Exhibit 10.1
STOCK PURCHASE AGREEMENT
FOR THE
PURCHASE AND SALE OF
ALL OUTSTANDING SHARES OF
CAPITAL STOCK OF
WATERS MEDICAL SYSTEMS, INC.
DATED AS OF JULY 24, 2007
BETWEEN
ZAREBA SYSTEMS, INC.
AND
HOLDING GC, INC.

 

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TABLE OF CONTENTS

                      Page
Preamble
        6  
Recita1s
        6   ARTICLE I DEFINITIONS     6   ARTICLE II PURCHASE AND SALE     10  
Section 2.01.
  Purchase and Sale     10  
Section 2.02.
  Closing     10  
Section 2.03.
  Post-Closing Adjustment     11  
Section 2.04.
  Procedure for Post-Closing Adjustment     11   ARTICLE III REPRESENTATIONS AND
WARRANTIES OF SELLER     12  
Section 3.01.
  Ownership of Shares     13  
Section 3.02.
  Organization and Good Standing     13  
Section 3.03.
  Capitalization     13  
Section 3.04.
  No Other Agreements to Sell the Shares, Capital Stock or Assets     13  
Section 3.05.
  Authorization; Execution and Delivery     13  
Section 3.06.
  Governmental Approvals and Filings; Permits And Licenses     14  
Section 3.07.
  No Conflict     14  
Section 3.08.
  Certificate of Incorporation and Bylaws     15  
Section 3.09.
  Financial Statements     15  
Section 3.10.
  Interim Operations     15  
Section 3.11.
  Subsidiaries     16  
Section 3.12.
  Properties     16  
Section 3.13.
  Leased Property     16  
Section 3.14.
  Proprietary Rights     17  
Section 3.15.
  Contracts     17  
Section 3.16.
  Insurance     18  
Section 3.17.
  Employee Relations; Benefit Plans     19  
Section 3.18.
  Legal Proceedings     23  
Section 3.19.
  Brokers and Investment Advisers     23  
Section 3.20.
  Certain Tax Matters     23  
Section 3.21.
  Environmental Matters     24  
Section 3.22.
  Transactions with Affiliates     25  
Section 3.23.
  No Undisclosed Liabilities     26  
Section 3.24.
  Compliance with Laws     26  
Section 3.25.
  Title to Assets     26  
Section 3.26.
  Substantial Customers and Suppliers     26  
Section 3.27.
  Business Accounts     26  
Section 3.28.
  Establishment Registration     26  
Section 3.29.
  Medical Devices     27  
Section 3.30.
  Accounts Receivable     27  
Section 3.31.
  Inventory     28  
Section 3.32.
  Limitations Applicable to Representations and Warranties     28  

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                      Page ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER  
  28  
Section 4.01.
  Organization and Good Standing     28  
Section 4.02.
  Authorization; Execution and Delivery     29  
Section 4.03.
  Consents and Approvals; No Violations     29  
Section 4.04.
  Purchase for Investment     29  
Section 4.05.
  Government Approvals and Filings     30  
Section 4.06.
  Brokers and Investment Advisers     30   ARTICLE V COVENANTS OF SELLER TO
BUYER     30  
Section 5.01.
  Regular Course of Business     30  
Section 5.02.
  No Default or Violations     31  
Section 5.03.
  Insurance     32  
Section 5.04.
  Certain Tax Matters     32  
Section 5.05.
  Notice of Changes     33  
Section 5.06.
  Consents     33  
Section 5.07.
  Access to Books and Records     33  
Section 5.08.
  No Shop     33  
Section 5.09.
  Confidentiality Agreements     34  
Section 5.10.
  Waters Employees Compensation     34  
Section 5.11.
  Accrued Liabilities     34  
Section 5.12.
  Non-Competition     35   ARTICLE VI COVENANTS OF BUYER TO SELLER     36  
Section 6.01.
  Notice of Changes     36  
Section 6.02.
  Certain Tax Matters     36  
Section 6.03.
  No Continuation of Plans With Respect to Buyer, Waters or Their Respective
Employees     36  
Section 6.04.
  Planned Dividend     37  
Section 6.05.
  Other Assets Used to Conduct Waters’ Business     37   ARTICLE VII
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES     37  
Section 7.01.
  Special Indemnifications by Seller     38  
Section 7.02.
  General Indemnification by Seller     39  
Section 7.03.
  Procedure     40  
Section 7.04.
  Other Principles Applicable to Seller’s Indemnity Obligations 41        
ARTICLE VIII COVENANTS OF SELLER AND BUYER     41  
Section 8.01.
  Expenses     41  
Section 8.02.
  Public Announcements     41  
Section 8.03.
  Further Assurances     42  
Section 8.04.
  Mutual Assistance     42   ARTICLE IX CONDITIONS TO THE OBLIGATIONS OF BUYER  
  42  
Section 9.01.
  Representations and Warranties True     42  
Section 9.02.
  Performance of Covenants     43  
Section 9.03.
  No Restraints     43  
Section 9.04.
  Seller's Officer's Certificate     43  
Section 9.05.
  Opinion of Counsel     43  
Section 9.06.
  No Material Adverse Effect     43  
Section 9.07.
  Resignation of Directors and Officers     43  
Section 9.08.
  Agreement with Respect to Leased Property     43  
Section 9.09.
  Consents     44  

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                      Page
Section 9.10.
  Device Listed with FDA     44  
Section 9.11.
  Proceedings     44  
Section 9.12.
  Domain Names; Patent     44   ARTICLE X CONDITIONS TO SELLER’S OBLIGATIONS    
44  
Section 10.01.
  Representations and Warranties True     45  
Section 10.02.
  Performance of Covenants     45  
Section 10.03.
  No Restraints     45  
Section 10.04.
  Buyer Officer's Certificate     45  
Section 10.05.
  Buyer Consents     45  
Section 10.06.
  Seller Consents     45  
Section 10.07.
  Opinion of Counsel     46  
Section 10.08.
  No Material Adverse Effect     46  
Section 10.09.
  Proceedings     46  
Section 10.10.
  Device Listed with FDA     46   ARTICLE XI TERMINATION     46  
Section 11.01.
  Termination and Abandonment     46  
Section 11.02.
  Liability Upon Termination     47   ARTICLE XII MISCELLANEOUS PROVISIONS    
47  
Section 12.01.
  Amendment and Modification     47  
Section 12.02.
  Waiver of Compliance     47  
Section 12.03.
  Notices     47  
Section 12.04.
  Assignment     48  
Section 12.05.
  Governing Law     48  
Section 12.06.
  Parties in Interest     48  
Section 12.07.
  Counterparts     49  
Section 12.08.
  Interpretation     49  
Section 12.09.
  Entire Agreement     49  
 
           
Schedules
           
 
           
Exhibits
           
 
           
Exhibit 3.01.
  Wells Fargo Release Letter        
 
           
Exhibit 9.04.
  Seller's Officer’s Certificate        
Exhibit 9.05.
  Opinion of Fredrikson & Byron, P. A        
Exhibit 9.11.
  Seller’s Secretary’s Certificate        
Exhibit 10.04.
  Buyer’s Officer’s Certificate        
Exhibit 10.07.
  Opinion of Abitbol & Cherry LLP        
Exhibit 10.09.
  Certificate of Buyer’s Authorized Officer        

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STOCK PURCHASE AGREEMENT
     This STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of July 24, 2007,
is entered by and between Zareba Systems, Inc., a Minnesota corporation (the
“Seller”), and Holding GC, Inc., a Delaware corporation (“Buyer”).
WITNESSETH:
     WHEREAS, Seller is the record and beneficial owner of all of the issued and
outstanding common stock, par value $.01 per share (the “Shares”), of Waters
Medical Systems, Inc., a Minnesota corporation (“Waters”), and desires to sell
the Shares to Buyer, and Buyer desires to purchase the Shares from Seller upon
the terms and subject to the conditions hereinafter set forth.
     NOW, THEREFORE, in consideration of the mutual benefits to be derived from
this Agreement and the representations, warranties, conditions and promises
hereinafter contained, the parties hereto hereby agree as follows:
ARTICLE I DEFINITIONS
The following terms, as used herein, shall have the following meanings:
“Accrued PTO” shall mean all accrued but unpaid hours of paid time off of the
Waters Employees up to and including the Closing Date.
“Adverse Rights” shall mean any and all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, pledges, encumbrances, security
interests and adverse claims or rights of any nature whatsoever.
“Affiliate” shall mean any person referred to under Item 404(a)(1)-(4) of
Regulation S-K under the Securities Act. “Affiliates” shall mean collectively
every Affiliate of a party.
“Buyer” shall have the meaning set forth in the Preamble.
“Closing” shall mean the closing of the purchase and sale of the Shares
hereunder.
“Closing Date” shall mean the date of the Closing.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Common Stock” shall mean the shares of common stock, par value $.01 per share,
of Waters.
“E+E” shall have the meaning set forth in Section 2.04(a) hereof.

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“E+E Audited Balance Sheet” shall have the meaning set forth in Section 2.04(a)
hereof.
“Employee Benefit Programs” shall mean together the Employee Pension Benefit
Plans and the Employee Welfare Benefit Plans.
“Employee Pension Benefit Plans” shall have the meaning set forth in
Section 3.17(c) hereof.
“Employee Welfare Benefit Plans” shall have the meaning set forth in
Section 3.17(c) hereof.
“Environmental Requirements” shall mean all applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders, approvals, plans and
authorizations of all governmental agencies, departments, commissions, boards,
bureaus or instrumentalities of the United States, states and political
subdivisions thereof relating to the protection of human health or the
environment and all applicable judicial and administrative and regulatory
decrees, judgments and orders relating to the protection of human health or the
environment.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
“FDA” shall mean the United States Food and Drug Administration.
“Final Closing Balance Sheet” shall have the meaning set forth in section 2.04
hereof.
“Financial Statements” shall mean (i) Waters’ unaudited balance sheet as at
June 30, 2006, its unaudited statement of operations for the twelve-month period
ending June 30, 2006, (ii) its interim unaudited balance sheet as at March 31,
2007, its unaudited statement of operations for the nine-month period ending on
March 31, 2007, (iii) its unaudited balance sheet as at June 30, 2007, and its
unaudited statement of operations for the twelve-month period ending June 30,
2007, and (iv) its unaudited balance sheet as at July 31, 2007, and its
unaudited statement of operations for the one-month period ending July 31, 2007.
“Hazardous Materials” shall mean any chemical substance: (A) the presence of
which requires investigation or remediation under existing common law or any
federal, state or local statute, regulation, ordinance, order, action or policy;
(B) which is or becomes defined as a “hazardous waste” or “hazardous substance”
under any existing federal, state or local statute, regulation or ordinance or
amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act or the Resource
Conservation and Recovery Act; (C) the presence of which on adjacent properties
constitutes a trespass by Seller or

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Waters; (D) which contains gasoline, diesel fuel or other petroleum
hydrocarbons; or (E) which contains asbestos.
“Income Taxes” shall mean all federal, state, local and foreign income or gross
receipts taxes, alternative or add-on minimum taxes, together with any interest
or penalty thereon.
“Insurance Policies” shall have the meaning set forth in Section 3.16 hereof.
“Intercompany Account” shall have the meaning set forth in Section 6.04 hereof.
“IRS” shall mean the United States Internal Revenue Service.
“Knowledge of Seller”, “knowledge of Waters”, “knowledge of Seller and/or
Waters”, “to the knowledge of Seller”, “to the knowledge of Waters”, “to the
knowledge of Seller and/or Waters” or the like means the actual personal
knowledge of Messrs. Gerald W. Grabowski, Jeffrey Mathiesen or Douglas E. King,
but otherwise without inquiry or investigation.
“Leased Property” shall mean the real property located at 2112 15th Street, NW,
Rochester, Minnesota, currently leased by Seller.
“Loss” and “Losses” shall mean, in connection with an indemnity obligation of
Seller, all losses, damages, obligations, liabilities, fees and expenses
(including, without limitation, amounts paid in settlement, reasonable
attorneys’ fees and costs of investigation) incurred by Buyer.
“Manufacturing Data” shall mean all designs, models, plans, electric and
engineering plans and any other related data used by Waters to manufacture or
assemble a specific product.
“Material Adverse Effect” shall mean a material adverse effect on the business,
assets, financial condition or results of operations of Waters taken as a whole.
“Net Assets” shall mean Waters’ total assets (excluding cash and Intercompany
Account) minus Waters’ total current liabilities.
“Other Taxes” shall mean all taxes, charges, fees, customs duties, levies or
other assessments including, without limitation, property, transfer, occupation,
service, license, payroll, franchise, excise, withholding, ad valorem,
severance, stamp, premium, windfall profit, employment or other tax,
governmental fee or like assessment or charge of any kind whatsoever, together
with any interest or penalty, other than Income Taxes and Sales and Use Taxes.

