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EXHIBIT 2.11
MERGER AGREEMENT
THIS MERGER AGREEMENT ("Agreement") is made as of April 10,
1998, by and among OFFICE CENTRE CORPORATION, a Delaware corporation ("Buyer"),
OFFICE CENTRE XXXXX XXXXX, a Delaware corporation and a wholly-owned subsidiary
of Buyer ("Acquisition"), OFFICE SOLUTIONS BUSINESS PRODUCTS and SERVICES, INC.,
a California corporation ("Company"), XXXXXX X. XXXXXXX, an individual resident
in California and XXXXXXX X. XXXXXXX, an individual resident in California (each
the "Seller" or "Shareholder" and collectively the "Sellers" and
"Shareholders").
RECITALS
WHEREAS, Buyer, Acquisition, the Company and the Sellers wish
to set forth the terms and conditions upon which a merger of the Company with
and into Acquisition will occur and provide for the representations, warranties,
agreements, and conditions applicable to the transactions contemplated by this
Agreement;
WHEREAS, the Board of Directors of each of Buyer, Acquisition
and the Company deems the merger advisable and in the best interests of each of
Buyer, Acquisition and the Company and of their respective shareholders.
WHEREAS, the shareholders of Acquisition and the Company have
approved this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following
terms have the meanings specified or referred to in this Section
1:
"ACQUISITION ADJUSTED EBITDA"--as defined in
Section 2.7(a).
"APPLICABLE CONTRACT"--any Contract (a) under
which the Company has or may acquire any rights, (b) under which the Company has
or may become subject to any obligation or liability, or (c) by which the
Company or any of the assets owned, leased or used by it is or may become bound.
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"BALANCE SHEET"--as defined in Section 3.4.
"BEST EFFORTS"--the efforts that a prudent Person desirous
of achieving a result would use in similar circumstances to cause such result to
be achieved as expeditiously as possible, however not at an unusual or
unreasonable cost or on unusual or unreasonable terms.
"BREACH"--a "Breach" of a representation, warranty,
covenant, obligation, or other provision of this Agreement or any instrument
delivered pursuant to this Agreement will be deemed to have occurred if there is
or has been any material inaccuracy in or breach of, or any material failure to
perform or comply with, such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such material inaccuracy,
breach, failure, claim, occurrence, or circumstance.
"BUYER"--as defined in the first paragraph of this
Agreement.
"CLOSING"--as defined in Section 2.6.
"CLOSING DATE"--the date and time as of which the Closing
actually takes place.
"COMPANY"--as defined in the first paragraph of this
Agreement.
" COMPANY ADJUSTED EBITDA" --earnings of the Company before
interest, taxes, depreciation and amortization with items added back for the
accounting period in question. Company Adjusted EBITDA shall be determined
consistent with Exhibit 2.7(a) which is attached hereto and incorporated herein.
"CONSENT"--any approval, consent, ratification, waiver, or
other authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions
contemplated by this Agreement, including:
(a) the merger of the Company with and into Acquisition;
(b) the execution, delivery, and performance of the
Employment Agreement; and
(c) the performance by Buyer, Acquisition, the Company and
Sellers of their respective covenants and obligations under this Agreement.
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"CONTRACT"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DISCLOSURE DOCUMENT" --as defined in Section 4.7.
"DAMAGES"--as defined in Section 11.2.
"DISCLOSURE LETTER"--the disclosure letter delivered by
Sellers and the Company to Buyer concurrently with the execution and delivery of
this Agreement.
"EBITDA"--earnings before interest, taxes, depreciation and
amortization.
"EBITDA CERTIFICATE" --as defined in Section 2.7(b).
"EMPLOYMENT AGREEMENT"--as defined in Section 7.2.
"ENCUMBRANCE"--any charge, claim, lien, option, pledge,
security interest, right of first refusal, or restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"ENVIRONMENT"--soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life, and any
other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"-- any cost,
damages, expense, liability, or obligation, arising from or under Environmental
Law or Occupational Safety and Health Law and consisting of or relating to:
(a) any environmental, health, or safety matters or
conditions (including on-site or off-site contamination, occupational safety and
health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal
or administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or
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corrective action, including any investigation, cleanup, removal, containment,
or other remediation or response actions ("Cleanup") required by applicable
Environmental Law or Occupational Safety and Health Law and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law.
The terms "removal," "remedial," and "response action,"
include the types of activities covered by the United States Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. sec. 9601 et
seq., as amended ("CERCLA").
"ENVIRONMENTAL LAW"--any Legal Requirement that requires or
relates to:
(a) advising or notifying of appropriate authorities and
employees of releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release
of pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(e) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up or
prevention;
(f) pollution, contamination, protection of the Environment,
human health or safety.
"ERISA"--the Employee Retirement Income Security Act of 1974
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"FACILITIES"--any real property, leaseholds, or other
interests currently or formerly owned or operated by the Company and any
buildings, plants, structures, or equipment
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(including motor vehicles, tank cars, and rolling stock) currently or formerly
owned or operated by the Company.
"FIRST MERGER CONSIDERATION" --as defined in Section 2.7(a).
"GAAP"--generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the Audited
Financial Statements referred to in Section 3.4 were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HAZARDOUS ACTIVITY"--the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, or use of
Hazardous Materials in, on, under, about, or from the Facilities or any part
thereof into the Environment and any other act or thing that increases the
danger, or risk of danger, or poses an unreasonable risk of harm to persons or
property on or off the Facilities, or that may affect the value of the
Facilities or the Company.
"INTEREST SHARES" --as defined in Section 2.7(d).
"INTERIM BALANCE SHEET"--as defined in Section 3.4.
"HAZARDOUS MATERIALS"--any waste or other substance that is
listed, defined, designated, classified or regulated as, or otherwise determined
to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or
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pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"IRC"--the Internal Revenue Code of 1986 or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
"IRS"--the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
"KNOWLEDGE"--an individual will be deemed to have
"Knowledge" of a particular fact or other matter if (a) such individual is
actually aware of such fact or other matter or (b) an ordinarily prudent
individual would discover or otherwise become aware of such fact or other matter
in the ordinary course of business; provided further that "Knowledge" is
distinguished from "actual knowledge", which means only actual awareness by the
individual in question of the fact or other matter.
A Person (other than an individual) will be deemed to have
"Knowledge" or "actual knowledge" of a particular fact or other matter if any
individual who is serving, or who has at any time served, as a director or
officer of such Person has, or at any time had, Knowledge or actual knowledge,
respectively, of such fact or other matter.
"LEGAL REQUIREMENT"--any federal, state, local, municipal,
or other administrative order, constitution, law, ordinance, principle of common
law, regulation, or statute.
"MERGER CONSIDERATION" --as defined in Section 2.7(a).
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program designed to provide safe
and healthful working conditions.
"ORDER"--any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person
will be deemed to have been taken in the "Ordinary Course of Business" only if:
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(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of Persons
exercising similar authority); and
(c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the Board of Directors
(or by any Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that are in
the same line of businesses as such Person.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate
of incorporation and the bylaws of a corporation; (b) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (c) any amendment to any of the foregoing.
"PERSON"--any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.
"PROCEEDING"--any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"RELATED PERSON"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one
or more members of such individual's Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity).
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With respect to a specified Person other than an
individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, general
partner, executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a
Material Interest;
(e) For purposes of this definition, (a) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse, (iii) any
child, parent, brother or sister of the individual or the individual's spouse,
and (iv) any other natural person who resides with such individual, and (b)
"Material Interest" means direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of voting securities or
other voting interests representing at least 5% of the outstanding voting power
of a Person or equity securities or other equity interests representing at least
5% of the outstanding equity securities or equity interests in a Person.
"RELEASE"--any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
"REPRESENTATIVE"--with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"SECOND MERGER CONSIDERATION" --as defined in Section
2.7(a).
"SECURITIES ACT"--the Securities Act of 1933 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"SELLERS"--as defined in the first paragraph of this
Agreement.
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"SUBSIDIARY"--with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"SURVIVING CORPORATION"--the corporation that survives the
merger of the Company into Acquisition, namely Acquisition.
"TAX"--any tax (including any income tax, capital gains tax,
value added tax, sales tax, property tax, gift tax, or estate levy), levy,
assessment, tariff, duty, deficiency, or other fee in any related charge or
amount (including any fine, penalty, interest or addition to tax), imposed,
assessed or collected by or under the authority of any Governmental Body or
payable pursuant to any tax sharing agreement or any other contract relating to
the sharing or payment of any such tax, levy, assessment, tariff, duty,
deficiency or fee.
"TAX RETURN"--any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE"--a substantial likelihood of a Release
that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.
