Skin USA’s investments in any of the Affiliates,  as
                  indicated on the face of its January 31, 1999 balance sheet.

         3.       All of Nu Skin  USA’s  cash as  indicated  on the  face of its
                  January 31, 1999 balance sheet in excess of $3,129,500.

         4.       All  contracts or  agreements  with,  and all loans made to or
                  guaranteed by, Nu Skin USA and any of its  subsidiaries or any
                  of the Affiliates.

         5.       All  tangible  personal  property of Nu Skin USA that is to be
                  retained for personal use by the  stockholders  of Nu Skin USA
                  as determined in good faith by Nu Skin United States,  Nu Skin
                  Enterprises and Nu Skin USA following the Closing.

         6.       Leasehold improvements relating to an operations center of Big
                  Planet, Inc.
<PAGE>
                                   EXHIBIT “B”

                               ACQUIRED CONTRACTS
<PAGE>
                               ACQUIRED CONTRACTS

         1.       Personal  Services  Agreement  dated  November  1, 1998 by and
                  between Nu Skin USA and Final Kick  Marketing  Group.  Expires
                  November 1, 2000.  Total  contract  amount is  $220,000,  plus
                  travel expenses.

         2.       Personal  Services  Agreement  dated  December  1, 1998 by and
                  between Nu Skin USA and Carmen Dominicci. Expires November 30,
                  2000. Total contact amount is $95,000, plus expenses

         3.       Personal  Services  Agreement  dated  August  25,  1998 by and
                  between Nu Skin USA and Isaac  Wilson  (Stray  Dogs).  Expires
                  August  9,  1999.  Total  contract  amount  is  $11,000,  plus
                  expenses.

         4.       Consulting  Agreement (undated) by and between Nu Skin USA and
                  Gibb Dyer. Contract amount is $4,000 per month through 1999.

         5.       Consulting  Agreement (undated) by and between Nu Skin USA and
                  Suzanne Barnes.  Contract amount is $500 per day in Utah, $750
                  per day  outside  of Utah , for  Demonstrations  at Nu  Colour
                  Application Workshops.

         6.       Consulting Agreement dated November 29, 1998 by and between Nu
                  Skin USA and Sherry  Drabner.  Contract amount is $500 per day
                  for Demonstrations at NU COLOUR Application Workshops.

         7.       Consulting Agreement dated November 27, 1998 by and between Nu
                  Skin USA and Susan Markey. Contract amount is $500 per day for
                  Demonstrations at NU COLOUR Application Workshops.

         8.       Consulting  Agreement dated December 3, 1998 by and between Nu
                  Skin USA and Marianne  Thompson.  Contract  amount is $500 per
                  day for Demonstrations at NU COLOUR Application Workshops.

         9.       Consulting Agreement dated November 28, 1998 by and between Nu
                  Skin USA and Kathy  Eckenbrecht.  Contract  amount is $500 per
                  day for Demonstrations at NU COLOUR Application Workshops.

         10.      Waiver of Objection to Use  Material  (undated)  granted by Nu
                  Skin USA, Inc. in favor of Lifetime  Productions,  Inc. Grants
                  Lifetime  Productions,  Inc. rights to use Nu Skin USA footage
                  of Christie Brinkley.

         11.      Sub Lease  Agreement  dated November 1, 1998 by and between Nu
                  Skin USA and  Franklin  Covey Co.  Expires  December 31, 1999.
                  Monthly payments are $7,661.
<PAGE>
                                   EXHIBIT “C”

                               ASSUMED LIABILITIES
<PAGE>
                               ASSUMED LIABILITIES

         In connection with the transactions  contemplated by this Agreement, Nu
Skin  United  States  will  assume  the  following  categories  of Nu Skin USA’s
liabilities:

         Trade A/R1*

         A/P Trade*

         Accrued Payables to Vendors*

         Accrued Payables – Consigned*

         Accrued Commissions

         Accrued Gallery of Gifts Liability

         Wages/Payroll Taxes Payable*

         Accrued Sales Tax*

         Other Accrued Liabilities*

         Deferred Shipping*

         Independent Warehouses*

         Attached  hereto is a balance  sheet of Nu Skin USA as of  January  31,
1999 showing the Nu Skin USA liabilities being assumed by Nu Skin United States.

         *  Specifically excluding all amounts that relate to the Affiliates.
<PAGE>
            CONTRACTUAL OBLIGATIONS ASSUMED BY NU SKIN UNITED STATES

         1.       Personal  Services  Agreement  dated  November  1, 1998 by and
                  between Nu Skin USA and Final Kick  Marketing  Group.  Expires
                  November 1, 2000.  Total  contract  amount is  $220,000,  plus
                  travel expenses.

         2.       Personal  Services  Agreement  dated  December  1, 1998 by and
                  between Nu Skin USA and Carmen Dominicci. Expires November 30,
                  2000. Total contact amount is $95,000, plus expenses

         3.       Personal  Services  Agreement  dated  August  25,  1998 by and
                  between Nu Skin USA and Isaac  Wilson  (Stray  Dogs).  Expires
                  August  9,  1999.  Total  contract  amount  is  $11,000,  plus
                  expenses.

         4.       Consulting  Agreement (undated) by and between Nu Skin USA and
                  Gibb Dyer. Contract amount is $4,000 per month through 1999.

         5.       Consulting  Agreement (undated) by and between Nu Skin USA and
                  Suzanne Barnes.  Contract amount is $500 per day in Utah, $750
                  per day  outside  of Utah , for  Demonstrations  at Nu  Colour
                  Application Workshops.

         6.       Consulting Agreement dated November 29, 1998 by and between Nu
                  Skin USA and Sherry  Drabner.  Contract amount is $500 per day
                  for Demonstrations at NU COLOUR Application Workshops.

         7.       Consulting Agreement dated November 27, 1998 by and between Nu
                  Skin USA and Susan Markey. Contract amount is $500 per day for
                  Demonstrations at NU COLOUR Application Workshops.

         8.       Consulting  Agreement dated December 3, 1998 by and between Nu
                  Skin USA and Marianne  Thompson.  Contract  amount is $500 per
                  day for Demonstrations at NU COLOUR Application Workshops.

         9.       Consulting Agreement dated November 28, 1998 by and between Nu
                  Skin USA and Kathy  Eckenbrecht.  Contract  amount is $500 per
                  day for Demonstrations at NU COLOUR Application Workshops.

         10.      Waiver of Objection to Use  Material  (undated)  granted by Nu
                  Skin USA, Inc. in favor of Lifetime  Productions,  Inc. Grants
                  Lifetime  Productions,  Inc. rights to use Nu Skin USA footage
                  of Christie Brinkley.

         11.      Sub Lease  Agreement  dated November 1, 1998 by and between Nu
                  Skin USA and  Franklin  Covey Co.  Expires  December 31, 1999.
                  Monthly payments are $7,661.
<PAGE>
                                   EXHIBIT “D”

                       FORM OF BILL OF SALE AND ASSIGNMENT
<PAGE>
                                   EXHIBIT “E”

                 FORM OF INSTRUMENT OF ASSUMPTION OF LIABILITIES
<PAGE>
                                   EXHIBIT “F”

                  FORM OR INDEMNIFICATION LIMITATION AGREEMENT
<PAGE>
                                   EXHIBIT “G”

                 FORM OF LEGAL OPINION OF HOLLAND & HART, L.L.P.
<PAGE>
                                   EXHIBIT “H”

                          ALLOCATION OF PURCHASE PRICE

         The  Allocation  of the Purchase  Price shall be agreed  upon,  in good
faith,  by Nu Skin  Enterprises,  Nu Skin United States,  and Nu Skin USA within
thirty (30) days after the Closing.

——–
         1 To the  extent any such trade  account  receivable  reflects a credit
balance  resulting  from the  issuance by Nu Skin USA of credit  vouchers to its
customers.

 

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Another double header for you today: both a Promissory Note and a Warrant Agreement from Amlaw pro bono honored law firm Patterson, Belk Webb & Tyler. This copy is complimentary from my friends at RealDealDocs.com – the online leader in legal documents. To search millions of legal docs for free, please visit www.RealDealDocs.com!

 

                                                                EXHIBIT 10.1

                PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT

                                 by and among

                        CARRINGTON LABORATORIES, INC.

                                     and

            THE PARTIES NAMED HEREIN ON SCHEDULE 1, AS PURCHASERS

                              November 18, 2005

                PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT

      THIS PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT (this  “Agreement”)

 is dated as  of November 18,  2005, among Carrington  Laboratories, Inc.,  a

 Texas corporation (the “Company”), and the purchasers identified on Schedule

 1 hereto (each a “Purchaser” and collectively the “Purchasers”).

 

      WHEREAS, subject  to  the  terms  and  conditions  set  forth  in  this

 Agreement and pursuant  to Section 4(2)  of the Securities  Act (as  defined

 below), and Rule 506  promulgated thereunder, the  Company desires to  issue

 and sell to the Purchasers, and  the Purchasers, severally and not  jointly,

 desire to purchase from the Company  in the aggregate, $5,000,000  principal

 amount of the Company’s 6.0% Subordinated  Promissory Notes and Warrants  to

 purchase 5,000,000 shares of Common Stock.

 

      NOW, THEREFORE, in consideration of  the mutual covenants contained  in

 this Agreement, and for  other good and  valuable consideration the  receipt

 and adequacy  of  which  are  hereby  acknowledged,  the  Company  and  each

 Purchaser agree as follows:

 

                                  ARTICLE I

                                 DEFINITIONS

 

     1.1 Definitions.   In  addition to the  terms defined  elsewhere in this

 Agreement, for all purposes of this Agreement, the following terms have  the

 meanings indicated in this Section 1.1:

 

           “Affiliate” means any Person that, directly or indirectly  through

 one or more intermediaries, controls or is controlled by or is under  common

 control with a Person, as  such terms are used  in and construed under  Rule

 144. With respect  to a Purchaser,  any investment fund  or managed  account

 that is managed on a discretionary  basis by the same investment manager  as

 such Purchaser will be deemed to be an Affiliate of such Purchaser.

 

           “Agreement” shall have the  meaning ascribed to  such term in  the

 Preamble.

 

           “Applicable Law” means any statute, law, rule or regulation or any

 judgment, order, writ, injunction  or decree of  any Governmental Entity  to

 which a specified Person or property is subject.

 

           “Business Day” means any day except  Saturday, Sunday and any  day

 which  shall  be  a  federal  legal  holiday  or  a  day  on  which  banking

 institutions in the  State of  Texas are authorized  or required  by law  or

 other governmental action to close.

 

           “Closing” shall have the meaning ascribed to such term in  Section

 2.1(a).

 

           “Closing Date” shall  have the meaning  ascribed to  such term  in

 Section 2.1(a).

 

           “Commission” means  the  United  States  Securities  and  Exchange

 Commission.

 

           “Common Stock” means  the common stock  of the  Company, $.01  par

 value per  share,  and any  securities  into  which such  common  stock  may

 hereafter be reclassified.

 

           “Company” shall  have the  meaning ascribed  to such  term in  the

 Preamble.

 

           “Damages” shall have the meaning ascribed to such term in  Section

 6.2.

 

           “Disclosure Schedules” means the Disclosure Schedules concurrently

 delivered herewith.

 

           “Exchange Act”  means  the Securities  Exchange  Act of  1934,  as

 amended.

 

           “Final Memorandum”  means  that certain  final  Private  Placement

 Memorandum dated November 14, 2005 provided by the Company to the Purchasers

 relating to the private offering of the Securities.

 

           “Governmental  Entity”  means  any   court  or  tribunal  in   any

 jurisdiction (domestic or foreign) or any public, governmental or regulatory

 body, agency, department,  commission, board, bureau  or other authority  or

 instrumentality (domestic or foreign).

 

           “Person” means an individual  or corporation, partnership,  trust,

 incorporated or unincorporated association, joint venture, limited liability

 company, joint  stock  company,  government (or  an  agency  or  subdivision

 thereof) or other entity of any kind.

 

           “PPM Draft” means that certain draft Private Placement  Memorandum

 dated November 14, 2005 provided by  the Company to the Purchasers  relating

 to the private offering of the Securities.

 

           “Proceedings”   means    all    proceedings,    actions,    suits,

 investigations, and inquiries  by or before  any arbitrator or  Governmental

 Entity.

 

           “Promissory Notes” means the 6.0% Subordinated Promissory Notes of

 the Seller, which shall be in the form attached as Exhibit A hereto.

 

           “Purchaser” shall have the  meaning ascribed to  such term in  the

 Preamble.

 

           “Registrable Securities” means  (a) the Warrant  Shares  or  other

 securities issued  or  issuable  to each  Purchaser  or  its  transferee  or

 designee (i) upon exercise  of the Warrants, or  (ii) upon any  distribution

 with respect to,  any exchange for  or any replacement  of such Warrants  or

 (iii) upon any conversion, exercise or exchange of any securities issued  in

 connection  with  any  such  distribution,  exchange  or  replacement;   (b)

 securities  issued  or  issuable  upon  any  stock  split,  stock  dividend,

 recapitalization or similar event with respect to the foregoing; and (c) any

 other security issued as a dividend  or other distribution with respect  to,

 in exchange for, or in replacement  or redemption of, any of the  securities

 referred  to  in  the  preceding  clauses;  provided,  however,  that   such

 securities shall cease  to be  Registrable Securities  when such  securities

 have been sold  to or through  a broker dealer  or underwriter  in a  public

 distribution or a public securities transaction or when such securities  may

 be sold without  any restriction pursuant  to Rule 144(k)  as determined  by

 counsel to the Company.

 

           “Registration Statement” shall have  the meaning ascribed to  such

 term in Section 4.4(b).

 

           “Required Minimum” means the maximum aggregate number of shares of

 Common Stock then issued or issuable pursuant to the Transaction Documents.

 

           “Rule 144” means Rule 144  promulgated by the Commission  pursuant

 to the Securities Act, as such Rule may be amended from time to time, or any

 similar rule  or  regulation  hereafter adopted  by  the  Commission  having

 substantially the same effect as such Rule.

 

           “SEC Filings”  shall have  the meaning  ascribed to  such term  in

 Section 3.1(h).

 

           “Securities” means  the Promissory  Notes,  the Warrants  and  the

 Warrant Shares.

 

           “Securities Act” means the Securities Act of 1933, as amended.

 

           “Series A  Warrants”  means the  Series  A Common  Stock  Purchase

 Warrants, in the form of Exhibit B hereto.

 

           “Series B  Warrants”  means the  Series  B Common  Stock  Purchase

 Warrants, in the form of Exhibit C hereto.

 

           “Subordination Agreement” means the Subordination Agreement, dated

 as of the date hereof, by and among the Purchasers, the Company and Comerica

 Bank, in the form of Exhibit D hereto.

 

           “Subscription Amount” means, as to each Purchaser, the amount  set

 forth beside such Purchaser’s  name on Schedule 1  hereto, in United  States

 dollars and in immediately available funds.

 

           “Transaction  Documents”  means  this  Agreement,  the  Promissory

 Notes, the  Warrants  and any  other  documents or  agreements  executed  in

 connection with the transactions contemplated hereunder.

 

           “Warrants” means the Series A Warrants and the Series B Warrants.

 

           “Warrant Shares” means  the shares of  Common Stock issuable  upon

 exercise of the Warrants.

 

                                 ARTICLE II

                              PURCHASE AND SALE

     2.1 Closing.

 

           (a) The  closing  of  the  transactions  contemplated  under  this

 Agreement (the “Closing”) will take place as promptly as practicable, but no

 later than five (5)  Business Days following satisfaction  or waiver of  the

 conditions set forth in  Sections 2.2 and 2.3  (other than those  conditions

 which by their terms are not to  be satisfied or waived until the  Closing),

 at the offices of the Company at 2001 Walnut Hill Lane, Irving, Texas  75038

 (or remotely via  exchange of  documents and  signatures) or  at such  other

 place or  day  as may  be  mutually acceptable  to  the Purchasers  and  the

 Company. The date on which the Closing occurs is the “Closing Date”.

 

           (b) At the Closing, the Purchasers  shall purchase, severally  and

 not jointly,  and  the Company  shall  issue  and sell,  in  the  aggregate,

 $5,000,000 principal  amount  of  Promissory Notes,  Series  A  Warrants  to

 purchase 2,500,000 shares of Common Stock and Series B Warrants to  purchase

 2,500,000 shares of Common Stock on  the Closing Date. Each Purchaser  shall

 purchase severally, and not jointly, from the Company, and the Company shall

 issue and sell to  each Purchaser, a Promissory  Note in a principal  amount

 equal to such Purchaser’s Subscription Amount  and Warrants to purchase  the

 number of  shares  of Common  Stock  as indicated  on  Schedule 1  for  such

 Purchaser.

 

      2.2 Conditions to Obligations of Purchasers to Effect the Closing.  The

 obligations of each  Purchaser to effect  the Closing  and the  transactions

 contemplated by this Agreement  shall be subject to  the satisfaction at  or

 prior to the Closing of each of  the following conditions, any of which  may

 be waived, in writing, by such Purchaser:

 

           (a) At the  Closing (unless otherwise specified below) the Company

 shall deliver or cause to be delivered to each Purchaser the following:

 

                (i)  this Agreement, duly executed by the Company;

 

                (ii) a Promissory  Note in the principal amount equal to such

 Purchaser’s  Subscription  Amount  as  set  forth  on  Schedule  1   hereto,

 registered in the name of such Purchaser;

 

                (iii) a  Series A  Warrant,  registered in  the name  of such

 Purchaser, pursuant to which such Purchaser shall have the right to  acquire

 up to  the number  of shares  of Common  Stock as  set forth  on Schedule  1

 hereto; and

 

                (iv) a  Series  B Warrant,  registered  in the  name  of such

 Purchaser, pursuant to which such Purchaser shall have the right to  acquire

 up to  the number  of shares  of Common  Stock as  set forth  on Schedule  1

 hereto.

 

           (b) All  representations and  warranties of  the Company contained

 herein shall remain true and correct as  of the Closing Date as though  such

 representations  and  warranties  were  made  on  such  date  (except  those

 representations and warranties that address matters only as of a  particular

 date will remain true and correct as  of such date) and the Purchaser  shall

 have received a certificate signed by the Company’s chief executive  officer

 and chief financial officer to such effect.

 

           (c) The  Company  shall  sell  Promissory  Notes  with  a  minimum

 aggregate principal amount of $2,500,000.

 

           (d) No  Proceeding   shall,  on the  Closing  Date, be  pending or

 threatened seeking to restrain, prohibit, or obtain damages or other  relief

 in connection  with any  Transaction Document  or  the consummation  of  the

 transactions contemplated thereby.

 

     2.3 Conditions to Obligations of the Company to Effect the Closing.  The

 obligations of  the  Company to  effect  the Closing  and  the  transactions

 contemplated by this Agreement  shall be subject to  the satisfaction at  or

 prior to the  Closing of each  of the following  conditions with respect  to

 such Purchaser, any of which may be waived, in writing, by the Company:

 

           (a) At  the Closing, such  Purchaser shall deliver  or cause to be

 delivered to the Company the following:

 

                (i)  this Agreement, duly executed by such Purchaser;

 

                (ii) a Subordination Agreement; and

 

                (iii) such Purchaser’s Subscription Amount, by wire transfer

 of immediately available funds.

 

           (b) All  representations  and  warranties of  each  such Purchaser

 contained herein shall  remain true and  correct as of  the Closing Date  as

 though such representations and warranties were made on such date.

 

           (c) No  Proceeding   shall,  on the  Closing  Date, be  pending or

 threatened seeking to restrain, prohibit, or obtain damages or other  relief

 in connection  with any  Transaction Document  or  the consummation  of  the

 transactions contemplated thereby.

 

           (d) The  Company  shall  sell  Promissory  Notes  with  a  minimum

 aggregate principal amount of $2,500,000.

 

                                 ARTICLE III

                        REPRESENTATIONS AND WARRANTIES

 

     3.1 Representations and Warranties of the  Company. Except as set  forth

 under the  corresponding  section  of  the  Disclosure  Schedules  delivered

 concurrently   herewith,   the   Company   hereby   makes   the    following

 representations and warranties as of the  date hereof and as of the  Closing

 Date to each Purchaser:

 

           (a) Corporate  Organization.   The Company  is a  corporation duly

 organized, validly existing,  and in  good standing  under the  laws of  the

 State of Texas and has all requisite corporate power and corporate authority

 to own, lease, and operate  its properties and to  carry on its business  as

 now being conducted.

 

           (b) Qualification.   The Company is  duly qualified or licensed to

 do business  and is  in good  standing  in each  jurisdiction in  which  the

 property owned, leased,  or operated by  it or the  conduct of its  business

 requires such qualification or licensing, except jurisdictions in which  the

 failure to be  so qualified or  licensed would not,  individually or in  the

 aggregate, have a material adverse effect  on the business, assets,  results

 of operations, or financial condition of the Company.

 

           (c) Capitalization of the Company.

 

                (i) The  authorized capital stock of  the Company consists of

 (i) 30,000,000 shares of  Common Stock, of which,  as of November 14,  2005,

 10,790,230 shares were outstanding, and  (ii) 1,000,000 shares of  Preferred

 Stock, par value $100 per share, of which, as of November 14, 2005, none  of

 which were outstanding.   All  outstanding shares  of capital  stock of  the

 Company have been validly issued and  are fully paid and nonassessable,  and

 no shares of capital stock of the Company are subject to, nor have any  been

 issued in violation of,  preemptive or similar rights.   As of November  14,

 2005, (A) an aggregate of 1,444,881 shares of Common Stock are issuable upon

 the exercise of outstanding options granted  under the Company’s 1995  Stock

 Option Plan, (B) an aggregate of 500,000 shares of Common Stock are reserved

 for issuance  under  the Company’s  2004  Stock  Option Plan,  of  which  an

 aggregate of 170,500 shares of Common  Stock are issuable upon the  exercise

 of outstanding  options granted  thereunder, (C) an  aggregate of  1,250,000

 shares of  Common  Stock  are reserved  for  issuance  under  the  Company’s

 Employee Stock Purchase  Plan, of which  an aggregate of  960,112 shares  of

 Common Stock have been  issued thereunder, and (D)  an aggregate of  300,000

 shares of a series of the  Company’s Preferred Stock designated as Series  D

 Preferred Stock  are reserved  for issuance  upon  the exercise  of  certain

 preferred share  purchase rights  associated with  the Common  Stock,  which

 rights become  exercisable by  the holders  thereof upon  the occurrence  of

 certain events, including  the acquisition of,  or the  announcement of  the

 intention to acquire, more than 15%  of the outstanding Common Stock by  any

 Person or group.

 

                (ii) Except as set forth  above in this  Section 3(c) and  as

 contemplated  by  this  Agreement,  as  of  November  14,  2005,  there  are

 outstanding (A) no shares of capital stock or other voting securities of the

 Company, (B) no securities of the  Company convertible into or  exchangeable

 for shares of capital stock or  other voting securities of the Company,  (C)

 no options or other rights to acquire from the Company, and no obligation of

 the Company to issue or  sell, any shares of  capital stock or other  voting

 securities of the Company or any securities of the Company convertible  into

 or exchangeable for  such capital  stock or  voting securities,  and (D)  no

 equity equivalents, interests in the ownership or earnings, or other similar

 rights of or with respect to the Company.

 

           (d) Authority  Relative to this  Agreement.  The  Company has full

 corporate power and corporate authority to execute, deliver, and perform the

 Transaction  Documents  and  to  consummate  the  transactions  contemplated

 thereby.  The  execution, delivery, and  performance by the  Company of  the

 Transaction Documents,  and  the  consummation by  it  of  the  transactions

 contemplated thereby, have been duly  authorized by all necessary  corporate

 action of the Company.   The Transaction Documents  have been duly  executed

 and delivered  by  the Company  and  constitute valid  and  legally  binding

 obligations of the  Company, enforceable against  the Company in  accordance

 with their respective terms, except that such enforceability may be  limited

 by  (i)  applicable  bankruptcy,  insolvency,  reorganization,   moratorium,

 and similar  laws  affecting  creditors’  rights  generally, (ii)  equitable

 principles which may  limit the availability  of certain equitable  remedies

 (such  as  specific  performance)  in  certain  instances,  and (iii) public

 policy considerations  with  respect  to  the  enforceability  of rights  of

 indemnification.

 

           (e) Noncontravention.  The execution, delivery, and performance by

 the Company of the Transaction Documents  and the consummation by it of  the

 transactions contemplated thereby do not and  will not (i) conflict with  or

 result in  a  violation  of  any  provision  of  the  Restated  Articles  of

 Incorporation or Bylaws of  the Company, (ii) conflict  with or result in  a

 violation of any provision of, or constitute (with or without the giving  of

 notice or the passage of time or both)  a default under, or give rise  (with

 or without the giving of notice or the passage of time or both) to any right

 of termination, cancellation,  or acceleration under,  any bond,  debenture,

 note,  mortgage,  indenture,  lease,  agreement,  or  other  instrument   or

 obligation to which the Company is a party or by which the Company or any of

 its properties may be bound, (iii)  result in the creation or imposition  of

 any lien or encumbrance upon the properties of the Company, or (iv) assuming

 compliance with  the matters  referred to  in  Section 3.1(f),  violate  any

 Applicable Law (as hereinafter defined) binding upon the Company, except, in

 the case of  clauses (ii), (iii),  and (iv) above,  for any such  conflicts,

 violations, defaults, terminations, cancellations, accelerations, liens,  or

 encumbrances which  would not,  individually or  in  the aggregate,  have  a

 material adverse effect on the business,  assets, results of operations,  or

 financial condition  of the  Company or  on the  ability of  the Company  to

 consummate the transactions contemplated hereby.

 

           (f) Governmental  Approvals.    No  consent,  approval,  order, or

 authorization  of,  or  declaration,  filing,  or  registration  with,   any

 Governmental Entity (as hereinafter defined) is  required to be obtained  or

 made  by  the  Company  in  connection  with  the  execution,  delivery,  or

 performance by the Company of the Transaction Documents or the  consummation

 by it of  the transactions contemplated  thereby, other than  (i) compliance

 with any applicable requirements of the Securities Act; (ii) compliance with

 any applicable requirements of the  Exchange Act; (iii) compliance with  any

 applicable state securities laws; and (iv) such consents, approvals, orders,

 or authorizations which, if not obtained, and such declarations, filings, or

 registrations which,  if  not  made,  would  not,  individually  or  in  the

 aggregate, have a material adverse effect  on the business, assets,  results

 of operations, or financial  condition of the Company  or on the ability  of

 the  Company  to  consummate  the  transactions  contemplated  hereby.   The

 representations and  warranties of  the Company  contained in  this  Section

 3.1(f), insofar as such representations and warranties pertain to compliance

 by the Company with  the requirements of the  Securities Act and  applicable

 state securities laws, are  based on the  representations and warranties  of

 the Purchasers contained in Section 3.2.

 

           (g) Authorization  of  Issuance.   The  Securities have  been duly

 authorized for issuance  and, when issued  and delivered by  the Company  in

 accordance with the provisions of the applicable Transaction Documents, will

 be validly issued, fully paid, and nonassessable.  The Warrant Shares,  when

 issued in accordance with  the terms of the  Transaction Documents, will  be

 validly issued, fully paid and nonassessable.  The Company has reserved from

 its duly authorized  capital stock a  number of shares  of Common Stock  for

 issuance of the Warrant Shares at least equal to the Required Minimum on the

 date hereof.  The issuance of the  Securities and the Warrant Shares is  not

 subject to any preemptive or similar rights.

 

           (h) Private Placement Memorandum; SEC Filings.

 

                (i) None   of   the  information   contained  in   the  Final

 Memorandum, as of such date  or as of the  date hereof, contains any  untrue

 statement of a material fact or omits to state any material fact required to

 be stated therein  or necessary in  order to make  the statements  contained

 therein, in  light of  the  circumstances under  which  they are  made,  not

 misleading.

 

                (ii) The Company has delivered to each Purchaser accurate and

 complete copies of (A) the Company’s Annual Report on Form 10-K for the year

 ended December 31, 2004, (B) the Company’s Annual Report to Shareholders for

 the fiscal year ended December 31,  2004, (C) the Company’s Proxy  Statement

 dated April 14, 2005,  relating to the 2005  Annual Meeting of  Shareholders

 and (D) the Company’s  Quarterly Report on Form  10-Q for the quarter  ended

 September 30, 2005, in each case in the  form filed by the Company with  the

 Commission (collectively,  the “SEC  Filings”).   None of  the SEC  Filings,

 including,  without  limitation,  any  financial  statements  or   schedules

 included therein, as  of the date  of filing thereof,  contained any  untrue

 statement of a material fact or omitted to state any material fact  required

 to be stated therein or necessary in order to make the statements  contained

 therein, in  light of  the circumstances  under which  they were  made,  not

 misleading.  The  financial statements of  the Company included  in the  SEC

 Filings present  fairly, in  conformity with  generally accepted  accounting

 principles applied on a consistent basis (except as may be indicated in  the

 notes thereto), the consolidated financial position of the Company as of the

 dates thereof and its consolidated results of operations and cash flows  for

 the periods then ended (subject to normal year-end audit adjustments in  the

 case of any unaudited interim financial statements).

 

           (i) Absence  of Undisclosed  Liabilities.   Except  as and  to the

 extent disclosed in the  Private Placement Memorandum  and the SEC  Filings,

 (a) as of September 30, 2005, the Company had no liabilities or  obligations

 (whether accrued, absolute, contingent, unliquidated, or otherwise) material

 to the  Company, and  (b) since  September  30, 2005,  the Company  has  not

 incurred any  such material  liabilities or  obligations, other  than  those

 incurred in the ordinary course of business.

 

           (j) Absence  of  Certain  Changes.   Except  as  disclosed  in the

 Private Placement Memorandum and the SEC Filings, since September 30,  2005,

 there has not  been any  material adverse  change in  the business,  assets,

 results of operations, or financial condition of the Company.

 

           (k) Scope of  Representations and Warranties.  Except as set forth

 in this Agreement, the Company makes no representations or warranties to the

 Purchasers and hereby  disclaims all  liability and  responsibility for  any

 representation, warranty,  statement, or  information made  or  communicated

 (orally or in writing)  to any Purchaser (including  but not limited to  any

 opinion, information, projection, or advice that  may have been provided  to

 the Purchasers  by any  officer, director,  employee, agent,  consultant  or

 representative of the Company).

 

     3.2 Representations  And  Warranties Of The Purchasers.  Each  Purchaser

 hereby, for itself and for no other Purchaser, represents and warrants as of

 the date hereof and as of the Closing Date to the Company as follows:

 

           (a) Organization.  Such Purchaser  (other than  individuals) is an

 entity duly organized, validly existing and in good standing under the  laws

 of the jurisdiction of its organization.