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“Patent” shall mean the United States patent No. 5,963,335 filed with the United
States Patent and Trademark Office on June 24, 1998.
“Planned Dividend” shall have the meaning set forth in Section 6.04 hereof.
“Private Consents” shall have the meaning set forth in Section 3.07 hereof.
“Proprietary Rights” shall have the meaning set forth in Section 3.14 hereof.
“Purchase Price” shall have the meaning set forth in Section 2.01 hereof.
“Sales and Use Taxes” shall mean all sales and use taxes, together with any
interest or penalty thereon.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Seller” shall have the meaning set forth in the Preamble.
“Seller’s Closing Balance Sheet” shall mean have the meaning set forth in
Section 2.04(a) hereof.
“Shares” shall have the meaning set forth in the first recital hereof.
“Special Environment Indemnity” shall have the meaning set forth in
Section 7.01(d) hereof.
“Special ERISA Indemnity” shall have the meaning set forth in Section 7.01(b)
hereof.
“Special Individual Threshold” shall mean with respect to the Special ERISA
Indemnity and the Special Environment Indemnity an individual Loss in an amount
less than $5,000.00.
“Special Stock and Assets Indemnity” shall have the meaning set forth in
Section 7.01(c) hereof.
“Special Tax Indemnity” shall have the meaning set forth in Section 7.01(a)
hereof.
“Tail Insurance” shall have the meaning set forth in Section 5.03 hereof.
“Taxes” shall mean, collectively, Income Taxes, Sales and Use Taxes and Other
Taxes.

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“Tax Return” shall include any report, statement, form, return or other document
or information required to be supplied to a taxing authority in connection with
Taxes.
“Third Party Claim” shall have the meaning set forth in Section 7.03(b) hereof.
“Waters” shall have the meaning set forth in the first recital hereof.
“Waters Employees” shall mean the employees listed on Schedule 1 only.
“Waters Employees Compensation Liabilities” shall mean the value of all Accrued
PTO of Waters Employees who accept employment by Buyer or Waters after the
Closing Date.
“Wells Fargo” shall mean Wells Fargo Bank, National Association.
“Wells Fargo Release Letter” shall mean the letter of Wells Fargo, dated
July 22, 2007, and agreed to and executed by Seller, Zareba Security, Inc.,
Buyer and Buyer’s counsel.
ARTICLE II PURCHASE AND SALE
Section 2.01. Purchase and Sale.
     Subject to the terms and conditions of this Agreement, at the Closing,
Seller shall sell, transfer and deliver to Buyer, and Buyer shall purchase from
Seller, the Shares free and clear of any Adverse Rights, representing 100% of
the issued and outstanding shares of capital stock of Waters. The purchase price
for the Shares shall be US$5,000,000 (the “Purchase Price”).
Section 2.02. Closing.
     (a) The Closing hereunder shall take place at the offices of Abitbol &
Cherry LLP, 545 Fifth Avenue, Suite 640, New York, New York on August 1, 2007,
provided, that the conditions set forth in Articles IX and X (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions as provided herein) shall have
been satisfied, or at such other time (not later than August 3, 2007) and place
as Buyer and Seller may agree.
     (b) At the Closing, Seller shall deliver to Buyer, free and clear of any
Adverse Rights, certificate #01 for the Shares, in genuine and unaltered form,
duly endorsed or accompanied by stock powers duly endorsed in blank, with any
required transfer stamps affixed thereto.
     (c) The Purchase Price shall be paid, at the Closing, by Buyer to Seller in
immediately available funds by wire transfer in United

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States dollars to an account designated by Seller by notice to Buyer not later
than two business days prior to the Closing Date.
     (d) At the Closing, Seller shall also deliver to Buyer the opinion,
certificates, contracts, documents and other instruments to be delivered under
Article IX.
     (e) At the closing, Buyer shall deliver to Seller the documents to be
delivered under Article X, if any.
Section 2.03. Post-Closing Adjustment. Subsequent to the Closing Date and within
ten business days of Buyer’s and Seller’s receipt of the E+E Audited Balance
Sheet or the Final Closing Balance Sheet, as the case may be, Seller shall pay
to Buyer a sum equal to the difference, if any, between (i) $601,000.00 and
(ii) the Net Assets set forth in Seller’s Closing Balance Sheet or the Final
Closing Balance Sheet, as the case may be; it being understood that no such
payment shall be due if the value of the Net Assets in either said Closing
Balance Sheet is equal to or greater than $575,000.00. This post-closing
adjustment determined pursuant to this Section 2.03 and Section 2.04 hereof
shall be Buyer’s sole remedy respecting any matter relevant to the value of the
Net Assets.
Section 2.04. Procedure for Post-Closing Adjustment.
     (a) As promptly as practicable after the Closing Date and in no event later
than September 15, 2007, Seller shall deliver to Buyer Waters’ unaudited balance
sheet as at July 31, 2007 (the “Seller’s Closing Balance Sheet”) and a
certificate signed by Seller’s President setting forth Seller’s calculation of
the Net Assets based on such Seller’s Closing Balance Sheet. The Seller’s
Closing Balance Sheet shall (i) fairly present Waters’ financial position as at
the close of business on July 31, 2007, and (ii) have been prepared on a
consistent basis with, and using assumptions and methodologies consistent with
those used in, Waters’ previous Financial Statements, as the same were tested
and concurred with by Esposito + Emr, Inc., Buyer’s independent certified
accountants (“E+E”) in connection with their audit of Waters’ balance sheet as
at March 31, 2007 (the “E+E Audited Balance Sheet”).
     (b) Upon delivery of Seller’s Closing Balance Sheet, Seller shall permit
E+E to review Seller’s Closing Balance Sheet and shall make available to them
all work papers, memoranda, schedules, other documents and information used by
Seller in preparing such Seller’s Closing Balance Sheet. E+E shall verify that
Seller’s Closing Balance Sheet was prepared on a basis consistent with the E+E
Audited Balance Sheet and using assumptions and methodologies consistent with
those used by Waters and tested and concurred with by E+E in the preparation of
the E+E Audited Balance Sheet. Notwithstanding the foregoing, if a line item
appears on the Seller’s Closing Balance Sheet for a liability, which did not
exist

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in the E+E Audited Balance Sheet, E+E shall be authorized to perform an audit
with respect to such new liability.
     (c) Buyer shall notify Seller if, pursuant to such review or audit, as the
case may be, E+E shall have determined that the Seller’s Closing Balance Sheet
(A) was not prepared in accordance with the parameters set forth in the second
sentence of paragraph (b) above and (B) Waters’ departure from such parameters
results in an overstatement of the Net Assets on the Seller’s Closing Balance
Sheet to an amount greater than $575,000.00 when they otherwise would have been
less than $575,000.00. If Seller does not agree with E+E’s determination and
Buyer and Seller cannot agree on a value of the Net Assets within 30 days of
Buyer’s notification, Buyer shall appoint a third independent certified
accountants firm, reasonably acceptable by Seller, to make its own determination
whether, based on the documentation provided to E+E (and any other information
provided to E+E), Seller’s Closing Balance Sheet was prepared on a basis
consistent with the E+E Audited Balance Sheet and using assumptions and
methodologies consistent with those used by Waters and tested and concurred with
by E+E in the preparation of the E+E Audited Balance Sheet. Such determination
shall be final (the “Final Closing Balance Sheet”) and binding upon both
parties. Buyer shall pay the fees and expenses of the third independent
certified accountants firm.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
For the purpose of inducing Buyer to purchase the Shares and pay the Purchase
Price, Seller hereby represents and warrants to Buyer as follows:
Section 3.01. Ownership of Shares. Seller is the sole owner of the Shares.
Seller has good and marketable title to the Shares, free and clear of any and
all Adverse Rights, except for the lien of Wells Fargo, which lien shall be
released on the Closing Date pursuant to the Wells Fargo Release Letter. Upon
consummation of the transactions contemplated by this Agreement, Buyer will
acquire good and marketable title to the Shares, free and clear of any and all
Adverse Rights.
Section 3.02. Organization and Good Standing. (a) Each of Seller and Waters is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota. Seller has all requisite corporate power and
authority to own and hold the Shares. Waters has all requisite corporate power
and authority to own, lease and operate the assets it purports to own, lease or
operate and to carry on its business as it is now being conducted.
     (b) Waters is qualified to do business in the State of Minnesota and every
other jurisdiction in which the nature of business transacted by it or the
character of the assets owned or leased by it requires such licensing or
qualification, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect.

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Section 3.03. Capitalization. Waters’ authorized capital stock consists of
50,000,000 shares of Common Stock of which 1,000 shares are issued and
outstanding and are owned by Seller. All of the Shares have been duly authorized
and validly issued, and are fully paid and non-assessable. There are no
outstanding securities convertible into or exchangeable for, or any outstanding
warrants, calls, options or other agreements or commitments for the issuance,
sale or delivery of, any shares of Waters’ capital stock or any securities so
convertible or exchangeable.
Section 3.04. No Other Agreements to Sell the Shares, Capital Stock or Assets.
Neither Seller or Waters is a party to any legal obligation or arrangement,
absolute or contingent, to any other person or entity to sell any of Waters’
assets, shares of capital stock or the Shares or any part thereof, other than
sales of inventory in the ordinary course of Waters’ business, or to sell or
place any restriction on the transfer of any of the Shares, or to effect any
merger, consolidation or other reorganization of Waters or to enter into any
agreement with respect thereto.
Section 3.05. Authorization, Execution and Delivery. The execution, delivery and
performance by Seller of this Agreement and the consummation of the transactions
contemplated hereby are within Seller’s corporate powers and have been duly
authorized by all necessary corporate action on Seller’s part. No approval of
Seller’s shareholders is required to consummate the transactions contemplated
hereby and, with respect to Seller, to perform its obligations hereunder. This
Agreement constitutes a legal, valid and binding obligation of Seller,
enforceable against it in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent transfer or other
similar laws affecting the enforcement of creditors’ rights in general or by
general principles of equity.
Section 3.06. Governmental Approvals and Filings; Permits and Licenses.
(a) Except as set forth in Schedule 3.06 (a), no consent or approval of,
authorization or permit from, declaration or notification to, or filing with,
any governmental or regulatory authority or agency is required in order (i) to
permit Seller to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby,
(ii) to prevent the termination of any right, privilege, license or agreement of
Waters, or to prevent any loss to Waters, by reason of the Closing of the
transactions contemplated by this Agreement or (iii) to allow Waters to conduct
its business following the Closing as currently conducted.
     (b) Schedule 3.6 (b) sets forth all of the Federal, state, and local or
other governmental permits, licenses and similar authorizations given or granted
to Seller and/or Waters, in effect on the date hereof and required for Waters to
operate its business as currently conducted. With respect to such permits,
licenses and similar authorizations required to be assigned to Buyer, Seller is
not aware of any reason why Seller should not be able to obtain any