"THREATENED"--a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or statement has
been made (orally or in writing) or any notice has been given (orally or in
writing) that would lead a prudent Person to conclude that such a claim,
Proceeding, dispute, action, or other matter is likely to be asserted,
commenced, taken, or otherwise pursued in the future.
2. THE MERGER
2.1 THE MERGER
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Upon the terms and subject to the conditions of this
Agreement, at the Effective Time, Company shall be merged with and into
Acquisition (the "Merger"). The separate existence and corporate organization of
the Company shall thereupon cease and the Company and Acquisition shall
thereupon be a single corporation. Acquisition shall be the surviving
corporation in the Merger (the "Surviving Corporation") and shall continue its
existence under the provisions of the Delaware General Corporation Law.
2.2 EFFECTIVE DATE OF THE MERGER
On the Closing Date, a certificate of merger (the "Articles
of Merger") shall be executed by the Company and Acquisition and shall be filed
with the Secretary of State of the States of California and Delaware. The Merger
shall become effective at such time as the Articles of Merger are filed with the
Secretary of State of the States of California and Delaware, such time being
hereinafter called the "Effective Time."
2.3 ARTICLES OF INCORPORATION
The Articles of Incorporation of Acquisition as in effect
immediately prior to the Effective Time shall be and remain the Articles of
Incorporation of the Surviving Corporation from and after the Effective Time
until amended as provided by law.
2.4 BY-LAWS
The By-Laws of Acquisition as in effect immediately prior to
the Effective Time shall be and remain the By-Laws of the Surviving Corporation
from and after the Effective Time until amended as provided by law.
2.5 DIRECTORS AND OFFICERS
Acquisition and Buyer shall, at Closing, cause Xxxxxx X.
Xxxxxx, Xx., [Buyer appointment] and Xxx Xxxxxxx to be appointed as directors of
the Surviving Corporation. Xxx Xxxxxxx and Xxxxxx X. Xxxxxx, Xx. shall serve as
the officers of the Surviving Corporation until their successors have been
elected or appointed and shall have qualified in accordance with applicable law.
2.6 CLOSING
The closing of such Merger (the "Closing") shall be
effective (i) on the date the conditions in Sections 7 and 8 have been satisfied
or otherwise waived, or (ii) at such other date as the parties hereto shall
agree in writing (the "Closing Date"), provided, however that the Closing and
the Closing Date
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shall not be earlier than April 6, 1998. The Closing shall be held at the
offices of Buyer's counsel at 000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx,
Xxxxxxx 00000 at 10:00 a.m. (local time).
2.7 CONVERSION OF COMPANY COMMON STOCK
(a) At the Effective Time, by virtue of the Merger and
without any further action on the part of any holder of capital stock of Buyer,
Acquisition, the Company or Sellers: (i) the Company shall be merged with and
into Acquisition; and (ii) the shares of the Company held by Sellers shall be
converted into and shall become, without further action on the part of the
Sellers, the right to receive cash and stock equal to the "Merger
Consideration". The Merger Consideration shall consist of the "First Merger
Consideration" and the "Second Merger Consideration". The "First Merger
Consideration" means cash and stock having an aggregate value of seven (7) times
the annualized Company Adjusted EBITDA based upon the greater of: (aa) the
annualized Company Adjusted EBITDA for the three (3) months beginning January 1,
1998 and ending with March 31, 1998; or (bb) the annualized Company Adjusted
EBITDA for the full months beginning January 1, 1998 and ending on the last day
of the month immediately prior to the Closing for which financial statements are
available. The parties agree that Exhibit 2.7(a), which is attached hereto and
incorporated herein by this reference, sets forth the agreed categories of
adjustments for the Company. The First Merger Consideration shall consist of (i)
fifty percent (50%) in shares of restricted Common Stock of Buyer which number
of shares of Common Stock shall be determined by dividing fifty percent (50%) of
the amount of the total First Merger Consideration by Buyer's initial public
offering price per share (the "IPO Price") and (ii) fifty percent (50%) in cash.
The "Second Merger Consideration" shall be shares of Buyer's Common Stock having
a value, at the IPO Price, of an amount equal to three and one-half (3.5) times
the difference between; (i) the annualized Company Adjusted EBITDA used in
determining First Merger Consideration and (ii) Acquisition Adjusted EBITDA.
"Acquisition Adjusted EBITDA" means the actual twelve (12) months EBITDA of
Acquisition after the Effective Date, including in such calculation of EBITDA
any increase for any acquisitions for such period, and excluding (i) all
reasonable acquisition expenses of this merger transaction and any and all other
acquisitions (provided however that any acquisition costs not incurred or
approved by Sellers shall be excluded regardless of whether such costs are
reasonable which consent shall not be unreasonably withheld by Sellers); and
(ii) any costs or expenses not in the ordinary course of Acquisition's business
which are approved by Buyer in writing; (iii) all overhead, management fees, or
other amounts charged to Acquisition by Buyers or any Related Person of Buyer.
There shall be counted as an expense, any bonus amounts paid to Xxxxxx Xxxxxxx
or a bonus to any employee of the Company
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in lieu of payment to Xxxxxxx. Notwithstanding the foregoing, in no event shall
the number of shares to be issued as the Second Merger Consideration exceed the
number of shares issued as a part of the First Merger Consideration. The only
restrictions on the Common Stock Buyer issued as Merger Consideration shall be
those set forth in Section 5.8 and as required by law.
(b) Within 120 calendar days the first
anniversary of the Effective Date, Buyer shall cause its independent auditing
firm to deliver to the Sellers a report of Acquisition Adjusted EBITDA of
Acquisition for the twelve (12) month period which ended on the first
Anniversary of the Effective Date (the "EBITDA Certificate"). In the event that
Acquisition produces Acquisition Adjusted EBITDA for such twelve (12) month
period in excess of annualized Company Adjusted EBITDA on which the Merger
Consideration was based, as determined by the accountants for Buyer, then
following review of the EBITDA certificate by Sellers and resolution of any
dispute pursuant to Section 2.7(c), Buyer shall cause the delivery to Sellers,
shares of its Common Stock in an amount equal to three and one-half (3.5) times
the increase divided by the IPO Price (but in no event a number of shares
greater than the number of shares included in the First Merger Consideration).
If the Acquisition Adjusted EBITDA is less than the annualized Company Adjusted
EBITDA on which the First Merger Consideration was based then no additional
consideration shall be received by Sellers. In addition to the Second Merger
Consideration, Buyer shall further issue and deliver to Seller the Interest
Shares simultaneously with delivery of the Second Merger Consideration.
(c) The Sellers shall have a period of
forty-five (45) days after delivery of the EBITDA certificate, to present in
writing to Buyer, any objections that the Sellers may have to any of the matters
set forth in such certificate, which objection shall be set forth in reasonable
detail. Sellers and Sellers' Representatives shall have full access to the books
and records of Acquisition and, to the extent relevant, of Buyer during each
forty-five (45) day period. If no objections are raised within such forty-five
(45) day period, the certificate shall be deemed accepted and approved by the
Sellers. If the Sellers shall raise any objections within the forty-five (45)
day period, the parties shall attempt to resolve the matter or matters in
dispute. If such dispute cannot be resolved within a further period of thirty
(30) days, the Sellers shall have the right to submit the dispute to a
nationally recognized firm of independent public accountants mutually agreed to
by Sellers and Buyer, which firm shall make a final and binding determination as
to such matter or matters in dispute. Each party shall bear one-half of the fees
and expenses in connection with such review.
(d) If Sellers are entitled to Second Merger
Consideration, then, in addition to the shares of Buyer's Common
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Stock constituting the Second Merger Consideration, Sellers shall also be
entitled to receive shares of Buyer's Common Stock valued at the IPO price, in
an amount equal to interest at the Applicable Federal Rate (determined as of the
Effective Date) on the value of the Second Merger Consideration, from the
Effective Date until the Second Merger Consideration is paid (the "Interest
Shares"). Should the foregoing computation result in a fractional share, the
number of Interest Shares shall be rounded up.
(e) The parties acknowledge and agree that the
Second Merger Consideration is necessary because of the inability of Buyer and
Sellers to agree on the value of the Company and a fixed amount of merger
consideration at the Closing, particularly given the Company's high rate of
growth during the fiscal year ending September 30, 1997 and during the current
fiscal year.
2.8 DETERMINATION OF FIRST MERGER CONSIDERATION
At least three (3) days before the scheduled
Closing Date, Company shall deliver to Buyer Company's computation of annualized
Company Adjusted EBITDA for the period January 1, 1998 through March 31, 1998
and for the period January 1, 1998 through the end of the last full month prior
to the scheduled Closing Date ("Company's EBITDA Certificate"); provided,
however that if the Company's financial records have not been properly closed
for that month and do not reasonably permit inclusion of the last full month
prior to the scheduled Closing Date, then the second period calculation shall be
based on January 1, 1998 through the end of the most recent full month before
the scheduled Closing Date for which the Company's financial records have been
properly closed.