 

           (b) Authority Relative to this Agreement.  Such Purchaser has full

 power and  authority  to  execute,  deliver,  and  perform  the  Transaction

 Documents and to consummate the transactions contemplated thereby.  If  such

 Purchaser is an  entity, the execution,  delivery, and  performance by  such

 Purchaser of  the Transaction  Documents to  which it  is a  party, and  the

 consummation by it of the transactions contemplated thereby, have been  duly

 authorized by all necessary corporate, or similar action on the part of such

 Purchaser.  Each of the Transaction  Documents to which such Purchaser is  a

 party has been duly executed and delivered by such Purchaser and constitutes

 a valid  and  legally  binding obligation  of  such  Purchaser,  enforceable

 against such  Purchaser  in accordance  with  its terms,  except  that  such

 enforceability may  be limited  by  (i) applicable  bankruptcy,  insolvency,

 reorganization, moratorium,  and similar  laws affecting  creditors’  rights

 generally, (ii) equitable  principles which  may limit  the availability  of

 certain  equitable  remedies  (such  as  specific  performance)  in  certain

 instances, and  (iii)  public  policy considerations  with  respect  to  the

 enforceability of rights of indemnification.

 

           (c) Noncontravention.  The execution, delivery, and performance by

 such Purchaser of the Transaction Documents to  which it is a party and  the

 consummation by it of the transactions contemplated thereby do not and  will

 not (i) if  such  Purchaser is  an  entity, conflict  with  or result  in  a

 violation of any provision of the charter, bylaws, or similar organizational

 documents of such Purchaser or (ii) violate any Applicable Law binding  upon

 such Purchaser, except for any such violations which would not, individually

 or in the aggregate affect the  ability of such Purchaser to consummate  the

 transactions contemplated hereby.

 

           (d) Governmental  Approvals.    No  consent,  approval,  order, or

 authorization  of,  or  declaration,  filing,  or  registration  with,   any

 Governmental Entity is required to be obtained or made by such Purchaser  in

 connection with the execution, delivery, or performance by such Purchaser of

 the Transaction Documents to which it is  a party or the consummation by  it

 of the transactions contemplated thereby.

 

           (e) General  Solicitation.  Such Purchaser  is not  purchasing the

 Securities as  a  result of  any  advertisement, article,  notice  or  other

 communication regarding the Securities published in any newspaper,  magazine

 or similar media or broadcast over  television or radio or presented at  any

 seminar or any other general solicitation or general advertisement.

 

           (f) No  Public   Sale  or  Distribution.  Such  Purchaser  is  (i)

 acquiring the Promissory Notes  and Warrants and (ii)  upon exercise of  the

 Warrants will acquire the Warrant Shares, for its own account and not with a

 view towards,  or  for  resale  in  connection  with,  the  public  sale  or

 distribution thereof; provided, however, that by making the  representations

 herein, such Purchaser does not agree to hold any of the Securities for  any

 minimum or other  specific term  and reserves the  right to  dispose of  the

 Securities at any  time in  accordance with  or pursuant  to a  registration

 statement or an exemption under the Securities Act.  Such Purchaser does not

 have any agreement or understanding, directly or indirectly, with any Person

 to distribute any of the Securities.

 

           (g) Purchaser  Status. At the time  such Purchaser was offered the

 Securities, it was, and at the date hereof it is, and on each date on  which

 it exercises any Warrants, it will  be either: (i) an “accredited  investor”

 as defined  in  Rule 501  under  the Securities  Act  or (ii)  a  “qualified

 institutional buyer” as defined in Rule 144A under the Securities Act.  Such

 Purchaser is a resident of the jurisdiction set forth below such Purchaser’s

 name  on Schedule  1 attached hereto.  Such Purchaser  is not acquiring  the

 Securities as  part  of a  “group”  as  such term  is  generally  understood

 pursuant to Section 13(d) of Regulation 13D-G of the Exchange Act or if such

 Purchaser is a member  of a group, the group  will beneficially own,  within

 the meaning of Section 13(d) of  Regulation 13D-G of the Exchange Act,  less

 than 15%  of  the Common  Stock  after  giving effect  to  the  transactions

 contemplated hereby.

 

           (h) Reliance  on  Exemptions.  Such  Purchaser  understands   that

 the  Promissory  Notes and Warrants  are  being  offered  and  sold  to  the

 Purchasers   in  reliance  on  specific  exemptions  from  the  registration

 requirements  of United States federal  and state  securities laws  and that

 the Company is relying in part upon the  truth  and  accuracy of,  and  such

 Purchaser’s compliance  with,  the representations,  warranties, agreements,

 acknowledgments and understandings  of such  Purchaser set  forth herein  in

 order to determine the availability of  such exemptions and the  eligibility

 of such Purchaser to acquire the Promissory Notes and Warrants.

 

           (i) Information.  Such Purchaser  and its  advisors, if  any, have

 been furnished  with  all  publicly  available  materials  relating  to  the

 business, finances and  operations of the  Company and  such other  publicly

 available materials relating to the offer  and sale of the Promissory  Notes

 and Warrants as have  been requested by such  Purchaser. Such Purchaser  has

 received a copy of  the Final Memorandum, and  acknowledges and agrees  that

 (a) the Final Memorandum supersedes the PPM Draft and (b) such Purchaser  is

 not  relying  on  the  PPM  Draft  in  making  the  investment  contemplated

 hereunder.  Such Purchaser and its advisors, if any, have been afforded  the

 opportunity to ask questions of the Company. Neither such inquiries nor  any

 other due  diligence  investigations  conducted by  such  Purchaser  or  its

 advisors, if any, or its representatives shall modify, amend or affect  such

 Purchaser’s right to  rely on the  Company’s representations and  warranties

 contained herein.  Such Purchaser  understands that  its investment  in  the

 Promissory Notes and Warrants involves a high degree of risk. Other than  to

 other  Persons  party  to  this  Agreement,  Purchaser  has  maintained  the

 confidentiality of  all  disclosures made  to  it in  connection  with  this

 transaction (including the existence and terms of this transaction).

 

           (j) Experience of  Such Purchaser. Such Purchaser, either alone or

 together with its  representatives, has such  knowledge, sophistication  and

 experience  in  business  and  financial  matters,  including  investing  in

 companies engaged in the business in which the Company is engaged, so as  to

 be capable of evaluating the merits and risks of the prospective  investment

 in the Promissory Notes  and Warrants, and has  so evaluated the merits  and

 risks of such investment. Such Purchaser  is able to bear the economic  risk

 of an investment in the Promissory Notes and Warrants and is able to  afford

 a complete loss of such investment.

 

           (k) No  Governmental  Review. Such  Purchaser understands  that no

 United  States  federal  or  state  agency   or  any  other  government   or

 governmental agency has passed on or made any recommendation or  endorsement

 of the Promissory Notes and Warrants  or the fairness or suitability of  the

 investment in the Promissory Notes and  Warrants, nor have such  authorities

 passed upon or endorsed the merits  of the offering of the Promissory  Notes

 and Warrants.

                                 ARTICLE IV

                       OTHER AGREEMENTS OF THE PARTIES

 

     4.1 Transfer Restrictions.

 

           (a) The  Securities may  only  be disposed  of in  compliance with

 state and  federal  securities laws.  In  connection with  any  transfer  of

 Securities other than  pursuant to an  effective registration statement,  to

 the Company or to an Affiliate of a Purchaser (who is an accredited investor

 and executes a customary representation letter), the Company may require the

 transferor thereof to provide to the Company an opinion of counsel  selected

 by the  transferor,  the  form  and substance  of  which  opinion  shall  be

 reasonably satisfactory to  the Company, to  the effect  that such  transfer

 does not  require  registration of  such  transferred Securities  under  the

 Securities Act.

 

           (b) As  a condition  to such  transfer, any  such transferee shall

 agree in writing to be bound by the  terms of this Agreement and shall  have

 the rights of a Purchaser under this Agreement.

 

           (c) While  any  Warrants  of  such  Purchaser  are  outstanding, a

 Purchaser may  not  transfer  its  Promissory  Note  unless  such  Purchaser

 simultaneously  transfers   (in  compliance   with  this   Agreement)   such

 Purchaser’s Warrants, and  while any Promissory  Note of  such Purchaser  is

 outstanding, a Purchaser may  not transfer any of  its Warrants unless  such

 Purchaser simultaneously transfers (in compliance with this Agreement)  such

 Purchaser’s Promissory Note.

 

     4.2 Legends.   It is agreed and understood  by each  Purchaser that  the

 form of Promissory Note, form of Warrants and any certificates  representing

 the Securities  to be  purchased by  it or  into which  such Securities  are

 convertible shall each conspicuously set forth on the face or back  thereof,

 in addition to any other legends required by agreement or Applicable Law,  a

 legend in substantially the following form:

 

           THE  SECURITIES   REPRESENTED  HEREBY   HAVE  NOT   BEEN

           REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,

           AND MAY NOT BE  OFFERED, SOLD, ASSIGNED OR  TRANSFERRED,

           IN THE ABSENCE  OF AN  EFFECTIVE REGISTRATION  STATEMENT

           UNDER SAID ACT  OR UNLESS  THE COMPANY  HAS RECEIVED  AN

           OPINION  OF  COUNSEL  REASONABLY  SATISFACTORY  TO   THE

           COMPANY  THAT  REGISTRATION  UNDER   SAID  ACT  IS   NOT

           REQUIRED.

 

           THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN

           RESTRICTIONS ON TRANSFER CONTAINED IN A PROMISSORY  NOTE

           AND WARRANT  PURCHASE AGREEMENT  AMONG THE  COMPANY  AND

           CERTAIN OTHER PARTIES THERETO. A COPY OF SUCH  AGREEMENT

           AND ALL APPLICABLE AMENDMENTS THERETO WILL BE  FURNISHED

           BY THE COMPANY TO THE HOLDER HEREOF WITHOUT CHARGE  UPON

           WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF

           BUSINESS OR REGISTERED OFFICE.

 

     4.3 Public  Announcements.   No  Purchaser  or any  of  their respective

 Affiliates shall  issue  any press  release  or otherwise  make  any  public

 statement with  respect to  the Transaction  Documents or  the  transactions

 contemplated thereby without the prior written consent of the Company.

 

     4.4 Registration Rights.

 

           (a) Registration  of  Registrable  Securities.    Subject  to  the

 occurrence of the Closing  and the terms and  provisions of this  Agreement,

 the Company shall use  its commercially reasonable  efforts to register  the

 Registrable Securities with the Commission under  the Securities Act  to the

 extent requisite to  permit the  sale or  other disposition  thereof by  the

 Purchasers.

 

           (b) Registration  Procedures.  The commercially reasonable efforts

 of the  Company under  Section  4.4(a) shall  mean  that the  Company  will,

 subject  to  the  terms  and  provisions  of  this  Section  4.4,  use   its

 commercially reasonable efforts to:

 

                (i)  prepare  and  file with the  Commission within  90  days

 following  the   Closing  a   registration  statement   (the   “Registration

 Statement”) covering the Registrable  Securities and cause the  Registration

 Statement to  become  effective  and to  keep  such  Registration  Statement

 continuously effective under the  Securities Act until such  date as is  the

 earlier of (A)  the date  when all  Registrable Securities  covered by  such

 Registration  Statement  have  been   sold  pursuant  to  the   Registration

 Statement, and (B) with respect to any holder, such time as all  Registrable

 Securities held by such holder may be sold without any restriction  pursuant

 to Rule 144;

 

                (ii) prepare and file with the Commission such amendments and

 supplements to  the  Registration  Statement and  the  prospectus  contained

 therein as may be  necessary to keep  the Registration Statement  effective,

 and comply with the  provisions of the Securities  Act, with respect to  the

 sale or  other  disposition  of  the  Registrable  Securities  whenever  the

 Purchasers shall desire to sell or  otherwise dispose of the same, but  only

 to the extent provided in this Section 4.4;

 

                (iii) furnish to each Purchaser such numbers of copies of the

 Registration Statement,  the prospectus  contained therein  (including  each

 preliminary  prospectus),  and   each  amendment  and   supplement  to   the

 Registration  Statement  and  such   prospectus,  in  conformity  with   the

 requirements of the Securities Act, as such Purchaser may reasonably request

 in order to  facilitate the  sale or  other disposition  of the  Registrable

 Securities;

 

                (iv) register or qualify the Registrable Securities for  sale

 under the securities or blue sky laws  of such states as the Purchasers  may

 reasonably request (except to the  extent exemptions from such  registration

 or qualification are available),  and do any and  all other acts and  things

 that may reasonably be necessary under  such securities or blue sky laws  to

 enable the Purchasers  to consummate the  sale or other  disposition of  the

 Registrable Securities in such states,  provided, however, that the  Company

 shall not  in  any  event be  required  to  keep any  such  registration  or

 qualification in effect after the expiration of the period during which  the

 Company maintains the effectiveness of the Registration Statement and  shall

 not for any such purpose be required to qualify to do business as a  foreign

 corporation in any state wherein it is not so qualified or to subject itself

 to taxation in any such state; and

 

                (v) before  filing the Registration Statement, any prospectus

 to be used in connection with the  offering to be conducted pursuant to  the

 Registration Statement, or any amendments or supplements to the Registration

 Statement or such prospectus  with the Commission,  furnish counsel to  each

 Purchaser with copies of all such documents proposed to be filed.

 

           (c) Required  Information.  The  Company shall not  be required to

 use its  commercially  reasonable  efforts  to  register,  or  maintain  the

 effectiveness of any registration of, Registrable Securities of a  Purchaser

 under the Securities Act or  the securities or blue  sky laws of any  states

 unless and until such  Purchaser furnishes to  the Company such  information

 regarding such Purchaser  and its  Registrable Securities  and the  intended

 method of  disposition of  such Registrable  Securities as  the Company  may

 reasonably request in order to satisfy  the requirements applicable to  such

 registration.

 

           (d) Limitations  on Registration.   The  rights of  the Purchasers

 pursuant to this Section 4.4 shall be subject to the following limitations:

 

                (i) If  at   any  time  or  from  time  to  time  during  the

 effectiveness of the Registration  Statement, the Company  is engaged in  or

 proposes to engage  in a  registered public  offering of  securities of  the

 Company or  any other  transaction  or activity  which,  in the  good  faith

 determination of the Board of Directors  of the Company, would be  adversely

 affected by offers or  sales of the Registrable  Securities pursuant to  the

 Registration Statement to the detriment of the Company, then the  Purchasers

 shall, upon the  written request  by the  Company, cease  making offers  and

 sales of the Registrable Securities  pursuant to the Registration  Statement

 (including sales pursuant  to Rule  144 under  the Securities  Act) for  the

 period of time specified by the  Company, which period shall not (i) in  the

 case of a registered public offering,  exceed the period beginning ten  days

 prior to the effective date of  the registration statement relating to  such

 offering and ending 120 days after such effective date, and (ii) in the case

 of any other transaction or activity,  exceed the period beginning ten  days

 prior to, and ending 120 days after, the date of commencement of such  other

 activity or date of consummation of such other transaction.  Each  Purchaser

 agrees to  enter  into such  further  agreements  with the  Company  or  any

 underwriter of securities of the Company deemed necessary by the Company  or

 any such underwriter to carry out the purposes  of this subsection (i).  The

 period of time that the Company  is obligated to maintain the  effectiveness

 of the Registration Statement  hereunder shall be  tolled during the  period

 the Purchasers  must  cease  making offers  and  sales  of  the  Registrable

 Securities pursuant to the Company’s request under this subsection (i).

 

                (ii) The  obligations  of  the Company  pursuant  to Sections

 4.4(a) and  (b)  shall  cease  (i) as  to  Registrable  Securities  sold  or

 otherwise disposed of pursuant to the Registration Statement or Section 4(1)

 of the Securities Act, or sold or otherwise  disposed of in any manner to  a

 person which, by virtue of this Section  4.4, is not entitled to the  rights

 provided by this Section 4.4, and (ii) as to Registrable Securities eligible

 for sale  pursuant to  Rule 144  promulgated under  the Securities  Act,  as

 amended from  time  to time,  or  any similar  rule  that may  hereafter  be

 adopted.

 

                (iii) In no event shall the Company be obligated to have more

 than  one  Registration  Statement  with  respect  to  the  registration  of

 Registrable Securities under the  Securities Act be  effective at any  given

 time, however if the conditions in (A)  or (B) of Section 4.4(b)(i) are  not

 satisfied and  the resale  of the  Registrable  Securities pursuant  to  the

 Registration Statement will no longer be allowed  as a result of the 3  year

 limitation of Rule 415  (effective December 1,  2005) promulgated under  the

 Securities Act  (or any  other similar  provision), the  Company shall  file

 additional Registration  Statements  and  use  its  commercially  reasonable

 efforts to  fully  satisfy  the intent  of  this  Section 4.4  to  have  the

 Registrable covered by an effective  Registration Statement until such  time

 as the he conditions in (A) or (B) of Section 4.4(b)(i) are satisfied.

 

                (iv) The rights and obligations of the Purchasers under  this

 Section 4.4 may  not be assigned  or transferred to  any person without  the

 prior written consent of the Company except with respect to the Transfer  of

 the Warrants (in which case such rights and obligations are transferred with

 such Warrants).

 

           (e) Expenses of Registration.  In connection with any registration

 of the Registrable  Securities pursuant to  the provisions  of this  Section

 4.4, each Purchaser shall pay any  brokerage and underwriting discounts  and

 commissions payable in respect  of the Registrable  Securities sold on  such

 Purchaser’s behalf, all fees and expenses  of any attorneys and  accountants

 employed by such Purchaser,  and any other costs  directly incurred by  such

 Purchaser, and the Company shall pay or cause to be paid and shall indemnify

 and hold harmless the  Purchasers from and against  any and all other  costs

 and expenses incurred in connection with such registration and related  blue

 sky registrations and qualifications.

 

           (f) Indemnification.   In connection with  any registration of the

 Registrable Securities pursuant to the provisions  of this Section 4.4,  the

 Company shall, to the extent permitted by Applicable Law, indemnify and hold

 harmless each Purchaser to the extent that companies generally indemnify and

 hold harmless underwriters  in connection  with public  offerings under  the

 Securities Act, and  each Purchaser shall  indemnify and  hold harmless  the

 Company, each  director and  officer of  the Company,  and each  person  who

 controls the Company within the meaning of the Securities Act to the  extent

 that selling shareholders generally indemnify  and hold harmless issuers  of

 securities in connection with public offerings under the Securities Act with

 respect to the information provided by such Purchaser for use by the Company

 in the preparation of the Registration Statement.

 

           (g) Inclusion  of Other  Securities.   Each Purchaser acknowledges

 that the Registration Statement, and any prospectus used in connection  with

 the offering  conducted pursuant  thereto, may  cover,  in addition  to  the

 Registrable Securities, other shares of Common Stock or other securities  of

 the Company to be sold by the Company or other persons.

 

     4.5 Fees  and Expenses.  Except as  otherwise expressly provided in this

 Agreement, all fees and expenses incurred in connection with the Transaction

 Documents and the  transactions contemplated thereby  shall be  paid by  the

 party incurring such fee or expense.

 

     4.6 Indemnification for Brokerage Fees.  The parties hereto  acknowledge

 and agree  that,  except  for  fees payable  by  the  Company  to  Stonewall

 Securities, Inc., no brokerage or finder’s  fees or commissions are or  will

 be  payable  in  connection  with  the  transactions  contemplated  by  this

 Agreement.  Each of the parties hereto agrees to indemnify and hold harmless

 each other  party  from  and against  any  other  claims or  demands  for  a

 commission or other  compensation by  any other  financial advisor,  broker,

 agent, finder, or similar intermediary claiming to have been employed by  or

 on behalf of such indemnifying party and to bear the cost of legal fees  and

 expenses incurred in defending against any such claim or demand.

 

     4.7 Allocation  of Partial  Prepayments.   In the  case of  each partial

 prepayments of the Promissory Notes, the  Company shall cause the  principal

 amounts of the Promissory Notes to be paid to be allocated among all of  the

 Promissory Notes  outstanding  at such  time  in proportion,  as  nearly  as

 practicable,  to  the  respective  unpaid  principal  amount  thereof.   Any

 Purchaser may waive this requirement with respect to its Promissory Note.

 

     4.8 Reservation  of  Warrant  Shares.   So  long  as  any  Warrants  are

 outstanding,  the  Company  shall  reserve  and  set  aside  from  its  duly

 authorized capital stock a number of shares of Common Stock for issuance  of

 the Warrant Shares  at least equal  to the maximum  number of shares  Common

 Stock that may be issued upon the exercise of all then outstanding Warrants.

 

     4.9   Consent  of  Purchasers.    By  executing  this  Agreement,   each

 Purchaser hereby  consents and  agrees that  one of  the Purchasers  may  be

 purchasing a  Promissory  Note  through  a  profit  sharing  trust  (Related

 Purchasing Trust) or similar entity and purchasing the Warrants accompanying

 such Promissory  Note  in  such  Purchaser’s  individual  capacity  (Related

 Purchasing  Individual).  If the foregoing  occurs,  the Related  Purchasing

 Trust and Related Purchasing  Individual will each executed  a copy of  this

 Agreement and will each hereby agree that all of the terms of this Agreement

 and the  Transaction Documents  shall apply  to  them as  if they  were  one

 Purchaser.

                                  ARTICLE V

                      TERMINATION, AMENDMENT, AND WAIVER

 

     5.1 Termination.   This Agreement may be terminated and the transactions

 contemplated hereby  abandoned at  any  time prior  to  the Closing  in  the

 following manner:

 

           (a) by  mutual written consent of  the Company and the Purchasers;

 or

 

           (b) by the Company, if, on the Closing Date, any of the conditions

 set forth in Section 2.3  shall not have been  satisfied and shall not  have

 been waived by the Company; or

 

           (c) by  the  Purchasers,  if,  on the  Closing  Date,  any  of the

 conditions set forth in Section 2.2 shall not have been satisfied and  shall

 not have been waived by the Purchasers.

 

     5.2 Effect  of Termination.   In  the event  of the  termination of this

 Agreement pursuant to Section 5.1  by the Company, on  the one hand, or  the

 Purchasers, on the other, written notice thereof shall forthwith be given to

 the other  party specifying  the provision  hereof  pursuant to  which  such

 termination is  made, and  this  Agreement shall  become  void and  have  no

 effect, except that the agreements contained in this Section and in Sections

 4.3, 4.5,  and 4.6  and Article  VI shall  survive the  termination  hereof.

 Nothing contained in this Section shall relieve any party from liability for

 any breach of this Agreement.

 

     5.3 Amendment.    This  Agreement  may  not  be  amended  except  by  an

 instrument in writing signed by or on behalf of all the parties hereto.

 

     5.4 Waiver.   No failure  or delay by  a party hereto  in exercising any

 right, power, or privilege hereunder shall  operate as a waiver thereof  nor

 shall any single or partial exercise  thereof preclude any other or  further

 exercise thereof or the  exercise of any other  right, power, or  privilege.

 The provisions of this Agreement may  not be waived except by an  instrument

 in writing signed by or on behalf of  the party against whom such waiver  is

 sought to be enforced.

                                 ARTICLE VI

                         SURVIVAL OF REPRESENTATIONS;

                               INDEMNIFICATION

     6.1 Survival.   The representations and warranties of the parties hereto

 contained in this Agreement or in  any certificate, instrument, or  document

 delivered pursuant  hereto  shall survive  the  Closing, regardless  of  any

 investigation made by or on behalf of any party.

 

     6.2 Indemnification  by Company.   The Company  shall indemnify, defend,

 and hold  harmless the  Purchasers  from and  against  any and  all  claims,

 actions, causes of action, demands, losses, damages, liabilities, costs, and

 expenses (including reasonable attorneys’ fees and expenses)  (collectively,

 “Damages”), asserted against, resulting to, imposed upon, or incurred by the

 Purchasers, directly  or indirectly,  by reason  of  or resulting  from  any

 breach by the Company of any of its representations, warranties,  covenants,

 or agreements contained in any Transaction Documents.

 

     6.3 Indemnification  by the Purchasers.   Each  Purchaser severally (but

 not jointly) shall indemnify, defend, and hold harmless the Company from and

 against any and all Damages asserted against, resulting to, imposed upon, or

 incurred by the Company, directly or  indirectly, by reason of or  resulting

 from any breach by such Purchaser of any of its representations, warranties,

 covenants, or agreements contained in any Transaction Document.

 

     6.4 Procedure  for  Indemnification.    Promptly  after  receipt  by  an

 indemnified party under Section 6.2 or 6.3 of notice of the commencement  of

 any action, such indemnified party shall,  if a claim in respect thereof  is

 to be made against  an indemnifying party under  such Section, give  written

 notice to  the  indemnifying party  of  the commencement  thereof,  but  the

 failure so to  notify the  indemnifying party shall  not relieve  it of  any

 liability that it may have to any indemnified party except to the extent the

 indemnifying  party  demonstrates  that  the  defense  of  such  action   is

 prejudiced thereby.   In case any  such action shall  be brought against  an

 indemnified party and it shall give written notice to the indemnifying party

 of the commencement  thereof, the indemnifying  party shall  be entitled  to

 participate therein  and, to  the extent  that it  may wish,  to assume  the

 defense thereof  with counsel  reasonably satisfactory  to such  indemnified

 party.   If the  indemnifying party  elects to  assume the  defense of  such

 action, the  indemnified  party shall  have  the right  to  employ  separate

 counsel at its own expense  and to participate in  the defense thereof.   If

 the indemnifying party elects not to assume (or fails to assume) the defense

 of such  action, the  indemnified  party shall  be  entitled to  assume  the

 defense of such action with counsel of its own choice, at the expense of the

 indemnifying party.  If the action is asserted against both the indemnifying

 party and the indemnified party and  there is a conflict of interests  which

 renders it  inappropriate  for  the  same  counsel  to  represent  both  the

 indemnifying party and the indemnified  party, the indemnifying party  shall

 be responsible for paying  for separate counsel  for the indemnified  party;

 provided, however, that  if there is  more than one  indemnified party,  the

 indemnifying party shall  not be responsible  for paying for  more than  one

 separate firm of attorneys to represent the indemnified parties,  regardless

 of the number of indemnified parties.  The indemnifying party shall have  no

 liability with  respect  to  any compromise  or  settlement  of  any  action

 effected without  its  written  consent (which  shall  not  be  unreasonably

 withheld).

                                 ARTICLE VII

                                MISCELLANEOUS

     7.1 Notices.   All notices, requests,  demands, and other communications

 required or permitted  to be  given or made  hereunder by  any party  hereto

 shall be in writing and shall be deemed to  have been duly given or made  if

 delivered personally or transmitted by  first class registered or  certified

 mail, postage  prepaid, return  receipt requested,  to  the parties  at  the

 addresses set forth opposite  their names on the  signature page hereof  (in

 the case  of the  Company) and  on Schedule  1 hereto  (in the  case of  the

 Purchasers) (or at such other addresses as shall be specified by the parties

 by like notice).

 

     7.2 Entire  Agreement.  This Agreement  constitutes the entire agreement

 between the parties  hereto with respect  to the subject  matter hereof  and

 supersedes all prior agreements and  understandings, both written and  oral,

 between the parties with respect to the subject matter hereof.

 

     7.3 Binding Effect;  Assignment; No Third Party Benefit.  This Agreement

 shall be binding upon  and inure to  the benefit of  the parties hereto  and

 their respective  heirs, legal  representatives, successors,  and  permitted

 assigns.  Except as  otherwise provided  in  this  Agreement,  neither  this

 Agreement nor any of the rights,  interests, or obligations hereunder  shall

 be assigned  by any  of the  parties  hereto.  Nothing  in  this  Agreement,

 express or implied,  is intended to  or shall confer  upon any person  other

 than the parties hereto, and their respective heirs, legal  representatives,

 successors, and permitted assigns, any rights, benefits, or remedies of  any

 nature whatsoever under or by reason of this Agreement.

 

     7.4 Severability.   If  any provision  of this  Agreement is  held to be

 unenforceable,  this  Agreement  shall  be  considered  divisible  and  such

 provision  shall  be  deemed  inoperative  to   the  extent  it  is   deemed

 unenforceable, and in all other respects this Agreement shall remain in full

 force and effect; provided however, that  if any such provision may be  made

 enforceable by limitation thereof, then such provision shall be deemed to be

 so limited  and shall  be enforceable  to the  maximum extent  permitted  by

 applicable law.

 

     7.5 Governing  Law.  THIS  AGREEMENT SHALL BE  GOVERNED BY AND CONSTRUED

 AND ENFORCED IN  ACCORDANCE WITH  THE LAWS OF  THE STATE  OF TEXAS,  WITHOUT

 REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

 

     7.6 Counterparts.   This Agreement may be executed by the parties hereto

 in any number of  counterparts, each of which  shall be deemed an  original,

 but all  of  which  shall constitute  one  and  the same  agreement.    Each

 counterpart may consist  of a number  of copies hereof  each signed by  less

 than all, but together signed by all, the parties hereto.

 

 

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement  as

 of the date first above written.

 

                                         COMPANY:

 

 Address for Notice:                     CARRINGTON LABORATORIES, INC.

 2001 Walnut Hill Lane

 Irving, Texas 75038

 Attn:  Dr. Carlton E. Turner

 

                                         By:

                                         —————————–

 With a Copy to:                         Name: Carlton E. Turner

 Patterson, Belknap, Webb & Tyler LLP    Title: President and CEO

 1133 Avenue of the Americas

 New York, New York  10036

 Attention:  Peter J. Schaeffer

 

                                    PURCHASER:

                                    [Print Exact Name]

                                         By:  —————————–

                                         Name: —————————–

                                         Title: —————————–

 SSN/EIN: —————————–

 Subscription Amount: $ —————-

 

Victory Acquisition Corporation Warrant Agreement from RealDealDocs.com

June 3, 2008

We had such a good response from the last Warrant Agreement I released so I figured I could release another one. This one was drafted by (yup) another Amlaw noted law firm: Akin Gump. Thanks to my friends at RealDealDocs.com for letting me release a full copy of the agreement for free. To search millions of legal docs for free, please visit www.RealDealDocs.com!

Exhibit 4.4

WARRANT AGREEMENT

Agreement made as of                     , 2007 between Victory Acquisition Corp., a Delaware corporation, with offices at 7 Times Square, 17th Floor, New York, New York 10036 (“Company”), and Continental Stock Transfer & Trust Company, a New York corporation, with offices at 17 Battery Place, New York, New York 10004 (“Warrant Agent”).