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required consent, approval, authorization or permit for assignment to Buyer.
Seller or Waters has complied in all material respects with all conditions or
requirements imposed by such permits and licenses, and neither Seller or Waters
has received any notice of cancellation or termination of, nor, to the knowledge
of Seller, no governmental or regulatory authority or agency intends to cancel
or terminate, any of such permits and licenses.
Section 3.07. No Conflict. Except for the obtaining of such consents and waivers
as are specifically contemplated by this Agreement or are listed and described
in Schedule 3.07 to this Agreement (the “Private Consents”), none of the
execution, delivery or performance of this Agreement by Seller, or the
consummation by Seller of the transactions contemplated hereby does or will
(a) conflict with or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or Bylaws of Seller or Waters;
(b) conflict with, result in a breach, violation of, or default (or an event
which with notice or lapse of time or both would become a default) under, or
give any third party any right to terminate, modify, cancel or accelerate the
performance required by, any of the terms, conditions or provisions of, or
require the consent of any third party to, any note, bond, mortgage, indenture,
deed of trust, license, permit, loan agreement, lease, sublease or other
material agreement or obligation to which Seller or Waters is a party, or by
which any of them is bound or to which any of their assets may be subject;
(c) give rise to a declaration or imposition of any Adverse Rights of any nature
whatsoever upon the Shares or any Adverse Rights upon any of the assets of
Waters; (d) violate or conflict with any writ, injunction, order, arbitration
award, judgment or decree applicable to Seller or Waters or to which any of
their assets is subject; (e) violate or conflict with any rule or regulation
applicable to Seller or Waters; or (f) have an adverse effect on any of the
permits, licenses or other authorizations listed on Schedule 3.6(b).
Section 3.08. Certificate of Incorporation and Bylaws. Seller has delivered to
Buyer copies of Waters’ Certificate of Incorporation and Bylaws, including all
amendments thereto, which are complete and correct copies of such instruments as
presently in effect.
Section 3.09. Financial Statements. Seller has heretofore furnished Buyer with
the Financial Statements. The Financial Statements:
     (a) are accurate, complete and have been prepared in accordance with the
books and records of Waters and have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved;
     (b) the balance sheets contained in the Financial Statements present fairly
the financial position of Waters as of the respective dates thereof; and

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     (c) the statements of operations contained in the Financial Statements
present fairly the results of operations of Waters for the respective periods
indicated therein.
Section 3.10. Interim Operations. Except as set forth in Schedule 3.10, since
March 31, 2007, Waters’ business has been conducted in the ordinary course in a
manner consistent with past practice and there has not been: (a) to the
knowledge of Seller, any event that constitutes or is reasonably likely to
result in a Material Adverse Effect; (b) any declaration or payment of any
dividends by Waters except the Planned Dividend; (c) any sale or transfer by
Waters of any assets, except sales of inventory in the ordinary course of
business and transactions reflected in the Intercompany Account, or any
cancellation of any debts or c1aims; (d) any mortgage, pledge or subjection to
any lien, charge or encumbrance of any kind on any assets of Waters; (e) any
material modification, amendment or termination of any material contract or
agreement to which Waters is a party; (f) any increase in, or commitment to
increase, the compensation payable or to become payable to any Waters’ Employee
or any officer, director, or other agent of Waters or any bonus paid to or
similar arrangement made with any such person; or (g) any material alteration in
the accounting practices or principles applicable to the Financial Statements.
The elimination of the Intercompany Account and the payment of the Planned
Dividend shall not create any obligation or liability of any nature whatsoever
on Buyer.
Section 3.11. Subsidiaries. Waters does not have any subsidiaries.
Section 3.12. Properties. Waters does not own any real property.
Section 3.13. Leased Properties. (a) Waters does not formally lease any real
property, but Waters uses with permission of Seller the Leased Property and
Waters’ books and records reflect that Waters bears the full cost of the lease
respecting the Leased Property with the same effect as if Waters was the lessee
of the Leased Property.
     (b) The Leased Property constitutes all the real estate necessary for the
operation of Waters’ business as presently conducted; provided, however, that
Buyer understands that certain administrative functions are provided by Seller
from Seller’s principal executive office. Seller has a valid leasehold interest
in the Leased Property. A true, complete and correct copy of the lease agreement
currently understood by the landlord, Seller and Waters to be in effect with
respect to the Leased Property has been delivered to Buyer. The lease with
respect to the Leased Property is in full force and effect and is valid and
enforceable in accordance with its terms against the parties thereto, except as
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
transfer or other similar laws affecting the enforcement of creditors’ rights in
general or by general principles of equity. All payment for rent and additional
rent due under such lease has been duly and timely paid in accordance with the
terms of such

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lease and all other material obligations of Seller thereunder have been
satisfied in accordance with the terms thereof. Neither Seller or Waters is in
default with respect to any material term or condition of such lease, nor, to
the knowledge of Seller, has any event occurred which through the passage of
time or the giving of notice, or both, would constitute a default thereunder by
Seller or Waters or would cause the acceleration of any obligation of Seller or
Waters with respect to the Leased Property, affect or result in the questioning
of the rights of Seller or Waters to the continued possession of the Leased
Property or create a lien or encumbrance upon Seller’s and/or Waters’ leasehold
interest in the Leased Property. Seller shall cooperate with Buyer to (i) obtain
from the Leased Property’s landlord consent to the assignment of the lease to
Buyer or (ii) consent to a sublease of the Leased Property from Seller to Buyer.
     (c) Neither Seller or Waters has received any written notice that Seller or
Waters is in violation of any building code, zoning ordinance or similar law or
regulation applicable to the Leased Property, and, to the knowledge of Seller,
there is no present plan, study or effort by any governmental authority or
agency or any private party or entity which in any way affects or would affect
the continuation of Waters’ current use of and activities on the Leased
Property.
     (d) The Leased Property is in good condition, ordinary wear and tear
excepted, and has been maintained by Seller or Waters materially in accordance
with the terms and conditions of the lease therefor. To Seller’s knowledge, no
repair, whether structural or other, needs to be performed to permit Waters
lawfully to conduct its business in the Leased Property.
Section 3.14. Proprietary Rights. Set forth in Schedule 3.14 is a list and brief
description or identification of all Proprietary Rights of Waters. Except as set
forth in Schedule 3.14, (a) Waters owns or possesses adequate licenses or other
valid rights to use all (i) United States patents, trademarks, trade names,
trade secrets, copyrights, service marks and applications therefor, and domain
names and (ii) all computer and electronic processing programs and software
which are currently used by Waters in its business (the assets described in
clauses (i) and (ii) are hereinafter referred to as the “Proprietary Rights”);
(b) the validity of the Proprietary Rights and of Waters’ title thereto (x) is
not being questioned in any litigation or dispute to which Seller, Waters or any
subsidiary of Seller is a party, nor, to the knowledge of Seller, is any such
litigation or dispute threatened, and (ii) has not been questioned in any
litigation or dispute to which Seller, Waters or any such subsidiary was a
party. The consummation on the Closing Date by Seller of the transactions
contemplated hereby will not result in the loss by Waters or impairment in
Waters’ hands of any of the rights referred in clause (i) above.

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Section 3.15. Contracts. (a) Schedule 3.15 sets forth a true and correct list of
all material written contracts to which Waters is a party as of the date hereof,
excluding all contracts respecting the sale of products. Seller has delivered or
made available to Buyer true and complete copies of each contract listed in
Schedule 3.15. All contracts listed in such Schedule 3.15 are in full force and
effect and are valid and binding in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
transfer or other similar laws affecting the enforcement of creditors’ rights in
general or by general principles of equity.
     (b) Except as set forth in one of the contracts listed in Schedule 3.15,
neither Waters or Seller for the account of Waters is a party to any
(w) contracts for the purchase of materials, commodities, supplies, other
personal property or real property, the receipt of services or the sale of
products each in excess of $5,000 other than in the ordinary course of business;
(x) joint venture or similar contract or agreement; (y) mortgage, indenture,
security agreement, note, loan agreement, guarantee or other agreement or
instrument involving Waters relating to indebtedness other than the Credit and
Security Agreement with Wells Fargo, dated as of September 7, 2004, and any
amendment thereto (as amended, the “Credit Agreement”), which Credit Agreement
upon the consent of Wells Fargo shall not be applicable after the Closing Date
in any respect to Waters, the Shares and Waters’ assets; or (z) other material
agreements not made in the ordinary course of business.
     (c) Waters has in all material respects performed all obligations to be
performed by it to date, and, to the knowledge of Seller, no event has occurred
which constitutes a violation or breach of, or a default (or event which with
the passage of time or the giving of notice or both would constitute a default)
by Waters, under any such contracts. To the knowledge of Seller, no event has
occurred which constitutes a violation or breach of, or a default (or event
which with the passage of time or the giving of notice or both would constitute
a default) under any such contract by any third party thereto, and, to the
knowledge of Seller, each such third party has in all material respects
performed all material obligations required to be performed by such third party
to date thereunder.
     (d) Waters has good and marketable title or otherwise has the right to use
each item of personal property (including customer lists) now used by it in the
operation of its business or the use of which is necessary for the performance
of any material contract to which it is a party.
Section 3.16. Insurance. Schedule 3.16 contains a true and complete list of all
current insurance policies pursuant to which Waters or its assets are and will
be insured through the Closing Date, specifying the insurer, amount of coverage,
and type of insurance (the “Insurance Policies”). The Insurance Policies are
outstanding

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and in force, and all premiums due under such Policies have been paid. Buyer
acknowledges that none of the Insurance Policies will be in force with respect
to Waters, its business, assets or operations upon consummation of the
transactions contemplated hereby.
Section 3.17. Employee Relations; Benefit Plans. (a) Except as set forth in
Schedule 3.17(a), (i) with respect to the Waters Employees, Seller and Waters
are in material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours;
(ii) with respect to the Waters Employees, neither Seller or Waters has received
in the six (6) months prior to the date of this Agreement a complaint, demand
letter or charge issued by a federal, state or local agency which alleges a
violation by Seller or Waters of any federal, state or local civil rights laws,
or any federal, state or local law or regulation respecting employment and
employment practices, terms and conditions of employment, wages and hours,
including the Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1991, the Americans with Disabilities Act, the Age Discrimination in Employment
Act, as amended, the Employee Retirement Income Security Act of 1974, Fair Labor
Standards Act, as amended, the National Labor Relations Act, as amended, the
Occupational Safety and Health Act, as amended, or the Vocational Rehabilitation
Act of 1973, as amended; (iii) no collective bargaining agreement covers any of
the Waters Employees in connection with their employment therewith, nor is any
being negotiated by Seller or Waters, nor with respect to the Waters Employees
are there any organizational campaigns, pending petitions or, to the knowledge
of Seller, activities seeking recognition of a collective bargaining unit;
(iv) with respect to the Waters Employees, there is no unfair labor practice
complaint against Seller or Waters pending before the National Labor Relations
Board or any comparable state, local or foreign agency; and (v) with respect to
the Waters Employees, there is no labor strike, dispute, slowdown, stoppage or
organizational effort pending or, to the knowledge of Seller, any labor strike,
dispute, slowdown, stoppage or organizational effort threatened against Seller
or Waters.
     (b) Schedule 3.17(b) contains a true and complete list of all written
employment contracts (including severance arrangements or any other arrangements
under which the Waters Employees will be entitled to receive payment, or
accelerate any payment due, from Seller or Waters as a result of the
transactions contemplated by this Agreement). None of the Waters Employees are
employees of Waters, but are employed by Seller. The Waters Employees are all of
the employees of Seller whose duties principally involve the Waters business.
Except as set forth in such Schedule 3.17(b), to Seller’s knowledge, no such
employee intends to terminate his or her employment relationship with Waters.
     (c) Schedule 3.17(c) contains a true and complete list of all “employee
pension benefit plans”, as defined in Section 3(2) of ERISA which are
established, maintained or contributed to by Seller