Sellers and Buyer shall review the Company's
EBITDA Certificate and, subject to correction of any obvious error in the
Company's EBITDA Certificate, the First Merger Consideration paid at the Closing
shall be paid based on the Company's EBITDA Certificate.
During thirty (30) days following the Closing,
Sellers may provide to Buyer a revised Company's EBITDA Certificate and any
corrections which Sellers believe are appropriate.
Within thirty (30) days after the Closing or, if a
revised Company's EBITDA Certificate is timely delivered by Sellers to Buyer,
then within thirty (30) days after delivery of the revised Company's EBITDA
Certificate, Buyer shall notify Sellers that either: (1) Buyer accepts as
accurate the Company's EBITDA Certificate or the revised Company's EBITDA
Certificate, as applicable; or (2) Buyer disputes the accuracy of the Company's
EBITDA Certificate or the revised Company's EBITDA
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Certificate, as applicable, specifying the disputed items and the factual basis
for the dispute. Failure of Buyer to so notify Sellers within such thirty (30)
day period shall constitute acceptance and approval by Buyer and Acquisition of
the Company's EBITDA Certificate or the revised Company's EBITDA Certificate, as
applicable.
If Buyer timely disputes any items, Sellers and
Buyer shall attempt to resolve the matter(s) in dispute. If such dispute is not
resolved within a further period of thirty (30) days, either Sellers or Buyer
may submit the dispute to a nationally recognized firm of independent public
accountants mutually acceptable to Sellers and Buyer, which firm shall make a
final and binding determination as to such matter(s) in dispute. Each party
shall bear one-half of the fees and expenses in connection with such review.
Upon final resolution of the amount of the First
Merger Consideration, any required adjustment shall be made by the respective
party promptly and one-half in cash/cash equivalents and one-half in Buyer's
Common Stock valued at the IPO Price.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
The Company and Sellers hereby jointly and
severally represent and warrant to Buyer and Acquisition as
follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under Applicable
Contracts. The Company is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification, except
where failure to so qualify would not have a material affect on the Company.
(b) Sellers have delivered or made available to
Buyer copies of the Organizational Documents of the Company, as currently in
effect.
3.2 AUTHORITY; NO CONFLICT
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(a) This Agreement constitutes the legal, valid, and binding
obligation of Sellers and the Company, enforceable against Sellers and the
Company in accordance with its terms subject to bankruptcy, insolvency or other
laws affecting the rights of creditors generally. Sellers and the Company have
all right, power, authority, and capacity to execute and deliver this Agreement
and to perform their obligations under this Agreement. The Sellers and the
Company have approved this Agreement under applicable state corporate law
provisions, and such approval is binding.
(b) Except as set forth in Part 3.2 of the Disclosure
Letter, neither the execution and delivery of this Agreement by Company and
Sellers nor the consummation or performance of any of the Contemplated
Transactions by Company and Sellers will, directly or indirectly (with or
without notice or lapse of time):
(i) result in a violation of (A) any provision of the
Organizational Documents of the Company, or (B) any resolution adopted by the
board of directors or the stockholders of the Company;
(ii) result in a violation of, or give any Governmental Body
or other Person the right to challenge any of the Contemplated Transactions or
to exercise any material remedy or obtain any material relief under, any Legal
Requirement or any Order to which the Company or Sellers, or any of the assets
owned or used by the Company, may be subject;
(iii) result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate, or modify, any material Governmental Authorization
that is held by the Company or that otherwise relates to the business of, or any
of the assets owned or used by, the Company;
(iv) result in a violation or breach of any provision of, or
give any Person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate, or
modify, any material Applicable Contract; or
(v) result in the imposition or creation of any Encumbrance
upon or with respect to any of the material assets owned or used by the Company.
Except as set forth in Part 3.2 of the Disclosure Letter,
neither Sellers or the Company is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this
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Agreement or the consummation or performance of any of the Contemplated
Transactions.
(c) Sellers are acquiring the Buyer's Common
Stock for their own account and not with a view to its distribution within the
meaning of Section 2(11) of the Securities Act. Sellers are "accredited
investors" as such term is defined in Rule 501(a) under the Securities Act.
3.3 CAPITALIZATION
The authorized equity securities of the Company
consist of 1,500 shares of common stock, no par value, of which 1,000 shares are
issued and outstanding and constitute all the outstanding shares of the Company.
The Sellers are and will be on the Closing Date, the record and beneficial owner
and holder of the outstanding shares of the Company free and clear of all
Encumbrances. All of the outstanding shares of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of the Company. None of the outstanding equity securities or
other securities of the Company was issued in violation of the Securities Act or
any other Legal Requirement. Except as set forth in part 3.3 of the Disclosure
Letter, the Company does not own, or has any Contract to acquire, any equity
securities or other securities of any Person or any direct or indirect equity or
ownership interest in any other business.
3.4 FINANCIAL STATEMENTS
Company has delivered or made available to Buyer:
(a) a reviewed balance sheet of the Company as at September 30, 1996; (b) the
audited balance sheet, related statements of income, changes in stockholders'
equity, and cash flow for the fiscal year then ending September 30, 1997 (the
"Audited Financial Statements"); and (c) a reviewed balance sheet of the Company
as at December 31, 1997 (the "Interim Balance Sheet") and the related
consolidated statement of income, changes in stockholders' equity, and cash flow
for the three (3) months then ended. Such financial statements and notes fairly
present in all material respects the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the Company as at
the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP subject, in the case of Interim Balance
Sheet, to normal recurring year-end adjustments (the effect of which will not,
individually run the aggregate, be materially adverse). No financial statements
of any Person other than the Company are required by GAAP to be included in the
financial statements.
3.5 BOOKS AND RECORDS
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The books of account and other financial records of the
Company, all of which have been made available to Buyer are, complete and
correct in all material respects and have been maintained in accordance with
sound business practices. The minute books of the Company contain accurate and
complete records of all meetings held by the stockholders, the Board of
Directors, and committees of the Board of Directors of the Company and
accurately reflect in all material respects, all other corporate action of the
Shareholders and Board of Directors of the Company for which minutes were
prepared. At the Closing, all of those books and records will be in the
possession of the Company.
3.6 TITLE TO TANGIBLE PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a
complete and accurate list of all real property, leaseholds, or other interests
therein owned by the Company. The Company does not hold fee title to any real
property. Sellers have delivered or made available to Buyer copies of leases by
which the Company occupies such real property and such leases are true, complete
and accurate. The Company owns or leases all the tangible properties and assets
(whether real, personal, or mixed) that they purport to own or lease located in
the facilities owned or operated by the Company and reflected as owned or leased
in the books and records of the Company, including all of the tangible
properties and assets reflected in the Interim Balance Sheet (except for assets
held under capitalized leases disclosed or not required to be disclosed in Part
3.6 of the Disclosure Letter and personal property sold since the date of the
Balance Sheet, as the case may be, in the Ordinary Course of Business), and all
of the tangible properties and assets purchased or otherwise acquired by the
Company since the date of the Interim Balance Sheet (except for personal
property acquired and sold since the date of the Interim Balance Sheet in the
Ordinary Course of Business and consistent with past practice), which
subsequently- purchased or acquired tangible properties and assets (other than
inventory and short-term investments) are listed in Part 3.6 of the Disclosure
Letter. All material tangible properties and assets reflected in the Interim
Balance Sheet are free and clear of all Encumbrances except with respect to all
such properties and assets, (a) mortgages or security interests shown on the
Interim Balance Sheet as securing specified liabilities or obligations, with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (b) mortgages or security interests
incurred in connection with the purchase of property or assets after the date of
the Interim Balance Sheet (such mortgages and security interests being limited
to the property or assets so acquired), with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a default)
exists, (c) liens for current taxes not yet due, and (d) with respect to
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real property, (i) minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of the Company, and (ii)
zoning laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and equipment
of the Company are structurally sound, in good operating condition and repair,
and adequate for the uses to which they are being put, and none of such
buildings, plants, structures, or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are
reflected on the Balance Sheet, the Interim Balance Sheet or on the accounting
records of the Company as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, the Accounts Receivable are, or will be
as of the Closing Date, current and collectible net of the respective reserves
shown on the Balance Sheet, the Interim Balance Sheet or on the accounting
records of the Company as of the Closing Date (in the case of the reserve as of
the Closing Date, the reserves will not represent a greater percentage of the
Accounts Receivable as of the Closing Date than the reserve reflected in the
Interim Balance Sheet represented of the Accounts Receivable reflected therein
and will not represent a material adverse change in the composition of such
Accounts Receivable in terms of aging). Subject to such reserves, each of the
Accounts Receivable either has been or will be collected in full, without any
set-off, within 120 days after the day on which it first becomes due and
payable. There is no contest, claim, or right of set-off, other than returns in
the Ordinary Course of Business, under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. Part 3.8 of the Disclosure Letter contains a complete and accurate
list of all Accounts Receivable as of the date of the Interim Balance Sheet,
which list sets forth the aging of such Accounts Receivable.