WHEREAS, the Company has received binding commitments from Eric J. Watson and Jonathan J. Ledecky (collectively, the “Insiders”) to purchase an aggregate of 5,000,000 warrants to purchase one share of the Company’s common stock, par value $.0001 per share (“Common Stock”) for $7.50, subject to adjustment as described herein (“Insider Warrants”); and

WHEREAS, the Company is engaged in a public offering (“Public Offering”) of Units and, in connection therewith, has determined to issue and deliver up to 28,750,000 Warrants (“Public Warrants” and together with the Insider Warrants, the “Warrants”) to the public investors, each Warrant evidencing the right of the holder thereof to purchase one share of Common Stock for $7.50, subject to adjustment as described herein; and

WHEREAS, the Company has filed with the Securities and Exchange Commission a Registration Statement on Form S-1, No. 333-             (“Registration Statement”), for the registration, under the Securities Act of 1933, as amended (“Act”) of, among other securities, the Warrants and the Common Stock issuable upon exercise of the Warrants; and

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer, exchange, redemption and exercise of the Warrants; and

WHEREAS, the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and

WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Warrant Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement.

2. Warrants.

2.1. Form of Warrant. Each Warrant shall be issued in registered form only, shall be in substantially the form of Exhibit A hereto, the provisions of which are incorporated herein and shall be signed by, or bear the facsimile signature of, the Chairman of the Board or President and Treasurer, Secretary or Assistant Secretary of the Company and shall bear a facsimile of the Company’s seal. In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.

2.2. Effect of Countersignature. Unless and until countersigned by the Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of no effect and may not be exercised by the holder thereof.

2.3. Registration.

2.3.1. Warrant Register. The Warrant Agent shall maintain books (“Warrant Register”), for the registration of original issuance and the registration of transfer of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant Agent by the Company.

2.3.2. Registered Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat the person in whose name such Warrant shall be registered upon the Warrant Register (“registered holder”), as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation of ownership or other writing on the Warrant Certificate made by anyone other than the Company or the Warrant Agent), for the purpose of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.

 

2

2.4. Detachability of Warrants. The securities comprising the Units will not be separately transferable until 5 business days (or as soon as practicable thereafter) following the earlier to occur of the expiration of the Underwriters’ over-allotment option in the Public Offering or its exercise in full, subject to the Company filing a Current Report on Form 8-K which includes an audited balance sheet reflecting the receipt by the Company of the gross proceeds of the Public Offering including the proceeds received by the Company from the exercise of the Underwriter’s over-allotment option and having issued a press release announcing when such separate trading will begin.

2.5 Insider Warrants. The Insider Warrants will be issued in the same form as the Public Warrants but they (i) will not be transferable or salable until the Company completes a business combination, (ii) will be non-redeemable by the Company so long as they are held by the Insiders or their affiliates and (iii) may be exercised for unregistered shares if a registration statement relating to the common stock issuable upon exercise of the warrants is not effective and current.

3. Terms and Exercise of Warrants

3.1. Warrant Price. Each Warrant shall, when countersigned by the Warrant Agent, entitle the registered holder thereof, subject to the provisions of such Warrant and of this Warrant Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $7.50 per whole share, subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1. The term “Warrant Price” as used in this Warrant Agreement refers to the price per share at which Common Stock may be purchased at the time a Warrant is exercised. The Company in its sole discretion may lower the Warrant Price at any time prior to the Expiration Date for a period of not less than 10 business days; provided, however, that any such reduction shall be identical in percentage terms among all of the Warrants.

3.2. Duration of Warrants. A Warrant may be exercised only during the period (“Exercise Period”) commencing on the later of (i) the consummation by the Company of a merger, capital stock exchange, asset acquisition or other similar business combination (“Business Combination”) (as described more fully in the Company’s Registration Statement) and (ii)                     , 2008, and terminating at 5:00 p.m., New York City time on the earlier to occur of (i)                     , 2011 or (ii) the date fixed for redemption of the Warrants as provided in Section 6 of this Agreement (“Expiration Date”). Except with respect to the

 

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right to receive the Redemption Price (as set forth in Section 6 hereunder), each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease at the close of business on the Expiration Date. The Company in its sole discretion may extend the duration of the Warrants by delaying the Expiration Date; provided, however, that the Company will provide notice to registered holders of the Warrants of such extension of not less than 20 days.

3.3. Exercise of Warrants.

3.3.1. Payment. Subject to the provisions of the Warrant and this Warrant Agreement, a Warrant, when countersigned by the Warrant Agent, may be exercised by the registered holder thereof by surrendering it, at the office of the Warrant Agent, or at the office of its successor as Warrant Agent, in the Borough of Manhattan, City and State of New York, with the subscription form, as set forth in the Warrant, duly executed, and by paying in full the Warrant Price for each full share of Common Stock as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Warrant, the exchange of the Warrant for Common Stock and the issuance of the Common Stock, in cash, good certified check or good bank draft payable to the order of the Company (or as otherwise agreed to by the Company);

3.3.2. Issuance of Certificates. As soon as practicable after the exercise of any Warrant and the clearance of the funds in payment of the Warrant Price, the Company shall issue to the registered holder of such Warrant a certificate or certificates for the number of full shares of Common Stock to which he is entitled, registered in such name or names as may be directed by him, her or it, and if such Warrant shall not have been exercised in full, a new countersigned Warrant for the number of shares as to which such Warrant shall not have been exercised. Subject to Section 7.4 and notwithstanding the foregoing, the Company shall not be obligated to deliver any securities pursuant to the exercise of a Public Warrant and shall have no obligation to settle such Public Warrant exercise unless a registration statement under the Act with respect to the Common Stock is effective, or in the opinion of counsel to the Company, the exercise of the Warrants is exempt from the registration requirements of the Act and such securities are qualified for sale or exempt from qualification under applicable securities laws of the states or other jurisdictions in which the registered holders reside. In the event that a registration statement with respect to the Common Stock underlying a Public Warrant is not effective under the Act, the holder of such Public Warrant shall not be entitled to exercise such Public Warrant and such Public Warrant may have no value and expire

 

4

worthless. In no event will the Company be required to net cash settle the warrant exercise. Public Warrants may not be exercised by, or securities issued to, any registered holder in any state in which such exercise would be unlawful. The shares of common stock issuable upon exercise of Insider Warrants shall be unregistered shares. In the event that a registration statement is not effective for the exercised Public Warrants, the purchaser of a unit containing such Public Warrant, will have paid the full purchase price for the unit solely for the shares included in such unit.

3.3.3. Valid Issuance. All shares of Common Stock issued upon the proper exercise of a Warrant in conformity with this Agreement shall be validly issued, fully paid and nonassessable.

3.3.4. Date of Issuance. Each person in whose name any such certificate for shares of Common Stock is issued shall for all purposes be deemed to have become the holder of record of such shares on the date on which the Warrant was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.

3.3.5. Intentionally Omitted.

4. Adjustments.

4.1. Stock Dividends – Split-Ups. If after the date hereof, and subject to the provisions of Section 4.6 below, the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock, or by a split-up of shares of Common Stock, or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Common Stock issuable on exercise of each Warrant shall be increased in proportion to such increase in outstanding shares of Common Stock.

4.2. Aggregation of Shares. If after the date hereof, and subject to the provisions of Section 4.6, the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Common Stock issuable on exercise of each Warrant shall be decreased in proportion to such decrease in outstanding shares of Common Stock.

 

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4.3 Adjustments in Exercise Price. Whenever the number of shares of Common Stock purchasable upon the exercise of the Warrants is adjusted, as provided in Section 4.1 and 4.2 above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of the Warrants immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter.

4.4. Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding shares of Common Stock (other than a change covered by Section 4.1 or 4.2 hereof or that solely affects the par value of such shares of Common Stock), or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Warrant holders shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the Warrant holder would have received if such Warrant holder had exercised his, her or its Warrant(s) immediately prior to such event; and if any reclassification also results in a change in shares of Common Stock covered by Section 4.1 or 4.2, then such adjustment shall be made pursuant to Sections 4.1, 4.2, 4.3 and this Section 4.4. The provisions of this Section 4.4 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers.

4.5. Notices of Changes in Warrant. Upon every adjustment of the Warrant Price or the number of shares issuable upon exercise of a Warrant, the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event specified in Sections 4.1, 4.2, 4.3 or 4.4, then, in any such event, the Company shall give written notice to each Warrant holder, at the last address set forth for such holder in the warrant register, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event.

 

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4.6. No Fractional Shares. Notwithstanding any provision contained in this Warrant Agreement to the contrary, the Company shall not issue fractional shares upon exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall, upon such exercise, round up or down to the nearest whole number the number of the shares of Common Stock to be issued to the Warrant holder.

4.7. Form of Warrant. The form of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after such adjustment may state the same Warrant Price and the same number of shares as is stated in the Warrants initially issued pursuant to this Agreement. However, the Company may at any time in its sole discretion make any change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may be in the form as so changed.

4.8 Notice of Certain Transactions. In the event that the Company shall propose to (a) offer the holders of its Common Stock rights to subscribe for or to purchase any securities convertible into shares of Common Stock or shares of stock of any class or any other securities, rights or options, (b) issue any rights, options or warrants entitling the holders of Common Stock to subscribe for shares of Common Stock or (c) make a tender offer, redemption offer or exchange offer with respect to the Common Stock, the Company shall send to the Warrant holders a notice of such proposed action or offer. Such notice shall be mailed to the registered holders at their addresses as they appear in the Warrant Register, which shall specify the record date for the purposes of such dividend, distribution or rights, or the date such issuance or event is to take place and the date of participation therein by the holders of Common Stock, if any such date is to be fixed, and shall briefly indicate the effect of such action on the Common Stock and on the number and kind of any other shares of stock and on other property, if any, and the number of shares of Common Stock and other property, if any, issuable upon exercise of each Warrant and the Warrant Price after giving effect to any adjustment pursuant to this Article 4 which would be required as a result of such action. Such notice shall be given as promptly as practicable after the Board has determined to take any such action and (x) in the case of any action covered by clause

 

7

(a) or (b) above at least 10 days prior to the record date for determining the holders of the Common Stock for purposes of such action or (y) in the case of any other such action at least 20 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of Common Stock, whichever shall be the earlier.

4.9 Other Events. If any event occurs as to which the foregoing provisions of this Article 4 are not strictly applicable or, if strictly applicable, would not, in the good faith judgment of the Board, fairly and adequately protect the purchase rights of the registered holders of the Warrants in accordance with the essential intent and principles of such provisions, then the Board shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as shall be reasonably necessary, in the good faith opinion of the Board, to protect such purchase rights as aforesaid.

5. Transfer and Exchange of Warrants.

5.1. Registration of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant Register, upon surrender of such Warrant for transfer, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. The Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to time upon request.

5.2. Procedure for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request for exchange or transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the registered holder of the Warrants so surrendered, representing an equal aggregate number of Warrants; provided, however, that in the event that a Warrant surrendered for transfer bears a restrictive legend, the Warrant Agent shall not cancel such Warrant and issue new Warrants in exchange therefor until the Warrant Agent has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether the new Warrants must also bear a restrictive legend.

5.3. Fractional Warrants. The Warrant Agent shall not be required to effect any registration of transfer or exchange which will result in the issuance of a warrant certificate for a fraction of a warrant.

5.4. Service Charges. No service charge shall be made for any exchange or registration of transfer of Warrants.

 

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5.5. Warrant Execution and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.

6. Redemption.

6.1. Redemption. Subject to Section 6.4 hereof, not less than all of the outstanding Warrants may be redeemed, at the option of the Company, at any time while they are exercisable and prior to their expiration, at the office of the Warrant Agent, upon the notice referred to in Section 6.2, at the price of $.01 per Warrant (“Redemption Price”), provided that the last sales price of the Common Stock has been at least $14.25 per share (subject to adjustment in accordance with Section 4 hereof), on each of twenty (20) trading days within any thirty (30) trading day period ending on the third business day prior to the date on which notice of redemption is given.

6.2. Date Fixed for, and Notice of, Redemption. In the event the Company shall elect to redeem all of the Warrants, the Company shall fix a date for the redemption. Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than 30 days prior to the date fixed for redemption to the registered holders of the Warrants to be redeemed at their last addresses as they shall appear on the registration books. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the registered holder received such notice.

6.3. Exercise After Notice of Redemption. The Warrants may be exercised for cash (or on a “cashless basis” in accordance with Section 3.3.1 of this Agreement) at any time after notice of redemption shall have been given by the Company pursuant to Section 6.2 hereof and prior to the time and date fixed for redemption. On and after the redemption date, the record holder of the Warrants shall have no further rights except to receive, upon surrender of the Warrants, the Redemption Price.

6.4 Exclusion of Certain Warrants. Any of the Insider Warrants shall not be redeemable by the Company as long as such Insider Warrants continue to be held by Eric J. Watson or Jonathan J. Ledecky or their affiliates. However, once such individuals or their affiliates transfer such Insider Warrants, such Insider Warrants shall then be redeemable by the Company pursuant to Section 6 hereof.

 

9

7. Other Provisions Relating to Rights of Holders of Warrants.

7.1. No Rights as Stockholder. A Warrant does not entitle the registered holder thereof to any of the rights of a stockholder of the Company, including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent or to receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the Company or any other matter.

7.2. Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination, tenor, and date as the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.

7.3. Reservation of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common Stock that will be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement.

7.4. Registration of Common Stock. The Company agrees that prior to the commencement of the Exercise Period, it shall use its best efforts to file with the Securities and Exchange Commission a post-effective amendment to the Registration Statement, or a new registration statement, for the registration, under the Act, of, and it shall use its best efforts to take such action as is necessary to qualify for sale, in those states in which the Warrants were initially offered by the Company, the Common Stock issuable upon exercise of the Warrants. In either case, the Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement until the expiration of the Warrants in accordance with the provisions of this Agreement. The Warrants shall not be exercisable and the Company shall not be obligated to issue Common Stock unless, at the time a holder seeks to exercise the Warrants, a prospectus relating to Common Stock issuable upon exercise of the Warrants is current and the Common Stock has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the Warrants.The provisions of this Section 7.4 may not be modified, amended or deleted without the prior written consent of Citigroup.

 

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8. Concerning the Warrant Agent and Other Matters.

8.1. Payment of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect of the issuance or delivery of shares of Common Stock upon the exercise of Warrants, but the Company shall not be obligated to pay any transfer taxes in respect of the Warrants or such shares.

8.2. Resignation, Consolidation, or Merger of Warrant Agent.

8.2.1. Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of 30 days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of the Warrant (who shall, with such notice, submit his Warrant for inspection by the Company), then the holder of any Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a corporation organized and existing under the laws of the State of New York, in good standing and having its principal office in the Borough of Manhattan, City and State of New York, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.

8.2.2. Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment.

 

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8.2.3. Merger or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement without any further act.

8.3. Fees and Expenses of Warrant Agent.

8.3.1. Remuneration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and will reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder.

8.3.2. Further Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Agreement.

8.4. Liability of Warrant Agent.

8.4.1. Reliance on Company Statement. Whenever in the performance of its duties under this Warrant Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the President or Chairman of the Board of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.

8.4.2. Indemnity. The Warrant Agent shall be liable hereunder only for its own negligence, willful misconduct or bad faith. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement except as a result of the Warrant Agent’s negligence, willful misconduct, or bad faith.

 

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8.4.3. Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant; nor shall it be responsible to make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock will when issued be valid and fully paid and nonassessable.

8.5. Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account for, and pay to the Company, all moneys received by the Warrant Agent for the purchase of shares of Common Stock through the exercise of Warrants.

9. Miscellaneous Provisions.

9.1. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns.

9.2. Notices. Any notice, statement or demand authorized by this Warrant Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent), as follows:

Victory Acquisition Corp.

7 Times Square, 17th Floor

New York, New York 10036

Attn: President

Any notice, statement or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent

 

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with the Company), as follows:

Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Compliance Department

with a copy in each case to:

Graubard Miller

The Chrysler Building

405 Lexington Avenue

New York, New York 10174

Attn: David Alan Miller, Esq.

Facsimile: (212) 818-8881

and

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, New York 10022

Attn: Bruce Mendelsohn, Esq.

Facsimile: (212) 872-1002

and

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Attn: David Spivak

Facsimile: (212) 723-8871

9.3. Applicable law. The validity, interpretation, and performance of this Agreement and of the Warrants shall be governed in all respects by the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenience forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.2 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim.

 

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9.4. Persons Having Rights under this Agreement. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the registered holders of the Warrants and, for the purposes of Sections 2.5, 6.1, 6.4, 7.4, 9.2 and 9.8 hereof, Citigroup, any right, remedy, or claim under or by reason of this Warrant Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. Citigroup shall be deemed to be a third-party beneficiary of this Agreement with respect to Sections 2.5, 6.1, 6.4, 7.4, 9.2 and 9.8 hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Warrant Agreement shall be for the sole and exclusive benefit of the parties hereto (and Citigroup with respect to the Sections 2.5, 6.1, 6.4, 7.4, 9.2 and 9.8 hereof) and their successors and assigns and of the registered holders of the Warrants.

9.5. Examination of the Warrant Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in the Borough of Manhattan, City and State of New York, for inspection by the registered holder of any Warrant. The Warrant Agent may require any such holder to submit his Warrant for inspection by it.

9.6. Counterparts. This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

9.7. Effect of Headings. The Section headings herein are for convenience only and are not part of this Warrant Agreement and shall not affect the interpretation thereof.

9.8 Amendments. This Agreement may be amended by the parties hereto without the consent of any registered holder for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the interest of the registered holders. All other modifications or amendments, including any amendment to increase the Warrant Price or shorten the Exercise Period, shall require the written consent of the registered holders of a majority of the then outstanding Warrants. Notwithstanding the foregoing, the Company may lower the Warrant Price or extend the duration of the Exercise Period pursuant to Sections 3.1 and 3.2, respectively, without the consent of the registered holders.

 

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9.9 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written.

 

 

 

 

VICTORY ACQUISITION CORP.

   

By:

 

  

Name:

 

 

Title:

 

 

 

CONTINENTAL STOCK TRANSFER
& TRUST COMPANY

   

By:

 

  

Name:

 

 

Title:

 

 

 

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Allscripts Employment Agreement from RealDealDocs.com

June 2, 2008

And we’re back to employment agreements. This one was drafted by Amlaw pick Akin Gump. So check out their skills courtesy of RealDealDocs.com. To search millions of legal docs for free, please visit www.RealDealDocs.com!

 

Exhibit 10.18

ALLSCRIPTS, INC.

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT, (this “Agreement”) is made as of this 31st day of January, 2003, by and between Allscripts, Inc., a corporation organized and existing under the laws of the State of Illinois, with its principal place of business at 2401 Commerce Drive, Libertyville, Illinois 60048 (“Company”) and Laurie McGraw (“Executive”).

RECITALS

WHEREAS, Company desires to employ Executive as its Executive Vice President, Client Services; and

WHEREAS, Executive desires to be employed by Company in the aforesaid capacity.

NOW THEREFORE, in consideration of the foregoing premises, of the mutual agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

AGREEMENT

 

1.

Employment.

Company hereby agrees to employ Executive, and Executive hereby accepts employment, as Executive Vice President, Client Services of Company, pursuant to the terms of this Agreement. Executive shall have the duties and responsibilities and perform such administrative and managerial services of that position as are set forth in the bylaws of Company (the “Bylaws”) or as shall be delegated or assigned to Executive by the Chief Executive Officer of Company from time to time. Executive shall carry out her responsibilities hereunder on a full-time basis for and on behalf of Company; provided that Executive shall be entitled to devote time to personal investments, civic and charitable activities, and personal education and development, so long as such activities do not interfere with or conflict with Executive’s duties hereunder. Notwithstanding the foregoing, Executive agrees that, during the term of this Agreement, Executive shall not act as an officer of any entity other than Company without the prior written consent of Company.

 

2.

Effective Date and Term.

The initial term of Executive’s employment by Company under this Agreement shall commence as of January 31, 2003 (the “Effective Date”) and shall continue in effect for a term of three (3) years, unless earlier terminated as provided herein. Thereafter, this Agreement shall automatically renew for additional and successive terms of one (1) year each, unless either Company or Executive elects not to renew this Agreement upon the expiration of the initial term or any renewal term by providing written notice of such non-renewal to the other party at least one hundred eighty (180) days prior to the expiration of the then current term. As used herein, the term “Employment Period” shall mean the period of from the Effective Date until the

 

~ 1 ~


termination of the Agreement (i) for non-renewal pursuant to this Section 2, or (ii) pursuant to Section 4 herein.

 

3.

Compensation and Benefits.

In consideration for the services Executive shall render under this Agreement, Company shall provide or cause to be provided to Executive the following compensation and benefits:

3.1 Base Salary. During the Employment Period, Company shall pay to Executive an annual base salary, effective March 1, 2003, at a rate of Two Hundred and Five thousand dollars ($205,000) per annum, subject to all appropriate federal and state withholding taxes, which base salary shall be payable in accordance with Company’s normal payroll practices and procedures. Executive’s base salary shall be reviewed annually prior to the beginning of each Fiscal Year (as defined below) during the Employment Period by the Chief Executive Officer of Company, and may be increased in the sole discretion of the Chief Executive Officer, based on Executive’s performance during the preceding Fiscal Year. For purposes of this Agreement, the term “Fiscal Year” shall mean the fiscal year of the Company, commencing on January 1 of each year and ending on December 31. Executive’s base salary, as such base salary may be increased annually hereunder, is hereinafter referred to as the “Base Salary.”

3.2 Performance Bonus. Executive shall be eligible to receive a cash bonus with respect to each Fiscal Year of Company that ends during the term of this Agreement (the “Performance Bonus”). Payment of the Performance Bonus, if any, will be subject to the sole discretion of the Chief Executive Officer, and the amount of any such Performance Bonus will be determined by, and based upon criteria selected by, the Chief Executive Officer, but in no event shall be less than Fifty thousand dollars ($50,000).

3.3 Benefits. During the Employment Period and as otherwise provided hereunder, Executive shall be entitled to the following:

3.3.1 Vacation. Executive shall be entitled to twenty (20) business days per Fiscal Year of paid vacation, such vacation time not to be cumulative (i.e., vacation time not taken in any Fiscal Year shall not be carried forward and used in any subsequent Fiscal Year).

3.3.2 Participation in Benefit Plans. Executive shall be entitled to health and/or dental benefits, including immediate coverage for Executive and her eligible dependents, which are generally available to Company’s senior executive employees and as provided by Company in accordance with its group health insurance plan coverage. In addition, Executive shall be entitled to participate in any profit sharing plan, retirement plan, group life insurance plan or other insurance plan or medical expense plan maintained by the Company for its senior executives generally, in accordance with the general eligibility criteria therein.

3.3.3 Physical Examination. Executive shall be entitled to receive reimbursement for the cost of one general physical examination per twelve (12) month period during the term of the Agreement from a physician chosen by Executive in her reasonable discretion.

 

~ 2 ~


3.3.4 Perquisites. Executive shall be entitled to such other benefits and perquisites that are generally available to Company’s senior executive employees and as provided in accordance with Company’s plans, practices, policies and programs for senior executive employees of Company.

3.3.5 Indemnification. Executive shall be entitled to indemnification (including immediate advancement of all legal fees with respect to any claim for indemnification) and directors’ and officers’ insurance coverage, to the extent made available to other senior executives, in accordance with the Bylaws and all other applicable policies and procedures of Company.

3.4 Expenses. Company shall reimburse Executive for proper and necessary expenses incurred by Executive in the performance of her duties under this Agreement from time to time upon Executive’s submission to Company of invoices of such expenses in reasonable detail and subject to all standard policies and procedures of Company with respect to such expenses.

3.5 Stock Awards. Executive shall be eligible to participate in any applicable stock bonus, stock option, or similar plan implemented by Company and generally available to its senior executive employees, including, without limitation, Company’s Amended and Restated 1993 Stock Incentive Plan approved by the Board and Company’s shareholders on or about June 7, 1999 (the “Plan”) for the grant of options to Executive as approved by the Board. Awards will be made at the discretion of the Chief Executive Officer, subject to approval by the Board.

 

4.

Termination of the Agreement Prior To the Expiration.

This Agreement and the Employment Period of Executive may be terminated at any time as follows (the effective date of such termination hereinafter referred to as the “Termination Date”):

4.1 Termination upon Death or Disability of Executive.

4.1.1 This Agreement and the Employment Period shall terminate immediately upon the death of Executive. In such event, all rights of Executive and/or Executive’s estate (or named beneficiary) shall cease except for the right to receive payment of the amounts set forth in Section 4.5.4 of the Agreement.

4.1.2 Company may terminate this Agreement and the Employment Period upon the disability of Executive. For purposes of this Agreement, Executive shall be deemed to be “disabled” if Executive, as a result of illness or incapacity, shall be unable to perform substantially her required duties for a period of three (3) consecutive months or for any aggregate period of three (3) months in any six (6) month period. In the event of a dispute as to whether Executive is disabled, Company may refer Executive to a licensed practicing physician of Company’s choice, and Executive agrees to submit to such tests and examination as such physician shall deem appropriate to determine Executive’s capacity to perform the services required to be performed by Executive hereunder. In such event, the parties hereby agree that the decision of such physician as to the disability of Executive shall be final and binding on the parties. Any termination of the Agreement under this Section 4.1.2 shall be effected without any

 

~ 3 ~


adverse affect on Executive’s rights to receive benefits under any disability policy of Company, but shall not be treated as a termination without cause.

4.2 Termination by Company for Cause. Company may terminate this Agreement and the Employment Period for Cause (as defined herein) upon written notice to Executive, which termination shall be effective on the date specified by Company in such notice; provided however, that Executive shall have a period of ten (10) days (or such longer period not to exceed 30 days as would be reasonably required for Executive to cure such action or inaction) after the receipt of the written notice from Company to cure the particular action or inaction, to the extent a cure is possible. For purposes of this Agreement, the term “Cause” shall mean:

4.2.1 the willful or grossly negligent failure by Executive to perform her duties and obligations hereunder in any material respect, other than any such failure resulting from the disability of Executive;

4.2.2 Executive’s conviction of a crime or offense involving the property of Company, or any crime or offense constituting a felony or involving fraud or moral turpitude; provided that, in the event that Executive is arrested or indicted for a crime or offense related to any of the foregoing, then Company may, at its option, place Executive on paid leave of absence, pending the final outcome of such arrest or indictment;

4.2.3 Executive’s violation of any law, which violation is materially and demonstrably injurious to the operations or reputation of Company; or

4.2.4 Executive’s material violation of any generally recognized policy of Company, Executive’s refusal to follow the lawful directions of the Chief Executive Officer, the Board, or Executive’s insubordination to her supervisor.

Notwithstanding the foregoing, any notice and lapse of time period provided in this Section 4.2 shall not be required with respect to any event or circumstance which is the same or substantially the same as an event or circumstance with respect to which notice and an opportunity to cure has been given within the previous six (6) months.

4.3 Termination without Cause. Either party may terminate this Agreement and the Employment Period without cause upon thirty (30) days prior written notice to the other party. If either party elects not to renew this Agreement for any renewal period pursuant to Section 2 hereof, such election shall not constitute a termination of the Employment Period without cause.

4.4 Termination by Executive for Constructive Discharge.

4.4.1 Executive may terminate this Agreement and the Employment Period, in accordance with the process set forth below, a result of a Constructive Discharge. For purposes of this Agreement “Constructive Discharge” shall mean:

 

 

(i)

a failure of Company to meet its obligations in any material respect under this Agreement, including, but not limited to, any reduction in or failure to pay the Base Salary;

 

~ 4 ~


 

(ii)

a material diminution in or other substantial adverse alteration in the nature or scope of Executive’s responsibilities with Company; or

 

 

(iii)

Executive has been asked to relocate her principal place of business to a location that is more than fifty (50) miles from Company’s offices located in Burlington, VT.

4.4.2

4.5 Rights upon Termination. Upon termination of this Agreement and the Employment, the following shall apply:

4.5.1 Termination by Company Without Cause or for Constructive Discharge. If Company terminates the Employment Period without Cause (other than a non-renewal by Company under Section 2), or if Executive terminates the Employment Period as a result of a Constructive Discharge, Executive shall be entitled to receive payment of any Base Salary amounts that have accrued but have not been paid as of the Termination Date, and the unpaid Performance Bonus, if any, with respect to the Fiscal Year preceding the Fiscal Year in which the Termination Date occurs (such Performance Bonus, if any, to be determined in the manner that it would have been determined, and payable at the time it would have been payable, under Section 3.2 had there been no termination of the Employment Period). In addition, subject to Section 4.5.2, below, Company shall be obligated to pay Executive (or provide Executive with) the following benefits as severance:

 

 

(i)

one (1) year of Executive’s Base Salary, payable in twelve (12) equal monthly installments commencing on the Termination Date, equal to Executive’s annual Base Salary in effect immediately prior to the Termination Date, such amount to be payable regardless of whether Executive obtains other employment and is compensated therefor (but only so long as Executive is not in violation of Section 5 hereof);

 

 

(ii)

the Performance Bonus for the Fiscal Year in which the Termination Date occurs that would have been payable under Section 3.2 had there been no termination of the Employment Period (such Performance Bonus to be determined in the manner it would have been determined under Section 3.2 had there been no termination of the Employment Period), payable as follows: in twelve (12) equal monthly installments commencing on the fifteenth day of the first full month following the Termination Date;

 

 

(iii)

continuation of Executive’s then current enrollment (including family enrollment, if applicable) in all health and/or dental insurance benefits set forth in Section 3.2.2 for a period of twelve (12) months following the Termination Date, with Executive’s contribution to such plans as if Executive were employed by Company, such contributions to be paid by Executive in the same period (e.g., monthly, bi-weekly, etc.) as all other employees of Company; provided, however that Company may terminate such coverage if payment from Executive is not made within ten (10) days

 

~ 5 ~


 

of the date on which Executive receives written notice from Company that such payment is due; and provided, further, that such benefits may be discontinued earlier to the extent that Executive becomes entitled to comparable benefits from a subsequent employer;

 

 

(iv)

outplacement services, in an amount up to ten thousand dollars ($10,000), paid to Executive on exit; and

 

 

(v)

any stock options or other awards granted to Executive pursuant to Section 3.5 that have not vested as of the Termination Date shall vest in full upon the Termination Date.