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or Waters with respect to any of the Waters Employees (the “Employee Pension
Benefit Plans”), all “employee welfare benefit plans”, as defined in
Section 3(1) of ERISA, which are established, maintained or contributed to by
Seller or Waters with respect to the Waters Employees (the “Employee Welfare
Benefit Plans”), and each employment, severance or other similar contract,
arrangement or policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements), workers’
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits or for deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation or other forms of incentive
compensation, post-retirement insurance, compensation or benefit which are
established, maintained or contributed to by Seller or Waters with respect to
the Waters Employees. Except as set forth in Schedule 3.17(c), none of the
Employee Benefit Programs to constitutes a “multiemployer plan”, as defined in
Section 3(37) of ERISA (a “Multiemployer Plan”). There is no liability, direct
or indirect, fixed or contingent, against Waters for any Employee Benefit
Program with respect to any “leased employees” as defined in Section 414(n) of
the Code. Each Employee Benefit Program is correctly categorized within
Schedule 3.17(c) as an Employee Pension Benefit Plan or an Employee Welfare
Benefit Plan, as appropriate. With respect to each Employee Benefit Program, to
the extent applicable to such program, Schedule 3.17(c) contains a true and
complete list of (and Seller has, or before the Closing will have, delivered to
Buyer true and materially complete copies of):
     (i) the most recent IRS determination letter;
     (ii) the most recent Annual Report (Form 5500 Series) and accompanying
schedules, as filed pursuant to applicable law;
     (iii) the Summary Plan Description (as currently in effect) distributed to
the Waters Employees;
     (iv) the most recent trustee reports, financial statements, actuarial
reports or audit reports prepared in connection therewith;
     (v) material written communications distributed to the Waters Employees
during the six months prior to the date of this Agreement that modify the
summary plan description;
     (vi) written interpretations of such Employee Benefit Programs prepared by
or at the request of Seller or Waters; and
     (vii) the most recent documents (including plan, related trust and
insurance contracts and any amendment thereto) governing the Employee Benefit
Programs.
     (d) Each of the Employee Benefit Programs materially complies currently,
and has complied in the past, both as to form and operation, with the terms of
such plans and with the applicable provisions of ERISA, the Code and other
applicable federal laws. Except as otherwise set forth in Schedule 3.17(d), all
necessary governmental approvals for the Employee Benefit Programs have been
obtained and a favorable determination as to the qualification under Section
401(a) of the Code, as amended, of each of the Employee Pension Benefit Plans
and each amendment thereto has been made by the IRS, and a recognition of
exemption from federal income

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taxation under Section 501(a) of the Code of each of the funded Employee Welfare
Benefit Plans has been made by the IRS, and, to the knowledge of Seller, nothing
has occurred since the date of such determination or recognition letter that
would adversely affect such qualification or exemption.
     (e) There are no civil or criminal actions, suits or claims pending or, to
the knowledge of Seller, threatened or which, to the knowledge of Seller, could
reasonably be expected to be asserted against Waters in connection with any of
the Employee Benefit Programs or against any administrator, party in interest or
fiduciary thereof. To the knowledge of Seller, none of the Employee Pension
Benefit Plans or Employee Welfare Benefit Plans or any fiduciary thereof has
been the direct or indirect subject of an audit investigation or examination by
any governmental or quasi-governmental agency.
     (f) To the knowledge of Seller, no “accumulated funding deficiency” (as
defined in Section 412 of the Code) currently exists with respect to any
Employee Pension Benefit Plan.
     (g) To the knowledge of Seller, no “reportable event” (as defined in
Section 4043{b) of ERISA) has occurred or is continuing with respect to any
Employee Pension Benefit Plan.
     (h) To the knowledge of Seller, no “prohibited transaction” (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) has occurred with
respect to any Employee Pension Benefit Plan or Employee Welfare Benefit Plan.
     (i) With respect to the Waters Employees, neither Seller nor Waters has
(A) ceased operations at a facility so as to become subject to the provisions of
Section 4068 (f) of ERISA; (B) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of ERISA; (C) ceased making
contributions on or before the date of this Agreement to any Employee Pension
Benefit Plan subject to the provisions of Section 4064(a) of ERISA to which such
entity made (or was obligated to make) contributions during any of the five
years prior to the date of this Agreement; (D) incurred or caused to occur a
complete withdrawal (within the meaning of Section 4203 of ERISA) or a partial
withdrawal (within the meaning of Section 4205 of ERISA) from a Multiemployer
Plan so as to incur withdrawal liability under Section 4201 of ERISA (without
regard to subsequent reduction or waiver of such liability under Section 4207 or
4208 of ERISA); or (E) been a party to any transaction or agreement with respect
to which the provisions of Section 4204 of ERISA were applicable.
     (j) To the knowledge of Seller, no notice of intent to terminate an
Employee Pension Benefit Plan has been filed nor has any such Plan been
terminated pursuant to the provisions of Section 4041 of ERISA.

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     (k) The Pension Benefit Guaranty Corporation (the “PBGC”) has not
instituted proceedings to terminate (or appoint a trustee to administer) an
Employee Pension Benefit Plan and, to the knowledge of Seller, no event has
occurred or condition exists which might constitute grounds under the provisions
of Section 4042 of ERISA for the termination of (or the appointment of a trustee
to administer) any such Plan.
     (l) To the knowledge of Seller, nothing done or omitted to be done and no
transaction or holding of any asset under or in connection with any Employee
Benefit Program has or will make Waters, or any officer or director of Waters,
subject to any liability under Title I of ERISA or liable for any tax pursuant
to Section 4972 or Sections 4975 through 4980, inclusive, of the Code.
     (m) Except as identified in Schedule 3.17(m), or as otherwise mandated by
law or any Employee Pension Benefit Plan, no Employee Benefit Program provides
post-retirement health, medical or death benefits for retired employees of
Waters. No action has been taken by Waters that would prevent Buyer from
amending or terminating any Employee Benefit Program in respect of any active
Waters Employee, other than any limitations imposed under the terms of a
collective bargaining agreement.
     (n) Except as disclosed on Schedule 3.17(n), to the knowledge of Seller,
all Employee Benefit Programs established, maintained or contributed to by
Seller or Waters with respect to the Waters Employees have been maintained, in
form and in operation, in compliance with the continuation coverage provisions
set forth in Sections 162(k) and 4980B of the Code and any applicable state laws
or regulations.
Section 3.18. Legal Proceedings. Except as set forth on Schedule 3.18, neither
Seller nor Waters is the subject of or a party to, or has received any written
notice of, any legal action, suit, arbitration or other proceeding or
investigation (including any such legal action, suit, arbitration or other
proceeding or investigation relating to products liability claims) which is
pending or threatened before any court or administrative agency, and there are
no outstanding orders, judgments, consent decrees, stipulations or similar
obligations by or with any court, administrative agency or other governmental
authority binding on Waters. Except as set forth on such Schedule 3.18, none of
Waters, nor any of its officers, directors or employees has been permanently or
temporarily enjoined by any order, judgment or decree of any court or any
governmental authority from engaging in or continuing any conduct or practice in
connection with Waters’ business.
Section 3.19. Brokers and Investment Advisers. No broker, finder or investment
adviser has acted directly or indirectly as such for, or is entitled to any
compensation from, Seller, Waters or any subsidiary of Seller in connection with
this Agreement or the transactions contemplated hereby.

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Section 3.20. Certain Tax Matters. (a) (i) Each of Seller and Waters (or Seller
on behalf of Waters) has timely filed or will timely file prior to the Closing
Date all Tax Returns required to be filed prior to the Closing Date; (ii) the
Tax Returns of Waters which were or will be due prior to the Closing Date are,
to the extent already filed, and if not yet filed, will be, accurate and
complete for all taxable periods ending on or before the Closing Date and
accurately set forth or will accurately set forth all items to the extent
required by the Code or treasury regulations thereunder or by applicable state,
local or foreign tax laws, regulations or rules to be reflected or included in
such returns; (iii)(A) Seller, Waters and any affiliates of Seller (as defined
in Section 1504(a) of the Code), have timely paid, will timely pay or timely
accrue on the books and records of Waters prior to the Closing Date all Taxes
(other than Income Taxes) payable for all periods ending on or before the
Closing Date, (B) for all periods beginning before and ending after the Closing
Date, all Taxes payable (or that will become payable) by Waters attributable to
the portion of the period ending as of the Closing Date have been timely paid or
will be timely paid by Seller or, other than Income Taxes, will be timely
accrued on the books and records of Waters prior to the Closing, and (C) the Tax
Returns of Seller and its affiliates (as defined in Section 1504(a) of the Code)
which were due prior to the Closing Date are accurate and complete for all
relevant taxable periods and accurately set forth all items to the extent
required by the Code or treasury regulations thereunder or by applicable state,
local or foreign tax laws, regulations or rules to be reflected or included in
such Tax Returns; (iv) there are no liens for Taxes upon any assets of Waters;
and (v) there is no action, suit, proceeding, investigation, audit or claim now
proposed or pending against or with respect to Seller and its Affiliates in
respect of any Tax for which Waters is liable, except as provided in
Schedule 3.20, and any such action, suit, proceeding, investigation, audit or
claim is being contested in good faith through appropriate proceedings.
     (b) There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any Tax Returns required to be filed with
respect to Waters and neither Seller nor Waters has requested any extension of
time within which to file any Tax Return.
Section 3.21. Environmental Matters. Except as set forth on Schedule 3.21,:
     (a) neither Seller or Waters has engaged in or permitted any operations or
activities upon, or any use or occupancy of the Leased Property, or any portion
thereof, for the purpose of or in any way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of any Hazardous Materials (whether legal or illegal, accidental or
intentional) on, under, in or about the Leased Property, or transported any
Hazardous Materials to, from or across the Leased Property, nor are any
Hazardous Materials presently constructed,

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deposited, stored, or otherwise located on, under, in or about the Leased
Property, nor, to the knowledge of Seller, have any Hazardous Materials migrated
from the Leased Property upon or beneath other properties, nor, to the knowledge
of Seller, have any Hazardous Materials migrated or threatened to migrate from
other properties upon, about or beneath the Leased Property;
     (b) neither Seller nor Waters has constructed, placed, deposited, stored,
disposed of or located on the Leased Property any asbestos in any form which has
become or threatens to become friable, and, to the knowledge of Seller, no third
party has constructed, placed, deposited, stored, disposed of or located on the
Leased Property any asbestos in any form which has become or threatens to become
friable;
     (c) to the knowledge of Seller, no underground treatment or storage tanks,
sumps, or water, gas or oil wells or piping appurtenant to any of the above are
or have ever been located on the Leased Property;
     (d) neither Seller or Waters has at or from the Leased Property engaged in
any release, discharge, dumping or disposal of polychlorinated biphenyls (PCBs)
nor are there any transformers, capacitors, ballasts or other equipment which
contains dielectric fluid containing PCBs at levels in excess of fifty parts per
million (50 ppm);
     (e) neither Seller nor Waters has constructed, placed, deposited, stored,
disposed of or located on the Leased Property any insulating material containing
urea formaldehyde and, to the knowledge of Seller, no third party has
constructed, placed, deposited, stored, disposed of or located on the Leased
Property any insulating material containing urea formaldehyde; and
     (f) neither Seller or Waters has received notice or other communication
concerning any alleged violation of Environmental Requirements respecting the
Leased Property or Waters business, whether or not corrected to the satisfaction
of the appropriate authority, nor notice or other communication concerning
alleged liability for environmental damages in connection with the Leased
Property, and there exists no writ, injunction, decree, order or judgment
outstanding, nor any lawsuit, claim, proceeding, citation, directive, summons or
investigation, pending or, to the knowledge of Seller, threatened, relating to
the ownership, use, maintenance or operation of the Leased Property by Seller or
Waters, or from alleged violation of any Environmental Requirements applicable
to the Lease Property or Waters business, or from the suspected presence of
Hazardous Material on the Leased Property.
Section 3.22. Transactions with Affiliates. (a) Except as set forth on Schedule
3.22, Waters is not indebted, directly or indirectly, to any Affiliate, other
than for salaries for services rendered or reimbursable business expenses
incurred in the ordinary course of business, nor is any such Affiliate (or
member of the immediate