3.9 INVENTORY
All inventory of the Company, whether or not
reflected in the Interim Balance Sheet, consists of a quality and quantity
usable and salable in the Ordinary Course of Business,
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except for obsolete items and items of below-standard quality, which in no event
exceeds $10,000, all of which have been written off or written down to net
realizable value in the Balance Sheet or on the accounting records of the
Company as of the Closing Date, as the case may be. All inventories not written
off have been priced at cost. The quantities of each item of inventory are
reasonable in the present circumstances of the Company.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the Disclosure
Letter, the Company has no liabilities or obligations of any nature (whether
known or whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Interim Balance
Sheet and current liabilities incurred in the Ordinary Course of Business since
the date thereof.
3.11 TAXES
(a) The Company has filed or caused to be filed
(on a timely basis since December 31, 1996) all Tax Returns that are or were
required to be filed by or with respect to the Company pursuant to applicable
Legal Requirements. Company has delivered to Buyer copies of, and Part 3.11 of
the Disclosure Letter contains a complete and accurate list of, all such Tax
Returns filed by the Company since December 31, 1996. The Company has paid, or
made provision for the payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by the Company, except such Taxes, if any, as are listed in Part 3.11
of the Disclosure Letter and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided in the
Balance Sheet.
(b) Except as set out in Part 3.11 of the
Disclosure Schedule, no United States federal income Tax Returns of the Company
subject to such Taxes have been audited by the IRS for the taxable year ending
September 30, 1997, which is the only full taxable year of the Company. Part
3.11 of the Disclosure Letter contains a complete and accurate list of any
audits of all such Tax Returns, including a reasonably detailed description of
the nature and outcome of each audit. All deficiencies proposed as a result of
such audits have been paid, reserved against, settled, or, as described in Part
3.11 of the Disclosure Letter, are being contested in good faith by appropriate
proceedings. Part 3.11 of the Disclosure Letter describes all adjustments to the
United States federal income Tax Returns filed by the Company or any group of
corporations including the Company for all taxable years since December 31,
1996, and the resulting deficiencies proposed by the IRS. Except as described in
Part 3.11 of the Disclosure Letter, the Company has not given or
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been requested to give waivers or extensions (or is or would be subject to a
waiver or extension given by any other Person) of any statute of limitations
relating to the payment of Taxes of the Company or for which the Company may be
liable.
(c) The charges, accruals, and reserves with respect to
Taxes on the respective books of the Company are adequate (determined in
accordance with GAAP) and are at least equal to the Company's liability for
Taxes based on the Company's taxable income for the period in question. There
exists no proposed tax assessment against the Company except as disclosed in the
Balance Sheet or in Part 3.11 of the Disclosure Letter. No consent to the
application of Section 341(f)(2) of the IRC has been filed with respect to any
property or assets held, acquired, or to be acquired by the Company. All Taxes
that the Company is or was required by Legal Requirements to withhold or collect
have been duly withheld or collected and, to the extent required, have been paid
to the proper Governmental Body or other Person.
(d) All Tax Returns filed by the Company are true, correct,
and complete. There is no tax sharing agreement that will require any payment by
the Company after the date of this Agreement.
3.12 NO MATERIAL ADVERSE CHANGE
Except as set forth in Part 3.12 of the Disclosure Letter
and, since the date of the Interim Balance Sheet, there has not been any
material adverse change in the business, operations, properties, prospects,
assets, or condition of the Company, and, to Sellers' and the Company's actual
knowledge, no event has occurred or circumstance exists that may result in such
a material adverse change, other than general economic conditions that could
affect the Company.
3.13 EMPLOYEE BENEFITS
Except for group medical insurance and any associated life
insurance, a 401K Plan, and those employee benefits described in the Company's
Employment Manual, a copy of which has been previously delivered or made
available to Buyer, and except as set forth in Part 3.13 of the Disclosure
Letter, the Company (i) has not contributed to any pension, profit sharing,
option or other incentive plan or other type of employee benefit plan, (ii) does
not maintain or has maintained, is or was a party to, or otherwise participates
or participated in, on its own behalf or on behalf of any former employees, any
pension, profit sharing, option or other incentive plan or other type of
employee benefit plan, or (iii) does not have any obligation to, or customary
arrangement with, former employees, if any, for bonuses, incentive compensation,
vacation, severance pay, sick
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pay, sick leave, insurance, service award, relocation, disability or other
benefits, whether oral or written.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS;
GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the
Disclosure Letter:
(i) the Company is, and at all times, has
been, in full compliance with each Legal Requirement that is or was applicable
to it or to the conduct or operation of its business or the ownership or use of
any of its assets;
(ii) no event has occurred or circumstance
exists that (with or without notice or lapse of time) in any material respect
(A) may constitute or result in a violation by the Company of, or a failure on
the part of the Company to comply with, any Legal Requirement, or (B) may give
rise to any obligation on the part of the Company to undertake, or to bear all
or any portion of the cost of, any remedial action of any nature; and
(iii) the Company has not received,
at any time, any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of, or failure to comply with, any material
Legal Requirement, or (B) any actual, alleged, or potential material obligation
on the part of the Company to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains
a complete and accurate list of each Governmental Authorization that is held by
the Company or that otherwise relates to the business of, or to any of the
assets owned or used by, the Company and for which the Company has documentation
(those for which documentation is not available are not material to the
operations of the Company) (all of which authorizations have been delivered or
made available to Buyer). Except as set forth in Part 3.14 of the Disclosure
Letter, each Governmental Authorization listed or required to be listed in Part
3.14 of the Disclosure Letter is valid and in full force and effect. Except as
set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times has
been, in full compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in Part 3.14
of the Disclosure Letter;
(ii) no event has occurred or
circumstance exists that may (with or without notice or lapse of time) (A)
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constitute or result directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Governmental Authorization listed or
required to be listed in Part 3.14 of the Disclosure Letter, or (B) result
directly or indirectly in the revocation, withdrawal, suspension, cancellation,
or termination of, or any modification to, any Governmental Authorization listed
or required to be listed in Part 3.14 of the Disclosure Letter;
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible, or potential material
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (B) any actual, proposed, possible, or potential
revocation, withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Part 3.14 of the Disclosure Letter have been duly filed on a timely basis with
the appropriate Governmental Bodies, and all other filings required to have been
made with respect to such Governmental Authorizations have been duly made on a
timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the
Disclosure Letter collectively constitute all of the Governmental Authorizations
necessary to permit the Company to lawfully conduct and operate their businesses
in the manner they currently conduct and operate such businesses and to permit
the Company to own and use their assets in the manner in which they currently
own and use such assets except where the failure to obtain a Governmental
Authorization would not result in a material adverse change to the Company.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.15 of the Disclosure
Letter, there is no pending Proceeding:
(i) that has been commenced by or against the Company that
relates to or may affect the business of, or any of the assets owned or used by,
the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
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To the Knowledge of Sellers and the Company, no such
Proceeding as described above has been Threatened. Company has delivered or made
available to Buyer copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in Part 3.15 of the Disclosure Letter. The
Proceedings listed in Part 3.15 of the Disclosure Letter will not have a
material adverse effect on the business, operations, assets, condition, or
prospects of the Company.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which the Company, or any of the
assets owned or used by the Company, is subject;
(ii) Sellers are not subject to any Order that relates to
the business of, or any of the assets owned or used by, the Company; and
(iii) no officer, director, agent, or employee of the
Company is subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or practice
relating to the business of the Company.
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) the Company is, and at all times has been, in full
compliance with all of the terms and requirements of each Order to which it, or
any of the assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is subject; and
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is or has been
subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure Letter,
since the date of the Interim Balance Sheet, the Company
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has conducted its business only in the Ordinary Course of Business and there has
not been any:
(a) change in the Company's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock of the
Company; issuance of any security convertible into such capital stock; grant of
any registration rights; purchase, redemption, retirement, or other acquisition
by the Company of any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries,
distributions or other compensation to any stockholder, director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of the
Company;
(e) damage to or destruction or loss of any asset or property of
the Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to the Company of more than
$10,000, except in the Ordinary Course of Business.