4.5.2 Termination With Cause by Company or Without Cause by Executive. If Company terminates the Employment Period with Cause, or if Executive terminates the Employment Period other than as a result of a Constructive Discharge or a non-renewal under Section 2, Company shall be obligated to pay Executive (i) any Base Salary amounts that have accrued but have not been paid as of the Termination Date; and (ii) the unpaid Performance Bonus, if any, with respect to the Fiscal Year preceding the Fiscal Year in which the Termination Date occurs (such Performance Bonus, if any, to be determined in the manner it would have been determined, and payable at the time it would have been payable, under Section 3.2 had there been no termination of the Employment Period).

4.5.3 Termination Upon Death or Disability. If the Employment Period is terminated because of the death or disability of Executive, Company shall be obligated to pay Executive or, if applicable, Executive’s estate, the following amounts: (i) earned but unpaid Base Salary; (ii) the unpaid Performance Bonus, if any, with respect to the Fiscal Year preceding the Fiscal Year in which the Termination Date occurs (such Performance Bonus, if any, to be determined in the manner it would have been determined, and payable at the time it would have been payable, under Section 3.2 had there been no termination of the Employment Period); and (iii) the amount of Executive’s Performance Bonus, if any, for the Fiscal Year in which the Termination Date occurs that would have been payable under Section 3.2 had there been no termination of the Employment Period (such Performance Bonus, if any, to be determined in the manner it would have been determined under Section 3.2 had there been no termination of the Employment Period), payable as follows: (a) fifty percent (50%) of such Performance Bonus shall be paid on the Termination Date; and (b) the remaining fifty percent (50%) shall be paid in twelve (12) equal monthly installments commencing on the fifteenth day of the first full month following the Termination Date.

4.5.4 Termination for Non-Renewal by Company. If the Employment Period is terminated by reason of a non-renewal by Company under Section 2, then Executive shall be entitled to receive payment of any Base Salary amounts that have accrued but have not been paid as of the Termination Date, and the unpaid Performance Bonus, if any, with respect to the Fiscal Year preceding the Fiscal Year in which the Termination Date occurs (such Performance Bonus, if any, to be determined in the manner that it would have been determined, and payable at the time it would have been payable, under Section 3.2 had there been no termination of the Employment Period). In addition, Company shall be obligated to pay Executive as severance one (1) year of Executive’s Base Salary, payable in twelve (12) equal monthly installments

 

~ 6 ~


commencing on the Termination Date, equal to Executive’s annual Base Salary in effect immediately prior to the Termination Date, such amount to be payable regardless of whether Executive obtains other employment and is compensated therefor (but only so long as Executive is not in violation of Section 5 hereof).

4.6 Effect of Notice of Termination. Any notice of termination by Company, whether for Cause or without cause, may specify that, during the notice period, Executive need not attend to any business on behalf of Company.

 

5.

Noncompetition and Confidentiality.

5.1 Covenant Not to Compete. During the Employment Period and for a period of one (1) year after the expiration or earlier termination of the Employment Period (other than a termination by Company without Cause or a termination by Executive for Constructive Discharge), Executive shall not, (i) directly or indirectly act in concert or conspire with any person employed by Company in order to engage in or prepare to engage in or to have a financial or other interest in any business which is a Direct Competitor (as defined below); or (ii) serve as an employee, agent, partner, shareholder, director or consultant for, or in any other capacity participate, engage or have a financial or other interest in any business which is a Direct Competitor (provided, however, that notwithstanding anything to the contrary contained in this Agreement, Executive may own up to two percent (2%) of the outstanding shares of the capital stock of a company whose securities are registered under Section 12 of the Securities Exchange Act of 1934). For purposes of this Agreement, the term “Direct Competitor” shall mean any person or entity engaged in the business of marketing or providing within the continental United States those businesses in which the Company currently engages in or plans to engage in the twelve months from the date of departure including but not limited to clinical software for physicians, decision support software, tools or applications, practice management systems, process consulting or implementation services, prescription products or services for pharmacy benefit management products or services including, without limitation, prepackaged prescription products or services, point of care pharmacy dispensing systems, and, mail service pharmacy products or services, or pharmaceuticals or pharmaceutical delivery systems. For purposes hereof, and by way of example, Direct Competitor shall include, without limitation, the following organizations or their affiliates or subsidiaries: McKesson/HBOC, Cerner, Epic, NextGen, A4, Integrate, GE Medical Systems, Siemens and Meditech.

5.2 No Solicitation of Employees. During the Employment Period and for a period of one (1) year following the expiration or earlier termination of the Employment Period for any reason, Executive shall not, directly or indirectly, whether for its own account or for the account of any other individual or entity, (i) employ, hire or solicit for employment, or attempt to employ, hire or solicit for employment, any Employee (as defined below), (ii) divert or attempt to divert, directly or indirectly, or otherwise interfere in a material fashion with or circumvent Company’s relationship with, any Employees, or (iii) induce or attempt to induce, directly or indirectly, any Employee to terminate his or her employment or other business relationship with Company. For purposes of this Section 5.2, “Employee” shall mean any person who is or was employed by Company during the Employment Period; provided, however, that “Employee” shall not include any person (a) whose employment with Company was terminated by Company without cause, or (b) who was not

 

~ 7 ~


employed by Company at any time during the six (6) month period immediately prior to the Termination Date.

5.3 Confidential Information. Company has advised Executive, and Executive acknowledges, that it is the policy of Company to maintain as secret and confidential all Protected Information (as defined below), and that Protected Information has been and will be developed at substantial cost and effort to Company. Executive shall not at any time, directly or indirectly divulge, furnish or make accessible to any person, firm, corporation, association or other entity (otherwise than as may be required in the regular course of Executive’s employment), nor use in any manner, either during the Employment Period or after the termination of the Employment Period for any reason, any Protected Information, or cause any such information of Company to enter the public domain, except as required by law or court order. “Protected Information” means trade secrets, confidential and proprietary business information of Company, and any other information of Company, including but not limited to, customer lists (including potential customers), sources of supply, processes, plans, materials, pricing information, internal memoranda, marketing plans, internal policies, and products and services which may be developed from time to time by the company and its agents or employees, including Executive; provided, however, that information that is in the public domain (other than as a result of a breach of this Agreement), approved for release by Company or lawfully obtained from third parties who are not bound by a confidentiality agreement with Company, is not Protected Information.

5.4 Injunctive Relief. Executive acknowledges and agrees that the restrictions imposed upon her by this Section 5 and the purpose for such restrictions are reasonable and are designed to protect the Protected Information and the continued success of Company without unduly restricting Executive’s future employment by others. Furthermore, Executive acknowledges that in view of the Protected Information of Company which Executive has or will acquire or has or will have access to and the necessity of the restriction contained in this Section 5, any violation of the provisions of this Section 5 would cause irreparable injury to Company and its successors in interest with respect to the resulting disruption in their operations. By reason of the foregoing, Executive consents and agrees that if he violates any of the provisions of this Section 5, the company and its successors in interest, as the case may be, shall be entitled, in addition to any other remedies that they may have, including monetary damages, to an injunction to be issued by a court of competent jurisdiction, restraining Executive from committing or continuing any violation of this Section 5.

5.5

 

6.

No Set-Off or Mitigation.

The Company’s obligation to make the payments provided or in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and, except as otherwise provided herein, such amounts shall not be reduced whether or not Executive obtains other employment.

 

~ 8 ~


7.

Indemnification.

To the fullest extent permitted by law, Company shall indemnify Executive (including the advancement of expenses) for any judgments, fines, amounts paid in settlement and reasonable expenses, including attorney’s fees, incurred by Executive in connection with the defense or any lawsuit or other claim to which Executive is made a party by reason of being an officer, director or employee of Company or any of its Subsidiaries.

 

8.

Miscellaneous.

8.1 Valid Obligation. This Agreement has been duly authorized, executed and delivered by Company and has been duly executed and delivered by Executive and is a legal, valid and binding obligation of Company and of Executive, enforceable in accordance with its terms.

8.2 No Conflicts. Executive represents and warrants that the performance by her of her duties hereunder will not violate, conflict with, or result in a breach of any provision of, any agreement to which he/she is a party.

8.3 Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Illinois, without reference to Illinois’ choice of law statutes or decisions.

8.4 Severability. The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any one ore more of the provisions hereof shall not affect the validity or enforceability of any other provision. In the event any clause of this Agreement is deemed to be invalid, the parties shall endeavor to modify that clause in a manner which carries out the intent of the parities in executing this Agreement.

8.5 No Waiver. The waiver of a breach of any provision of this Agreement by any party shall not be deemed or held to be a continuing waiver of such breach or a waiver of any subsequent breach of any provision of this Agreement or as nullifying the effectiveness of such provision, unless agreed to in writing by the parties.

8.6 Notices.

All demands, notices, requests, consents and other communications required or permitted under this Agreement shall be in writing and shall be personally delivered or sent by facsimile machine (with a confirmation copy sent by one of the other methods authorized in this Section), or by commercial overnight delivery service, to the parties at the addresses set forth below:

 

 

 

 

To Company:

  

Allscripts, Inc.

2401 Commerce Drive

Libertyville, Illinois 60048

Attention: Chief Executive Officer

 

~ 9 ~


 

 

 

with a copy to:

  

Akin, Gump, Strauss, Hauer & Feld, L.L.P.

1333 New Hampshire Avenue, N.W.

Washington, D.C. 20036

Attention: Philip Green

 

 

To Executive:

  

Laurie McGraw

 

  

_______________

 

  

_______________

Notices shall be deemed given upon the earliest to occur of (i) receipt by the party to whom such notice is directed, if hand delivered; (ii) if sent by facsimile machine, on the day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which such notice is directed) such notice is sent if sent (as evidenced by the facsimile confirmed receipt) prior to 5:00 p.m. Central Time and, if sent after 5:00 p.m. Central Time, on the day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which such notice is directed) after which such notice is sent; or (iii) on the first business day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which such notice is directed) following the day the same is deposited with the commercial carrier if sent by commercial overnight delivery service. Each party, by notice duly given in accordance therewith may specify a different address for the giving of any notice hereunder.

8.7 Assignment of Agreement. This Agreement shall be binding upon and inure to the benefit of Executive and Company, their respective successors and permitted assigns and Executive’s heirs and personal representatives. Neither party may assign any rights or obligations hereunder to any person or entity without the prior written consent of the other party. This Agreement shall be personal to Executive for all purposes.

8.8 Entire Agreement; Amendments. Except as otherwise provided herein, this Agreement contains the entire understanding between the parties, and there are no other agreements or understandings between the parties with respect to Executive’s employment by Company and her obligations thereto. Executive acknowledges that he is not relying upon any representations or warranties concerning her employment by Company except as expressly set forth herein. No amendment or modification to the Agreement shall be valid except by a subsequent written instrument executed by the parties hereto.

8.9 Dispute Resolution and Arbitration. The following procedures shall be used in the resolution of disputes:

8.9.1 Dispute. In the event of any dispute or disagreement between the parties under this Agreement, the disputing party shall provide written notice to the other party that such dispute exists. The parties will then make a good faith effort to resolve the dispute or disagreement. If the dispute is not resolved upon the expiration of fifteen (15) days from the date a party receives such notice of dispute, the entire matter shall then be submitted to arbitration as set forth in Section 8.9.2.

8.9.2 Arbitration. If the dispute or disagreement between the parties has not been resolved in accordance with the provisions of Section 8.9.1 above, then any such controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be

 

~ 10 ~


settled by arbitration to be held in Chicago, Illinois, in accordance with the rules of the American Arbitration Association then in effect. Any decision rendered herein shall be final and binding on each of the parties and judgement may be entered thereon in the appropriate state or federal court. The arbitrators shall be bound to strict interpretation and observation of the terms of this Agreement. The company shall pay the costs of arbitration.

8.10 Survival. The provisions of Sections 4.5, 5, 7 and 8.9 of this Agreement shall survive the expiration or earlier termination of the Agreement.

8.11 Headings. Section headings used in this Agreement are for convenience of reference only and shall not be used to construe the meaning of any provision of this Agreement.

8.12 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument.

[Signature page follows]

 

~ 11 ~


IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.

 

 

 

 

ALLSCRIPTS, INC

 

 

By:

 

/s/ Glen E. Tullman

Name:

 

Glen E. Tullman

Title:

 

Chief Executive Officer

 

 

EXECUTIVE

 

/s/ Laurie McGraw

Laurie McGraw

 

GE Financial Assurance Holdings Stock Purchase Agreement from RealDealDocs.com

May 30, 2008

You guessed it: another Amlaw top law firm legal document draft! This time it is a Stock Purchase Agreement from Weil Gotshal. Yours to use as you please from the kind gang down at RealDealDocs.com. To search millions of legal docs for free, please visit www.RealDealDocs.com!

Exhibit 10

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT, dated as of March 14, 2005 (this “Agreement”), is by and between GE Financial Assurance Holdings, Inc., a Delaware corporation (“GEFAHI”), and Genworth Financial, Inc., a Delaware corporation (the “Company”).

 

WHEREAS, the Company has filed a Registration Statement on Form S-1 with the Securities and Exchange Commission (the “Registration Statement”) with respect to the sale of shares of class A common stock of the Company, par value $.001 per share (the “Class A Common Stock”), by GEFAHI;

 

WHEREAS, GEFAHI is the record and beneficial owner of 343,088,145 shares of class B common stock of the Company, par value $.001 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Genworth Common Stock”);

 

WHEREAS, simultaneously with, and contingent upon, the closing of the registered secondary offering of Class A Common Stock pursuant to the prospectus included in the Registration Statement (the “Offering”), GEFAHI desires to sell, and the Company desires to repurchase, certain shares of the Class B Common Stock held by GEFAHI, upon the terms and subject to the conditions of this Agreement; and

 

WHEREAS, General Electric Company, a New York corporation (“GE”), General Electric Capital Corporation, a Delaware corporation (“GECC”), GEI, Inc., a Delaware corporation (“GEI”), GEFAHI and Genworth have previously entered into that certain Master Agreement, dated as of May 24, 2004 (the “Master Agreement”).

 

NOW, THEREFORE, in consideration of the premises and the representations, warranties and covenants contained in this Agreement and other valuable consideration, the receipt of which hereby is acknowledged, the Company and GEFAHI hereby agree as follows:

 

ARTICLE I

 

PURCHASE AND SALE OF CLASS B COMMON STOCK

 

Section 1.01. Purchase and Sale. Upon the terms and subject to the conditions set forth herein and in reliance on the representations, warranties and covenants contained herein, GEFAHI agrees to sell and deliver to the Company, and the Company agrees to purchase and accept from GEFAHI at the Closing (as hereinafter defined), that number of shares of Class B Common Stock equal to $500,000,000 (five hundred million dollars) divided by the Net Offering Price (as hereinafter defined), rounded to the nearest whole share (the “Repurchase Shares”), for a purchase price per share (the “Purchase Price”) equal to the net proceeds per share of Class A Common Stock that GEFAHI will receive from the underwriters in the Offering (the “Net Offering Price”).


Section 1.02. Closing. The closing of the purchase and sale of the Repurchase Shares hereunder shall take place at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153, on the date of the closing of the Offering, after satisfaction or waiver of the conditions set forth in Article IV, or at such other place, time and date as the parties hereto shall mutually agree upon (the “Closing”). The date on which the Closing shall be held is referred to in this Agreement as the “Closing Date.”

 

Section 1.03. GEFAHI Closing Deliveries. At the Closing, GEFAHI shall deliver or cause to be delivered to the Company:

 

(a) stock certificates representing the Repurchase Shares duly endorsed in blank, or accompanied by stock powers duly executed in blank, with all required documentary or transfer tax stamps, if any, affixed; and

 

(b) the certificate contemplated by Section 4.01(b).

 

Section 1.04. Company Closing Deliveries. At the Closing, the Company shall deliver or cause to be delivered to GEFAHI:

 

(a) an amount equal to the product of (i) the number of Repurchase Shares actually purchased by the Company and (ii) the Purchase Price, by wire transfer in immediately available funds to an account designated by GEFAHI or by certified or cashier’s check payable to GEFAHI; and

 

(b) the certificate contemplated by Section 4.02(b).

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF GEFAHI

 

GEFAHI represents and warrants to the Company as follows:

 

Section 2.01. Organization and Good Standing. GEFAHI is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. GEFAHI has all the requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

 

Section 2.02. Authorization. The execution and delivery by GEFAHI of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary corporate or other action on the part of GEFAHI and no further consent or authorization is required of GEFAHI’s board of directors or its stockholders to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by GEFAHI and constitutes the valid, legal and binding obligation of GEFAHI, enforceable against GEFAHI in accordance with its terms, assuming the due execution and delivery by the Company, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights

 

2


generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law).

 

Section 2.03. No Conflicts; Consents.

 

(a) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will conflict with or result in a breach or violation of: (i) the organizational documents of GEFAHI, (ii) any provision of law applicable to GEFAHI or (iii) the terms of any material agreement to which GEFAHI is a party or by which GEFAHI is bound.

 

(b) No consent, approval or authorization of or filing with any governmental authority or other third party is required to be obtained or made by GEFAHI in connection with the execution and delivery of this Agreement and the performance by GEFAHI of its obligations hereunder.

 

Section 2.04. Title and Conveyance of Repurchase Shares. GEFAHI has, and on the Closing Date will have, good and valid title to the Repurchase Shares being sold pursuant to this Agreement, free and clear of all liens, security interests and encumbrances and has the legal right and power to enter into this Agreement and to sell, transfer and deliver the Repurchase Shares; and upon sale and delivery of, and payment for, such Repurchase Shares as provided herein at the Closing, GEFAHI will convey to the Company good and valid title to such Repurchase Shares free and clear of all liens, security interests and encumbrances. The Repurchase Shares are not subject to any preemptive rights or similar rights.

 

Section 2.05. Information. GEFAHI confirms that the Company has made available to GEFAHI and its representatives the opportunity to ask questions of the officers and management employees of the Company and to acquire such additional information about the business and financial condition of the Company as GEFAHI has requested, and all such information has been received.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to GEFAHI as follows:

 

Section 3.01. Organization and Good Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all the requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

 

Section 3.02. Authorization. The execution and delivery by the Company of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary corporate or other action on the part of the Company and no further consent or authorization is required of the Company’s board of directors or its stockholders to authorize this Agreement or to consummate the transactions contemplated

 

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hereby. This Agreement has been duly executed and delivered by the Company and constitutes the valid, legal and binding obligation of the Company, enforceable against the Company in accordance with its terms, assuming the due execution and delivery by GEFAHI, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law).

 

Section 3.03. No Conflicts; Consents.

 

(a) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will conflict with or result in a breach or violation of: (i) the organizational documents of the Company, (ii) any provision of law applicable to the Company or (iii) the terms of any material agreement to which the Company is a party or by which the Company is bound.

 

(b) No consent, approval or authorization of or filing with any governmental authority or other third party is required to be obtained or made by the Company in connection with the execution and delivery of this Agreement, and the performance by the Company of its obligations hereunder.

 

Section 3.04. Solvency. Immediately before and after and giving effect to the Offering and the sale and purchase of the Repurchase Shares, (i) the assets of the Company, at a fair valuation, will exceed its debts, including contingent and unliquidated debts; (ii) the present fair saleable value of the assets of the Company will exceed the amount required to pay its liability on its debts, including contingent and unliquidated debts, as those debts become absolute and matured, (iii) the Company will have adequate capital with which to conduct its present and anticipated businesses; and (iv) the Company does not intend to incur or believe or reasonably believe that it will incur debt beyond its ability to pay as those debts become due. The Company has sufficient surplus (as defined in the Delaware General Corporation Law) or net profits in 2004 to pay for the Repurchase Shares.

 

Section 3.05. Fairness Opinion. The Audit Committee of the Company has received a written opinion from its financial advisor prior to the execution of this Agreement and dated as of March 11, 2005, to the effect that the Purchase Price hereunder, which is equal to the Net Offering Price, is fair to the Company from a financial point of view.

 

ARTICLE IV

 

CONDITIONS

 

Section 4.01. Conditions to Obligations of the Company. The obligation of the Company to effect the transactions contemplated hereby shall be subject to the fulfillment, on or prior to the Closing, of each of the following conditions (any or

 

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all of which may be waived by the Company in whole or part to the extent permitted by applicable law):

 

(a) the representations and warranties of GEFAHI set forth in Article II hereof shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of the Closing Date;

 

(b) GEFAHI shall have performed in all material respects all obligations required to be performed by it at or prior to Closing, and the Company shall have received a certificate from an executive officer of GEFAHI certifying the satisfaction of the conditions set forth in Sections 4.01(a) and (b);

 

(c) the Offering shall have been consummated;

 

(d) no temporary restraining order, preliminary or permanent injunction or other judgment, decision or order issued by any governmental authority of competent jurisdiction shall be in effect preventing the consummation of the transactions contemplated hereby; and

 

(e) the Company shall have determined that the Company as of the Closing Date has sufficient surplus (as defined in the Delaware General Corporation Law) or net profits in 2004 to pay for the Repurchase Shares.

 

Section 4.02. Conditions to Obligations of GEFAHI. The obligation of GEFAHI to effect the transactions contemplated hereby shall be subject to the fulfillment, on or prior to the Closing, of each of the following conditions (any or all of which may be waived by GEFAHI in whole or part to the extent permitted by applicable law):

 

(a) the representations and warranties of the Company set forth in Article III hereof shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if such representations and warranties had been made on and as of the Closing Date (except with respect to the representation and warranty set forth in Section 3.05);

 

(b) the Company shall have performed in all material respects all obligations required to be performed by it at or prior to Closing, and GEFAHI shall have received a certificate from an executive officer of the Company certifying the satisfaction of the conditions set forth in Sections 4.02(a) and (b);

 

(c) the Offering shall have been consummated; and

 

(d) no temporary restraining order, preliminary or permanent injunction or other judgment, decision or order issued by any governmental authority of competent jurisdiction shall be in effect preventing the consummation of the transactions contemplated hereby.

 

5


ARTICLE V

 

EXPENSES

 

Section 5.01. Expenses. GEFAHI shall pay its own expenses and costs, including, without limitation, all counsel fees and transfer taxes, and the Company shall pay its own expenses and costs in connection with this Agreement and the transactions contemplated hereby.

 

ARTICLE VI

 

MISCELLANEOUS

 

Section 6.01. Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing:

 

(a) By the mutual written consent of the Company and GEFAHI;

 

(b) By either the Company or GEFAHI by written notice to the other party, if the Closing shall not have occurred prior to April 4, 2005; provided, however, that such right shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of such Closing to occur on or prior to such date;

 

(c) By either the Company or GEFAHI if there shall be a material breach by the other party of its representations, warranties, covenants or agreements contained in this Agreement; or

 

(d) By either the Company or GEFAHI, if there shall have been issued, by a court of competent jurisdiction, a permanent or final order, decree or injunction prohibiting or restraining the consummation of the transactions contemplated hereby.

 

Section 6.02. Integration; Amendments; Waiver. This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, whether oral or written, between the parties hereto with respect to the subject matter hereof. Any term of this Agreement may be amended or modified only by the written agreement of the parties. No term or condition of this Agreement may be waived, except by a writing executed by the party against whom enforcement of any such waiver is being sought. No waiver by either party hereto of any term or condition of this Agreement, in any one or more instances, shall operate as a waiver of such term or condition at any other time.

 

Section 6.03. Successors and Assigns. All of the terms and provisions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

 

6


Section 6.04. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given (i) when delivered personally by hand (with written confirmation of receipt), (ii) when sent by facsimile (with written confirmation of transmission) or (iii) one business day following the day sent by overnight courier (with written confirmation of receipt), in each case at the following addresses and facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party pursuant to this provision):

 

If to the Company, to:

 

Genworth Financial, Inc.

6620 West Broad Street

Richmond, VA 23230 Facsimile: 804-662-2414

Attention: General Counsel

 

If to GEFAHI, to:

 

GE Financial Assurance Holdings, Inc.

c/o General Electric Company

3135 Easton Turnpike

Fairfield, CT 06828

Facsimile: 203-373-3079

Attention: Chief Corporate and Securities Counsel

 

Section 6.05. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and performed in such State irrespective of the choice of Laws principles of the State of New York other than Section 5-1401 of the General Obligations Law of the State of New York.

 

Section 6.06. Severability. If any provision of this Agreement or the application of any such provision to any person or circumstances shall be held invalid by a court of competent jurisdiction, the remainder of this Agreement, including the remainder of the provision held invalid, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

 

Section 6.07. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

Section 6.08. Headings. All section headings herein are for convenience of reference only and are not part of this Agreement, and no construction or inference shall be derived therefrom.

 

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Section 6.09. Remedies. The Company and GEFAHI shall be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages would not be an adequate remedy for any breach of the provisions of this Agreement and that the Company and GEFAHI, in their sole discretion, may apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.

 

Section 6.10. Amendment of Master Agreement. Concurrently with the Closing contemplated by this Agreement, GE, GECC, GEI, GEFAHI and Genworth agree to amend Section 6.18 of the Master Agreement to add a provision to the effect that until the date that is at least 185 days after the date of consummation of a sale by GEFAHI of shares of Class B Common Stock that results in GEFAHI owning less than fifty percent (50%) of the outstanding Genworth Common Stock (a “Trigger Transaction”), neither Genworth nor any other member of the Genworth Group (as defined in the Master Agreement) may (nor may Genworth or any other member of the Genworth Group agree to), without the prior written consent of GE: (a) purchase, redeem or otherwise acquire or retire for value any shares of Class A Common Stock at a price per share that is less than the price per share received by GEFAHI in the Trigger Transaction or (b) engage in any derivative security transaction with respect to shares of Genworth Common Stock (including a derivative security such as an option, warrant, convertible security, stock appreciation right, or similar right) that would be equivalent economically to a transaction of the type described in clause (a) above. Such amendment to Section 6.18 of the Master Agreement shall be set forth in a written amendment to the Master Agreement in a form to be mutually agreed upon by the parties.

 

Section 6.11. GEFAHI Consent and Proxy. Concurrently with the Closing contemplated by this Agreement, GEFAHI agrees to deliver to Genworth:

 

(a) an irrevocable consent to permit Genworth to effect acquisitions for consideration at or below $1,000,000,000 from time to time if, at any time, GEFAHI owns forty-five percent (45%) or less of the outstanding Genworth Common Stock; and

 

(b) an irrevocable proxy to vote the shares of Class B Common Stock held by GEFAHI in a favor of an amendment to Genworth’s Amended and Restated Certificate of Incorporation consistent with such acquisition threshold in the event that Genworth elects to amend its Amended and Restated Certificate of Incorporation to reflect the foregoing.

 

Section 6.13 Public Announcements. The Company and GEFAHI agree that any press release regarding this Agreement or the transactions contemplated hereby shall be mutually acceptable.

 

8


Section 6.14 Survival. All representations, warranties and covenants shall survive the Closing.

 

Section 6.15 Effect of Termination. A termination of this Agreement as provided in Section 6.01 shall not release any party hereto from liability for a breach of this Agreement.

 

[signatures appear on following page]

 

9


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first set forth above by their respective officers thereunto duly authorized.

 

GENWORTH FINANCIAL, INC.

By:

 

/S/    RICHARD P. MCKENNEY        

 

 

Name:

 

Richard P. McKenney

 

 

Title:

 

Senior Vice President –

Chief Financial Officer

 

GE FINANCIAL ASSURANCE HOLDINGS, INC.

By:

 

/S/    KATHRYN CASSIDY        

 

 

Name:

 

Kathryn Cassidy

 

 

Title:

 

 

 

 

GENERAL ELECTRIC COMPANY

(solely for purposes of Section 6.11)

By:

 

/S/    BRIAN MCANANEY        

 

 

Name:

 

Brian McAnaney

 

 

Title:

 

 

 

GENERAL ELECTRIC CAPITAL CORPORATION

(solely for purposes of Section 6.11)

By:

 

/S/    KATHRYN CASSIDY        

 

 

Name:

 

Kathryn Cassidy

 

 

Title:

 

 

 

GEI, INC.

(solely for purposes of Section 6.11)

By:

 

/S/    KATHRYN CASSIDY        

 

 

Name:

 

Kathryn Cassidy

 

 

Title:

 

 

 

Edgen Corporation Stock Purchase Agreement from RealDealDocs.com

May 29, 2008

Welcome back! Below you’ll find the Stock Purchase Agreement for Edgen Corporation drafted by Amlaw’s top profit law firm Dechert. It’s available here for your copy, edit and printing convenience as a courtesy from my friends over at RealDealDocs.com. To search millions of legal docs for free, please visit www.RealDealDocs.com!

 

Exhibit 2.1

 

 

STOCK PURCHASE AGREEMENT

 among

EDGEN ACQUISITION CORPORATION,

as Purchaser,

EDGEN CORPORATION,

as Edgen,

 

The Stockholders set forth on the
Stockholder Signature Page attached hereto

as Sellers,

 

and

 

THE SELLERS REPRESENTATIVE

 

Dated as of December 31, 2004


 

STOCK PURCHASE AGREEMENT

 

This STOCK PURCHASE AGREEMENT dated as of December 31, 2004 (the “Agreement”), is by and among Edgen Acquisition Corporation, a Nevada corporation (the “Purchaser”), Edgen Corporation, a Nevada corporation (“Edgen”), the stockholders of Edgen listed on the Schedule 1.1(a) attached hereto (each a “Seller” and collectively, the “Sellers”) and Harvest Partners III, LP, a Delaware limited partnership, as the Sellers Representative.  The Purchaser, Sellers and Edgen are sometimes referred to collectively herein as the “Parties.” Certain capitalized terms which are used herein are defined in Article I below.

 

WHEREAS, as of the date hereof, the Sellers collectively own 100% of the issued and outstanding capital stock of Edgen;

 

WHEREAS, Sellers desire to sell all of the issued and outstanding shares of capital stock of Edgen (such shares, the “Shares”), to the Purchaser, and the Purchaser desires to purchase all of the Shares from the Sellers, upon the terms and subject to the conditions contained in this Agreement (the “Acquisition”); and

 

WHEREAS, as a result of the purchase of the Shares, the Purchaser will own 100% of the issued and outstanding equity interests of Edgen.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises made herein, and in consideration of the representations, warranties and covenants herein contained, the Parties hereby agree as follows:

 

ARTICLE II
PURCHASE AND SALE OF SHARES

 

2.1.                              Purchase and Sale.  Subject to the terms and conditions of this Agreement and in reliance upon the representations, warranties, covenants and agreements of the Parties contained herein, at the Closing, each of the Sellers shall sell and transfer to Purchaser, and Purchaser shall purchase and acquire from each of the Sellers, all of the Shares owned by such Seller as set forth opposite such Seller’s name on Schedule 1.1(a) hereto, for the consideration set forth below.

 

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2.2.                              Purchase Price.