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family of such Affiliate) indebted to Waters, except for advances made to Waters
Employees in the ordinary course of business in order to meet reimbursable
business expenses and transactions reflected in the Intercompany Account in the
ordinary course of business.
     (b) Except as set forth on Schedule 3.22, Waters is not a party to any
contract, lease, agreement or other arrangement with any Affiliate (or any
member of the immediate family of any Affiliate).
Section 3.23. No Undisclosed Liabilities. Waters does not have any indebtedness
for money borrowed. Waters has not incurred any undisclosed liabilities or
obligations of any nature, other than in the ordinary course of business,
whether absolute, accrued, contingent or otherwise, and whether due or to become
due which have not been disclosed to Buyer in this Agreement, the Financial
Statements or the Schedules attached hereto and which remain undischarged.
Section 3.24. Compliance with Laws. Except as set forth on Schedule 3.24, to the
knowledge of Seller, Waters is not in violation of or in default under, and, to
the knowledge of Seller, there does not exist any basis for any claim of
violation of or default under, any judgment, decree, or order, or any law, rule
or regulation, including, without limitation, those relating to insurance,
usury, health, fire and safety (including the Occupational Health and Safety
Act), environmental protection, waste disposal and pollution control.
Section 3.25. Title to Assets. Waters has and, upon consummation of the
transactions contemplated hereby, Waters shall continue to have, good and
marketable title to all of Waters’ assets appearing in the Financial Statements
or Waters’ other books and records free and clear of any Adverse Rights.
Section 3.26. Substantial Customers and Suppliers. Schedule 3.26(a) hereto lists
Waters’ ten largest customers, on the basis of revenues for goods sold for the
last two twelve-month periods. Schedule 3.26(b) hereto lists Waters’ ten largest
suppliers, on the basis of cost of goods or services purchased for the last two
twelve-month periods. Except as disclosed in Schedule 3.26(c), to the knowledge
of Seller, no customer or supplier listed in Schedule 3.26 (a) or Schedule 3.26
(b) hereto, has threatened to cease or materially reduce such purchases, use,
sales or provision of services after the date hereof.
Section 3.27. Business Accounts. Waters does not maintain any account or safe
deposit box with banks, trust companies, securities brokers and other financial
institutions. Waters has no powers of attorney or comparable delegations of
authority outstanding.
Section 3.28. Establishment Registration. Schedule 3.28 contains the full
application and correspondence file with the FDA

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maintained by Seller and/or Waters respecting the establishment registration of
the Leased Property. The Leased Property is duly registered with an active
status with the FDA as a manufacturer, repackager/relabeller, initial
distributor, contract manufacturer “establishment”, as such term is defined in
21 CFR 807. To the knowledge of Seller, no events have occurred or are
continuing with respect to Waters, which could reasonably be foreseen to
adversely affect the status of such registration.
Section 3.29. Medical Devices. (a) Schedule 3.29 contains the complete premarket
notification and correspondence file with the FDA maintained by Seller and/or
Waters respecting Waters’ RM3 device. The RM3 device is duly listed with an
active status with the FDA under 21 CFR 876.5880. Waters owns or has the
unrestricted right to use the Manufacturing Data required to enable it to
manufacture or have manufactured for it the RM3 device (including all
accessories thereto) and/or their respective components in their respective
current forms or configurations.
     (b) Waters owns or has the unrestricted right to use the Manufacturing Data
required to enable it to manufacture or have manufactured for it Water’s OXICOM
device (including all accessories thereto) and/or their respective components in
their respective current forms or configurations.
     (c) In developing the specifications for the manufacture of the devices
referred in paragraphs (a) and (b) above, to the knowledge of Seller and Waters,
neither Seller or Waters infringed any patent, copyrights or other similar
rights of any third party.
     (d) Waters warrants to its customers the devices referred in paragraphs
(a) and (b) above manufactured or sold by Waters are free from defects in
materials and workmanship when properly installed and used for a period of one
year from the date of shipment from the factory. Seller has made available to
Buyer Sellers and Water’s information respecting product warranty claims made by
third parties respecting the devices referred in paragraphs (a) and (b) above.
Section 3.30. Accounts Receivable. Except as set forth in Schedule 3.30, Waters’
accounts receivable reflected on Seller’s balance sheet as at June 30, 2007
(i) arose from bona fide sales transactions in the ordinary course of business
and are payable pursuant to the applicable terms of sale, (ii) are legal, valid
and binding obligations of the respective debtors enforceable in accordance with
their terms, (iii) are not subject to any valid set-off or counterclaim, (iv) do
not represent obligations for goods sold on consignment, on approval or on a
sale-or-return basis or subject to any other repurchase or return arrangement,
(v) are collectible in the ordinary course of business consistent with past
practice in the aggregate recorded amounts thereof, net of any applicable
reserve reflected in said balance sheet, and (vi) are not the subject of any
actions or proceedings brought by or on behalf of Waters; provided, however,
that neither Seller or Waters

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represent or warrant the collectibility of Waters accounts receivable.
Section 3.31. Inventory. All inventory of Waters reflected on the balance sheet
included in Seller’s balance sheet as at June 30, 2007 consists of a quality and
quantity usable and salable in the ordinary course of business consistent with
past practices. All items included in the inventory of Waters are its property,
will be free and clear of any Adverse Rights at Closing, are not held by Waters
on consignment from others and conform in all material respects to all standards
applicable to such inventory or its use or sale imposed by governmental or
regulatory authorities. Without limiting its obligations under Section 2.03
hereof, Seller does not represent or warrant that the inventory of Waters will
have a value of any particular minimum amount on the Closing Date, as the same
may be affected by purchases and sales made in the ordinary course of business
between June 30, 2007 and the Closing Date.
Section 3.32. Limitations Applicable to Representations and Warranties. THE
REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN ARTICLE III HEREOF ARE
EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND
WHATSOEVER FROM SELLER AND SELLER WILL NOT BE DEEMED TO HAVE MADE ANY OTHER
REPRESENTATION OR WARRANTY.
Buyer acknowledges and agrees that Seller and Waters have not made any (and make
no) representation or warranty (in this Agreement or otherwise) with respect to
any projections, estimates, budgets or other predictions with respect to the
properties, assets or business of Waters, including with respect to future
revenues, results of operations, cash flows, financial condition, business, or
operations, and Buyer acknowledges and agrees that it is not relying on any such
projections, estimates, budgets or other predictions of Seller or Waters.
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
For the purpose of inducing Seller to sell the Shares pursuant to this
Agreement, Buyer hereby represents and warrants to Seller as follows:
Section 4.01. Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate the properties it purports to own, lease or operate and to carry on its
business as it is now being conducted. Buyer has delivered to Seller copies of
Buyer’s Certificate of Incorporation and By-Laws, and all amendments thereto,
which are complete and correct copies of such instruments as presently in
effect.
Section 4.02. Authorization; Execution and Delivery. Buyer has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the

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transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Buyer and the consummation by it of the transactions
contemplated hereby have been duly authorized by all requisite corporate action
of Buyer, and this Agreement is a legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent transfer or other
similar laws affecting the enforcement of creditors’ rights in general or by
general principles of equity.
Section 4.03. Consents and Approvals; No Violations. Except for the obtaining of
such consents and waivers as are specifically contemplated by this Agreement,
none of the execution, delivery or performance of this Agreement by Buyer, nor
the consummation by Buyer of the transactions contemplated hereby will
(a) conflict with or result in a breach of the Certificate of Incorporation or
By-Laws of Buyer; (b) require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority;
(c) result in a default (or an event which with notice or lapse of time or both
would become a default), or give to any third party any right of termination,
cancellation, amendment or acceleration under, or result in the creation of a
lien or encumbrance on any of the assets of Buyer pursuant to, any note,
license, agreement or other instrument or obligation to which Buyer is a party
or by which Buyer or any of its assets is bound or affected; or (d) violate or
conflict with any order, writ, injunction, decree, statute, rule or regulation
applicable to Buyer or any of its assets, other than such defaults, rights of
termination, cancellation, amendment or acceleration, such liens and
encumbrances and such consents and approvals the failure to obtain which, in the
aggregate, would not have a material adverse effect on the business, assets,
financial condition, results of operations or prospects of the business of
Buyer.
Section 4.04. Purchase for Investment. Buyer, acknowledging that the Shares in
the hands of Seller are restricted securities within the meaning of the
Securities Act and the rules and regulations promulgated thereunder, is
acquiring the Shares solely for its own account and with no view to making any
distribution thereof.
Section 4.05. Government Approvals and Filings. As of the Closing Date, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby by Buyer will require Buyer to obtain any
approval or consent of, or any authorization or permit from, or any filing or
registration with, any governmental or regulatory authority which will not have
been obtained.
Section 4.06. Brokers and Investment Advisers. No broker, finder or investment
adviser has acted directly or indirectly as such for, or is entitled to any
compensation from, Buyer in connection with this Agreement or the transactions
contemplated hereby except Natixis Pramex International Corp., whose fees for
services in connection with such transactions will be paid by Buyer.

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ARTICLE V COVENANTS OF SELLER TO BUYER
Section 5.01. Regular Course of Business. Except as otherwise consented to in
writing by Buyer or as expressly contemplated by this Agreement (including the
Schedules attached hereto), prior to the Closing, Seller shall cause Waters to
carry on its business in the ordinary course of business and in a manner
consistent with past practices. Except as expressly contemplated by this
Agreement, or as consented to in writing by Buyer, from the date hereof through
the Closing, Seller shall not permit or cause Waters to:
     (a) amend its Articles of Incorporation or Bylaws;
     (b) issue, sell or deliver, agree to issue, sell or deliver, or authorize
the issuance, sale or delivery of, any shares of any class of its capital stock
or any securities convertible into or exchangeable for any such shares or
convertible into securities in turn so exchangeable or convertible, or any
warrants, calls, options or other rights calling for the issuance, sale or
delivery of any such shares or convertible or exchangeable securities or redeem
or call or commit for redemption, purchase or other acquisition any shares of
its capital stock or other securities;
     (c) (i) borrow or agree to borrow any funds or mortgage or pledge any of
its assets, tangible or intangible, (ii) voluntarily assume or guarantee the
obligations of any other person or incur any liability (fixed or contingent),
(iii) cancel or agree to cancel any debts or claims, (iv) lease, license, sell
or transfer any of its assets (other than inventory in the ordinary course of
business), properties or rights or (v) make, or permit any amendment or
termination of, any contract, agreement, license or other right to which it is a
party;
     (d) increase the compensation payable or to become payable to the Waters
Employees or any of Waters’ officers, directors, or agents, enter into any new
arrangements for any severance or termination or bonus pay with any such
persons, enter into any employment contract not terminable at will with any
employee or make any loan to or engage in any transaction with any officer or
director of Seller or Waters, or any employee of Seller or any Waters Employee;
     (e) except as required by law, enter into or make any material change in
any Employee Benefit Program;
     (f) acquire control or ownership of any other corporation, association,
joint venture, partnership, business trust or other business entity, or acquire
control or ownership of all or a material portion of the assets of any of the
foregoing, or merge, consolidate or otherwise combine with any other corporation
or enter into any agreement providing for any of the foregoing;

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     (g) declare or pay any dividend in kind or make any other distribution in
kind to its shareholders, except the Planned Dividend;
     (h) make any material alteration in the accounting principles or practices
of Waters;
     (i) make any capital expenditure or commitment for additions to property,
plant or equipment;
     (j) enter into any lease of real property or personal property;
     (k) sell or transfer any interest in or grant any other right to use or
have access to any customer list of Waters or Proprietary Rights or any permits
or licenses of Waters; or
     (1) fail to maintain its business organization and goodwill intact or fail
to use its best efforts to maintain its relationship with suppliers, customers,
creditors, employees and others having business relationships with it.
Section 5.02. No Default or Violation. Except as otherwise consented to in
writing by Buyer, Seller shall use reasonable efforts to cause Waters to not:
     (a) violate, or commit a material breach of or a default under, any
material contract, agreement, lease, license, mortgage or commitment to which
Waters is a party or to which any of Waters’ assets may be subject, or
     (b) commit a material violation of any applicable order, judgment, statute,
rule or regulation or any other requirement of any governmental body or court,
relating to its business.
Section 5.03. Insurance. Except as otherwise consented to in writing by Buyer,
Seller shall, or shall cause Waters to, maintain in full force and effect prior
to the Closing all the Insurance Policies currently in force. For a period of
two years after the Closing, Seller will maintain in full force and effect
insurance policies substantially equivalent to those currently in force insuring
against the risks addressed by the Insurance Policies with respect to events
that occur solely prior to the Closing Date (the “Tail Insurance”). Waters will
be named an additional insured under such Tail Insurance.
Section 5.04. Certain Tax Matters. (a) Seller shall prepare and shall timely
file all federal Tax Returns with respect to Income Taxes and consolidated or
combined state Tax Returns, if any, which are required to be filed for taxable
periods ending on or prior to the Closing Date and shall timely pay in full all
Income Taxes shown on such Tax Returns to be due with respect to such periods.
Seller shall include the operations of Waters through the Closing Date in its
consolidated Tax Returns and in consolidated or combined state Tax Returns with
respect to Income Taxes, if any. Seller shall also prepare and shall