(g) except in the Ordinary Course of Business, sale, lease, or
other disposition of any asset or property (other than inventory in the Ordinary
Course of Business) of the Company or mortgage, pledge, or imposition of any
lien or other encumbrance on any material asset or property of the Company,
including the sale, lease, or other disposition of any of the intellectual
property assets;
(h) cancellation or waiver of any claims or rights with a value to
the Company in excess of $10,000;
(i) material change in the accounting methods used by the Company;
or
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(j) agreement, whether oral or written, by the Company to do any
of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter contains a complete and
accurate list, and Company has delivered or made available to Buyer true and
complete copies, of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by the Company of an amount or value
in excess of $15,000;
(ii) each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or receipts of
the Company in excess of $15,000;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per item
or aggregate payments of less than $15,000 and with terms of less than one
year);
(iv) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other intellectual property,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(v) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee representative
of a group of employees;
(vi) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by the Company with any other Person;
(vii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of the Company or any Seller
of the Company or limit the freedom of the Company or any Seller of the Company
to engage in any line of business or to compete with any Person;
(viii) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than direct payments
for goods and sales commission arrangements for employees;
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(ix) each power of attorney granted by the Company that is
currently effective and outstanding;
(x) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by the Company to be responsible for consequential damages;
(xi) each Applicable Contract for future capital
expenditures in excess of $15,000;
(xii) each currently effective written warranty, guaranty,
indemnity, and or other similar undertaking with respect to contractual
performance extended by the Company other than in the Ordinary Course of
Business;
(xiii) each Contract for indebtedness of the Company
involving future aggregate payments of more than $10,000; and
(xiv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 3.17(b) of the Disclosure
Letter:
(i) Sellers (and no Related Person of the Sellers) do not
have or may acquire any rights under, and Sellers do not have or may become
subject to, any obligation or liability under, any Contract that relates to the
business of, or any of the assets owned or used by, the Company; and
(ii) no officer or director of the Company is bound by any
Contract that purports to limit the ability of such officer or director to (A)
engage in or continue any conduct, activity, or practice relating to the
business of the Company, or (B) assign to the Company or to any other Person any
rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure
Letter, each Contract identified or required to be identified in Part 3.17(a) of
the Disclosure Letter is in full force and effect and is valid and enforceable
in accordance with its material terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure
Letter:
(i) the Company is, and at all times has been, in full
compliance with all applicable terms and requirements of each Contract under
which the Company has or had
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any material obligation or liability or by which the Company or any of the
material assets owned or used by the Company is or was bound;
(ii) each other Person that has or had any material
obligation or liability under any Contract under which the Company has or had
any rights is in full compliance with all material applicable terms and
requirements of such Contract;
(iii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give the Company or other Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any Applicable
Contract; and
(iv) the Company has not given to or received from any other
Person, any notice or other communication (whether oral or written) regarding
any actual, alleged, possible, or potential violation or breach of, or default
under, any Applicable Contract.
(e) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to the Company under current or completed Applicable Contracts with any
Person and, to Sellers' Knowledge, no such Person has made written demand for
such renegotiation.
(f) The Applicable Contracts relating to the sale or
provision of products or services by the Company have been entered into in the
Ordinary Course of Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in violation of any Legal
Requirement.
(g) The Company has made available to Buyer true, complete and
correct copies of the Contracts required to be set forth in Part 3.17 of the
Disclosure Letter.
3.18 INSURANCE
(a) Company has made available to Buyer:
(i) true and complete copies of all
current policies of insurance to which the Company is a party or under which the
Company, or any director of the Company, is covered; and
(ii) true and complete copies of all
pending applications for policies of insurance.
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(b) Part 3.18(b) of the Disclosure Letter
describes:
(i) any self-insurance arrangement by or affecting the
Company, including any reserves established thereunder; (ii) any contract or
arrangement, other than a policy of insurance, for the transfer or sharing of
any risk by the Company; and
(iii) all obligations of the Company to third parties with
respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.
(c) There has not been any claim under any insurance policy
of the Company since its formation that could reasonably be expected to have a
material adverse effect on the Company.
(d) Except as set forth on Part 3.18(d) of the Disclosure
Letter:
(i) Since its formation the Company has not received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder.
(ii) The Company has paid all premiums due, and have
otherwise performed all of their obligations, under each policy to which the
Company is a party or that provides coverage to the Company or director thereof.
(iii) The Company has given notice to the insurer of all
claims that may be insured thereby, if failure to make such claim could
reasonably be expected to have a material adverse affect on the Company.
3.19 ENVIRONMENTAL MATTERS
Except as set forth in part 3.19 of the disclosure
letter:
(a) The Company is, and at all times has been,
in full compliance with, and has not been and is not in violation of or liable
under, any Environmental Law. Neither Sellers or the Company has any basis to
expect, nor has any of them received, any actual or Threatened Order, notice, or
other communication
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from (i) any Governmental Body or private citizen acting in the public interest,
or (ii) the current or prior owner or operator of any Facilities, of any actual
or potential violation or failure to comply with any Environmental Law, or of
any actual or Threatened obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which Sellers or the Company has had an interest, or with respect to any
property or Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by Sellers, or
the Company, or from which Hazardous Materials have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of Sellers and the
Company, Threatened claims, Proceedings or Encumbrances relating to any
Environmental, Health, and Safety Liabilities or arising under or pursuant to
any Environmental Law, with respect to or affecting any of the Facilities or any
other properties and assets (whether real, personal, or mixed) in which the
Company has or had an interest.
(c) Neither Sellers or the Company has any basis to expect, nor
has any of them received, any citation, directive, inquiry, notice, Order,
summons, warning, or other communication that relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual, or potential violation or failure
to comply with any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which the Company had an
interest, or with respect to any property or facility to which Hazardous
Materials generated, manufactured, refined, transferred, imported, used, or
processed by the Company have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) The Company has no Environmental, Health, and Safety
Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which the Company
(or any predecessor), has or had an interest.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities, including any Hazardous Materials contained in
barrels, above or underground storage tanks, landfills, land deposits, dumps,
equipment (whether moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps, or any other part of
the Facilities, or incorporated into any structure therein or thereon. The
Company has not permitted or conducted
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any Hazardous Activity conducted with respect to the Facilities or any other
properties or assets (whether real, personal, or mixed) in which the Company has
or had an interest.
(f) There has been no Release or Threat of Release, of any
Hazardous Materials at or from the Facilities, or from or by any other
properties and assets (whether real, personal, or mixed) in which the Company
has or had an interest.
(g) Sellers and Company have delivered or made available to Buyer
true and complete copies and results of any reports, studies, analyses, tests,
or monitoring possessed by Sellers or the Company pertaining to Hazardous
Materials or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by the Company with Environmental Laws.
(h) There are no underground or above-ground storage tanks,
incinerators or surface impoundments at, on, or about under or within any real
property operated or controlled, in whole or in part by the Company.
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Letter contains
a complete and accurate list of the following information for each employee or
director of the Company, including each employee on leave of absence or layoff
status: employer; name; job title; current compensation paid or payable and any
change in compensation since December 31, 1997; vacation accrued; and service
credited for purposes of vesting and eligibility to participate under the
Company's insurance, medical, welfare, or vacation plan, or any other employee
benefit plan.
(b) No officer or director of the Company is a party to, or is
otherwise bound by, any agreement or arrangement, including any confidentiality,
non-competition, or proprietary rights agreement, between such officer or
director and any other Person ("Proprietary Rights Agreement") that in any way
adversely affects or will affect (i) the performance of his duties as an officer
or director of the Company, or (ii) the ability of the Company to conduct its
business, including any Proprietary Rights Agreement with Sellers or the Company
by any such officer or director.
3.21 LABOR RELATIONS; COMPLIANCE
The Company has not been or is a party to any collective
bargaining or other union labor Contract. There has not been, there is not
presently pending or existing, and to Sellers' Knowledge there is not
Threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any proceeding against or affecting the Company
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relating to the alleged violation of any Legal Requirement pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or affecting the Company
or its premises, or (c) any application for certification of a collective
bargaining agent. No event has occurred or circumstance exists that could
provide the basis for any work stoppage. There is no lockout of any employees
by the Company, and no such action is contemplated by the Company. Except as
set forth in Part 3.21 of the Disclosure Letter, the Company has complied in
all material respects with all Legal Requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing. Except as set forth in Part
3.21 of the Disclosure Letter, the Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY
(a) The Company does not own or licenses for use
any patents, trademarks, trade names, service marks, mask works or copyrights,
other than the common trade law names, the common law trade names listed on 3.22
of the Disclosure Letter.
(b) To the Company's and Sellers' Knowledge,
there has not been any actual or alleged infringement or use or misuse by any
party of the Company's trade secrets, confidential information or other
intellectual property rights, except as set forth on Part 3.22 of the Disclosure
Letter.
3.23 CERTAIN PAYMENTS
Neither the Company or any director or officer of
the Company, or any other person associated with or acting for or on behalf of
the Company, has directly or indirectly and in violation of any Legal
Requirement (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Company or any Affiliate of the Company, (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Company.