 

(a)                                  The aggregate purchase price (the “Purchase Price”) for the Shares shall be an amount equal to (i) One Hundred Twenty Four Million Dollars ($124,000,000), plus (ii) the Net Cash Amount on the Closing Date (if a positive number, the Purchase Price will be increased by such amount and if a negative number, the Purchase Price will be reduced by such Net Cash Amount), less (iii) the aggregate amount required to be paid to satisfy and discharge in full the Indebtedness on the Closing Date (including (without double counting) Capital Leases which remain outstanding at Closing), less (iv) the Transaction Expenses, plus (v) cash received by Edgen upon the exercise of options after the date hereof.  The Purchase Price shall be paid at Closing in accordance with Section 2.3 below.

 

(b)                                 The Sellers Representative shall cause Edgen to prepare and deliver to the Purchaser immediately prior to Closing a certificate (the “Certificate of Closing Amounts”) certifying (i) the Net Cash Amount on the Closing Date, and (ii) the amount of the Transaction Expenses, specifying the amounts owing to each creditor with respect thereto (together with payment instructions therefor); provided, that the Sellers Representative shall deliver a good faith estimate of the Certificate of Closing Amounts two days before Closing.

 

(c)                                  It is contemplated by the Parties that, upon the Closing, all Indebtedness of Edgen and the Subsidiaries outstanding immediately prior to the Closing other than Capital Leases will be fully repaid (the “Repaid Indebtedness”).  To facilitate such repayment, no less than three (3) days prior to the Closing Date, Edgen shall obtain payoff letters for all Repaid Indebtedness of the Companies, which payoff letters shall indicate the amount necessary to repay such creditors in full and that such creditors have agreed to release all Liens in respect of such Repaid Indebtedness relating to the assets and properties of the Companies, upon receipt of the amounts indicated in such payoff letters.  Subject to the satisfaction of all of the conditions, covenants and obligations of the Sellers and Edgen to be satisfied prior to the Closing, in connection with the Closing, the Sellers and Edgen hereby instruct Purchaser (i) to make the payments referenced in such payoff letters on the Closing Date to discharge the Indebtedness covered thereby and (ii) to pay the Transaction Expenses in the amounts and to the parties specified in the Certificate of Closing Amounts.

 

2.3.                              Payment of Purchase Price.  At the Closing:

 

(a)                                  $4,000,000 of the Purchase Price (the “Indemnity Escrowed Funds”) will be placed in escrow with The Bank of New York, N.A. (the “Escrow Agent”) pursuant to an escrow agreement in the form of Exhibit B hereto (the “Escrow Agreement”); and

 

(b)                                 The Purchaser shall distribute the balance of the Purchase Price by wire transfer of immediately available funds to the account or accounts designated in writing by the Sellers Representative for such purpose, in accordance with the following preferences:

 

(i)                                     first, to the holders of shares of Edgen’s Series A Preferred Stock issued on October 25, 1996 pro rata in an amount equal to $148.66 per share, plus $0.02

 

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per share for each day from and after December 31, 2004 to but not including the Closing Date;

 

(ii)                                  second, to the holders of shares of Edgen’s Series A Preferred Stock issued on December 28, 1998 pro rata in an amount equal to $136.00 per share, plus $0.02 per share for each day from and after December 31, 2004 to but not including the Closing Date;

 

(iii)                               third, to the holders of shares of Edgen’s Series B Preferred Stock pro rata in an amount equal to $800.00 per share; and

 

(iv)                              then, to the holders of shares of Edgen’s Common Stock, to be distributed pro rata in accordance with the number of shares of Common Stock held by each such holder;

 

provided, however, that the amount to be paid to each Seller pursuant to this Section 2.3 shall be reduced by the aggregate exercise price payable by such Seller at Closing upon the exercise of such Seller’s Company Options (if any) (each such amount, a “Seller Exercise Price Amount”), together with all federal and state income and other Taxes required to be withheld in connection with such exercise, and each such Seller referred to herein hereby authorizes and directs the Purchaser to make (and hereby waives and releases all rights to) such deductions from the amount otherwise payable to such Seller hereunder (it being understood and agreed that the aggregate amount of all such deductions referred to herein shall be deemed for purposes hereof to have been paid by the Purchaser to Edgen).

 

2.4.                              Tax Refunds; Deductible Transaction Expenses.

 

(a)                                  In addition to the Purchase Price, the Purchaser shall pay in cash, to the Persons receiving payment as holders of Edgen’s Common Stock pursuant to Section 2.3(b)(iii) above, on the same pro rata basis as for the payment pursuant to Section 2.3(b)(iii), an amount equal to the amount received by any of the Companies with respect to the 2002 Tax Refund, within five (5) Business Days of the receipt of any portion of the 2002 Tax Refund, without deduction, offset or counterclaim, other than expenses incurred in making such payments.

 

(b)                                 In addition to the Purchase Price, the Purchaser shall pay in cash, without offset deduction or counterclaim, other than expenses incurred in making such payments, an amount, not to exceed $1.3 million, equal to the net tax savings realized by the Companies as a result of payment of the Deductible Transaction Expenses.  Such payment shall be made no later than five (5) Business Days after such tax savings is realized; provided, however, that if such tax savings results in a reduction of Taxes due by the Companies with respect to a year, such tax savings shall be deemed to be realized upon the earlier of (i) the filing of Tax Returns reflecting such reduction for such year, or (ii) the date on which any of the Companies makes a payment of estimated Taxes with respect to such year which is lower than the amount which such payment would have been but for the payment of the Deductible Transaction Expenses.  Notwithstanding the foregoing, unless the Purchaser shall establish otherwise, it shall be presumed that a Tax benefit of no less than $1.3 million with respect to the Deductible Transaction Expenses shall have been realized no later than December 31, 2005.  To the extent the Purchaser establishes that

11

 

such Tax benefit has not been realized by such time, a similar presumption shall apply with regard to each subsequent fiscal quarter until such Tax benefit has been fully realized; provided, that such presumption shall cease to apply as of December 31, 2008 and Purchaser shall have no further obligation to pay any such Tax benefit.  Payments made pursuant to this Section 2.4(b) shall be paid to the Persons receiving payment as holders of Edgen’s Common Stock pursuant to Section 2.3(b)(iii) above, on the same pro rata basis as for the payment pursuant to Section 2.3(b)(iii).

 

2.5.                              Company Options.  All outstanding options to purchase shares of Edgen stock (the “Company Options”) shall be cancelled upon Closing.  In any case in which the per share exercise price of a Company Option exceeds the per share price paid to the holders of share of Edgen’s Common Stock, any consideration paid by Edgen in consideration of such cancellation shall be included in Transaction Expenses.  The Company shall take all appropriate actions, including, without limitation, obtaining a signed acknowledgement of each holder of outstanding Company Options to the treatment of such Company Options as set forth under this Section 2.5, to effect the cancellation all such Company Options.

 

2.6.                              Closing.  The consummation of the purchase and sale of the Shares in accordance with this Agreement (the “Closing”) shall commence at 10:00 a.m., local time, at the New York offices of Dechert LLP, 30 Rockefeller Plaza, New York, New York 10112, on the second Business Day after all of the conditions precedent to Closing hereunder shall have been satisfied or waived (other than the conditions with respect to actions the respective parties will take at Closing), or at such other time and place as the Parties shall agree upon in writing.  The date of the Closing is referred to as the “Closing Date.”  The Parties shall deliver at the Closing such documents, certificates of officers and other instruments as are set forth in Article VI hereof and as may reasonably be required to effect the transfer by Sellers of the Shares pursuant to and as contemplated by this Agreement and to consummate the Acquisition.  All events occurring at the Closing shall be deemed to occur simultaneously (with the concurrent delivery of the documents required to be delivered pursuant to Article VII and payment of the Purchase Price).

 

2.7.                              Sellers Representative.  Harvest Partners III, LP is hereby appointed and authorized by Sellers to act as their representative (the “Sellers Representative”) pursuant to Sellers Representative Agreement attached hereto as Exhibit C, and Harvest Partners III, LP hereby accepts such appointment, for purposes of and as contemplated by this Section 2.7 and in respect of any disputes arising in connection with any of the foregoing or with respect to this Agreement and the transactions contemplated hereby.  Sellers Representative shall also be authorized and directed to accept any written notice which may be or is required to be sent to Sellers pursuant to this Agreement.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS

 

As an inducement to Purchaser to enter into this Agreement and to consummate the Acquisition, each Seller severally but not jointly represents and warrants to Purchaser as follows:

 

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3.1.                              Title to Shares.  Such Seller holds the issued and outstanding capital stock of Edgen in the amounts, classes and series set forth in Schedule 1.1(a).  Such Seller is, and immediately prior to the Closing will be, the record and beneficial owner of, and has good and marketable title to, the Shares set forth opposite such Seller’s name in Schedule 1.1(a), free and clear of any Lien, and such good and marketable title shall be transferred to Purchaser at the Closing, free and clear of any Lien.  Except as set forth on Schedule 1.1(a), such Seller is not a party to or bound by and does not have any options, calls, contracts, commitments or rights of any character (including conversion or preemptive rights) relating to any issued or unissued Shares in Edgen or any other debt or equity security issued or to be issued by Edgen, including any agreement, instrument or understanding, order or decree with respect to the voting of or that would restrict the transfer by such Seller of such Seller’s Shares pursuant to this Agreement.  Immediately after the Closing, such Seller will not be a party to or bound by and will not have any options, calls, contracts, commitments or rights of any character (including conversion or preemptive rights) relating to any issued or unissued Shares in Edgen or any other debt or equity security issued or to be issued by Edgen, including any agreement, instrument or understanding, order or decree with respect to the voting of or that would restrict the transfer by such Seller of such Seller’s Shares pursuant to this Agreement.

 

3.2.                              Authority Relative to this Agreement.  If such Seller is a corporation or limited liability company, such Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation.  Such Seller has full power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder.  The execution and delivery of this Agreement and such other Transaction Documents by such Seller and the consummation by such Seller of the Acquisition and the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate or other action on the part of such Seller, and no other corporate or other proceedings on the part of such Seller are necessary to authorize this Agreement or such other Transaction Documents to which such Seller is a party or to consummate the Acquisition and the transactions contemplated hereby.  This Agreement has been, and such other Transaction Documents to which such Seller is a party will be duly executed and delivered by such Seller and, assuming due authorization, execution and delivery by Purchaser, this Agreement constitutes, and each other Transaction Document to which such Seller is a party upon execution will constitute, a legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, fraudulent conveyance, reorganization or other similar law affecting the enforceability of creditors’ rights generally and to the effect of general principles of equity which may limit the availability of remedies (whether in a proceeding at law or in equity).

 

3.3.                              No Conflict.  Except as set forth on Schedule 3.3, the execution and delivery of this Agreement and the Transaction Documents to which such Seller is a party by such Seller does not, and the performance by such Seller of its obligations hereunder and thereunder and the consummation of the Acquisition and the transactions contemplated hereby will not:  (a) conflict with or violate any provision of the certificate of formation, limited liability company operating agreement, certificate of incorporation, bylaws or comparable charter document, of such Seller; (b) conflict with or violate any law, rule or regulation or any judgment or order applicable to

 

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such Seller or by which any of such Seller’s Shares is bound or affected; (c) result in any breach of or constitute a default (or an event which might, with the passage of time or the giving of notice or both, constitute a default) under, or require notice or consent under, any mortgage, indenture, deed of trust, lease, contract, agreement, license or other instrument to which any such Seller is a party or by which any of such Seller’s Shares is bound or affected; (d) result in the creation of a Lien on any of such Seller’s Shares or give to others any interests or rights therein; (e) result in the maturation or acceleration of any material liability or obligation of such Seller (or give others the right to cause such a maturation or acceleration); or (f) result in the termination of or loss of any material right (or give others the right to cause such a termination or loss) under any agreement or contract to which such Seller is a party or by which it may be bound, except in the case of clauses (b) and (c), for any conflict, violation, breach or default that would not be material to such Seller’s ability to ability to consummate the transactions contemplated by this Agreement in any material respect.

 

3.4.                              Required Filings and Consents.  The execution and delivery of this Agreement by such Seller do not, and the performance by such Seller of its obligations hereunder and the consummation of the Acquisition and the transactions contemplated hereby will not, require any consent, approval, authorization or permit of, or registration, qualification or filing by any such Seller with or notification by any such Seller to, any Governmental Authority or other Person, except for any such non-governmental consent, approval, authorization or permit, or registration, qualification or filing or notification the failure of which to obtain would not reasonably be expected to materially and adversely affect such Seller’s ability to consummate the transactions contemplated hereby.

 

3.5.                              Litigation.  No action, suit, proceeding or investigation is pending or, to such Seller’s knowledge, threatened, against such Seller with respect to his or its execution and delivery of this Agreement or the consummation by such Seller of the transactions contemplated hereby.

 

3.6.                              No Finder.  Except as set forth on Schedule 4.17, the fees and expenses of which shall be solely the responsibility of Sellers, none of such Seller, nor any Affiliate of such Seller has agreed to pay to any broker, finder, investment banker or any other Person a brokerage, finder’s or other fee or commission in connection with this Agreement or the Acquisition and the transactions contemplated hereby.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EDGEN

 

As an inducement to Purchaser to enter into this Agreement and to consummate the Acquisition, Edgen represents and warrants to Purchaser as follows:

 

4.1.                              Organization and Qualification.  Each of Edgen, ELC and ECI is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own, lease and operate its assets and properties and to carry on the Business as it is now being conducted.  Each of EAPG and ECPG is a limited liability company duly organized, validly existing and in good standing

 

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under the laws of its jurisdiction of formation and has all requisite limited liability company power and authority to own, lease and operate its assets and properties and to carry on the Business as it is now being conducted.  Each of the Companies is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the assets and properties owned, leased or operated by it or the nature of the Business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not reasonably be expected to have a Material Adverse Effect.  Edgen has made available or delivered to Purchaser complete and correct copies of each of the Companies’ certificate of incorporation and by-laws or other comparable charter documents, as amended to date, which are in full, force and effect.

 

4.2.                              Capitalization.

 

(a)                                  The authorized capital stock of Edgen consists of (i) 6,505,512 shares of common stock (the “Common Stock”), 6,000,000 shares of which have been designated as Class A Common Stock, par value $0.01 per share (“Class A Common Stock”), 3,737,580 of which are issued and outstanding; and 505,512 shares of which have been designated as Class B Common Stock, par value $0.01 per share (“Class B Common Stock”), 505,512 of which are issued and outstanding; and (ii) 500,000 shares of preferred stock, 372,644 shares of which have been designated as 6% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), 367,644 of which are issued and outstanding; and 10,000 of which have been designated as Series B Redeemable Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), all of which are issued and outstanding.  Schedule 1.1(a) sets forth the name of each holder of options for shares of capital stock of Edgen, the number of shares of capital stock that such options are exercisable for with respect to each holder, along with the applicable vesting schedule, if any, the date upon which such option was granted and the term of such option, and the exercise price.  Other than the options set forth on Schedule 1.1(a), all of which shall be cancelled and terminated as of Closing, there are no outstanding options, warrants or other rights to subscribe for, acquire or purchase any securities of Edgen.  On the Closing Date, the total number of Shares issued and outstanding will be as set forth in Schedule 1.1(a) and there will be no shares of capital stock of Edgen issued or outstanding other than the Shares being sold by the Sellers to Purchaser hereunder, nor will there be issued or outstanding any securities convertible into or exchangeable for any shares of capital stock of Edgen or any options, warrants or other rights to purchase or acquire such shares or securities.  Except as otherwise disclosed in Schedule 1.1(a), there are no outstanding subscriptions, commitments, agreements, understandings or arrangements of any kind relating to the issuance, sale, transfer or assignment, or dividend or voting rights, or rights to designate directors, or rights to register the sale under the Securities Act, with respect to any shares of capital stock of any class or other equity interests of Edgen or any of the Subsidiaries or any securities convertible into or exchangeable for such shares, or any options, warrants or other rights to acquire such shares or securities.  Except as set forth in Schedule 1.1(a), neither Edgen nor any of the Subsidiaries has any obligation to purchase, redeem, or otherwise acquire any of its capital stock or any interests therein.  All of the outstanding shares of capital stock and membership interests of Edgen and the Subsidiaries are (or will be on the Closing Date, immediately following the exercise of the options) duly and validly authorized and issued, fully paid and non-assessable, were not issued in violation of any agreement or understanding binding upon any of the

 

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Companies and were offered, issued, sold and delivered in compliance with applicable federal and state securities or “blue-sky” laws and regulations.  There are no outstanding or authorized equity appreciation, phantom stock or similar rights with respect to any of the Companies.

 

(b)                                 The authorized capital stock of ECI consists of 100 shares of Class A Common Stock, all of which are issued and outstanding and owned beneficially and of record by Edgen.  The authorized capital stock of ELC consists of 1000 shares of common stock, no par value, 501 of which are issued and outstanding and owned beneficially and of record by Edgen.  The authorized membership interests of ECPG consists of one membership interest, which is issued and outstanding and owned beneficially and of record by ELC.  The authorized membership interests of EAPG consists of 100 membership interests, all of which are issued and outstanding and owned beneficially and of record by ECPG.  There are no outstanding options, warrants or other rights to subscribe for, acquire or purchase any securities of any of the Subsidiaries.  Except as otherwise disclosed on Schedule 4.2(b), all of the issued and outstanding capital stock of ECI and ELC is owned by Edgen, free clear of any Lien, (ii) all of the issued and outstanding membership interests of ECPG is owned by ELC, free and clear of any Lien and (iii) all of the issued and outstanding membership interests of EAPG is owned by ECPG, free and clear of any Lien.

 

4.3.                              Authority Relative to this Agreement.  Edgen has all necessary corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder.  The execution and delivery of this Agreement and such other Transaction Documents to which it is a party by Edgen and the consummation by Edgen of the Acquisition and the transactions contemplated hereby have been duly and validly authorized by all necessary corporate or other action on the part of Edgen, and no other corporate or other proceedings on the part of Edgen are necessary to authorize this Agreement and such other Transaction Documents to which it is a party and to consummate the Acquisition and the transactions contemplated hereby.  This Agreement has been, and such other Transaction Documents to which Edgen is a party will be, duly executed and delivered by Edgen and, assuming due authorization, execution and delivery by Purchaser,  this Agreement constitutes, and each other Transaction Document to which Edgen is a party upon execution will constitute, a legal, valid and binding obligation of Edgen, and, assuming due authorization, execution and delivery by Purchaser, enforceable against Edgen in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, fraudulent conveyance, reorganization or other similar law affecting the enforceability of creditors’ rights generally and to the effect of general principles of equity which may limit the availability of remedies (whether in a proceeding at law or in equity).

 

4.4.                              No Conflict.  Except as set forth on Schedule 4.4, the execution and delivery of this Agreement and the Transaction Documents to which Edgen is a party by Edgen do not, and the performance by Edgen of its obligations hereunder and thereunder and the consummation of the Acquisition and the transactions contemplated hereby will not:  (a) conflict with or violate any provision of the certificate of formation, limited liability company operating agreement, certificate of incorporation, bylaws or comparable charter document, of any of the Companies; (b) assuming the due authorization, execution and delivery by Purchaser, conflict with or violate any law, rule or regulation or any judgment or order applicable to any of the Companies or by

 

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which any of the Companies’ assets is bound or affected; (c)  result in any breach of or constitute a default (or an event which might, with the passage of time or the giving of notice or both, constitute a default) under, or require notice or consent under, any mortgage, indenture, deed of trust, lease, contract, agreement, license or other instrument to which any of the Companies is a party or by which any of the Companies’ assets is bound or affected; (d) result in the creation of a Lien, other than Liens in connection with the transactions contemplated by the Senior Commitment or the Senior Notes Offering, on any asset or property of any of the Companies or the Shares or give to any third party any interest or rights therein; (e) result in the maturation or acceleration of any material liability or obligation of any of the Companies (or give any third party the right to cause such a maturation or acceleration); or (f) result in the termination of or loss of any material right (or give any third party the right to cause such a termination or loss) under any agreement or contract to which any of the Companies are a party or by which it may be bound, except in the case of clauses (b) and (c), for any conflict, violation, breach or default that would not reasonably be expected to have a Material Adverse Effect.

 

4.5.                              Required Filings and Consents.  The execution and delivery of this Agreement by Edgen does not, and the performance by Edgen of its obligations hereunder and the consummation of the Acquisition and the transactions contemplated hereby will not, require any consent, approval, authorization or permit of, or registration, qualification or filing by any of the Companies with or notification by any of the Companies to, any Governmental Authority or other Person, except for:  (a) the consents, approvals, authorizations, permits, registrations, qualifications, filings or notifications set forth on Schedule 4.5; or (b)  any such consent, approval, authorization, permit, registration, qualification, filing or notification the failure of which to obtain would not reasonably be expected to materially and adversely affect the Companies’ ability to consummate the transactions contemplated hereby.

 

4.6.                              Financial Statements.  Schedule 4.6 contains true, correct and complete copies of Edgen’s Audited Financial Statements and a copy of its unaudited consolidated balance sheet as of November 30, 2004 (the “Balance Sheet”) and the related unaudited consolidated statement of income for the eleven month period then ended (together with the Balance Sheet, the “Interim Statement”).  Each of the Audited Financial Statements and the Interim Statement were prepared in accordance with GAAP applied on a consistent basis (except for income tax provisions that relate to the Interim Statement); and fairly present in all material respects the consolidated financial condition, assets and liabilities and the results of operations and cash flows of the Companies for the periods covered thereby, subject in the case of the Interim Statement to normal year end audit adjustments and the absence of notes.  The Audited Financial Statements and the Interim Statement have been prepared from and are in accordance with the books and records of the Companies.

 

4.7.                              Absence of Undisclosed Liabilities.  None of the Companies has any material liability or obligation of any nature (absolute, contingent, accrued or otherwise) other than:  (a) liabilities reflected as such in the Interim Statement; (b) liabilities incurred in the ordinary course of business consistent with past practice since the date of the Balance Sheet and fully reflected as liabilities on Edgen’s books of account, none of which has had or would be reasonably expected to have a Material Adverse Effect; (c) obligations of continued performance

 

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under contracts commitments and arrangements entered into in the ordinary course of business and consistent with past practice and (d) the liabilities disclosed on Schedule 4.7.

 

4.8.                              Absence of Certain Changes or Events.  Since September 30, 2004, except as contemplated by this Agreement or disclosed on Schedule 4.8, the Companies have conducted the Business in the ordinary course of business and consistent with past practice.  Without limiting the generality of the foregoing, since September 30, 2004, there has not been:

 

(a)                                  (i) any event, fact or circumstance which has had or would reasonably be expected to have a Material Adverse Effect, or (ii) any change in the assets, liabilities, sales, income or business of Edgen or any of its Subsidiaries or in any of Edgen’s or any of its Subsidiaries’ relationships with suppliers, customers or lessors, other than changes which arose in the ordinary course of business and which have not been or would not be reasonably expected to have a Material Adverse Effect;

 

(b)                                 any damage to or destruction or loss of any asset, property, right or interest of any of the Companies, whether or not covered by insurance, which has had or would be reasonably expected to have a Material Adverse Effect;

 

(c)                                  any acquisition, sale or transfer of any asset or property, other than sales of inventory and disposal of obsolete, damaged or defective inventory, or equipment in the ordinary course of business;

 

(d)                                 any increase in the salary or other compensation payable or to become payable to, or any advance (excluding advances for ordinary business expenses) or loan to, any of the respective officers, directors, agents and employees of any of the Companies, or any bonus payments or arrangements made to or with any of them (other than any annual wage increase in the ordinary course of business and consistent with past practice and other than bonuses and other compensation payable as a result of the transaction contemplated by this Agreement and paid at Closing as a Transaction Expense);

 

(e)                                  any declaration, setting aside or payment of any dividend or any other distributions in respect of Edgen’s or any of its Subsidiaries’ capital stock or other equity securities or any distribution to the Sellers or their Affiliates;

 

(f)                                    except for the issuance of shares pursuant to the exercise of any options set forth on Schedule 1.1(a), any issuance of any shares of the capital stock of the Companies or any direct or indirect redemption, purchase or other acquisition of any of the Companies’ capital stock or other equity securities;

 

(g)                                 any entry by any of the Companies into any transaction which is not in the ordinary course of business, consistent with past practice or as contemplated herein including, but not limited to, any agreement by Edgen or any Affiliate thereof to compensate any employee of Edgen in any manner upon or with respect to the consummation of the transactions contemplated at Closing;

 

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(h)                                 any creation or incurrence by any of the Companies of (i) any obligations or liabilities, whether absolute, accrued, contingent or otherwise (including, without limitation, any Indebtedness), other than obligations and liabilities which involve an amount not in excess of $100,000 or are incurred in the ordinary course of business or as contemplated herein; or (ii) any Lien on any assets securing obligations in excess of $100,000;

 

(i)                                     any discharge, forgiveness, cancellation or satisfaction by Edgen or any of its Subsidiaries of any material Lien, debt, claim or payment by any of the Companies of any material obligation or material liability (fixed or contingent) other than in the ordinary course of business or as contemplated herein;

 

(j)                                     any change in the accounting methods or practices of Edgen or any of its Subsidiaries other than changes required by Regulation S-X (17 CFR § 210, et seq.) in connection with the Senior Notes Offering;

 

(k)                                  (i) any write-down of the value of any assets or inventory by any of the Companies or (ii) any write-off of any notes or accounts receivable of any of the Companies, in each case, other than those for which reserves or accruals have been established on the Balance Sheet or those in immaterial amounts; or

 

(l)                                     any material Tax election (or revocation of a Tax election), except in a manner consistent with past practice, any change in any method of accounting for Tax purposes, or any settlement or compromise of any material Tax liability.

 

4.9.                              Real Property.

 

(a)                                  The real property and interests in real property described on Schedule 4.9 by name of record holder, address, acreage and type of use, is all of the real property owned by any of the Companies (the “Real Property”).  Each of the Real Property locations is a separate lot or parcel for the purpose of real estate tax, subdivision, zoning, deed conveyance and leases, separated from any property not owned by any Company.  Other than those leases described on Schedule 4.9, none of the Companies has entered into any agreements giving any Person any right to lease, sublease or otherwise occupy any portion of such Real Property.  The leases, occupancies and similar non-fee ownership described on Schedule 4.9 (“Leased Properties”) by name of landlord, mortgage, address, rent, security deposit, maturity and date, are all of the real property interests other than the Real Property in which the Companies, as lessee or sublessee, have any interest therein.  Except as set forth in Schedule 4.9, the Companies (i) own fee simple title to the Real Properties insurable at market rates, free and clear of all Liens, other than Permitted Liens and (ii) hold valid leasehold interests in the Leased Properties.  The Real Properties and Leased Properties are not in violation of any Liens.  To the Knowledge of Edgen, no proceeding is pending or threatened for the taking or condemnation of all or any portion of such Real Property or any Leased Property.  No Company has received any written notice from insurers of the Real Properties and Leased Properties relating to any violations, defects, deficiencies, or need for repairs.

 

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(b)                                 The Sellers have previously made available or delivered to the Purchaser copies of the following:  (i) all title insurance policies or commitments that were delivered to the Companies by any title insurance company in connection with the Companies’ investigation, acquisition financing, or refinancing of the Real Properties and Leased Properties, to the extent they are in the Companies’ possession or reasonably available upon request of a third party (the “Title Policies”); (ii) all instruments, documents or agreements referenced in the Title Policies that create or evidence conditions or exceptions to title affecting the Real Properties and Leased Properties, in the Companies’ possession or reasonably available upon request of a third party (the “Exception Documents”); (iii) any surveys, plats or plans delivered to the Companies in connection with the Companies’ investigation, purchase, financing or refinancing of the Real Properties and Leased Properties, in the Companies’ possession or reasonably available upon request of a third party (the “Surveys”); (iv) all contracts and instruments affecting the Real Property to which any Company is a party or otherwise subject (“Real Property Contracts”), and, (v) all contracts and instruments affecting the Leased Property to which any Company is a party or is otherwise subject (“Leased Property Contracts”).

 

(c)                                  Except as set forth in Schedule 4.9 and as would not, individually as to any particular Real Property or Leased Property location or in the aggregate as to any number of such locations, reasonably be expected to have a Material Adverse Effect, each of the Real Property Contracts and Leased Property Contracts: (i) is in true, correct and complete form, in full force and effect, and has not been amended, modified, or supplemented except by documents provided to the Purchaser, (ii) has no outstanding payment due, (iii) is not subject to cancellation by any third party, (iv) is not in default by any of the Companies, or to the Knowledge of Edgen, any other party, nor has any party thereunder received or given written or, to the Knowledge of Edgen, oral notice of default, and (v) no Company or Seller has undertaken any act or failed to perform an act, which would entitle the insurance companies insuring the Companies’ interest to deny or limit coverage, including defense against title insurance based on theories of imputed knowledge.

 

4.10.        Intellectual Property.

 

(a)                                  Schedule 4.10 sets forth a complete and accurate list of all: patents (including all patent applications, and all continuations, continuations in part, divisionals, or extensions of the foregoing) owned by the Companies (collectively, the “Companies’ Patents”); registered or material trademarks, service marks, trade names, and domain names, including any applications for registration of the foregoing, owned by the Companies (collectively, the “Companies’ Marks”); material copyrights, including any registrations and applications for registration of copyrights, owned by the Companies (collectively, the “Companies’ Copyrights”).

 

(b)                                 Except as described in Schedule 4.10, none of the Companies, or, to the Knowledge of Edgen, any other party, is in breach of or default under any license or other agreement by which the Companies use the Intellectual Property of any third party, and each such license or other agreement is now and following the Closing shall be valid and in full force and effect.

 

(c)                                  Except as otherwise described in Schedule 4.10:

 

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(i)                                     the Companies own or have the right to use the Intellectual Property used in the business of the Companies free and clear of all liens, claims and encumbrances; and

 

(ii)                                  to the Knowledge of Edgen, the operation of the business of the Companies, including but not limited to the design, development, use, import, manufacture and sale of the products, technology or services of the Companies, does not, infringe, dilute, misappropriate or otherwise violate the Intellectual Property of any third party, and no claim has been made, notice given, or dispute arisen to that effect.  Except as set forth in the Schedule 4.10, the Companies have no pending claim(s) that any third party has infringed, misappropriated or otherwise violated any of the Intellectual Property owned by the Companies.