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timely file all Tax Returns with respect to Sales and Use Taxes and Other Taxes,
if any, which are required to be filed for taxable periods ending on or prior to
the Closing Date and shall timely pay in full all Taxes shown on such Tax
Returns to be due with respect to such periods.
     (b) Seller shall be responsible for initiating any claim for a refund,
filing any amended Tax Return, contest, resolve, defend against any assessment,
notice of deficiency or other adjustment or proposed adjustment or in respect of
Waters with respect to any Tax Returns for any taxable period ending on or prior
to the Closing Date, paying any amount shown as due thereon and taking any other
actions necessary to contest, resolve or defend against any assessment, notice
of deficiency or other adjustment or proposed adjustment which are required as a
result of any examination of such Tax Returns by applicable Federal, state,
local or other taxing authorities for such taxable years; provided, however,
that Seller shall consult with Buyer prior to filing any amended Tax Returns or
taking any such actions and, to the extent such Tax Returns or actions are in
the sole judgment of Buyer reasonably likely to have a Material Adverse Effect
post-closing, Seller shall use reasonable efforts to not take any position that
would cause such a Material Adverse Effect.
Section 5.05. Notice of Changes. Seller shall promptly notify Buyer in writing
of (a) any event known to Seller or Waters occurring subsequent to the date of
this Agreement which would render any representation or warranty of Seller
contained in this Agreement or any document or instrument delivered in
accordance herewith, including the Schedules attached hereto, if made on or as
of the date of such event or the Closing Date, untrue or inaccurate in any
material respect and (b) any event known to Seller or Waters that constitutes or
is reasonably likely to result in a Material Adverse Effect.
Section 5.06. Consents. Prior to the Closing Date, Seller shall use its best
efforts to obtain the Private Consents contemplated by Section 3.07 hereof.
Section 5.07. Access to Books and Records. Seller shall afford to Buyer and its
accountants, counsel and other representatives reasonable access throughout the
period prior to the Closing Date to the Leased Property and all of the assets,
books, contracts, and records of Waters. Such access shall be afforded Buyer and
such representatives during regular business hours after reasonable notice to
Seller. Seller shall cooperate with Buyer and shall provide Buyer with access to
the Leased Property and Waters Employees upon reasonable notice and during
regular business hours. On the Closing Date, Seller will deliver or make
available to Buyer at the offices of Waters all of Waters’ books and records,
including Waters’ corporate minute book, and if, at any time after the Closing,
Seller discovers in its possession or under its control any other books and
records of Waters, it will forthwith

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deliver such books and records to Buyer, which are not maintained at Seller’s
principal place of business.
Section 5.08. No Shop. Seller (a) shall not solicit, encourage, cooperate with
or furnish information as to any proposal, bid, agreement or arrangement, or
accept, or agree to accept any such proposal, bid, agreement or arrangement to
acquire Waters or any substantial part of its capital stock or assets from the
date of this Agreement to the earlier of the termination of this Agreement or
the Closing Date and (b) shall inform Buyer of the terms of any unsolicited
offer (including the identity of the offeror) to acquire Waters or a substantial
part of its capital stock or assets during such period.
Section 5.09. Confidentiality Agreements. Seller shall execute and deliver
documents satisfactory to Buyer pursuant to which Seller shall assign to Buyer
all of Seller’s rights under all confidentiality agreements executed by third
parties in connection with the proposed sale of Waters. Seller shall further
provide Buyer with a list of all the potential buyers of Waters (together with
their legal or financial advisors) that received confidential information
thereunder. If so requested by Buyer, Seller shall request any person or entity
on such list and designated by Buyer to return or destroy all such confidential
information in accordance with and subject to the limitations of the applicable
confidentiality agreement.
Section 5.10. Waters Employees Compensation. Buyer understands and agrees that
effective on the Closing Date, Seller will terminate the employment of all
Waters Employees employed by Seller. On July 27, 2007, Seller shall pay for the
account of Waters all compensation due and payable to Waters Employees up to and
including such date (less all appropriate withholdings) for base salary, bonus,
paid time off or other benefit or incentive compensation. Seller shall use
reasonable efforts to cause Waters to accrue on its books and records all
compensation due to Waters Employees for the period from July 27, 2007 through
the Closing Date, but not due and payable on or before the Closing Date,
including paid time off; provided, however, that it is understood and agreed
that Seller shall be solely liable for any incentive compensation owed or
promised to Douglas E. King pursuant to Seller’s offer of employment to Mr. King
dated June 29, 2006, and no amount thereof shall be included in Waters Employees
Compensation Liabilities. On or before August 11, 2007, Seller shall pay (less
all appropriate withholdings) all compensation due to Waters Employees for the
period July 27, 2007, through the Closing Date, including any Accrued PTO to
Waters Employees who do not accept employment by Buyer or Waters after the
Closing Date as provided in Section 8.03(b) hereof. Buyer shall cause Waters to
pay the Waters Employees Compensation Liabilities as they become due and
payable.

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Section 5.11. Accrued Liabilities. From the date hereof through the Closing
Date, Seller shall pay for the account of Waters, or shall cause Waters to pay
all amounts to suppliers, vendors, consultants, experts, other contractors and
creditors as may be due such creditors prior to the Closing Date pursuant to the
terms and conditions of the obligations to such creditors as reflected on the
books and records of Seller and/or Waters. To the extent, any portion of such
amounts or indebtedness is not due and payable pursuant to the terms and
conditions of the obligations to such creditors on or prior to the Closing Date,
but such amounts or indebtedness is accrued on the books and records of Waters,
Buyer shall use commercially reasonable efforts to cause Waters to pay the same
after Closing in accordance with such terms and conditions. Notwithstanding
anything herein to the contrary, Waters and Buyer will have no recourse against
Seller with respect to such amounts which are accrued on the books and records
of Waters in accordance with generally accepted accounting principles and on a
consistent basis with previous Financial Statements.
Section 5.12. Non-Competition. (a) Seller shall not, for a period of five years
from the Closing Date, either alone or in conjunction with any other person or
entity, or directly or indirectly through its present or future Affiliates:
     (i) solicit, entice, persuade, induce, request or otherwise cause any
Waters Employee to refrain from rendering services to Waters or to terminate his
or her relationship, whether employment, contractual or otherwise, with Waters
or Buyer, unless such Waters Employee (A) resigns voluntarily (without any
solicitation from Seller or any of its Affiliates) or (B) is terminated by
Waters after the Closing Date;
     (ii) induce or attempt to cause (A) any client, customer or supplier of
Waters to terminate or materially reduce its business with Waters or (B) any
agent or consultant of Waters to resign or sever a relationship with Waters;
     (iii) in any manner utilize or disclose (unless compelled by judicial or
administrative process) to any person, firm, corporation, association or other
entity, any confidential and proprietary information of Waters, including, but
not limited to, any confidential information with respect to any of Waters’
customers (past, existing or prospective), commercial partners, methods of
distribution, production costs, pricing and marketing strategies, new product
information, employees, financial information, or technical processes, which are
not generally known to the public or recognized as standard practice in the
industry in which Waters is engaged, the disclosure of which Seller knows or
should reasonably know will be materially damaging to Waters except for such
disclosures; or
     (iv) own, manage, operate, join, control, finance or participate in the
ownership, management, operation, control or financing of, or be connected as a
partner, principal, agent, representative, consultant or otherwise with, any
business, firm, person, partnership, corporation or other entity that is in a
business competing with the businesses of Waters, Buyer or any Affiliate of
Buyer in any jurisdiction.

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     (b) The parties hereto recognize that the laws and public policies of the
various states of the United States may differ as to the validity and
enforceability of covenants similar to those set forth in this Section. It is
the intention of the parties that the provisions of this Section be enforced to
the fullest extent permissible under the laws and policies of each jurisdiction
in which enforcement may be sought, and that the unenforceability (or the
modification to conform to such laws or policies) of any provisions of this
Section shall not render unenforceable, or impair, the remainder of the
provisions of this Section. Accordingly, if any provision of this Section shall
be determined to be invalid or unenforceable, such invalidity or
unenforceability shall be deemed to apply only with respect to the operation of
such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
     (c) The parties hereto acknowledge and agree that any remedy at law for any
breach of the provisions of this Section would be inadequate, and Seller hereby
consents to the granting by any court of an injunction or other equitable
relief, without the necessity of actual monetary loss being proved, in order
that the breach or threatened breach of such provisions may be effectively
restrained.
ARTICLE VI COVENANTS OF BUYER TO SELLER
Section 6.01. Notice of Changes. The Buyer shall promptly notify Seller in
writing of any event known to Buyer, which would render any representation or
warranty of Buyer contained in this Agreement, if made on or as of the date of
such event or the Closing Date, untrue or inaccurate in any material respect.
Section 6.02. Certain Tax Matters. Buyer covenants that, without the prior
written consent of Seller, neither Buyer nor Waters will file any amended Tax
Return or claim for a refund or raise any issue in connection with the
examination of any Tax Return for Waters with respect to any taxable period
ending on or before the Closing Date. Buyer shall cause Waters to promptly
notify Seller of the commencement of any such examination by any federal or
state taxing authority of which it has notice.
Section 6.03. No Continuation of Plans With Respect to Buyer, Waters or Their
Respective Employees. (a) Buyer understands and agrees that effective on the
Closing Date, Seller will terminate the employment of all Waters Employees
employed by Seller and upon such termination, subject to the terms and
conditions of such plans, Waters Employees will have no further right to
participate under any Employee Pension Benefit Plans, Employee Welfare Benefit
Plans, any other incentive compensation plan or other employee benefit plan or
Multiemployer Plan maintained by Seller and/or Waters or with respect to which
Seller and/or Waters participated prior to the Closing Date.