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3.24 DISCLOSURE
(a) No representation or warranty of Sellers in
this Agreement and no statement in the Disclosure Letter
knowingly omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading.
(b) No notice given pursuant to Section 5.5 will
contain any untrue statement or omit to state a material fact necessary to make
the statements therein or in this Agreement, in light of the circumstances in
which they were made, not misleading.
3.25 RELATIONSHIPS WITH RELATED PERSONS
Except as set forth in Part 3.25 of the Disclosure
Letter, neither Sellers or any Related Person of Sellers or of the Company has
any interest in any property (whether real, personal, or mixed and whether
tangible or intangible), used in or pertaining to the Company's business.
Neither Sellers or any Related Person of Sellers or of the Company owns (of
record or as a beneficial owner) an equity interest or any other financial or
profit interest in, a Person that (i) has business dealings or a material
financial interest in any transaction with the Company, or (ii) engages in
competition with the Company with respect to any line of the products or
services of the Company (a "Competing Business") in any market presently served
by the Company. Except as set forth in Part 3.25 of the Disclosure Letter,
neither Sellers or any Related Person of Sellers or of the Company is a party to
any Contract with, or has any claim or right against the Company that will
survive the Closing.
3.26 BROKERS OR FINDERS
Sellers, the Company and their agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
3.27 CREDIT LINE; CASH
At Closing, (i) there will be no amounts due or
outstanding under the Company's credit line with Xxxxx Fargo Bank and (ii) the
Company will have cash available of at least $150,000.
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4. REPRESENTATIONS AND WARRANTIES OF ACQUISITION AND
BUYER
Acquisition and Buyer (the "Buyer Companies")
jointly and severally represent and warrant to Sellers as
follows:
4.1 ORGANIZATION; POWER; QUALIFICATION
(a) Acquisition is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is a wholly-owned subsidiary of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of Acquisition and Buyer has full corporate power and authority
to conduct its business as it is now being conducted, and to own or use the
properties and assets that it purports to own or use. Each of Buyer and
Acquisition is duly qualified to do business as a foreign corporation, duly
qualified and is in good standing unless the laws of each state and jurisdiction
in which either the ownership or use of the properties owned or used by it or
the nature of the activities conducted by it requires such qualification, except
where the failure to so qualify would not have a material adverse effect on the
Buyer or on Acquisition.
(b) Buyer and Acquisition have delivered to
Sellers copies of their respective Organizational Documents as currently in
effect.
4.2 AUTHORITY
(a) This Agreement constitutes the legal, valid,
and binding obligation of Acquisition and the Buyer, enforceable against
Acquisition and the Buyer in accordance with its terms subject to bankruptcy,
insolvency or other laws affecting the rights of creditors generally.
Acquisition and the Buyer have all right, power, authority, and capacity to
execute and deliver this Agreement and to perform their obligations under this
Agreement. Acquisition and the Buyer have approved this Agreement in accordance
with applicable state corporate law provisions, and such approval is binding.
(b) Neither the execution and delivery of this
Agreement by Buyer and Acquisition nor the consummation or performance of any of
the Contemplated Transactions by Buyer and Acquisition will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or
result in a violation of (A) any provision of the Organizational Documents of
the Buyer or Acquisition, or (B) any resolution adopted by the
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board of directors or the stockholders of the Buyer or Acquisition;
(ii) result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Contemplated Transactions or to
exercise any material remedy or obtain any material relief under, any Legal
Requirement or any Order to which the Buyer or Acquisition, or any of the assets
owned or used by the Buyer or Acquisition, may be subject;
(iii) result in a violation of any of the terms or requirements
of, or give any Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any material Governmental Authorization that is
held by the Buyer or Acquisition or that otherwise relates to the business of,
or any of the assets owned or used by, the Buyer or Acquisition;
(iv) result in a violation or breach of any provision of, or give
any Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify,
any material contract of Buyer or of Acquisition; or
(v) result in the imposition or creation of any Encumbrance upon
or with respect to any of the material assets owned or used by the Buyer or
Acquisition.
Neither Acquisition or the Buyer is or will be required to give
any notice to or obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions, except for those Consents already
obtained.
4.3 CAPITALIZATION
As of the date hereof, the equity securities of the Buyer consist
of 50,000,000 shares of common stock, $.001 par value per share, of which
4,712,372 shares are issued and outstanding (other than those to be issued for
acquisitions or in connection with Buyer's IPO). All of the outstanding common
stock of the Buyer has been duly authorized and validly issued and is fully paid
and nonassessable. The shares of the Buyer's Common Stock to be delivered to
Sellers as Merger Consideration pursuant to Section 2.7 will be duly authorized,
validly issued, fully paid and non-assessable.
4.4 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other
records of the Buyer, are complete, in all
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material respects, and correct and have been maintained in accordance with sound
business practices, including the maintenance of an adequate system of internal
controls.
4.5 CERTAIN PROCEEDINGS; ORDERS
There is no pending Proceeding that has been
commenced against Buyer or Acquisition that relates to or may affect the
business of, or any of the assets owned or used by Buyer or Acquisition or that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's and
Acquisition's Knowledge, no such proceeding has been Threatened. There is no
Order to which the Buyer or Acquisition, or any of the assets owned or used by
either of them, is subject. No officer, director, agent, or employee of the
Buyer or Acquisition is subject to any Order that prohibits such officer,
director, agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of the Buyer or Acquisition.
4.6 BROKERS OR FINDERS
Buyers and Acquisition and their officers and
agents have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement and will indemnify and hold the Company and
Sellers harmless from any such payment alleged to be due by or through Buyer or
Acquisition as a result of the action of Buyer and Acquisition or their officers
or agents.
4.7 DISCLOSURE
Buyer has delivered to Sellers disclosure
information concerning Buyer, its management, its financial statements, its
proposed IPO, its outstanding stock and stock rights, and its proposed
acquisitions other than the Contemplated Transactions (collectively the
"Disclosure Document"). All of the information in such Disclosure Document is
true and correct in all material respects and, together with Buyer's and
Acquisition's representations and warranties set forth in this Agreement, do not
omit to state a material fact necessary to make the statements therein or herein
not misleading.
5. COVENANTS OF SELLERS AND THE COMPANY PRIOR TO
CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing
Date, Sellers will, and will cause the Company and its
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Representatives to, (a) afford Buyer and its Representatives and prospective
lenders and their Representatives (collectively, "Buyer's Advisors") full and
free access to the Company's personnel, properties (including subsurface
testing), contracts, books and records, and other documents and data, (b)
furnish Buyer and Buyer's Advisors with copies of all such contracts, books and
records, and other existing documents and data pertaining to the Company as
Buyer may reasonably request, and (c) furnish Buyer and Buyer's Advisors with
such additional financial, operating, and other data and information pertaining
to the Company as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESS OF THE COMPANY
Between the date of this Agreement and the Closing
Date, Sellers will cause the Company to do each of the following except as set
forth in Part 5.2 of the Disclosure Letter:
(a) conduct the business of the Company only in
the Ordinary Course of Business;
(b) use reasonable efforts to: preserve intact
the current business organization of the Company; keep available the services of
the current officers, employees, and agents of the Company; and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with the Company;
(c) confer with Buyer concerning operational
matters of a material nature; and
(d) otherwise report periodically to Buyer
concerning the status of the business, operations, and finances
of the Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Sellers will
not, and will cause the Company not to, without the prior consent of Buyer, take
any affirmative action, or fail to take any reasonable action within their or
its control, as a result of which any of the changes or events listed in Section
3.16 is likely to occur.
5.4 REQUIRED APPROVALS; FILINGS
Between the date of this Agreement and the Closing
Date, each party hereto will cooperate with the other parties with respect to
all filings that any other party elects to make or is required by Legal
Requirements to make in connection with
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the Contemplated Transactions, and (b) cooperate with the other parties in
obtaining any required consents.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing
Date, Sellers will promptly notify Buyer in writing if Sellers
become aware of any fact or condition that causes or constitutes a Breach of any
of Sellers' representations and warranties as of the date of this Agreement, or
if Sellers become aware of the occurrence after the date of this Agreement of
any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition require
any change in the Disclosure Letter if the Disclosure Letter were dated the date
of the occurrence or discovery of any such fact or condition, Sellers will
promptly deliver to Buyer a supplement to the Disclosure Letter specifying such
change. During the same period, Sellers will promptly notify Buyer of the
occurrence of any Breach of any covenant of Sellers in this Section 5 or of the
occurrence of any event that may make the satisfaction of the conditions in
Section 7 impossible or unlikely.