 

(d)                                 The information technology, process management, order and inventory management and other computer systems owned, licensed, leased, operated on behalf of, or otherwise held for use in the business of the Companies, including all computer hardware, software, firmware and telecommunications systems used in the business of the Companies, perform reliably and in material conformance with the appropriate specifications or documentation for such systems.  Except for scheduled or routine maintenance, the information technology systems of the Companies are fully available for use in the business of the Companies and, as applicable, by the customers and clients of the Companies, 24 hours a day, 7 days a week.

 

4.11.                        Contracts.

 

(a)                                  Schedule 4.11(a) sets forth a list of all material contracts, agreements and instruments to which Edgen or any of the Companies is a party or by which any of them are bound or to which any of them are subject (collectively, the “Material Contracts”), which includes the following contracts:

 

(i)                                     any contract requiring the payment of more than $250,000 over the life of the contract or $100,000 in any period of twelve consecutive months, whether payable by or to any of the Companies;

 

(ii)                                  any trust indenture, mortgage, security agreement, promissory note, loan agreement or other contract relating to the borrowing of money in an amount in excess of $100,000;

 

(iii)                               any agreement of guarantee (other than inter-Company guarantees), support, indemnification, assumption or endorsement of, or any similar commitment with respect to, the liabilities of any other Person in an amount in excess of $250,000;

 

(iv)                              any contract relating to Intellectual Property;

 

(v)                                 any contract providing for a joint venture, partnership or similar contract with any other Person;

 

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(vi)                              any contract with any former director or officer or any current director, officer, employee, consultant or shareholder of any of the Companies;

 

(vii)                           each real estate lease or sublease with respect to each Leased Property;

 

(viii)                        any contract with a labor union (including any collective bargaining agreement);

 

(ix)                                any contract which includes or constitutes a power of attorney (excluding powers of attorney in connection with customs forms);

 

(x)                                   any contract containing confidentiality or non-disclosure obligations from any of the Companies;

 

(xi)                                any contract relating to the purchase or sale of a business in the previous five (5) years or in which indemnification obligations remain outstanding; or

 

(xii)                             any non-competition or non-solicitation contract including any contract that after the Closing will restrict the conduct of any line of business by the Companies or upon consummation of the transactions contemplated hereby will restrict the ability of the Companies to engage in any line of business in which they may lawfully engage.

 

(b)                                 Except as set forth on Schedule 4.11(b), each of the Companies has performed in all material respects the obligations required to be performed by it under the Material Contracts, and, to the Knowledge of Edgen, each of the Material Contracts is in full force and effect.  Each Material Contract is enforceable against the Company party (and, to the Knowledge of Edgen, any other parties to such Material Contract) in accordance with its terms.  There does not exist under any Material Contract any material default, condition or event that, after notice or lapse of time or both, would constitute a material default on the part of any Company, or to the Knowledge of Edgen, on the part of any other parties to such Material Contract.  True, correct and complete copies of all Material Contracts have been made available or delivered to Purchaser.

 

4.12.                        Permits.  Edgen has and maintains, and all of the permits, licenses, approvals, franchises, certificates, consents and other authorizations from any Governmental Authority as are necessary for the conduct of the business of the Companies except for any Permit, which the failure to have maintained such Permit would not reasonably be expected to have a Material Adverse Effect (the “Permits”).  Schedule 4.12 sets forth a true and accurate list of all the Permits.  Each Permit is in full force and effect and is being complied with in all material respects by the Companies.  No notice has been received by any of the Companies with respect to any failure by any Company to have any Permit.  True, correct and complete copies of all Permits have been made available or delivered to Purchaser.

 

4.13.                        Compliance with Laws.  Edgen, each of the Companies has complied in all respects with, and is in compliance in all respects with, all laws, statutes and governmental

 

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regulations and all judicial or administrative tribunal orders, judgments, writs, injunctions or decrees applicable to its business, except where the failure to so comply would not have a Material Adverse Effect.  Except as set forth on Schedule 4.13 hereto, no written or, to the Knowledge of Edgen, oral notice has been received by any of the Companies, and none of the Companies has any Knowledge of any notice being given, with respect to any violation of any provision of any federal, state or local law or administrative regulation in respect of its business.

 

4.14.                        Litigation.  There are no material claims, actions, suits or proceedings pending or, to the Knowledge of Edgen, threatened, against or affecting Edgen of any of its Subsidiaries or any of their assets or affecting the Shares or any Seller’s rights thereto, at law or in equity, by or before any Governmental Authority.  There are no outstanding judgments, decrees or orders of any Governmental Authority against any of the Companies, or any of their assets or businesses.

 

4.15.                        Employment Matters.  Each of the Companies is and has been in compliance in all material respects with all federal and state laws respecting employment and employment practices, terms and conditions of employment, wages and hours and nondiscrimination in employment, and neither Edgen nor any of its Subsidiaries has engaged in any unfair labor practice.  Except as set forth on Schedule 4.15:  (i) none of the Companies is a party to any contract with any labor organization or other representative of its employees and no such contract is currently being negotiated by Edgen or any of its Subsidiaries; and (ii)  none of the Companies has experienced any material labor strike, slowdown, work stoppage or similar labor controversy within the past three (3) years.  There is no labor strike, dispute, slow-down or work stoppage actually pending against or involving any of the Companies, other than disputes with individual employees.  All employment manuals and other similar documents containing rules or regulations or policies of any of the Companies currently in effect regarding the general conduct, compensation, labor relations and employment and severance of any of the Companies’ employees have been made available or delivered to Purchaser.

 

4.16.                        Employee Benefits.  Edgen has made available to Purchaser a list and copies of each Employee Plan and all material related documents, including the most recent Form 5500 for such plan, as applicable.  Each Employee Plan has been operated and administered in all material respects in compliance with ERISA, the Code and all other federal and state laws to the extent applicable.  None of the Companies nor any ERISA Affiliate currently is obligated, or has ever maintained or been obligated, to contribute to a (A) ”multiemployer plan” (as defined in Section 3(37) of ERISA), or (B) ”defined benefit plan” (as defined in Section 3(35) of ERISA).  The Companies do not maintain and, to the Knowledge of Edgen, have never maintained any employee welfare benefit plans, as defined in Section 3(1) of ERISA, that provide post-retirement benefits to former employees and to current employees after their termination of employment (including without limitation, medical and life insurance benefits), other than as may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and by the regulations thereunder.

 

4.17.                        No Finder.  Except as set forth on Schedule 4.17, the fees and expenses of which shall be solely the responsibility of Sellers, Edgen has agreed not to pay to any broker, finder, investment banker or any other Person a brokerage, finder’s or other fee or commission in connection with this Agreement, the Acquisition and the transactions contemplated hereby.

 

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4.18.                        Environmental Matters.  Except as specifically disclosed on Schedule 4.18:

 

(a)                                  Each of the Companies has conducted and is now conducting their operations in compliance in all material respects with all Environmental Laws.

 

(b)                                 Each of the Companies holds and has been and is in compliance in all material respects with all permits, certificates, licenses, approvals, registrations and authorizations required under Environmental Laws (“Environmental Permits”), all such Environmental Permits are in full force and effect, and are listed in Schedule 4.18(b).

 

(c)                                  None of the Companies has received any written or, to the Knowledge of Edgen, oral notice, citation, summons, order or complaint, and no penalty has been assessed or is pending or, to the Knowledge of Edgen, threatened by any third party (including any Governmental Authority) with respect to the Management or Release of Regulated Substances by or on behalf of any of the Companies or any of its predecessors, in relation to its past or present operations, or with respect to the presence of or exposure to Regulated Substances.  None of the Companies has received and, to the Knowledge of Edgen, no one else has received, any request for information, notice of claims, demand or other notification that it (or any of its predecessors) is or may be potentially responsible with respect to any investigation, cleanup remedial action or other response action of Regulated Substances (whether on-site or off-site).

 

(d)                                 No Regulated Substances have been Released or are threatened to be Released by any of the Companies or, to the Knowledge of Edgen, by any other person, and no Regulated Substances are present in an uncontained state at, on, about, under the Owned Real Property, the properties leased or subleased by any of the Companies, or to the Knowledge of Edgen, at any property formerly owned, operated or leased by the Companies or any of their predecessors.

 

(e)                                  Edgen has made available to Purchaser all environmental reports and documents in any of the Companies’ possession or control.

 

4.19.                        Taxes and Tax Returns.  Except as set forth on Schedule 4.19:

 

(a)                                  The Companies have timely filed or timely requested extensions of time to file all Tax Returns required to be filed by it for all Taxable periods ending on or before the Closing Date, and all such Tax Returns are, or will be when timely filed, true, correct and complete in all material respects;

 

(b)                                 The Companies have paid to the appropriate Tax Authority, or, if payment is not yet due, will pay when due to the appropriate Tax Authority, all Taxes due and owing, whether or not reflected on the Companies’ Tax Returns, for all Taxable periods ending on or before the Closing Date;

 

(c)                                  The Companies are not a party to any Tax allocation or Tax sharing agreement; and

 

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(d)                                 Edgen is not a Person other than a “United States Person” within the meaning of the Code.

 

(e)                                  None of the Companies is currently the beneficiary of any extension of time within which to file any Tax Return.  No written or, to the Knowledge of Edgen, oral claim has ever been received by any of the Companies from an authority in a jurisdiction where any of the Companies does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.  There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Companies.

 

(f)                                    No foreign, federal, state, or local tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to any of the Companies.  None of the Companies has received from any foreign, federal, state, or local taxing authority (including jurisdictions where any of the Companies have not filed Tax Returns) any (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any taxing authority against any of the Companies.  Sellers have made available or delivered to Purchaser correct and complete copies of all federal income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by any of the Companies filed or received with respect to taxable periods ending on or after December 31, 2001.  None of the Companies is subject to a private letter ruling of the IRS (or similar ruling from any other taxing authority) that has continuing effect after the Closing Date.

 

(g)                                 None of the Companies has extended any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

 

(h)                                 None of the Companies has been a United States real property holding corporation within the meaning of Code §897(c)(2) during the applicable period specified in Code §897(c)(1)(A)(ii).

 

(i)                                     The Companies have disclosed on their federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code § 6662.

 

(j)                                     None of the Companies (A) has been a member of an affiliated group of corporations filing a consolidated federal income Tax Return (other than a group the common parent of which is Edgen) or (or any similar group of corporations under state, local, or foreign law); or (B) has any liability for the Taxes of any Person (other than Edgen or any of its Subsidiaries) under Treasury Regulation § 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.

 

(k)                                  The unpaid Taxes of the Companies (A) did not, as of September 30, 2004, exceed the accrued Tax liability (exclusive of any accrual or liability for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the September 30, 2004 balance sheet (rather than in any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the

 

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past custom and practice of the Companies in filing their Tax Returns.  Since the date of the September 30, 2004 balance sheet, none of the Companies has incurred any liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the ordinary course of business consistent with past custom and practice.

 

(l)                                     None of the Companies will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (A) change in method of accounting for a taxable period ending on or prior to the Closing Date; (B) ”closing agreement” as described in Code § 7121 (or any corresponding or similar provision of state, local or foreign income Tax law) that has continuing effect after the Closing Date; or (C) intercompany transactions or any excess loss account described in Treasury Regulations under Code § 1502 (or any corresponding or similar provision of state, local or foreign income Tax law).

 

(m)                               None of the Companies has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was intended to be governed in whole or in part by Code § 355 or § 361.

 

4.20.                        Subsidiaries.  Edgen has four wholly-owned Subsidiaries:  ECI, ELC, EAPG and ECPG.  Except for the Subsidiaries, none of the Companies owns any operational control over or contract or other right to acquire, directly or indirectly, any capital stock or other equity securities of any corporation or other entity, nor do any of the Companies have any direct or indirect equity or ownership interest in any business other than the Business.  Neither Edgen nor any of the Subsidiaries has any obligation to invest in or otherwise provide funds to any other Person.

 

4.21.                        InsuranceSchedule 4.21 sets forth a list of each insurance policy maintained by the Companies (the “Policies”).  All of such Policies are in full force and effect (and will continue in full force and effect to the Closing Date), and none of the Companies is in default with respect to its obligations under any such Policies.  The aggregate coverages provided by the Policies are reasonable, in both scope and amount, in light of the risks attendant to the business in which any of the Companies is, or has been, engaged and are comparable to coverages customarily maintained by companies in similar lines of businesses.  Except as set forth in Schedule 4.21, (a) there are no outstanding material claims under any Policy, (b) there are no premiums or claims due under any Policy which are delinquent, and (c) there have been no gaps in coverage for the last five years.  Except set forth on Schedule 4.21, within the past two years, no notice of cancellation or non-renewal with respect to, or disallowance of any material claim under, any Policy has been received by any of the Companies.

 

4.22.                        Title to Assets.  Each of the Companies has good title to all of their respective properties and assets, including the properties and assets reflected in the September 30, 2004 audited balance sheet (except those disposed of in the ordinary course of business since the date of such audited balance sheet), free and clear of all Liens except for Permitted Liens.  All of such assets and properties have been maintained in all material respects consistent with industry standards and are reasonably adequate and suitable for the purposes for which they are used in the business of the Companies.

 

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4.23.                        Customers and SuppliersSchedule 4.23 contains (a) a list of the top ten customers of the Companies (by volume in dollars of sales to such customers) for the eleven-month period ended November 30, 2004 (the “Major Customers”) and (b) a list of the top ten suppliers of the Companies (by volume in dollars of purchases from such suppliers) for such period (the “Major Suppliers”).  Since September 30, 2004, none of the Companies has received any written notice from any Major Customer to the effect that such Major Customer will stop or materially modify its purchases from Edgen or any of its Subsidiaries (whether as a result of the consummation of the transactions contemplated hereby or otherwise), which cessation or modification would reasonably be expected to result in a material adverse change to Edgen’s and its Subsidiaries’ business relationship with such Major Customer.  Neither Edgen nor any of its Subsidiaries, since September 30, 2004, has received any written notice from any Major Supplier to the effect that such Major Supplier will stop or materially modify the aggregate volume of its supply of materials, products or services to the Companies (whether as a result of the consummation of the transactions contemplated hereby or otherwise), which cessation or modification could reasonably be expected to result in a material adverse change to the Companies’ business relationship with such Major Supplier.

 

4.24.                        Transactions with Affiliates.  Except as set forth in Schedule 4.24 hereto, none of the Companies, nor any of their respective Affiliates, nor any of the Companies’ officers, directors or employees (or any “associate” (as such term is defined in Rule 405 of the Securities Act) of the foregoing), has any interest, directly or indirectly, in any lease, Lien, contract, license, encumbrance, loan or other agreement or commitment to which Edgen or any of its Subsidiaries is a party, or any property or asset used or owned by, or any interest in any supplier of, any of the Companies in any one case exceeding $25,000.  Except as set forth in Schedule 4.24 hereto, none of the Companies is indebted, directly or indirectly, to (a) any Affiliate of Edgen or (b) any officer, director or employee of any of the Companies (or any of their “associates” as defined above) for any liability or obligation, whether arising by reason of stock ownership or oral or written agreement.  No employee of any of the Companies owes any money to any of the Companies (except in respect of advances for business expenses).

 

4.25.                        Bank AccountsSchedule 4.25 sets forth the name of each bank in which any of the Companies has an account or safe deposit box, the identifying numbers or symbols thereof and the names of all persons authorized to draw thereon or to have access thereto.

 

4.26.                        Inventory.  All of the inventories of the Companies, including that reflected in the Balance Sheet, are valued at the lower of cost or market, the cost thereof being determined by the average cost method, except as disclosed in the Audited Financial Statements or Interim Statement.  All of the inventories reflected in the Interim Statement and all inventories acquired by the Companies since September 30, 2004 consist of items of a quality and quantity usable and saleable in the ordinary course of the such Companies’ business within a reasonable period of time and at normal profit margins.  The Companies’ reserves in the Audited Financial Statements on account of inventory have been made in accordance with GAAP.

 

4.27.                        Accounts Receivable.  All of the accounts and notes receivable of the Companies represent amounts receivable for merchandise actually delivered or services actually provided (or, in the case of non-trade accounts or notes represent amounts receivable in respect of other

 

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bona-fide business transactions), have arisen in the ordinary course of business.  To the Knowledge of Edgen, all such receivables are fully collectible in the normal and ordinary course of business, except to the extent of a reserve in an amount not in excess of the reserve for doubtful accounts reflected on the Interim Statement.

 

4.28.                        Indebtedness.  Except as set forth on Schedule 4.28 hereto, none of the Companies has any Indebtedness outstanding at the date hereof.  As of the Closing, none of the Companies will have any Indebtedness outstanding other than as described on the Certificate of Closing Amounts.

 

4.29.                        Disclosure.  No representation or warranty by Edgen in this Agreement or the Transaction Documents, and no exhibit, document, statement, certificate or schedule furnished or to be furnished to Purchaser pursuant hereto, or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements or facts contained herein or therein not misleading.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

As an inducement to Sellers and Edgen to enter into this Agreement and to consummate the Acquisition, Purchaser represents and warrants to Sellers and Edgen as follows:

 

5.1.                              Organization and Qualification.  Purchaser is a corporation, duly organized, validly existing and in good standing under the laws of the State of Nevada.  Purchaser is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the assets and properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for failures to be so qualified or licensed and in good standing that do not have a Material Adverse Effect on Purchaser.

 

5.2.                              Authority Relative to this Agreement.  Purchaser has all necessary corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the Acquisition and the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and such other Transaction Documents by Purchaser and the consummation by Purchaser of the Acquisition and the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Purchaser, and no other corporate proceedings on the part of Purchaser are necessary to authorize this Agreement or to consummate the Acquisition and the transactions contemplated hereby.  This Agreement and such other Transaction Documents have been or will be duly executed and delivered by Purchaser and this Agreement constitutes, and each other Transaction Document upon execution will constitute, a legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, fraudulent conveyance, reorganization or other similar law affecting the enforceability of creditors’ rights generally and to the effect of general principles of equity which may limit the availability of remedies (whether in a proceeding at law or in equity).

 

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5.3.                              No Conflict.  The execution and delivery of this Agreement and the Transaction Documents by Purchaser do not, and the performance by Purchaser of its obligations hereunder and thereunder and the consummation of the Acquisition and the transactions contemplated hereby will not:  (a) conflict with or violate any provision of the certificate of incorporation or by-laws of Purchaser; (b) conflict with or violate any law, rule or regulation or any judgment or order applicable to Purchaser or by which any of Purchaser’s assets is bound or affected; (c) result in any breach of or constitute a default (or an event which might, with the passage of time or the giving of notice or both, constitute a default) under, or require notice or consent under, any mortgage, indenture, deed of trust, lease, contract, agreement, license or other instrument to which Purchaser is a party or by which any of Purchaser’s assets is bound or affected; or (d) result in the creation of a Lien on any Purchaser’s assets or give to others any interests or rights therein, except in the case of clauses (b), (c) and (d) for any conflict, violation, breach or default that would not be material to Purchaser’s ability to consummate the transactions contemplated by this Agreement and the Transaction Documents in any material respect.

 

5.4.                              Required Filings and Consents.  The execution and delivery of this Agreement and the Transaction Documents to which Purchaser is a party by Purchaser do not, and the performance by Purchaser of its obligations hereunder and thereunder and the consummation of the Acquisition and the transactions contemplated hereby and thereby will not, require any consent, approval, authorization or permit of, or filing by Purchaser with or notification by Purchaser to, any Governmental Authority, except for such consents, approvals, authorizations, permits and filings the failure of which to obtain would not reasonably be expected to have a material adverse effect on Purchaser’s ability to consummate the transactions contemplated by this Agreement and the Transaction Documents.

 

5.5.                              No Finder.  Purchaser has not agreed to pay to any broker, finder, investment banker or any other Person a brokerage, finder’s or other fee or commission in connection with this Agreement, the Acquisition and the transactions contemplated hereby.

 

5.6.                              Financial Resources.  Purchaser (a) has attached as Schedule 5.6 hereto a copy of (i) the financing commitment letter from GMAC Commercial Finance, LLC (the “Senior Commitment”), which sets forth the material terms and conditions of the Senior Commitment and agreed to and accepted by Purchaser; (ii) the equity commitment letter (the “Equity Commitment”) from ING Furman Selz Investors III L.P., ING Barings U.S. Leveraged Equity Plan LLC and ING Barings Global Leveraged Equity Plan, Ltd. (collectively, the “Equity Financing Parties”) and agreed to and accepted by Purchaser, which sets forth the material terms and conditions of the Equity Commitment, and (iii) the contingency letter agreement (the “Contingency Letter Agreement”) from the Equity Financing Parties and agreed to and accepted by Purchaser, each of which is in full force and effect; (iv) a certificate of an authorized representative of each of the Equity Financing Parties certifying as to due authorization of the Equity Commitment Letter and the Contingency Letter Agreement, among other things, and (b) proposes to conduct the Senior Notes Offering.

 

5.7.                              No Litigation.  As of the date hereof, there is no claim, action, suit or proceeding pending or, to the knowledge of Purchaser, threatened, against Purchaser before any

 

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Governmental Authority that prohibits or restricts, or seeks to prohibit or restrict, the consummation of the Acquisition and the transactions contemplated hereby.

 

5.8.                              Investment Representation.  Purchaser is acquiring the Shares solely for investment purposes and solely for its own account, without any intention to resell or redistribute such Shares in violation of the Securities Act.

 

ARTICLE VI
ADDITIONAL COVENANTS

 

6.1.                              Conduct of Business.  From the date hereof through the Closing Date, except as contemplated by this Agreement or described on Schedule 6.1 and except for actions directly related to the announcement of the transactions contemplated by this Agreement, Edgen shall, and Edgen shall cause the Companies to, conduct the Companies’ operations in the ordinary course, consistent with past practice in the last twelve (12) months, and Edgen shall not, and Edgen shall cause the Companies not to, directly or indirectly:

 

(a)                                  grant any increase in the salary or other compensation payable or to become payable to, or any advance (excluding advances for ordinary business expenses) or loan to, any of the respective officers, directors, agents and employees of any of the Companies, or any bonus payments or arrangements made to or with any of them (other than any annual wage increase in the ordinary course of business and consistent with past practice) except for bonus payments for the Companies’ 2004 fiscal year in accordance with the express terms of the Companies’ pre-existing employment contracts set forth on Schedule 4.11; provided, that the Company and the Sellers shall convene a stockholders meeting to consider and, if deemed advisable, approve the compensation arrangements set forth on Schedules 1.1(d) and 4.11;

 

(b)                                 make any change in any accounting principle (including Tax accounting), method, estimate or practice, except for any such change required by GAAP, the Code, any state tax codes or as required by Regulation S-X (17 CFR § 210, et seq.) in connection with the Senior Notes Offering;

 

(c)                                  make a material change in the manner of business or operations of any of the Companies or make any material change in any existing inventory management or credit, collection or payment policies, procedures or practices with respect to accounts receivable or accounts payable;

 

(d)                                 enter into any lease, contract or commitment or engage in any transaction not contemplated by this Agreement or not in the ordinary course of business and consistent with its normal business practices, or amend, modify or terminate (i) any Material Contract; (ii) any other contract, other than amendments or modifications in the ordinary course of business or (iii) any employee benefit plan of the Companies;

 

(e)                                  sell or otherwise dispose of any assets with an aggregate fair market value greater than $100,000, other than the sale or other disposal of inventory and obsolete or worn-out equipment in the ordinary course of business;

 

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 (f)                                    effect any issuance, grant or sale of any shares of its capital stock (or any securities convertible into or exchangeable for such capital stock, or any options, warrants or other rights to acquire such capital stock or securities) or make any commitment or offer to do the same;

 

(g)                                 declare, pay or set aside for payment any dividend or other distribution in respect of its capital stock or redeem, purchase or otherwise acquire, or offer, sell or issue, directly or indirectly, any shares of the capital stock or other securities of any of the Companies (including options, warrants or rights to acquire securities), or merge or consolidate (or engage in any other business combination transaction) with any Person or effect any share exchange, reclassification or subdivision of any its capital stock or adopt any plan of liquidation or dissolution or other reorganization or reclassification of its capital stock, or acquire the stock, assets or business of any other Person;

 

(h)                                 pay, loan or advance any amount to, or sell, transfer or lease any of its material assets to, or enter into any agreement or arrangement with any Affiliate, including, but not limited payments to the Sellers except for (i) management fees of not more than $123,900 payable to Harvest Partners III, LP in accordance with the Amended and Restated Management Agreement dated October 20, 2004 by and among Harvest Partners Inc., Edgen and ECPG and (ii) management fees of not more than $23,925 payable to Stonehenge Capital Company, LLC in accordance with the Amended and Restated Management Agreement dated November 1, 2004 by and among Stonehenge Capital Company, LLC, Edgen and ECPG, each of which payments shall be included as Transaction Expenses ;

 

(i)                                     (i) incur any Liens other than Permitted Liens; (ii) make, change or revert any tax election or make any agreement or settlement with any taxing authority; (iii) waive, cancel or forgive any amounts owed to any of the Companies in excess of $100,000; (iv) guarantee or become a co-maker or accommodation maker or otherwise become or remain contingently liable in connection with any Indebtedness of any Person other than Edgen or any of its Subsidiaries; (v) loan, advance funds or make an investment in or capital contribution to any Person other than Edgen or any of its Subsidiaries; (vi) commence or settle any litigation or arbitration proceedings; (vii) incur any liabilities or obligations other than in the ordinary course of business; (viii) amend, modify, restate or alter in any manner the certificate of incorporation or bylaws (or other organizational documents) of Edgen or any of its Subsidiaries; (ix) enter into any new transaction or arrangement which, if existing on the date hereof, would be required to be disclosed on Schedule 4.24 hereto; (x) prepay any Indebtedness of the Companies or modify or amend the schedule of principal or interest payments pursuant to any Indebtedness in effect on the date hereof, except for the prepayment of any Indebtedness without penalty; or (xi) commit or enter into any agreement to do any of the foregoing.

 

6.2.                              Consents, Filings and Authorizations; Efforts to Consummate.

 

(a)                                  The Companies shall make all commercially reasonable efforts to obtain and deliver to Purchaser at the Closing consents from the relevant parties to the contracts or agreements set forth in Schedule 7.3(e).

 

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(b)                                 Purchaser and Edgen shall make all filings and submissions under such laws as are applicable to them or to their respective Affiliates and as may be required for the consummation of the Acquisition in accordance with the terms of this Agreement.  Each Party shall as promptly as practicable comply with the laws and regulations of any other Governmental Authority that are applicable to any of the transactions contemplated by this Agreement and pursuant to which any consent is necessary.  Purchaser and Edgen shall cooperate with one another in connection with any such filings.  All such filings shall comply in form and content in all material respects with applicable laws.  The Parties shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, any Governmental Authority with respect to the transactions contemplated by this Agreement.

 

(c)                                  Subject to the terms and conditions herein, each Party, without material monetary payment, shall use its commercially reasonable efforts to take or cause to be taken all actions and to do or cause to be done all things necessary, proper or advisable:  (i) to cause the conditions to the obligations of each Party to consummate the Acquisition to be satisfied as soon as reasonably practicable; (ii) under applicable laws, permits and orders, to consummate and to give each other all of the benefits contemplated by this Agreement and to make effective the Acquisition and the transactions contemplated hereby as soon as reasonably practicable, and to cooperate with each other in connection with the foregoing, including obtaining all consents required in connection with such Party’s consummation of the Acquisition and (iii) obtain such consents, approvals and permissions from landlords, their mortgagees, local regulatory authorities with jurisdiction of the transfer, and other parties with effective rights of approval.

 

6.3.                              Public Announcements.  From and after the date of this Agreement until the Closing Date, Purchaser, on one hand, Edgen, and on the other hand, agrees not to make (and shall cause their Affiliates not to make) any public announcement or other public disclosure concerning this Agreement or the transactions contemplated herein without obtaining the prior written consent of the other Party as to form, content and timing (such consent not to be unreasonably withheld); provided, however, that the foregoing shall not restrict any Party (or any Affiliate of Edgen) from making any public announcement or public disclosure as may be required by applicable law (including the rules of any stock exchange or other self-regulated body), and, if practicable, such Party (or Affiliate thereof) shall give the other Party not less than five (5) Business Days prior written notice of the proposed disclosure.

 

6.4.                              Access to Information; Confidentiality.

 

(a)                                  From and after the date of this Agreement until the earlier to occur of the Closing Date or the date this Agreement shall be terminated pursuant to Article VII hereof, upon reasonable notice and subject to applicable law relating to the exchange of information and to confidentiality obligations of Edgen entered into prior to the date hereof, Edgen and its Subsidiaries shall afford to Purchaser’s Representatives access during normal business hours to senior management (including key employees), Edgen’s accountants and such properties, books, records, contracts, commitments and other information of the Companies as Purchaser may reasonably request, but excluding bids, contracts and other information prepared solely for use in connection with the sales process resulting in the Acquisition.  Purchaser’s Representatives shall

 

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have the right to perform Phase I environmental site assessments (“Phase I”) during normal business and at Purchaser’s expense, at any and all Real Property.  Purchaser shall have the right to conduct additional invasive environmental investigations, including sampling or testing, at any or all of the Real Property if Purchaser has a reasonable basis to do so based on the information it obtains in its diligence or the results of a Phase I.

 

(b)                                 Each of Purchaser and Edgen acknowledges that the information provided to the other and its Representatives in connection with the Acquisition and this Agreement is subject to that certain Confidentiality Agreement, dated as of August 15, 2004, between Jefferies Capital Partners and Edgen (the “Confidentiality Agreement”), the terms of which are incorporated herein by this reference.

 

(c)                                  Each Seller shall, and shall cause his or its Representatives (as such term is defined in the Confidentiality Agreement) to, keep confidential and not disclose to any other person or entity or use for his or its own benefit or the benefit of any other person or entity any Information (as such term is defined in the Confidentiality Agreement) in his, its or their possession or control.  The obligations of the Sellers under this Section 6.4(c) shall not apply to Information which (i) is or becomes generally available to the public without breach of the commitment provided for in this Section 6.4(c); or (ii) is required to be disclosed by law, order or regulation of a court or tribunal or governmental authority; provided, however, that, in any such case, each Seller shall notify Edgen or Purchaser as early as reasonably practicable prior to disclosure to allow Edgen or Purchaser to take appropriate measures to preserve the confidentiality of such Information at the cost of Edgen or Purchaser.