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     (b) Buyer understands and agrees that after the Closing Date, no employee
of Waters, Buyer or any Affiliate of either of them will have any right to
participate under any Employee Pension Benefit Plans, Employee Welfare Benefit
Plans, any other incentive compensation plan or other employee benefit plan or
Multiemployer Plan maintained by Seller and/or Waters prior to or after the
Closing Date, with respect to which Waters participated prior to the Closing
Date or with respect to which Seller and/or its Affiliates may participate after
the Closing Date.
Section 6.04. Planned Dividend. Buyer understands that the Financial Statements
and Seller’s and Water’s respective books and records reflect an intercompany
account of material size and amount (the “Intercompany Account”). The
Intercompany Account currently represents, and it is expected that on the
Closing Date will continue to represent, amounts due and owing by Seller to
Waters. Among other things, the Intercompany Account evidences payments by
Seller of liabilities of Waters or liabilities attributed to Waters by Seller
and arising in the ordinary course of Waters’ business, such as, without
limitation, compensation of Waters Employees, rent respecting the Leased
Premises. Buyer understands and agrees that on or before the Closing Date, the
Board of Directors of Waters shall declare as a dividend or other distribution
to Seller, all of Waters’ rights against Seller with respect to the Intercompany
Account as it may exist on the Closing Date (the “Planned Dividend”). Such
dividend will extinguish the Intercompany Account. On or before the Closing
Date, Buyer will have completed such due diligence as it desires to perform
respecting the Intercompany Account.
Section 6.05. Other Assets Used to Conduct Waters’ Business. Buyer understands
that assets and resources of Seller, including employees other than the Waters
Employees, have been and will continue to be used prior to the Closing Date in
the ordinary course of business to support Waters’ business. Buyer acknowledges
and agrees the Waters assets are not all of the assets necessary to conduct
Waters’ business after the Closing Date in the manner conducted prior to the
Closing Date and that Waters does not own or have rights to such assets and
resources. On or before the Closing Date, Buyer will have completed such due
diligence as it desires to perform respecting the nature and extent of the
assets and resources of Seller used to support Waters’ business.
ARTICLE VII INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 7.01. Special Indemnification by Seller. (a) Special Tax Indemnity.
Seller shall be liable for, and shall hold Buyer harmless from and against any
and all Taxes for any taxable period or portion thereof ending on or before the
Closing Date (other than Taxes respecting the Waters Employees Compensation
Liabilities) which are due or payable by Waters with respect to the
participation by Waters in the filing of any Tax Returns which include Waters in
a consolidated return, a combined return, or a

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return subject to a “group relief” or any similar concept. The indemnity
provided under this Section 7.01(a) shall hereinafter be referred to as the
“Special Tax Indemnity”.
     (b) Special ERISA Indemnity. Subject to the Special Individual Threshold,
Seller hereby indemnifies and holds harmless Buyer from and against the full
amount of any Loss, which Buyer may incur or suffer as a result of any “employee
pension benefit plan”, as defined in Section 3(2) of ERISA applicable to any
Waters Employee, any “employee welfare benefit plan”, as defined in Section 3(1)
of ERISA applicable to any Waters Employee, or any other incentive compensation
plan or other employee benefit plan applicable to any Waters Employee
established, maintained or contributed to by (i) any corporation which prior to
the Closing Date is a member of a controlled group of corporations with Waters
within the meaning of Section 414(b) of the Code, (ii) a trade or business
(including a sole proprietorship, partnership, trust, estate or corporation)
which is under common control with Waters prior to the Closing Date within the
meaning of Section 414(c) of the Code or (iii) a member of an affiliated service
group with Waters prior to the Closing Date within the meaning of Sections
414(m) or (o) of the Code (the “Special ERISA Indemnity”). The Special ERISA
Indemnity does not apply to any expense incurred by Buyer or Waters with respect
to any “employee pension benefit plan”, any “employee welfare benefit plan”, or
any other incentive compensation plan or other employee benefit plan applicable
to any Waters Employee established, maintained or contributed to by Buyer or
Waters after the Closing Date unless such expense is a result of an inaccuracy
of one of Seller’s representations and warranties set forth in Sections 3.17(c)
through 3.17(n).
     (c) Special Stock and Assets Indemnity. Seller hereby indemnifies and holds
harmless Buyer from and against any and all Losses which Buyer may incur or
suffer as a result of the inaccuracy of the representations and warranties of
Seller with respect to (i) the ownership of the Shares contained in Section 3.01
hereof, (ii) the capitalization of Waters contained in Section 3.03 hereof,
(iii) the establishment registration and device listings contained in
Sections 3.28 and 3.29 hereof, and (iv) the non-competition covenant contained
in Section 5.12 hereof (the “Special Stock and Assets Indemnity”).
     (d) Special Environment Indemnity. Subject to the Special Individual
Threshold, Seller hereby indemnifies and holds harmless Buyer from and against
any and all Losses arising from the inaccuracy of the representations and
warranties of Seller contained in Section 3.21 hereof (the “Special Environment
Indemnity”).
     (e) Terms of Special Indemnities. The Special Tax Indemnity shall survive
until 30 days after the expiration of the relevant statute of limitations. The
Special ERISA Indemnity, the Special Stock and Assets Indemnity and the Special
Environment Indemnity shall survive indefinitely. Buyer shall be fully
indemnified for

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all amounts required to be paid by Seller beginning with the first dollar of
such amounts and regardless of the aggregate amount thereof and any amounts paid
under any such Special Indemnity shall not be counted in calculating the maximum
of $1,000,000 of indemnification payable pursuant to Section 7.02 hereof.
Section 7.02. General Indemnification by Seller. (a) Seller hereby indemnifies
and holds harmless Buyer from and against any and all Losses, which Buyer may
incur or suffer as a result of:
     (i) the inaccuracy of any representation or warranty made by Seller
pursuant to this Agreement or any document or instrument delivered in connection
herewith, including the Schedules attached hereto (other than those referred to
in Section 7.01 hereof); or
     (ii) the breach of any covenant, agreement or obligation of Seller
contained in this Agreement or any document or instrument delivered in
connection herewith;
provided, however, that Seller’s liability hereunder shall not exceed $1,000,000
in the aggregate and Seller shall be liable to Buyer hereunder only with respect
to an individual Loss that is greater than $20,000, in which case Seller shall
pay Buyer the full amount of the Loss, subject to the ceiling set forth above.
     (b) Notwithstanding any other provision of this Agreement, Seller shall not
be required to indemnify Buyer against, and Losses shall not include, product
warranty claims not involving personal injury or property damage arising under
written warranties provided by Seller or Waters with respect to products of
Waters’ business. All product warranty claims not involving personal injury or
property damage arising under such written warranties accrued on the books and
records of Waters as of the Closing Date and arising or asserted thereafter
shall be the expense of Waters, without any recourse to Seller.
Section 7.03. Procedure. (a) Whenever any claim for indemnification by Buyer
shall arise under this Article VII, which is not a Third Party Claim, Buyer
shall promptly provide notice to Seller of the claim and the facts constituting
the basis for such claim.
     (b) Within ten (10) business days after receipt by Buyer of written notice
of the assertion of a claim by a third party in respect of which indemnity may
be sought under or pursuant to this Article VII (a “Third Party Claim”), Buyer
shall notify Seller in writing of the assertion thereof; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder, except to the extent Seller shall have been actually prejudiced as a
result of such failure. After such notification to Seller, Buyer shall deliver
to Seller copies of any court papers within ten (10) days after Buyer’s receipt
thereof, and copies of all notices and documents within twenty (20) days after
Buyer’s receipt thereof.
     (c) (i) If a Third Party Claim is made against Buyer, Seller may elect,
subject to the condition set forth herein, to assume the defense thereof with
representatives chosen by it and satisfactory to Buyer in Buyer’s reasonable
judgment; provided, however, that

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(x) Seller shall first acknowledge in writing to Buyer Seller’s obligation to
indemnify Buyer in respect of the Third Party Claim, (y) such counsel shall not,
except with the prior written consent of Buyer, which consent shall not be
unreasonably withheld, also be counsel to Seller with respect to such claim in
the same or related action or proceeding, and (z) Seller shall pay all costs and
expenses incurred in connection with such defense and shall take all steps
necessary in the defense or settlement of the Third Party Claim. In connection
therewith, Buyer shall cooperate fully, but at the expense of Seller, to make
available to Seller all pertinent information and witnesses under Buyer’s
control and take such other steps as in the opinion of counsel for Seller are
necessary and reasonable to enable Seller to conduct such defense.
          (ii) Should Seller promptly after receipt of the notice referred to in
paragraph (i) above fail to assume the control of the defense of the Third Party
Claim or fail to answer the notice of Buyer referred to in paragraph (b) above,
Buyer shall be entitled to defend, compromise and settle such Third Party Claim
as it may appear advisable, in Buyer’s sole discretion, and such settlement or
any other final determination of the Third Party Claim shall be binding upon
Seller as to the amount of the Losses. The final, nonappealable determination of
any such Third Party Claim, including all related costs and expenses, shall be
binding and conclusive upon the parties as to the amount of the Losses.
     (d) Notwithstanding anything herein to the contrary, Buyer shall have the
right, exercisable in Buyer’s sole discretion, to control the defense of any
Third Party Claim seeking an amount in the aggregate in excess of Seller’s
indemnification ceiling set forth in Section 7.02 hereof, and to compromise and
settle such Third Party Claim with Seller’s consent, which consent shall not be
unreasonably delayed or withheld.
     (e) Payment of all undisputed Losses pursuant to this Article VII shall be
made by Seller in cash within thirty (30) days of demand therefor. If Seller
disputes its indemnity obligation for Losses claimed by Buyer under this
Article VII, Seller shall pay Buyer within thirty (30) days after the dispute
respecting such indemnity obligation is resolved by a settlement agreement or by
a nonappealable judgment, as the case may be. Any amounts which were due to
Buyer but not paid until the subsequent resolution of any such dispute shall
accrue interest at the interest rate for legal judgments from the date which is
thirty (30) days after the date of Buyer’s demand.
     (f) For purposes of this Article VII, the term “Buyer” shall include Buyer,
Waters (as it may exist after the Closing Date), their Affiliates and their
respective directors, officers, employees and agents.
Section 7.04. Other Principles Applicable to Seller’s Indemnity Obligations.
Notwithstanding anything to the contrary set forth in Section 7.01, SELLER SHALL
NOT BE LIABLE FOR ANY INCIDENTAL OR

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CONSEQUENTIAL DAMAGES OR FOR LOST PROFITS OF ANY KIND WITH RESPECT TO ANY CLAIM
OF BUYER UNDER THIS AGREEMENT EXCEPT FOR ANY SUCH DAMAGES OR LOST PROFITS THAT
ARE THIRD PARTY CLAIMS.
ARTICLE VIII COVENANTS OF SELLER AND BUYER
Section 8.01. Expenses. Each party hereto shall bear its own expenses incurred
in connection with this Agreement or any transaction contemplated hereby.
Section 8.02. Public Announcements. (a) Seller and Buyer, recognizing that each
may have independent obligations with respect to the dissemination of material
information to its respective shareholders and the public, agree that, to the
maximum extent feasible consistent with such obligations, they will confer with
each other prior to the issuance of, and agree on the form and substance of, any
reports, statements or releases pertaining to this Agreement or any transaction
contemplated hereby.
     (b) On the Closing Date, Seller and Buyer shall send a joint notice to all
customers having an outstanding account receivable in the books and records of
Waters on such Closing Date instructing said customers to make payment to Waters
or to wire funds to Waters’ bank account.
Section 8.03. Further Assurances. (a) Seller and Buyer agree to execute and
deliver such instruments and take such other actions as any of them may
reasonably require in order to carry out the intent of this Agreement.
     (b) After the Closing, Seller shall remit to Waters within five days of
receipt any payment intended to be made to Waters whether pursuant to a Waters
account receivable or otherwise; provided, however, that it is understood and
agreed that Seller shall be entitled to retain from any such payment an amount
equal in the aggregate to the sum of (i) all compensation and payroll taxes owed
or with respect to Waters Employees for the period from July 27, 2007 to the
Closing Date and (ii) any Accrued PTO with respect to Waters Employees who do
not accept employment by Waters or Buyer after the Closing Date.
Section 8.04. Mutual Assistance. Subsequent to the Closing Date, Buyer and
Waters on the one hand, and Seller, on the other hand, agree to furnish or cause
to be furnished to each other, upon request, as promptly as practicable, such
information (including access to books and records) and assistance relating to
Waters as is reasonably necessary for the filing of any return, for the
preparation of any audit, and for the prosecution or defense of any claim, suit
or proceeding. Buyer and Waters, on the one hand, and Seller, on the other hand,
shall, until the expiration of the applicable statute of limitations period,
cooperate with each other in the conduct of any audit or other proceedings
involving Waters for any Tax purposes and shall each execute and deliver such
powers

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of attorney and other documents as are necessary to carry out the intent, and
accomplish the purposes, of this Section 8.04.
ARTICLE IX CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations under this Agreement of Buyer to consummate the transactions
contemplated hereby shall be subject to the satisfaction, or to the waiver by it
in the manner contemplated by Section 12.02 hereof, on or before the Closing
Date, of the following conditions:
Section 9.01. Representations and Warranties True. Seller’s representations and
warranties contained in this Agreement and the Schedules attached hereto shall
be true and accurate in all material respects as of the date when made and as of
the Closing Date.
Section 9.02. Performance of Covenants. Seller shall have performed and complied
in all material respects with each and every covenant, agreement and condition
required by this Agreement or any document or instrument delivered in connection
herewith to be performed or complied with by it on or prior to the Closing Date.
Section 9.03. No Restraints. No preliminary or permanent injunction or other
order of any court or administrative agency nor any statute, rule or regulation
enacted or promulgated by any governmental authority shall be in effect which
restrains or prohibits any transaction contemplated hereby or affects Waters’
assets.
Section 9.04. Seller’s Officer’s Certificate. Seller shall have furnished Buyer
with a certificate signed by its President, substantially in the form of
Exhibit 9.04 attached hereto, to the effect that Seller’s representations and
warranties contained in this Agreement and the Schedules attached hereto are
true and correct and that each of Seller and Waters has performed or complied in
all material respects with all terms, covenants and provisions of this Agreement
required to be performed or complied with by it on or prior to the Closing Date.
Section 9.05. Opinion of Counsel. Buyer shall have received an opinion from
Fredrikson & Byron, P. A., counsel to Seller, dated the Closing Date,
substantially in the form of Exhibit 9.05 hereto.
Section 9.06. No Material Adverse Effect. There shall not have occurred, nor
shall there exist, any event or set of circumstances not otherwise disclosed in
this Agreement or the Schedules attached hereto which constitutes or is
reasonably likely to result in a Material Adverse Effect.
Section 9.07. Resignation of Directors and Officers. All directors and officers
of Waters shall have executed and Seller shall have delivered to Buyer their
written resignation, effective as of the Closing Date.