5.6 NO NEGOTIATION
Until such time, if any, as this Agreement is
terminated pursuant to Section 9, Sellers will not, and the Company will not and
each of their Representatives will not directly or indirectly solicit, initiate
or encourage, accept or discuss any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than Buyer)
relating to any transaction involving the sale of the business or assets of the
Company, or any of the capital stock of the Company, or any merger,
consolidation, business combination, or similar transaction involving the
Company. Sellers or the Company will promptly notify Buyer of any such inquiries
or proposals.
5.7 BEST EFFORTS
Between the date of this Agreement and the Closing
Date, Sellers and the Company will use their Best Efforts to cause the
conditions in Section 7 to be satisfied.
5.8 RESTRICTIONS ON COMMON STOCK OF BUYER
Sellers acknowledge that each certificate
representing Buyer's Common Stock acquired pursuant to this Agreement shall bear
the following restrictive legend:
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THE SECURITIES REPRESENTED BY THE CERTIFICATE (THE
"SHARES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR
SALE OR OTHERWISE DISTRIBUTED WITHOUT ONE OF THE
FOLLOWING: (i) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SHARES UNDER THE SECURITIES ACT, OR (ii) AN
OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION,
THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SAID
SALE, OFFER OR DISTRIBUTION.
Sellers further agree that Sellers will consent to such "lock-up" restriction as
may be imposed by the Buyer's underwriter or any entity regulating the issuance
of the Buyer's Common Stock in its initial public offering, provided, however
that Sellers shall only be required to consent to "lock up" restrictions that
are the same as those "lock up" restrictions imposed on principals of companies
acquired by Buyer which in no event exceed one (1) year.
6. COVENANTS OF BUYER AND ACQUISITION PRIOR TO
CLOSING DATE.
6.1 NOTIFICATION
Between the date of this Agreement and the Closing
Date, Buyer and Acquisition will promptly notify Sellers in writing if Buyer or
Acquisition becomes aware of any fact or condition that causes any statement in
the Disclosure Document or any statement therein to become untrue or incomplete
in any material respect or causes or constitutes a Breach of any of Buyer's or
Acquisition's representations and warranties as of the date of this Agreement,
or if Buyer or Acquisition becomes aware of the occurrence after the date of
this Agreement or any fact or condition that would, except as expressly
contemplated by this Agreement, cause or constitute a Breach of any such
representation or warranty or would cause the Disclosure Document or any
statement therein to become untrue or incomplete in any material respect.
6.2 BEST EFFORTS
Between the date of this Agreement and the Closing
Date, Buyer and Acquisition will each use its Best Efforts to cause the
conditions in Section 8 to be satisfied.
6.3 REQUIRED APPROVALS; FILINGS
Buyer and Acquisition shall comply with Section
5.4.
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6.5 INSURANCE
At or before the Closing, Acquisition shall have obtained,
or have taken all action necessary to continue the Company's insurance from
reliable insurance companies and in amounts at least equal to the insurance
coverage amount for the respective type of insurance maintained by the Company
and disclosed pursuant to Section 3.18.
7. CONDITIONS PRECEDENT TO BUYER'S AND ACQUISITION'S
OBLIGATION TO CLOSE
Buyer's and Acquisition's obligations to
consummate the Merger and to take the other actions required to be taken by
Buyer and Acquisition at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Buyer and Acquisition, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
All of Sellers' and the Company's representations
and warranties in this Agreement must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, after giving
effect to any supplement to the Disclosure Letter subject, however, to the
provisions of Section 9).
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that
Sellers and the Company are required to perform or to comply with pursuant to
this Agreement at or prior to the Closing, must have been duly performed and
complied with in all material respects.
(b) There shall be delivered at Closing (i) the
Employment Agreement with Xxxxxx X. Xxxxxxx ("Xxxxxxx") in the form of Exhibit
7.2(b)(i) (the "Employment Agreement") executed by Xxxxxxx; (ii) a Lease
Agreement executed by the Company and Xxxxxxx in form reasonably acceptable to
Buyer; (iii) a certificate executed by Sellers and an officer of the Company
representing to Buyer and Acquisition that Sellers' and the Company's
representations and warranties in this Agreement were accurate in all material
respects as to the date of this Agreement and are accurate in all material
respects as of the Closing as if made on the Closing Date; and (iv) each of the
other covenants and obligations in the Agreement must have been performed and
complied with by Sellers and Company in all respects.
7.3 CONSENTS
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Each of the consents identified in Part 3.2 number
7 of the Disclosure Letter, must have been obtained and must be in full force
and effect.
7.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been
delivered to Buyer:
(a) an opinion of Xxxxxx & Xxxxxx, LLP, dated
the Closing Date, in a form reasonably acceptable to Buyer;
(b) such other documents as Buyer or its counsel
may reasonably request for the purpose of (i) evidencing the accuracy of any of
Sellers' and the Company's representations and warranties, (ii) evidencing the
performance by Sellers, the Company, or the compliance by Sellers or the Company
with, any covenant or obligation required to be performed or complied with by
such party, (iii) evidencing the satisfaction of any condition referred to in
this Section 7, or (iv) otherwise facilitating the consummation or performance
of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS
Since the date of this Agreement, there must not
have been commenced, pending or Threatened any Proceeding (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the Contemplated
Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR MERGER
CONSIDERATION
There must not have been made or Threatened by any
Person any claim asserting that such Person (a) is the holder or the beneficial
owner of, or has the right to acquire or to obtain beneficial ownership of, any
stock of, or any other voting, equity, or ownership interest in, the Company, or
(b) is entitled to all or any portion of the Merger Consideration.
7.7 NO PROHIBITION
Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published,
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introduced, or otherwise proposed by or before any Governmental Body.
7.8 NO INJUNCTION
No preliminary or permanent injunction or other
order by any federal or state court preventing or consummation of the
Contemplated Transactions in this Agreement has been issued and continues in
effect, and this Agreement and the transactions contemplated hereby are not
prohibited under any applicable federal or state law or regulation.
7.9 MATERIAL ADVERSE CHANGE
There shall have been no material adverse change
in the business, operations, prospects, financial condition or
results of the Company.
7.10 INITIAL PUBLIC OFFERING
Buyer shall have completed its initial public
offering.
8. CONDITIONS PRECEDENT TO SELLERS' AND THE COMPANY'S
OBLIGATION TO CLOSE
Sellers' and the Company's obligations to
consummate the Merger and to take the other actions required to be taken by
Sellers and the Company at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived by Sellers and the Company, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's and Acquisition's representations
and warranties in this Agreement and all statements in the Disclosure Document
must have been accurate in all material respects as of their respective dates
and must be accurate in all material respects as of the Closing Date as if made
on the Closing Date.
8.2 BUYER'S AND ACQUISITION'S PERFORMANCE
(a) All of the covenants and obligations that
Buyer and Acquisition are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing must have been performed and complied with
in all material respects.
(b) There shall be delivered to Sellers at
Closing (i) the cash portion of the Merger Consideration in accordance with wire
transfer instructions given by Sellers; (ii)
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certificates evidencing the shares of Common Stock of Buyer constituting the
stock portion of the Merger Consideration; (iii) the Employment Agreement with
Xxxxxxx executed by Acquisition; (iv) the certificate executed by Buyer and
Acquisition representing to Sellers that Buyer's and the Acquisition's
representations and warranties in this Agreement and all statements in the
Disclosure Document were accurate in all material respects as of their
respective dates and are accurate in all material respects as of the Closing as
if made on the Closing Date; and (v) each of the other covenants and obligations
in the Agreement must have been performed and complied with by Buyer and
Acquisition in all respects.
8.3 ADDITIONAL DOCUMENTS
Buyer and Acquisition must have caused the following
documents to be delivered to Sellers:
(a) an opinion of Atlas, Xxxxxxxx, Trop &
Borkson, P.A., dated the Closing Date, in a form reasonably
acceptable of Sellers;
(b) such other documents as Sellers or their
counsel may reasonably request for the purpose of (i) evidencing the accuracy of
any representation or warranty of Buyer or Acquisition, (ii) evidencing the
performance by Buyer or Acquisition of, or the compliance by Buyer or
Acquisition with, any covenant or obligation required to be performed or
complied with by Buyer or Acquisition, (iii) evidencing the satisfaction of any
condition referred to in this Section 8, (iv) evidencing compliance with Section
6.5; or (v) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions; and
(c) a certificate executed by Buyer representing
and warranting that none of Xxxxxxx Xxxx or Xxx Xxxxxx has actual knowledge of
any breach by Company or Sellers of any of their representatives or warranties
given by Company and/or Sellers herein or in any document delivered before or at
closing.
8.4 CONSENTS
Each of the consents identified in Part 3.2 number
7 of the Disclosure Letter, must have been obtained and must be in full force
and effect.
8.5 NO PROCEEDINGS
Since the date of this Agreement, there must not
have been commenced, pending or Threatened any Proceeding (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions,
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or (b) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the Contemplated Transactions.