 

6.5.                              Expenses.  All expenses of the preparation, execution and consummation of this Agreement and of the transactions contemplated hereby, including, without limitation, attorneys’, accountants’ and outside advisers’ fees and disbursements, shall be borne by (a) the Purchaser, if incurred for Purchaser’s account, (b) the Companies, if incurred for the account of the Companies or the Sellers only to the extent actually paid in cash prior to Closing such that the payment of expenses either reduces the Companies’ cash on hand or increases Indebtedness, as the case may be; or (c) the Sellers, if incurred for the account of the Companies or the Sellers and which is neither paid in cash by the Companies prior to Closing nor deducted as a Transaction Expenses from the Purchase Price pursuant to Section 2.2.  Notwithstanding the foregoing the Purchaser shall pay the fees payable (i) under the filing, local counsel and other fees in connection with governmental consents in Canada (including applicable Canadian provinces); (ii) in connection with expenses of the Companies incurred or to be incurred by the Companies in connection with the Purchaser’s obtaining the financing necessary to pay the Purchase Price (including, but not limited to, the Senior Notes Offering and the Senior Commitment) and (iii) in connection with the September 30, 2004 Audited Financial Statements.

 

6.6.                              Supplements to Disclosure Schedules.  Each of Sellers and Edgen shall have the right from and after the date hereof until the seventh day prior to the Closing Date to amend or written supplement the Disclosure Schedules attached to this Agreement for any event which first occurs after the date hereof.  As promptly as practicable after any event described below which first occurs after the date hereof, the Sellers’ Representative will provide Purchaser with a supplement or amendment to the Disclosure Schedules with respect to any matter, condition or

 

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occurrence hereafter arising (or, in the case of matters for which Sellers’ or Edgen’s disclosure obligation hereunder is limited to knowledge, discovered) which, if existing or occurring on the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedules.  No claim for breach of this Agreement may be made by Purchaser based on any disclosure made by Sellers or Edgen in any such amended or supplemented Disclosure Schedules.  In connection with the delivery of any amended or supplemented Disclosure Schedules, the Sellers or Edgen shall promptly provide to Purchaser all additional information reasonably requested by the Purchaser in order to make a determination as to whether Purchaser shall accept such supplement of the Disclosure Schedules.  Promptly after making such determination, the Purchaser shall either (i) accept such amended or supplemented Disclosure Schedules, in which case Purchaser shall be deemed at Closing to have waived any claim with respect to the contents thereof, or (ii) terminate this Agreement.  The draft of the audited financial statements which are attached as part of Schedule 4.6 as of the date hereof will be replaced by the audited financial statements accompanying the executed report of Deloitte & Touche LLP as soon as practicable but no later than January 7, 2005.  Such replacement shall be deemed for all purposes to be a written supplement to the Disclosure Schedules for an event first occurring after the date of the Purchase Agreement.

 

6.7.                              Tax Matters.  The following provisions shall govern the allocation of responsibility as between the Purchaser and the Sellers for certain tax matters following the Closing Date:

 

(a)                                  Tax Indemnification.  The Sellers shall indemnify the Companies, Purchaser, and each Purchaser Affiliate and hold them harmless from and against (without duplication), any loss, claim, liability, expense, or other damage attributable to (i) all Taxes (or the non-payment thereof) of the Companies for all Taxable periods (a) ending on or before the Closing Date and (b) the portion through the end of the Closing Date for any Taxable period that includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”), as determined in Section 6.7(b); (ii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which any of the Companies (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation § 1.1502-6 or any analogous or similar state, local, or foreign law or regulation (other than the consolidated group of which Edgen is the common parent); (iii) any and all Taxes of any person (other than the Companies) imposed on the Companies as a transferee or successor, by contract or pursuant to any law, rule, or regulation, which Taxes relate to an event or transaction occurring before the Closing; (iv) any amount of the 2002 Tax Refund Purchaser or any of the Companies is required, by applicable law, to repay to any taxing authority, including any interest and penalties with respect to such payment; and (v) any amount of the Tax benefit arising from payment of the Deductible Transaction Expenses which Purchaser or any of the Companies is required by applicable law to repay to any taxing authority, including any interest and penalties with respect thereto, but only to the extent that (x) such repayment reduces the net Tax savings from payment of the Deductible Transaction Expenses to an amount below $1.3 million, and (y) Purchaser has previously made a payment pursuant to Section 2.4(b) in respect of such tax benefit; provided, however, that in the case of clauses (i), (ii), and (iii) above, the Sellers shall be liable only to the extent that any such Tax exceeds the amount, if any, accrued as a liability for such Tax (excluding any accrual or liabilty for deferred Taxes established to reflect timing differences

 

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between book and Tax income) on the face of the balance sheet attached to the September 30, 2004 Audited Financial Statements or accrued since the date of such balance sheet and prior to Closing on the books of the Companies in the ordinary course of business consistent with past practice.  The Sellers shall reimburse the Purchaser for any Taxes of the Companies which are the responsibility of the Sellers pursuant to this Section 6.7(a) within fifteen (15) business days after payment of such Taxes.

 

(b)                                 Straddle Period.  In the case of any Taxable period that includes (but does not end on) the Closing Date (a “Straddle Period”), the amount of any Taxes based on or measured by income or receipts of the Companies for the Pre-Closing Tax Period shall be determined based on an interim closing of the books as of the close of business on the Closing Date and the amount of other Taxes of the Companies for a Straddle Period which relate to the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the entire Taxable period multiplied by a fraction the numerator of which is the number of days in the Taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period.

 

(c)                                  Responsibility for Preparing and Filing Tax Returns.  Purchaser shall prepare or caused to be prepared and file or caused to be filed all Tax Returns for the Companies which are filed after the Closing Date.  In the case of Tax Returns for the year which includes the Closing Date, Purchaser shall cause such Tax Returns to be filed in such a manner as to claim a deduction with respect to the Deductible Transaction Expenses.  In the case of any Tax Returns which reflect any Tax for which Sellers may be required to indemnify any person under the Agreement, (i) such Tax Returns shall be prepared in a manner consistent with prior practice unless otherwise required by applicable law and such Tax Returns shall be true, correct and complete in all material respects, and (ii) Sellers may review and comment on such Tax Returns prior to filing and Purchasers shall make, or cause the Companies to make, any changes to such Tax Returns as are reasonably requested by Sellers and that would not violate applicable law.

 

(d)                                 Cooperation on Tax Matters.

 

(i)                                     Purchaser, the Companies, and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns pursuant to this Section 6.7 and any audit, litigation or other proceeding with respect to Taxes.  Such cooperation shall include the retention and (upon the other Party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  The Companies and the Sellers agree (A) to retain all books and records with respect to Tax matters pertinent to the Companies relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Purchaser or Sellers, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other Party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other Party so requests, the Companies or Sellers, as the case may be, shall allow the other

 

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Party to take possession of such books and records.  Sellers will retain the right, with the participation of the Purchaser, to conduct and resolve any audit, administrative or judicial proceeding relating to income Taxes with respect to any period ending prior to or on the Closing Date, to the extent Sellers may be obligated to indemnify the Purchaser pursuant to Section 6.7(a); provided, however, that, subject to subsection (g) of this Section 6.7, no resolution of such proceeding shall be accepted that may have an adverse effect on the Purchaser or the Companies, in which case, the Purchaser and the Companies will have the right to participate in and approve of the resolution of such proceeding; provided further, however, that the Purchaser and the Companies shall not approve any such resolution that may have an adverse effect on the Sellers’ obligation to indemnify the Purchaser.  Purchaser will promptly notify Sellers of any such audit, proposed adjustment or related matter that could affect the Sellers’ obligations pursuant to Section 6.7(a) hereof.

 

(ii)                                  Purchaser and Sellers further agree, upon request, to use their best efforts to obtain any certificate or other document from any governmental authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby).

 

(iii)                               Purchaser and Sellers further agree, upon request, to provide the other party with all information that either party may be required to report pursuant to Code § 6043A and all Treasury Regulations promulgated thereunder.

 

(e)                                  Tax Sharing Agreements. All Tax sharing agreements or similar agreements with respect to or involving the Companies (other than any such agreements to which only the Companies are parties) shall be terminated as of the Closing Date and, after the Closing Date, the Companies shall not be bound thereby or have any liability thereunder.

 

(f)                                    Transfer Taxes.  All transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement (“Transfer Taxes”) shall be paid in equal portions by the Sellers and the Purchaser when due.  In other words, the Sellers and the Purchaser shall share equally the cost of Transfer Taxes.  The Purchaser or the Sellers, as required by applicable law, will prepare and file all necessary Tax Returns and other documentation with respect to all Transfer Taxes, and, if required by applicable law, the party not filing such a Tax Return will, and will cause its Affiliates to, join in the execution of any such Tax Returns and other documentation.

 

(g)                                 Tax Refund; Deductible Transaction Expenses.

 

(i)                                     Prior to the date hereof, certain of the Companies have prepared (but have not filed) refund claims (“Unfiled 2002 Claims”) with respect to portions of the 2002 Tax Refund.  At such time as Sellers shall designate, the Companies shall cause

 

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such Unfiled 2002 Claims, as are designated by Sellers, to be signed and filed on behalf of the appropriate Company.

 

(ii)                                  The parties shall cooperate fully in pursuing claims with respect to the 2002 Tax Refund and in securing the Tax benefits attributable to payment of the Deductible Transaction Expenses.  The Companies shall take such actions (in the case of the 2002 Tax Refund, at Sellers’ expense), as are reasonably necessary or appropriate to obtain such refund or Tax benefit, as the case may be, and shall not take any action (including, without limitation, making any tax election or filing any Tax Return) which is inconsistent with, or which could adversely affect the ability of any of the Companies to receive any portion of the 2002 Tax Refund or to realize, at the earliest available time, the Tax benefits attributable to payment of the Deductible Transaction Expenses.  The Companies shall keep the Sellers informed of all developments in connection with such items.  Without limitation of the foregoing, the Companies shall, within two (2) Business Days of receipt by any of the Companies of any notice or communication from any taxing authority with respect to any portion of the 2002 Tax Refund or the tax treatment of any portion of the Deductible Transaction Expenses, provide a copy of such notice or communication to the Sellers.

 

(iii)                               In the event any taxing authority proposes to deny all or any portion of the 2002 Tax Refund or to deny or delay all or any portion of the Tax benefits with respect to the Deductible Transaction Expenses, the Sellers shall control any contact with such taxing authority with respect to such refund; provided, however, that Sellers shall (a) keep the Companies informed about such contacts and provide copies of any written communications; (b) not take any action that violates applicable law; and (c) not settle or compromise any matter with respect thereto without the approval of the Companies, which approval shall not be unreasonably withheld.  At Sellers’ expense, the Companies shall cooperate with reasonable requests in accordance with applicable law in any such contacts with a taxing authority regarding the 2002 Tax Refund or the Tax benefits attributable to the Deductible Transaction Expenses.

 

6.8.                              280G Matters.  The Sellers shall indemnify and hold harmless the Companies, Purchaser and each Purchaser Affiliate, to the fullest extent permitted by law from and against any and all liabilities, costs, claims and expenses, including all reasonable professional fees (such as attorneys’ or accountants’ fees), arising out of the payment of any “excess parachute payments” as defined by section 280G of the Code (“Excess Parachute Payments”).  Such costs shall include, but not be limited to, the costs of paying any tax gross-up to the individual who receives an Excess Parachute Payment and the costs of the lost deduction to Purchaser, the Companies or any successor thereof, if applicable, of the payment of any Excess Parachute Payments.

 

6.9.                              Termination of Affiliate Relations.  All contracts (i) between the Companies, on the one hand, and Sellers and their Affiliates, on the other hand (other than contracts solely between the Companies), or (ii) under which any of the Companies guarantees any payment or performance of Sellers or any of their Affiliates (other than a Company), shall be terminated as of the Closing.

 

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6.10.                        No Shop.  Each Seller covenants that from the date hereof through the Closing Date it will not, and will not permit any of its Affiliates and its and their respective Representatives to, (a) make, solicit, assist, initiate, facilitate or encourage any inquiries, proposals, offers or bids from any other party relating to the Companies, the equity interests of the Companies or a substantial portion of the Companies’ assets or business, or (b) participate in any discussions or negotiations regarding, or furnish or cause to be furnished to any Person any non-public information relating to the Companies, the equity interests of the Companies or a substantial portion of the Companies’ assets or business.  Each Seller covenants that from the date hereof through the Closing Date, it will not, directly or indirectly, enter into or authorize, or permit any of its Representatives or Affiliates (including the Companies) to enter into, any agreement or agreement in principle with any third party for the acquisition of any of the equity interests of the Companies or a substantial portion of the Companies’ assets.  Prior to the Closing, none of the Sellers shall, directly or indirectly, sell, transfer, pledge, hypothecate, encumber, gift or otherwise dispose or surrender possession of, or enter into any contract or agreement for the sale, transfer, pledge, hypothecation, gift or other disposition of any shares of capital stock of Edgen owned by such Seller (or any securities convertible into or exchangeable for such shares or any options, warrants or other rights to acquire such shares or securities) or any interest therein.

 

6.11.                        Financing.  The Purchaser shall use commercially reasonable efforts to obtain the financing contemplated by the Senior Notes Offering and the Senior Commitment on the terms set forth in Section 7.3(k).

 

6.12.                        Further Assurances.  The Sellers, Edgen and Purchaser shall execute and deliver to all appropriate other parties such other instruments as may be reasonably required in connection with the performance of this Agreement and each shall take all such further actions as may be reasonably required to carry out the transactions contemplated by this Agreement.

 

ARTICLE VII
CONDITIONS TO CLOSING

 

7.1.                              Conditions to the Obligations of Sellers, Edgen and Purchaser.  The obligations of Sellers and Edgen, on one hand, and Purchaser, on the other hand, to consummate the Acquisition are subject to the satisfaction or, if permitted by applicable law, waiver of the following conditions on or prior to the Closing Date:

 

(a)                                  No Injunction.  (i) No restraining order or injunction shall prohibit the transactions contemplated by this Agreement.

 

(b)                                 Antitrust Clearances.  Any required clearances, approvals or confirmations of the Acquisition shall have been obtained pursuant to any foreign acquisition control statutes.

 

7.2.                              Conditions to Obligation of Sellers and Edgen.  The obligation of Sellers and Edgen to consummate the Acquisition is subject to the fulfillment at or prior to the Closing of the following conditions, any one or more of which may be waived in writing in whole or in part by Sellers Representative and Edgen:

 

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(a)                                  Accuracy of Representations and Warranties.  Each of the representations and warranties of Purchaser contained in this Agreement, in any other Transaction Document or in any written certificate delivered pursuant to this Agreement shall be true and correct on the date of this Agreement, such Transaction Document or such certificate, as the case may be, and shall be true and correct in all material respects on and as of the Closing Date as if made on and as of the Closing Date (except for representations and warranties that expressly relate to a date earlier than the Closing Date which shall continue to be true and correct as of the specified date and except for representations and warranties that contain any form of materiality qualification, which shall be true and correct in all respects).

 

(b)                                 Performance.  Purchaser shall have performed and complied in all material respects with all agreements, obligations and covenants required to be performed or complied with by it on or prior to the Closing Date.

 

(c)                                  Deliveries to Sellers Representative and Edgen.  Purchaser shall have delivered to Sellers Representative and Edgen the following:

 

(i)                                     A certificate, dated the Closing Date, of an executive officer of Purchaser confirming the matters set forth in Section 7.2(a) and (b);

 

(ii)                                  A certificate, dated the Closing Date, of the Secretary or Assistant Secretary of Purchaser certifying, among other things, that attached or appended to such certificate:  (A) is a true and correct copy of the certificate of incorporation and by-laws of Purchaser, and all amendments thereto; (B) is a true copy of all corporate actions taken by it, including resolutions of its board of directors, authorizing the consummation of the Acquisition and the execution, delivery and performance of this Agreement and each of the Transaction Documents to be delivered by Purchaser pursuant hereto; and (C) are the names and signatures of Purchaser’s duly elected or appointed officers who are authorized to execute and deliver this Agreement and the other Transaction Documents to which Purchaser is a party; and

 

(iii)                               A certificate of good standing from the appropriate state agency, dated as of a recent date, certifying that Purchaser is in good standing in the State of Delaware.

 

(d)                                 Escrow Agreement.  Each of the Purchaser and the Escrow Agent shall have executed and delivered to the Sellers Representative the Escrow Agreement, and the Escrow Agreement shall be in full force and effect.

 

7.3.                              Conditions to Obligation of Purchaser.  The obligation of Purchaser to consummate the Acquisition is subject to the fulfillment at or prior to the Closing of the following conditions, any one or more of which may be waived in writing in whole or in part by Purchaser:

 

(a)                                  Accuracy of Representations and Warranties.  Each of the representations and warranties of Sellers, on one hand, and Edgen, on the other hand, contained in this

 

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Agreement, in any other Transaction Document or in any written certificate delivered pursuant to this Agreement shall be true and correct on the date of this Agreement, such Transaction Document or such certificate, as the case may be, and shall be true and correct in all material respects on and as of the Closing Date as if made on and as of the Closing Date (except for representations and warranties that expressly relate to a date earlier than the Closing Date which shall continue to be true and correct as of the specified date and except for representations and warranties that contain any form of materiality qualification, which shall be true and correct in all respects).

 

(b)                                 Performance.  Sellers and Edgen shall have performed and complied in all material respects with all agreements, obligations and covenants required to be performed or complied with by them on or prior to the Closing Date.

 

(c)                                  No Material Adverse Effect.  During the period from the date hereof to the Closing Date, there shall not have occurred any Material Adverse Effect.

 

(d)                                 Deliveries by Sellers Representative and Edgen.  Sellers Representative or Edgen shall have delivered to Purchaser the following:

 

(i)                                     The original certificates evidencing the Shares issued to Sellers, accompanied by stock powers duly executed in blank, and such other instruments of conveyance as may be acceptable to Purchaser and its counsel;

 

(ii)                                  A certificate, dated the Closing Date, of an executive officer of Edgen confirming the matters set forth in Section 7.3(a) and (b);

 

(iii)                               A certificate, dated the Closing Date, of each Seller confirming the matters set forth in Section 7.3(a) and (b);

 

(iv)                              A certificate, dated the Closing Date, of the Secretary or Assistant Secretary of Edgen certifying, among other things, that attached or appended to such certificate:  (A) is a true and correct copy of Edgen’s certificate of incorporation and by-laws, and all amendments thereto; (B) is a true copy of all corporate actions taken by it, including resolutions of its board of directors, authorizing the consummation of the Acquisition and the execution, delivery and performance of this Agreement and each of the Transaction Documents to be delivered by it pursuant hereto; and (C) are the names and signatures of its duly elected or appointed officers who are authorized to execute and deliver this Agreement and the other Transaction Documents to which it is a party; and

 

(v)                                 Certificates of good standing from the appropriate state agencies, dated as of a recent date, certifying that each Company is in good standing in the state of its incorporation and in each other jurisdiction in which such Company is qualified to do business as a foreign corporation.

 

(e)                                  Consents, Waivers, etc.  Edgen shall have obtained the third party consents, approvals, filings, releases and waivers listed on Schedule 7.3(e).

 

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(f)                                    Expenses.  The Sellers shall have caused Edgen to prepare and deliver to the Purchaser the Certificate of Closing Amounts and shall have delivered payoff letters for all Indebtedness.

 

(g)                                 Resignations of Directors.  The directors of Edgen and each of its Subsidiaries set forth on Schedule 7.3(g) hereto shall have resigned their positions with Edgen and/or its Subsidiaries on or prior to the Closing Date.

 

(h)                                 Opinions of Counsel.  Each of Piper Rudnick LLP, counsel to Edgen, Schreck Brignone, special Nevada counsel to Edgen, shall have delivered to the Purchaser a written opinion, addressed to the Purchaser and dated the Closing Date, substantially in the form of Exhibits C-1 and C-2, respectively, hereto.  Edgen’s Canadian counsel shall have delivered to Purchaser a written opinion, substantially in the form of Exhibit C-2 hereto, to the extent it relates to ECI and subject to local custom.  To the extent a Seller is not represented by Piper Rudnick LLP, counsel to such Seller shall deliver to Purchaser a written opinion addressed to Purchaser and dated the Closing Date, substantially in the form of Exhibit C-1 hereto, to the extent it relates to such Seller and subject to local custom.

 

(i)                                     Termination of Agreements.  Each of the agreements listed on Schedule 7.3(i) hereto shall have been terminated.

 

(j)                                     FIRPTA Certificate.  Edgen shall have delivered to the Purchaser a certificate of Edgen prepared in accordance with Treasury Regulations section 1.1445-2, certifying that the Shares are not a “U.S. real property interest.”

 

(k)                                  Financing Proceeds.  The Purchaser shall have (i) completed an offering of senior notes and (A) the gross proceeds from such offering shall have been not less than $100 million, (B) the yield on such senior notes shall have been no greater than 10% per annum, (C) the other terms and conditions of the senior notes and the related agreements shall be reasonably satisfactory to Purchaser, and (D) no equity of Purchaser or any of its Affiliates shall have been offered in connection with such senior note offering (the “Senior Notes Offering”), and (ii) entered into a credit agreement on terms and conditions consistent with the Senior Commitment and all conditions to borrow under such credit agreement shall have been satisfied.

 

(l)                                     Escrow Agreement.  Each of the Sellers Representative and the Escrow Agent shall have executed and delivered to the Purchaser the Escrow Agreement, and the Escrow Agreement shall be in full force and effect.

 

(m)                               Stock Options.  The Purchaser shall have received evidence that all stock options and any stock option plans of Edgen or its Subsidiaries have been terminated.

 

(n)                                 Title Endorsements.  Receipt of non-imputation endorsements and such other endorsements as the Purchaser may require to obtain the benefit of title insurance coverage for all Real Property, without exception for acts of the Sellers or the Companies prior to the Closing.

 

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ARTICLE VIII
TERMINATION; EFFECT OF TERMINATION

 

8.1.                              Termination of Agreement.  This Agreement may be terminated and the Acquisition may be abandoned at any time prior to the Closing:

 

(a)                                  by mutual written consent of Sellers Representative and Purchaser;

 

(b)                                 after February 4, 2005, by either Sellers Representative or Purchaser, if the Closing has not occurred by that date; and provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(b) shall not be available to a Party whose action or failure to act has been a principal cause of or resulted in the failure of the Acquisition to occur on or before such date and such action or failure to act constitutes a breach of this Agreement;

 

(c)                                  by Sellers Representative, upon written notice, if any representation or warranty of Purchaser shall have become untrue such that the condition set forth in Section 7.2(a) would not be satisfied or if Purchaser shall have materially breached any agreement, obligation or covenant such that the condition set forth in Section 7.2(b) would not be satisfied; provided, that if the inaccuracy in Purchaser’s representations and warranties or the breach of Purchaser’s agreement, obligation or covenant is curable through the exercise of Purchaser’s commercially reasonable efforts, then Sellers Representative may not terminate this Agreement for thirty (30) days after Sellers Representative shall have given written notice of such inaccuracy or breach to Purchaser (so long as Purchaser continues to use commercially reasonable efforts to cure the inaccuracy or breach during such period), it being understood that Sellers Representative may not terminate this Agreement if Purchaser cures such inaccuracy or breach within such thirty (30) day period; and provided, further, that the right to terminate this Agreement pursuant to this Section 8.1(c) shall not be available to Sellers Representative if Sellers’ or Edgen’s breach of or failure to comply with their obligations under this Agreement is a principal cause of or resulted in the event giving rise to such termination right;

 

(d)                                 by Purchaser, upon written notice if any representation or warranty of Sellers or Edgen shall have become untrue such that the condition set forth in Section 7.3(a) would not be satisfied or if Sellers or Edgen shall have materially breached any agreement, obligation or covenant such that the condition set forth in Section 7.3(b) would not be satisfied; provided that if the inaccuracy in Sellers’ or Edgen’s representations and warranties or the breach of Sellers’ or Edgen’s agreement, obligation or covenant is curable through the exercise of commercially reasonable efforts, then Purchaser may not terminate this Agreement for thirty (30) days after Purchaser shall have given written notice of such inaccuracy or breach to Sellers Representative (so long as Sellers and/or Edgen continue to use commercially reasonable efforts to cure such inaccuracy or breach during such period), it being understood that Purchaser may not terminate this Agreement if Sellers or Edgen cures such inaccuracy or breach within such thirty (30) day period; and provided, further, that the right to terminate this Agreement pursuant to this Section 8.1(d) shall not be available to Purchaser if Purchaser’s breach of or failure to comply with its obligations under this Agreement is a principal cause of or resulted in the event giving rise to such termination event;

 

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(e)                                  by Purchaser or Sellers Representative if there shall be any law that makes consummation of the Acquisition illegal or otherwise prohibited, or if any order of any Governmental Authority enjoining Purchaser, Sellers or Edgen from consummating the Acquisition is entered and such order shall have become final and nonappealable; provided that the Party seeking to terminate this Agreement pursuant to this provision shall have used all reasonable efforts to remove or vacate such order; or

 

(f)                                    by Purchaser pursuant to Section 6.6.

 

8.2.                              Effect of Termination; Right to Proceed.

 

(a)                                  In the event that this Agreement is terminated pursuant to Section 8.1, then this Agreement shall have no further force or effect, and all further obligations of the Parties shall terminate without further liability of either Party (except for obligations under Sections 6.3, 6.4(b), 6.4(c), 6.5, 10.3, 10.5, 10.6 and this Section 8.2); provided that subject to the following sentence, nothing in this Section 8.2 shall relieve any Party of liability arising out of fraudulent or willful or intentional breach of this Agreement prior to a termination hereof.

 

(b)                                 In the event that a condition precedent to a Party’s obligation is not met, nothing contained herein shall be deemed to require any Party to terminate this Agreement, rather than to waive such condition precedent and proceed with the Acquisition.

 

(c)                                  Notwithstanding the foregoing, if this Agreement is terminated by a party because of the breach of the Agreement by the other party or because one or more of the conditions to the terminating party’s obligations under this Agreement is not satisfied as a result of the other party’s failure to comply with its obligations under this Agreement, the terminating party’s right to pursue all legal remedies will survive such termination unimpaired.

 

ARTICLE IX
SURVIVAL; INDEMNIFICATION

 

9.1.                              Survival.  The representations and warranties contained in this Agreement, any Transaction Document or in any statement or certificate furnished or to be furnished pursuant hereto or in connection with the transactions contemplated hereby shall survive the Closing until the date that is 18 months after the Closing Date, except that the representations and warranties (i) made in Section 3.1 hereof (relating to title), Section 4.2 (relating to capitalization), Section 4.1 hereof (relating to organization), Section 4.20 hereof (relating to subsidiaries), Section 3.2 and 4.3 hereof (relating to authority), Sections 3.6 and 4.17 hereof (relating to brokers), Section 4.19 hereof (relating to taxes), Section 4.16 hereof (relating to employee benefits matters) and Section 4.24 (relating to transactions with affiliates), shall survive the Closing until the date that is thirty (30) days after the expiration of the applicable statute of limitations) and (ii) made in Section 4.18 hereof (relating to environmental matters) (and in the officer’s certificate delivered under Section 7.3(d) in so far as it relates to such representations) shall survive the Closing until the date that is three (3) years after the Closing Date.  If a claim for indemnification is made hereunder in respect of any alleged breach of a representation and warranty before the expiration of the applicable survival period for such representation or

 

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warranty, such representation or warranty shall survive, with respect to such claim, until such claim is resolved.  The covenants contained in this Agreement shall survive the Closing and remain in effect indefinitely.

 

9.2.                              Indemnity by the Sellers.

 

(a)                                  Subject to the overall limitations, the minimum amounts and the time limitations set forth in Sections 9.1 and 9.4, each of the Sellers agrees to indemnify and hold the Purchaser and, after the Closing, Edgen and its Subsidiaries, and their respective Affiliates, officers and directors (collectively, the “Purchaser Indemnitees”) harmless from and with respect to any and all claims, liabilities, losses, damages, costs and expenses, including without limitation the fees and disbursements of counsel (collectively, “Damages”), arising directly or indirectly out of:

 

(i)                                     any breach of or inaccuracy in any representation or warranty made by Edgen in this Agreement or any Transaction Document or breach of or any inaccuracy in any certificate delivered by Edgen at Closing pursuant hereto, including the officer’s certificate referred to in Section 7.3(d) and the Certificate of Closing Amounts;

 

(ii)                                  any Taxes of Edgen and its Subsidiaries as provided in Section 6.7 or any costs associated with the payment of Excess Parachute Payments as provided in Section 6.8;

 

(iii)                               any breach of any covenant made by Edgen in this Agreement or any Transaction Document; and

 

(iv)                              any obligation under any bylaw or Certificate of Incorporation (or similar document) of Edgen or any of its Subsidiaries or any agreement or under law requiring any Company to provide indemnification or expense reimbursement to any person who was a director of Edgen or any of its Subsidiaries prior to the Closing except to the extent that such obligation to provide indemnification, contribution or expense reimbursement arose out of or related to the Senior Notes Offering (other than with respect to any untrue statement or alleged untrue statement or omission or alleged omission made in the Senior Notes Offering in reliance upon and in conformity with written information furnished to Purchaser by or on behalf of such director specifically for inclusion therein or in connection with any efforts by any such director to engage in the selling of the notes contemplated by the Senior Notes Offering other than at the express direction of the Purchaser).

 

(b)                                 Subject to the overall limitations, the minimum amounts and the time limitations set forth in Section 9.1, each of the Sellers agrees severally, and not jointly, to indemnify and hold the Purchaser Indemnitees harmless from and with respect to any and all Damages, related to or arising directly or indirectly out of the following (each, an “Individual Seller Claim”):

 

(i)                                     any breach of or inaccuracy in any representation or warranty made by such Seller in this Agreement;

 

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(ii)                                  any breach of any covenant made by such Seller in this Agreement; and

 

(iii)                               any breach of, or inaccuracy in, the certificate of such Seller delivered pursuant to Section 7.3(d) with respect to such Seller or his, her or its Shares, for which breach or inaccuracy such Seller shall be solely liable.