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Section 9.08. Agreement With Respect to the Leased Property. The leasehold
interest in the Leased Property shall have been assigned to Buyer or Waters or a
sublease agreement with Seller shall have been entered for the Leased Property,
such sublease to be on terms and conditions identical to those of the existing
lease agreement for said Leased Property. Seller shall deliver to Buyer the
agreement or consent of the landlord of the Leased Property to such assignment
or sublease, which agreement or consent shall not contain terms and conditions
stricter than in the existing lease agreement. The Leased Property shall in any
event remain registered in the Establishment Database of the FDA.
Section 9.09. Consents. The Private Consents and all other consents, approvals
and actions of, filings with and notices to any governmental or regulatory
authority necessary to permit Seller to perform its obligations under this
Agreement and to consummate the transactions contemplated hereby (i) shall have
been duly obtained, made or given, (ii) shall be in form and substance
reasonably satisfactory to Buyer, (iii) shall not be subject to the satisfaction
of any condition that has not been satisfied or waived and (iv) shall be in full
force and effect. Seller shall have executed, and shall cause Zareba Security,
Inc. to execute, the Wells Fargo Release Letter and shall deliver the same on or
prior to the Closing Date.
Section 9.10. Device Listed with FDA. On the Closing Date, Waters’ RM3 device
shall be registered on the FDA’s Device Listing Database with an active status.
Section 9.11. Proceedings. All requisite corporate action and proceedings of
Seller in connection with the transactions contemplated hereby shall be
satisfactory in form and substance to Buyer and its counsel, and Buyer and its
counsel shall have received a certificate from Seller’s secretary, substantially
in the form of Exhibit 9.11 attached hereto, with copies of all documents
identified therein, including without limitation records of requisite corporate
action and proceedings.
Section 9.12. Domain Names; Patent. (a) Seller shall have executed and delivered
to Buyer assignments by Seller to Waters of the following domain names:
wtrs.com, watersinc.com, watersinst.com and watersmed.com, in form suitable for
recording with the relevant registrar.
     (b) Seller shall have executed and delivered to Buyer an assignment, in
form suitable for recording, of the Patent if the Patent is not registered in
Water’s name on or before the Closing Date.

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ARTICLE X CONDITIONS TO SELLER’S OBLIGATIONS
The obligations of Seller under this Agreement to consummate the transactions
contemplated hereby shall be subject to the satisfaction, or to the waiver by it
in the manner contemplated by Section 12.02 hereof, on or before the Closing
Date, of the following conditions:
Section 10.01. Representations and Warranties True. Buyer’s representations and
warranties contained in this Agreement shall be true and accurate in all
material respects as of the date when made and as of the Closing Date.
Section 10.02. Performance of Covenants. Buyer shall have performed and complied
in all material respects with each and every covenant, agreement and condition
required by this Agreement to be performed or complied with by it on or prior to
the Closing Date.
Section 10.03. No Restraints. No preliminary or permanent injunction or other
order of any court or administrative agency nor any statute, rule or regulation
enacted or promulgated by any governmental authority shall be in effect which
restrains or prohibits any transaction contemplated hereby or affects Waters’
assets.
Section 10.04. Buyer Officer’s Certificate. Buyer shall have furnished Seller
with a certificate of its principal officer, substantially in the form of
Exhibit 10.04 attached hereto, to the effect that Buyer’s representations and
warranties contained in this Agreement are true and correct in all material
respects at and as of the Closing as though such representations and warranties
were made on the date thereof and that Buyer has performed or complied in all
material respects with all terms, covenants and provisions of this Agreement
required to be performed or complied with by it on or prior to the Closing Date.
Section 10.05. Buyer Consents. All consents, approvals and actions of, filings
with and notices to any governmental or regulatory authority necessary to permit
Buyer to perform its obligations under this Agreement and to consummate the
transactions contemplated hereby (i) shall have been duly obtained, made or
given, (ii) shall be in form and substance reasonably satisfactory to Seller,
(iii) shall not be subject to the satisfaction of any condition that has not
been satisfied or waived and (iv) shall be in full force and effect.
Section 10.06. Seller Consents. Seller shall have obtained the Private Consents
and all other consents, approvals and actions of, filings with and notices to
any governmental or regulatory authority necessary to permit Seller to perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby (i) shall have been duly obtained, made or given, (ii) shall
be in form and substance reasonably satisfactory to Seller, (iii) shall not be
subject to the satisfaction of any condition that has not been satisfied or
waived and (iv) shall be in full force and effect. Buyer shall have executed,
and shall

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cause its counsel to execute, the Wells Fargo Release Letter and shall deliver
the same on or prior to the Closing Date.
Section 10.07. Opinion of Counsel. Seller shall have received an opinion from
Abitbol & Cherry, LLP, counsel to Buyer, dated the Closing Date, substantially
in the form of Exhibit 10.07 attached hereto.
Section 10.08. No Material Adverse Effect. There shall not have occurred, nor
shall there exist, any event or set of circumstances not otherwise disclosed in
this Agreement or the Schedules attached hereto which constitutes or is
reasonably likely to result in a Material Adverse Effect.
Section 10.09. Proceedings. All requisite corporate action and proceedings of
Buyer in connection with the transactions contemplated hereby shall be
satisfactory in form and substance to Seller and its counsel, and Seller and its
counsel shall have received a certificate from an authorized officer of Buyer,
substantially in the form of Exhibit 10.09 attached hereto, with copies of all
documents identified therein, including without limitation records of requisite
corporate action and proceedings.
Section 10.10. Device Listed with FDA. On the Closing Date, Waters’ RM3 device
shall be registered on the FDA’s Device Listing Database with an active status
and, if it is not, such event shall not have occurred at the request of Seller
or Waters.
ARTICLE XI TERMINATION
Section 11.01. Termination and Abandonment. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned before the Closing Date:
     (a) by Buyer if there has been a material misrepresentation or material
breach on the part of Seller in the representations, warranties and covenants
set forth herein or in any document or instrument delivered pursuant hereto
(including the Schedules), or if immediately preceding the Closing, there has
been any failure on the part of Seller to comply with its material obligations
hereunder; or
     (b) by Seller if there has been a material misrepresentation or material
breach on the part of Buyer in the representations, warranties and covenants set
forth herein or in any document or instrument delivered by it pursuant hereto,
or if immediately preceding the Closing, there has been any failure on the part
of Buyer to comply with its material obligations hereunder; or
     (c) by Buyer or Seller if an injunction is issued by a court of competent
jurisdiction against Seller and /or Waters and enjoining the Closing of the
transactions contemplated hereby on or before the Closing Date; or
     (d) by Buyer or Seller if the conditions to the terminating party’s
obligations to close are not satisfied or waived on or before August 3, 2007.

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Section 11.02. Liability Upon Termination. In the event of termination or
abandonment of this Agreement, neither Buyer nor Seller shall have any liability
or further obligation under this Agreement to the other, except that any
covenant intended to survive the termination of this Agreement shall survive any
such termination or abandonment in accordance with the terms thereof. If this
Agreement is terminated or abandoned as aforesaid, NEITHER PARTY SHALL BE LIABLE
TO THE OTHER FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES OR LOST PROFITS IN CONNECTION WITH ANY SUCH TERMINATION OR ABANDONMENT
OF THIS AGREEMENT, REGARDLESS OF THE FORM IN WHICH ANY LEGAL OR EQUITABLE ACTION
MAY BE BROUGHT AGAINST SUCH PARTY (SUCH AS, CONTRACT, NEGLIGENCE OR OTHERWISE)
EVEN IF SUCH PARTY HAS BEEN INFORMED OF THE POSSIBILITY THEREOF.
ARTICLE XII MISCELLANEOUS PROVISIONS
Section 12.01. Amendment and Modification. To the fullest extent provided by
applicable law, this Agreement may be amended, modified and supplemented with
respect to any of the terms contained herein by an appropriate written
instrument executed by an authorized representative of each of the parties at
any time prior to or following the Closing.
Section 12.02. Waiver of Compliance. To the fullest extent permitted by
applicable law, each of Seller and Buyer may by an instrument in writing
executed by their respective authorized representatives extend the time for or
waive performance of any of the obligations of the other to it or waive
compliance by the other with any of the covenants for its benefit, or waive any
of the conditions to its obligations, contained herein. No such extension of
time or waiver shall operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
Section 12.03. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or when mailed by overnight courier,
postage prepaid, or when given by facsimile transmission (promptly confirmed in
writing), as follows:
If to Seller, to:
Zareba Systems, Inc.
13705 26th Ave. N, Suite 102
Minneapolis, MN 55441
Facsimile: 763-509-7450
Attention: Mr. Gerald W. Grabowski
With copy to:
Fredrikson & Byron, P. A.
Suite 4000, 200 South 6 St.
Minneapolis, MN 55402
Facsimile: 612-492-7077

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Attention: John A. Grimstad, Esq.
or to such other person or address as Seller shall designate in writing, such
writing to be delivered to the Buyer in the manner provided in this
Section 12.03;
If to Buyer, to:
Holding GC, Inc.
c/o Natixis Pramex International Corp.
1251 Avenue of the Americas, 34th Floor
New York, New York 10020
Facsimile: (212) 583-4929
Attention: Mr. Georges-Antoine Lopez
With a copy to:
Abitbol & Cherry, LLP
545 Fifth Avenue, Suite 640
New York, New York 10017
Facsimile: (212) 682-7174
Attention: Pierre N. Abitbol, Esq.
or to such other person or address as Buyer shall designate in writing, such
writing to be delivered to Seller in the manner provided in this Section 12.03.
Section 12.04. Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other party.
Section 12.05. Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Delaware, without reference to conflict of laws provisions.
Section 12.06. Parties in Interest. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give to any
person, firm or corporation other than the parties hereto any rights or remedies
under or by reason of this Agreement or any transaction contemplated hereby.
Section 12.07. Counterparts. This Agreement may be executed simultaneously in
two (2) counterparts and by the respective parties on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section 12.08. Interpretation. The headings of sections and articles of this
Agreement are inserted for convenience of reference only and shall not
constitute a part hereof. All

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references herein to Sections and Articles are to sections and articles of this
Agreement, unless otherwise indicated. This Agreement has been jointly prepared
by the parties hereto and the terms hereof shall not be construed in favor of or
against any party on account of its participation in such preparation.
Section 12.09. Entire Agreement. This Agreement and all documents and
instruments delivered pursuant hereto, including the Schedules, contain the
entire understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
[signature page is next]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date and year first written above.

                  ZAREBA SYSTEMS, INC.   HOLDING GC, INC.
 
               
By:
  /s/Gerald W. Grabowski       By:   /s/Georges-Antoine Lopez
 
  Gerald W. Grabowski,           Georges-Antoine Lopez,
 
  President and CEO           President

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