 

9.3.                              Third Party Claims.  In the event that any Purchaser Indemnitee desires to make a claim against any Seller under Section 9.2 above in connection with any action, suit, proceeding or demand at any time instituted against or made upon such Purchaser Indemnitee by any third party for which such Purchaser Indemnitee may seek indemnification hereunder (a “Third Party Claim”), such Purchaser Indemnitee shall promptly deliver notice of such Third Party Claim and of such Purchaser Indemnitee’s claim for indemnification with respect thereto to the Sellers Representative or, if such Third Party Claim is an Individual Seller Claim, to the individual Seller against whom such Individual Seller Claim is made, provided, that the failure by such Purchaser Indemnitee to notify the Sellers Representative of any such Third Party Claim or any individual Seller of any Individual Seller Claim, as the case may be, shall not adversely affect such Purchaser Indemnitee’s rights to be indemnified hereunder except to the extent that the indemnifying Seller or Sellers are materially prejudiced thereby.  Within thirty (30) days (or, where circumstances require, such shorter time as the Purchaser Indemnitee may reasonably specify as being required under the circumstances) after receipt of notice of a Third Party Claim from a Purchaser Indemnitee, the Sellers Representative or the individual Seller, as the case may be, may notify such Purchaser Indemnitee of the indemnifying Sellers’ or Seller’s election to assume the defense of such Third Party Claim, in which case the indemnifying Sellers or Seller shall have the authority to negotiate, compromise and settle such Third Party Claim, if the following conditions are satisfied:

 

(a)                                  the Sellers Representative or the individual Seller, as the case may be, shall have confirmed in writing that as between the Purchaser Indemnitees and the indemnifying Seller or Sellers, such indemnifying Seller or Sellers shall be solely obligated to satisfy and discharge such claim;

 

(b)                                 if requested by the Purchaser Indemnitees, the indemnifying Seller or Sellers shall have delivered to Purchaser financial statements of the indemnifying Seller or Sellers evidencing, in the reasonable determination of Purchaser, such Seller’s or Sellers’ financial ability, together with monies in the Escrow Account (taking into account the reasonable amount anticipated to be paid in satisfaction of any pending claim) to satisfy the full amount of any adverse monetary judgment that may result from such Third Party Claim;

 

(c)                                  the Purchaser Indemnitees shall not have given the Sellers Representative or the individual Seller, as the case may be, written notice that it has determined, in the exercise of its reasonable discretion, that a conflict of interest makes separate representation by the Purchaser Indemnitee’s own counsel advisable; and

 

(d)                                 such Third Party claim involves (and continues to involve) solely monetary damages and shall not be likely in the Purchaser Indemnitee’s reasonable judgment to

 

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have a material adverse effect on any of the Purchaser Indemnitees or, in any of the Purchaser Indemnitees’ good faith judgment, to have a detrimental effect on the business prospects of such Purchaser Indemnitee.  (Sections 9.3 (a) -(d), collectively, the “Litigation Conditions”).

 

If the indemnifying Sellers, in the case of a Third Party Claim, or the indemnifying Seller, in the case of a Third Party Claim which is an Individual Seller Claim, elect to assume the defense of such Third Party Claim, such indemnifying Sellers or Seller shall be entitled at their own expense to conduct and control the defense and settlement of such Third Party Claim through counsel of their own choosing (which counsel shall be reasonably satisfactory to the Purchaser); provided that the Purchaser may participate in the defense of such Third Party Claim with its own counsel at its own expense; and, provided, further, that the indemnifying Seller or Sellers may not settle any Third Party Claim without the consent of the Purchaser, which consent shall not be unreasonably withheld or delayed.  If the Sellers Representative or the individual Seller, as the case may be, does not assume sole control over the defense or settlement of such Third Party Claim within thirty (30) days after receipt of the Purchaser’s notice of a Third Party Claim, or, after assuming such control, fails to diligently defend against such Third Party Claim in good faith (it being agreed that settlement of such Third Party Claim does not constitute such a failure to defend) or any Litigation Condition ceases to be met, the Purchaser Indemnitees shall have the right (as to itself) to defend and settle the claim in such manner as it may deem reasonably appropriate, and the Sellers Representative or the individual Seller, as the case may be, shall promptly reimburse the Purchaser Indemnitees therefore (to the extent such Third Party Claim is subject to indemnification under Section 9.2).

 

9.4.                              Limitations of Liability.

 

(a)                                  Subject to the other provisions of this Section 9.4, the Sellers shall not be required to indemnify the Purchaser Indemnitees under Section 9.2(a)(i) unless the aggregate amount of Damages for which the Purchaser Indemnitees are (but for this subsection (a)) entitled to indemnification from all Sellers pursuant to Section 9.2(a)(i) exceeds $500,000 in the aggregate (the “Deductible Amount”).  If the aggregate amount of Damages for which the Purchaser Indemnitees are (but for the provisions of the preceding sentence) entitled to indemnification pursuant to Section 9.2(a)(i) exceeds $500,000, the Purchaser Indemnitees shall be entitled to indemnification for the aggregate amount of all Damages in excess of the Deductible Amount, subject to the limitations on the maximum amount of recovery set forth in Section 9.4(b).  Notwithstanding the foregoing, any Damages arising directly or indirectly out of any breach by any of the Companies or the Sellers of, or inaccuracy in, their representations and warranties contained in Section 3.1 hereof (relating to title), Section 4.2 (relating to capitalization), Sections 4.1 hereof (relating to organization), Section 4.20 hereof (relating to subsidiaries), Section 3.2 and 4.3 hereof (relating to authority), Sections 3.6 and 4.17 hereof (relating to brokers), Section 4.19 hereof (relating to taxes), Section 4.16 hereof (relating to employee benefits matters) and Section 4.24 (relating to transactions with affiliates) (or any breach of, or inaccuracy in, the officer’s certificate delivered under Section 7.3(d) to the extent that such breach or inaccuracy relates to such representations and warranties) (all such claims collectively referred to herein as “Purchase-Price-Limited Claims”) shall not be subject to the Deductible Amount.  Without limitation of the foregoing, subject to Section 9.4(i), any Damages arising directly or indirectly out of the breach by a Seller of, or inaccuracy in, his or its

 

46

 

representations, and warranties contained in Section 3.1, Section 3.2 or Section 3.6, shall be the sole obligation of such Seller.

 

(b)                                 Subject to Section 9.4(d) below, the aggregate Damages payable by the Sellers, collectively, pursuant to Section 9.2(a)(i) above with respect to all claims other than Purchase-Price-Limited Claims shall not exceed an amount equal to $8,000,000 (the “Maximum Amount”), and with respect to Purchase-Price-Limited Claims shall not exceed the aggregate amount of the Purchase Price received by the Sellers collectively.  The aggregate Damages payable by each Seller pursuant to Section 9.2(a)(i) above with respect to all claims other than Purchase-Price-Limited Claims shall not exceed an amount equal to such Seller’s Indemnity Percentage of the Maximum Amount, and with respect to Purchase-Price-Limited Claims shall not exceed the amount (when aggregated with all other amounts previously paid or to be paid by such Seller pursuant to this Article IX) of the Purchase Price actually received by such Seller.  Subject to Section 9.4(i), the maximum liability of any Seller with respect to any Third Party Claim or other claim for Damages for which such Seller is responsible under Section 9.2(a)(i) shall be such Seller’s Indemnity Percentage of the amount of such Third Party Claim or other claim for Damages.

 

(c)                                  The amount of any Damages payable under Section 9.2 by the any of Sellers shall be net of any (i) amounts actually recovered (after deducting all attorneys’ fee, expenses and other costs of recovery) by the Purchaser Indemnitee(s) under applicable insurance policies; provided, that the amounts of any increase in insurance premium or retroactive premiums or premium adjustments resulting from the making of a claim or claims against insurers shall, for this purpose, be deemed to be deducted from the amount so paid by such insurers and (ii) Tax benefit recognized by the Purchaser Indemnitee(s) arising from the incurrence or payment of any such Damages.  If a Tax benefit with respect to the incurrence or payment of any item of Damages is recognized after an indemnification payment with respect to such item of Damages has been paid, the Purchaser Indemnitee who received such indemnification payment shall, upon recognition of such Tax benefit, refund to the Sellers an amount equal to such Tax benefit.  For this purpose, the Purchaser Indemnitee(s) shall be deemed to recognize a tax benefit with respect to a taxable year if, and to the extent that, the Purchaser Indemnitee(s)’ cumulative liability for Taxes through the end of such taxable year, calculated by excluding any Tax items attributable to the Damages from all taxable years, exceeds the Purchaser Indemnitee(s)’ actual cumulative liability for Taxes through the end of such taxable year, calculated by taking into account any Tax items attributable to the Damages for all taxable years (to the extent permitted by relevant Tax law and treating such Tax items as the last items claimed for any taxable year), provided that, unless the Purchaser shall establish otherwise, a Purchaser Indemnitee shall be presumed to have recognized a Tax benefit for the year in which any item of Damages is paid or accrued, assuming full obligation in such year, at the highest required Tax rate then in effect, of any deduction, credits or other Tax effects of such item of Damages.  If the Purchaser Indemnitee(s) receives any amounts under applicable insurance policies subsequent to an indemnification payment by the Sellers, then such Purchaser Indemnitee(s) shall promptly reimburse the applicable Sellers for any payment made or expense incurred by such Sellers in connection with providing such indemnification payment up to the amount received by the Purchaser Indemnitee(s), net of any expenses incurred by such Purchaser Indemnitee(s) in collecting such amount.

 

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(d)                                 Subject to Section 9.4(i) below, the representations and warranties of each Seller contained in Article III and the covenants made by each Seller in this Agreement are made severally by each Seller as to himself, herself or itself only, and any Seller who has breached his, her or its representations or warranties in Article III as to himself, herself or itself or any of his, her or its covenants made in this Agreement (but only such Seller) shall be liable with respect to all Damages arising from the breach thereof, up to the amount of the Purchase Price actually received by such Seller and no other Seller shall be liable for any such Damages.

 

(e)                                  No limitation or condition of liability provided in this Article IX shall apply to fraud or intentional misrepresentation.

 

(f)                                    Any payments made by the Sellers or any of them to the Purchaser under Section 6.7, and any indemnification payments made by the Sellers or any of them pursuant to this Article IX shall be, to the extent permitted by law, treated by all parties as a reduction in the Purchase Price received by such Seller(s) hereunder.

 

(g)                                 The Sellers and the Purchaser agree that, for purposes of this Article IX, when determining whether or not there has been a breach of any representation or warranty by Edgen or any Seller and when calculating the amount of Damages resulting from any such breach, qualifications of such representations and warranties by “material” or “Material Adverse Effect” or other similar qualifiers shall be disregarded.

 

(h)                                 Edgen and each Seller acknowledges and agrees that no right of indemnification on the part of the Purchaser or any other Purchaser Indemnitee shall be limited, restricted or waived in any way by reason of any investigation or audit conducted prior to the Closing or the knowledge of the Purchaser or its Affiliates or representatives at any time prior to the Closing of any breach of any representation, warranty, covenant or agreement of Edgen or any Seller, or the decision of the Purchaser to complete the Closing.  Notwithstanding anything to the contrary herein, the Purchaser shall have the right, irrespective of any such knowledge or investigation or any decision by the Purchaser to complete the Closing, to rely fully on the representations, warranties, covenants and agreements of Edgen and the Sellers contained in this Agreement (and any certificate delivered hereunder).

 

(i)                                     From and after the Closing, any indemnification to which a Purchaser Indemnitee is entitled under this Agreement as a result of any Damages shall first be satisfied by recouping all of such Damages (subject to the limitations in this Article IX) from the Escrow Account in accordance with the terms of the Escrow Agreement until all such funds that make up the Escrow Account have been distributed to the Purchaser Indemnitees to satisfy Claims or to the Sellers in accordance with the terms of the Escrow Agreement.  It being understood that such Purchaser Indemnitee may recover the full amount of any Damages from the Escrow Account even though the Claim giving rise to such Damages is not being shared by all Sellers in accordance with their Indemnity Percentages.  Thereafter, the aggregate amount of Damages payable by each Seller pursuant to Section 9.2(a) above with respect to all claims other than Individual Seller Claims shall not exceed an amount equal to such Seller’s Indemnity Percentage.

 

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9.5.                              No Additional Warranties.  THE REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN ARE THE ONLY REPRESENTATIONS OR WARRANTIES GIVEN BY THE PARTIES.  EXCEPT WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES OF THE PARTIES SET FORTH IN THIS AGREEMENT, THE PARTIES EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, EITHER ORAL OR WRITTEN, MADE BY THE PARTIES OR ANY AGENT OR REPRESENTATIVE OF THE PARTIES WITH RESPECT TO THE PHYSICAL, STRUCTURAL OR ANY OTHER CONDITION OF ANY ASSETS OR THE COMPLIANCE OF ANY OF THE PARTIES WITH ANY LAW.

 

ARTICLE X
GENERAL

 

10.1.                        Notices.  All notices, requests, claims, demands or other communications that are required or may be given pursuant to the terms of this Agreement or the other Transaction Documents shall be in writing and shall be deemed to have been duly given:  (a) when delivered, if delivered by hand; (b) one (1) Business Day after transmitted, if transmitted by a nationally-recognized overnight courier service; (c) when sent by facsimile transmission, if sent by facsimile transmission which is confirmed; or (d) three (3) Business Days after mailing, if mailed by registered or certified mail (return receipt requested), in each case to the Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 10.1):

 

(a)                                  If to Sellers, Sellers Representative or Edgen:

 

Ira Kleinman and Colin Farmer

Harvest Partners Inc.

280 Park Avenue, 33rd Floor

New York, New York 10017

Telephone:

(212) 599-6300

Fax:

(212) 812-0100

 

with a simultaneous copy to:

 

Edgen Corporation

1844 Highland Road

Baton Rouge, Louisiana 70809

Attention: David Laxton

Telephone:

(225) 756-7223

Fax:

(225) 756-7953

 

and to:

 

Leonard Gubar, Esq.

Piper Rudnick LLP

1251 Avenue of the Americas

 

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New York, New York 10020

Telephone:

(212) 835-6000

Fax:

(212) 835-6001

 

(b)                                 If to Purchaser:

 

Jefferies Capital Partners

520 Madison Avenue, 8th Floor

New York, New York 10022

Attention:

James Luikart and Nicholas Daraviras

Telephone:

(212) 284-1700

Fax:

(212) 284-1717

 

With a simultaneous copy to:

 

Dechert LLP

4000 Bell Atlantic Tower

1717 Arch Street

Philadelphia, Pennsylvania 19103

Attention:

Carmen J. Romano, Esq.

Telephone:

(215) 994-4000

Fax:

(215) 994-2222

 

10.2.                        Severability.  If any provision of this Agreement for any reason shall be held to be illegal, invalid or unenforceable, such illegality shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such illegal, invalid or unenforceable provision had never been included herein.  The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

 

10.3.                        Assignment; Binding Effect.  No assignment by either Party of its rights nor delegation by either Party of its obligations under this Agreement or any Transaction Document shall be permitted unless the other Party consents in writing thereto; provided, however, that the Purchaser may without such consent assign or delegate its rights and obligations hereunder or under any instrument executed in connection herewith to any affiliate or as collateral security to any lender providing financing in connection herewith, and, following the Closing, to any Person who acquires (whether in a single transaction or a series of related transactions) all or substantially all of the assets or capital stock of Edgen or any of its Subsidiaries.  This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns.

 

10.4.                        Exhibits and Schedules.  All Exhibits and Schedules attached hereto and referred to herein are hereby incorporated herein and made a part of this Agreement for all purposes as if fully set forth herein. Notwithstanding any provision to the contrary in this Agreement, the disclosures made by a Party in any Schedule to this Agreement shall apply (notwithstanding the

 

50

 

absence of any express cross-reference) with the same force and effect to each other Section hereof to which it is readily apparent that such disclosures should apply.  The inclusion of any item on any Schedule attached hereto shall not constitute an admission that such item is material or that a violation, right of termination, default, liability or other obligation of any kind exists with respect to such item, but rather is intended only to qualify certain representations and warranties in this Agreement and to set forth other information required by the Agreement.  Except as expressly set forth on the attached Schedules, the definitions contained in the Agreement are incorporated therein by reference.

 

10.5.                        Governing Law; Submission to Jurisdiction.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK OTHER THAN CONFLICT OF LAWS PRINCIPLES THEREOF DIRECTING THE APPLICATION OF ANY LAW OTHER THAN THAT OF NEW YORK.  EXCEPT FOR TITLE, LIEN, IN REM, AND SIMILAR MATTERS OF PROPERTY RIGHTS, TITLES AND INTERESTS, COURTS WITHIN THE STATE OF NEW YORK (LOCATED WITHIN THE CITY OF NEW YORK) WILL HAVE EXCLUSIVE JURISDICTION OVER ALL DISPUTES BETWEEN THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.  THE PARTIES HEREBY CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS.  EACH OF THE PARTIES WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS; (B) SUCH PARTY AND SUCH PARTY’S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS; OR (C) ANY LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT FORUM.

 

10.6.                        Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

10.7.                        Interpretation.  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 provisions of this Agreement.

 

10.8.                        Counterparts.  This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

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10.9.                        Entire Agreement.  This Agreement (including the Schedules and Exhibits attached hereto) and the other Transaction Documents executed in connection with the consummation of the Acquisition contain the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements, written or oral, with respect thereto, other than the Confidentiality Agreement.

 

10.10.                  Waivers and Amendments.  This Agreement may be amended, superseded, canceled, renewed or extended only by a written instrument signed by Sellers Representative, Edgen and Purchaser.  The provisions hereof may be waived only in writing signed by the Party waiving compliance.  No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.

 

10.11.                  No Third Party Beneficiaries.  Except for the Purchaser Indemnitees, nothing herein expressed or implied is intended or shall be construed to confer upon or give to any Person other than the Parties hereto and their respective permitted successors and assigns, any rights or remedies under or by reason of this Agreement.

 

10.12.                  Seller Release.

 

(a)                                  Each Seller does hereby, on behalf of itself and its agents, representatives, attorneys, assigns, Affiliates, heirs, executors and administrators (collectively, the “Seller Parties”) RELEASE AND FOREVER DISCHARGE Edgen, each of Edgen’s Subsidiaries, the Purchaser and their respective Affiliates, parents, joint ventures, officers, directors, shareholders, members, managers, employees, consultants, representatives, successors and assigns, heirs, executors and administrators (collectively, the “Company Parties”) from all causes of action, suits, debts, claims and demands whatsoever at law, in equity or otherwise, which such Seller or any of the Seller Parties ever had, now has, or hereafter may have, by reason of any matter, cause or thing whatsoever, from the beginning of its initial dealings with Edgen or any of its Subsidiaries to the Closing, and particularly, but without limitation of the foregoing general terms, any claims arising from or relating in any way to such Seller’s status as a stockholder, investor, holder of any equity interests, lender (except as to any such Seller or any of its Affiliates holding Indebtedness of Edgen as set forth on Schedule 4.28 hereto) or debtor of Edgen or any of its Subsidiaries (including any right to indemnification or contribution from Edgen (whether statutory, common law, pursuant to Edgen’s charter documents or otherwise)), any agreement between such Seller, Edgen or any of its Subsidiaries or any Affiliate of Edgen or any of its Subsidiaries, and, if applicable, such Seller’s employment relationship with Edgen or any of its Subsidiaries, but not including such claims to payments, indemnification, contribution and other rights provided to such Seller under this Agreement and the employment agreements or causes of action, suits, debts, claims and demands whatsoever at law, in equity or otherwise, arising from or relating in any way to such Seller Parties’ status as a director, officer, stockholder, investor or holder of any equity interests in connection with the Senior Notes Offering (other than with respect to any untrue statement or alleged untrue statement or omission or alleged omission made in the Senior Notes Offering in reliance upon and in conformity with

 

52

 

written information furnished to Purchaser by or on behalf of any member of such Seller Party specifically for inclusion therein, but only with respect to such member of the Seller Party specifically for inclusion therein or in connection with any efforts by any Seller Party to engage in the selling of the notes contemplated by the Senior Notes Offering other than at the express direction of the Purchaser).  The release contained in this paragraph (a) is effective without regard to the legal nature of the claims raised and without regard to whether any such claims are based upon tort, equity, implied or express contract or discrimination of any sort.

 

(b)                                 Each Seller, on behalf of itself and the Seller Parties, agrees never to bring (or cause or permit to be brought) any action or proceeding against Edgen or any Company Party regarding such Seller’s status as a stockholder, investor, holder of any equity interests, lender (except as to any such Seller or any of its Affiliates holding Indebtedness of Edgen as set forth on Schedule 4.28 hereto) or debtor of Edgen, any agreements of such Seller with Edgen or any of its Subsidiaries that relate to such Seller’s status as a stockholder, investor, lender or debtor of Edgen (including without limitation the agreements set forth on Schedule 7.3(i) hereto), or any claim released pursuant to Section 10.12(a).  Each Seller agrees that in the event that any claim, suit or action released pursuant to Section 10.12(a) shall be commenced by it or any of the Seller Parties against Edgen or any Company Party, the release contained in Section 10.12(a) shall constitute a complete defense to any such claim, suit or action so instituted.

 

(c)                                  The parties agree and acknowledge that the release of any asserted or unasserted claims against Edgen and the Company Parties pursuant to Section 16(a) are not and shall not be construed to be an admission of any violation of any Federal, state or local statute or regulation, or of any duty owed by Edgen or any of the Company Parties to any Seller Party.

 

(d)                                 Edgen and each Seller hereby acknowledges and agrees that each agreement set forth on Schedule 7.3(i) hereto has been terminated and is of no further force and effect.

 

(e)                                  Each Seller that is a holder of shares of Preferred Stock hereby waives its, his or her right to require Edgen to redeem its, his or her shares of Preferred Stock in connection with the transactions contemplated hereby, and hereby releases Edgen from its obligation to redeem such Seller’s shares of Preferred Stock in connection with the transactions contemplated hereby.

 

(f)                                    Each Seller hereby waives any rights it, he or she may have to acquire equity securities of Edgen.

 

(g)                                 Each Seller certifies and acknowledges that such Seller:

 

(i)                                     has read the terms of this Agreement and the release provided hereunder, and that such Seller understands its terms and effects, including the fact that such Seller has agreed to RELEASE AND FOREVER DISCHARGE Edgen and all Company Parties from any legal action or other liability of any type related in any way to the matters released pursuant to Section 10.12(a); and

 

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(ii)                                  has signed this Agreement voluntarily and knowingly in exchange for the consideration described herein, which such Seller acknowledges is adequate and satisfactory to it.

 

(h)                                 This Section 10.12 shall be effective upon the consummation of the Closing.

 

 

[Signatures appear on the next page]

 

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EXECUTION

 

IN WITNESS WHEREOF, the Parties have caused this Stock Purchase Agreement to be signed in their respective names by their duly authorized representatives as of the date first above written.

 

 

 

PURCHASER:

 

 

 

 

 

EDGEN ACQUISITION CORPORATION

 

 

 

 

 

By:

 /s/ Nicholas Daraviras

 

 

 

Name:

Nicholas Daraviras

 

 

Title:

President, Secretary and Treasurer

 

 

 

EDGEN:

 

 

 

 

 

 

 

 

 

 

EDGEN CORPORATION

 

 

 

 

 

 

 

 

 

 

By:

 /s/ Daniel J. O’Leary

 

 

 

Name:

Daniel J. O’Leary

 

 

Title:

Chief Executive Officer

 

S-2

 

 

 

THL Managers V LLC Management Agreement from RealDealDocs.com

May 28, 2008

Hello again, friends. I have something fresh for ya today! A management agreement drafted by yet another Amlaw 2008 top law firm. Take a peak at the whole agreement courtesy of the kind folks over at RealDealDocs.com. To search millions of legal docs for free, please visit www.RealDealDocs.com!

EXHIBIT 10.20

                                                                

                              MANAGEMENT AGREEMENT

 

     This Management Agreement (this “AGREEMENT”) is entered into as of the 19th

day of December, 2003, by and between Simmons Company, a Delaware corporation

(the “COMPANY”), and THL Managers V, LLC, a Delaware limited liability company

(the “SPONSOR”).

 

         WHEREAS, certain affiliates of Thomas H. Lee Partners, L.P. (“THL”)

have provided equity financing to the Company’s indirect parent, THL Bedding

Holding Company, a Delaware corporation (“HOLDINGS”), pursuant to that certain

Contribution Agreement dated as of December 19, 2003, by and among Holdings and

the persons listed on the signatures pages thereto.

 

         WHEREAS, Holdings’ indirect subsidiary, THL Bedding Company (“THL

BEDDING”) entered into that certain Stock Purchase Agreement by and among THL

Bedding, Simmons Holdings, Inc. and the sellers party thereto, dated as of

November 17, 2003, and THL Bedding entered into that certain ESOP Stock Sale

Agreement by and among THL Bedding, Simmons Holdings, Inc. and State Street Bank

and Trust Company, dated as of November 21, 2003, pursuant to which, as of the

date hereof, THL Bedding acquired all of the outstanding shares of Simmons

Holdings, Inc. (the “ACQUISITION”).

 

         WHEREAS, immediately following the Acquisition, THL Bedding merged with

and into Simmons Holdings, Inc. and Simmons Holdings, Inc. merged with and into

Simmons Company, with Simmons Company as the surviving entity.

 

         WHEREAS, the Sponsor has staff specifically skilled in corporate

finance, strategic corporate planning, and other management skills and advisory

services.

 

         WHEREAS, the Company will require the Sponsor’s special skills and

management advisory services in connection with its business operations and

execution of its strategic plan.

 

         WHEREAS, the Sponsor is willing to provide such skills and services to

the Company.

 

         NOW, THEREFORE, in consideration of the mutual covenants contained

herein, and for other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the parties hereto, intending to

be legally bound, hereby agree as follows:

 

         1.       Services. The Sponsor hereby agrees that if, during the term

of this Agreement (the “TERM”), the Company reasonably and specifically requests

that the Sponsor provide the services set forth below and the Sponsor agrees to

provide such services, the Sponsor or one of its affiliates will provide the

following services to the Company and its subsidiaries:

 

         (a)      advice in connection with the negotiation and consummation of

agreements, contracts, documents and instruments related to the Company’s

finances or relationships with banks or other financial institutions; or

 

       (b)      advice with respect to the development and implementation of

strategies for improving the operating, marketing and financial performance of

the Company, and other senior management matters related to the business,

administration and policies of the Company.

 

         The Sponsor shall have no obligation to the Company as to the method or

timing of services rendered hereunder, and the Company shall not have any right

to dictate or direct the details of the performance of services by the Sponsor

rendered hereunder.

 

         The parties hereto expressly acknowledge that the services to be

performed hereunder by the Sponsor shall not include investment banking or other

financial advisory services rendered by Sponsor or its affiliates to the Company

in connection with any specific acquisition, divestiture, refinancing or

recapitalization by the Company or any of its subsidiaries for which the Sponsor

may be entitled to receive additional compensation by mutual agreement of the

Company or its subsidiary and the Sponsor. This Agreement shall in no way

prohibit the Sponsor or any of its affiliates or any of their respective

partners (both general and limited), members (both managing and otherwise),

officers, directors, employees, agents or representatives from engaging in other

activities, whether or not competitive with any business of the Company of any

of its affiliates.

 

         2.       Payment of Fees. In exchange for the Sponsor’s arrangement of

the equity financing and agreement to provide the services set forth herein, the

Company hereby agrees to pay to the Sponsor (or its designee) the following

fees:

 

                  (a)      a transaction fee in connection with the transactions

contemplated in the Stock Purchase Agreement payable at the Closing (as defined

in the Stock Purchase Agreement) of $20,000,000; and

 

                  (b)      a management fee (the “FEE”) equal to the greater of

(i) $1,500,000 per year or (ii) 1.0% of Consolidated EBITDA (as defined in the

Credit and Guaranty Agreement dated as of December 19, 2003 by and among the

Lenders from time to time party thereto, Goldman Sachs Credit Partners L.P., UBS

Securities LLC, Deutche Bank A.G., Cayman Islands Branch, the Company and

certain of the subsidiaries of the Company, as the same may be amended,

modified, renewed, refunded, replaced or refinanced from time to time) before

deducting the Fee payable pursuant to this Section 2(b) (“ADJUSTED EBITDA”),

commencing at the Closing. The Fee shall be payable semi-annually in advance

(based on the prior year’s Adjusted EBITDA) on January 2nd and July 2nd of each

year, with an adjustment of the Fee for any fiscal year payable promptly

following the determination of Adjusted EBITDA for such fiscal year or on

termination of this Agreement. The first installment of the Fee shall be payable

at the Closing. The initial Fee shall be for the period through July 2, 2004 and

shall include a pro rata portion of the 2003 fiscal year based on the number of

days in the 2003 fiscal year following the Closing. All references to “per

annum” or “annual” herein refer to the fiscal year of the Company.

 

         Each payment made pursuant to this Section 2 shall be paid by wire

transfer of immediately available funds to the accounts specified on Exhibit A

attached hereto, or to such other account(s) as each Sponsor may specify in

writing to the Company.

 

         3.       Term. This Agreement shall be effective as of the date hereof

and shall continue in full force and effect, unless and until (a) terminated by

the Sponsor, (b) terminated automatically on the date which the Sponsor and its

affiliates no longer beneficially owns at least twenty percent

 

                                       2

 

(20%) of the equity securities of Holdings, or (c) terminated by the Sponsor

upon the consummation of any public offering of the equity securities of the

Company or Holdings. Upon any termination of this Agreement, each of (A) the

obligations of the Company under Section 4 below, (B) any and all owed and

unpaid obligations of the Company under Section 2 above and (C) the provisions

of Section 7 shall survive any termination of this Agreement to the maximum

extent permitted under applicable law. In the event that the Sponsor terminates

this Agreement in accordance with clause (c) above of this Section, the Company

agrees to pay the Sponsor a cash lump-sum termination fee equal to the net

present value of the fees that would have been payable to such Sponsor (but for

the termination hereof) pursuant to Section 2(b) hereof for a period of seven

(7) years from the date of such termination calculated using a discount rate

equal to the ten-year treasury rate on the date of such termination. Such

termination fee shall be payable by wire transfer of immediately available funds

within ten (10) days after the date of termination to the account specified on

Exhibit A attached hereto, or to such other account(s) as the Sponsor may

specify in writing to the Company. As used herein, the term “PERSON” shall be

construed in the broadest sense and means and includes a natural person, a

partnership, a corporation, an association, a joint stock company, a limited

liability company, a trust, a joint venture, an unincorporated organization and

any other entity and any federal, state, municipal, foreign or other government,

governmental department, commission, board, bureau, agency or instrumentality,

or any private or public court or tribunal.

 

         4.       Expenses; Indemnification.

 

         (a)      Expenses. In addition to the fees set forth in Section 2

hereof, the Company agrees to pay on demand all reasonable costs and expenses

incurred by the Sponsor and their affiliates or any of them in connection with

this Agreement and in connection with performing services hereunder including

but not limited to air travel charged at charter equivalent rates, legal,

consulting, out of pocket and other expenses, including but not limited to the

fees and disbursements of Weil, Gotshal & Manges LLP, counsel to the Sponsor,

and any other consultants or advisors retained by the Sponsor or its respective

counsel arising in connection therewith, including but not limited to the

preparation, negotiation and execution of this Agreement, the performance of

services hereunder (including, without limitation, fees and expenses of

independent professionals, research, transportation and per diem costs).