8.6 CONSUMMATION OF RELATED TRANSACTIONS
On or prior to the Closing Date, (i) each of the
corporations listed on Schedule 8.6 shall have merged with Buyer (or a
wholly-owned subsidiary of Buyer) or shall have become a wholly-owned subsidiary
of Buyer by the acquisition of all the stock thereof, (ii) the consolidated
balance sheet of Buyer upon closing of the acquisitions referred to in clause
(i), shall not be materially and adversely different from the balance sheet
included in the proforma financial statements of Buyer as set forth on Schedule
8.6, and (iii) Sellers shall have received a certificate from Buyer stating,
that such condition has been satisfied.
8.7 INITIAL PUBLIC OFFERING
Buyer shall have completed its initial public
offering, as described in the Disclosure Document.
8.8 NO INJUNCTION
No preliminary or permanent injunction or other
order by any federal or state court preventing or consummation of the
Contemplated Transactions in this Agreement has been issued and continues in
effect, and this Agreement and the transactions contemplated hereby are not
prohibited under any applicable federal or state law or regulation.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at
the Closing, be terminated:
(a) by either Buyer and Acquisition or Sellers
and the Company if a material Breach of any provision of this Agreement has been
committed by the other party and such Breach has not been cured or waived within
ten (10) days of the date of notification of such Breach;
(b) by Buyer and Acquisition if any of the
conditions in Section 7 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Buyer to comply with its obligations under this Agreement) and
Buyer has not waived such condition on or before the Closing Date; or (ii) by
Sellers and the Company, if any of the conditions in Section 8
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has not been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Sellers
and the Company to comply with their obligations under this Agreement) and
Sellers have not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Acquisition
and Sellers and the Company; or
(d) by either Buyer and Acquisition or Sellers
and the Company if the Closing has not occurred (other than through the failure
of any party seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before September 30, 1998, or such later
date as the parties may agree upon.
(e) by either Buyer/Acquisition or
Seller/Company if the other party makes a supplemental disclosure pursuant to
Section 6.1 or Section 5.5, as applicable, and the party receiving the
supplemental disclosure determines in its sole discretion that it will
terminate this Agreement rather than go forward with the Contemplated
Transactions given the information disclosed.
A party's right of termination under Section 9.1
is such party's exclusive remedy and only right in any of the circumstances
described above in subparts (a) through (e). If this Agreement is terminated
pursuant to Section 9.1, all further obligations of the parties under this
Agreement terminate.
10. COVENANTS FOLLOWING CLOSING
10.1 SALES/USE TAX
To the extent, if any, that any sales or use tax
is imposed on any of the Contemplated Transactions or any portion thereof,
Acquisition shall timely file any and all required returns and pay any and all
sales and/or use tax imposed thereon.
10.2 REGISTRATION OF MOTOR VEHICLES
As soon as is reasonably possible following the
Closing, Acquisition shall register in Acquisition's name all motor vehicles
received by Acquisition in the merger transaction hereunder.
10.3 REQUIREMENTS FOR TAX-FREE REORGANIZATION
Buyer, Acquisition, the Company and Sellers acknowledge and
agree that they intend the merger under the Agreement to qualify as a forward
triangular merger under Internal Revenue Code Section 368 (a)(2)(D) and related
Internal
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Revenue Code sections and Internal Revenue Service regulations. Buyer and
Acquisition agree not to take any action or fail to take any action, the
consequence of which would be, or would be likely to be, to cause this merger
transaction not to qualify as a Section 368(a)(2)(D) forward triangular merger.
In addition to and not in limitation of the foregoing, Buyer and Acquisition
will comply with the following until such time as any action to the contrary of
any of the following will not adversely impact the treatment of this merger as
a tax-free reorganization:
(a) Buyer and Acquisition agree to continue the
historic business of the Company and to use in business a significant portion of
the Company's historic business assets.
(b) Buyer agrees that it has no present plan or
intention to, and will not, liquidate Acquisition, merge Acquisition into or
with another Person, sell or otherwise dispose of the stock of Acquisition, or
cause Acquisition to sell or otherwise dispose of any of the assets of the
Company except in the ordinary course of business.
10.4 ACCESS TO BOOK AND RECORDS
Buyer and Acquisition will allow Sellers and
Sellers' Representatives to have access to the books and records of the Company
and Acquisition for any reasonable tax or business purpose related to the
Company's operations prior to Closing.
10.5 CERTAIN STOCK OPTIONS
Following the Closing, Buyer will use reasonable
efforts to establish a Stock Option Plan and, pursuant to the plan, grant
options to employees of the Company, other than Sellers, to purchase 26,600
shares of Buyer's Common Stock, subject to adjustment for stock splits and stock
dividends.
11. INDEMNIFICATION; REMEDIES
11.1 SURVIVAL
(a) All representations, warranties, covenants,
and obligations in this Agreement, the Disclosure Letter and any of the
supplements thereto, and any other certificate or document delivered pursuant to
this Agreement will survive the Closing until sixteen (16) months from the
Closing except for the representations and warranties in Sections 3.3, 3.11, and
3.19 which shall survive for the applicable statute of limitations.
(b) All representations, warranties, covenants,
and obligations of Buyer and Acquisition in this Agreement and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing for the applicable statute of limitations.
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11.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
SELLERS
Subject to the limitations set forth in Section
11.4, Sellers will jointly and severally indemnify and hold harmless Buyer and
Acquisition (collectively, the "Indemnified Persons") from any loss, liability,
claim, damage (excluding incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' and
other professional fees) whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any Breach of any representation or warranty
made by Sellers in this Agreement, after giving effect to the Disclosure Letter
and the supplements thereto, or any other certificate or document delivered by
Sellers pursuant to this Agreement;
(b) any Breach by Sellers or the Company of any
covenant or obligation of Sellers or the Company in this
Agreement;
(c) any product shipped or any services provided
by Company prior to the Closing Date;
(d) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Sellers or the
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions; and
(e) any matter disclosed in numbers 1, 2 and 5
of Part 3.15 of the Disclosure Letter.
11.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
BUYER
Subject to the limitations set forth in Section
11.4 as applicable, Buyer will indemnify and hold harmless Sellers and Company
from any loss, liability, claim, damage (excluding incidental and consequential
damages), expense (including costs of investigation and defense and reasonable
attorneys' and other professional fees) whether or not involving a third-party
claim (collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
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(a) any Breach of any representation or warranty
made by Buyer and/or Acquisition in this Agreement, after giving effect to any
supplemental disclosure, or any other certificate of document delivered by
Buyer and/or Acquisition pursuant to this Agreement;
(b) any Breach by Buyer or Acquisition of any
covenant or obligation of Buyer or Acquisition in this Agreement;
(c) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Buyer and/or
Acquisition (or any Person acting on behalf of either or both of them) in
connection with any of the Contemplated Transactions.
11.4 LIMITATIONS
(a) Prior to Closing, no party shall have any
right to indemnification and the provisions of Section 9.1 shall apply and
constitute the sole and exclusive remedy of the parties.
(b) Following the Closing, Sellers will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to or on the Closing Date, other than those in Sections 3.3, 3.11 and 3.19,
unless on or before sixteen (16) months from the date of Closing, Buyer notifies
Sellers of a claim specifying the factual basis of that claim. A claim with
respect to Section 3.3, 3.11 and 3.19 may be made at any time prior to the
applicable statute of limitations with respect to such matter.
(c) Following the Closing, Buyer will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and to comply with prior
to or on the Closing Date, unless on or before the expiration of the applicable
statute of limitations, Sellers notify Buyer of claims specifying the factual
basis of that claim.
(d) Notwithstanding any other provision of this
Agreement, (i) neither Buyer nor Acquisition shall be entitled to
indemnification for Damages arising out of matters referred to in Section 11.2
unless and only to the extent that such Damages exceed Seventy-Five Thousand
Dollars ($75,000.00); (ii) in no event shall the aggregate liability of Sellers
arising out of matters referred to in Section 11.2 exceed Thirty-Five Percent
(35%) of the value of the First Merger Consideration, except with respect to
Sections 3.3, 3.11 and 3.19, the aggregate liability for breach of any such
section shall not exceed the value of the
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First Merger Consideration (with the shares of Common Stock valued at the IPO
price); (iii) in no event shall the aggregate liability of Buyer and
Acquisition arising out of matters referred to in Section 11.3(a) exceed the
value of the First Merger Consideration received by Sellers in any proceeding
in which any claim for Damages is asserted, regardless of the legal theory
asserted; (iv) the limitations set forth in subparts (i) and (ii) immediately
above shall apply in any proceeding in which any claim for damages is asserted
regardless of the legal theory asserted; and (v) the provisions of Section 9.1
and this Section 11 (including Sections 11.1 through 11.7) shall constitute the
sole and exclusive remedies of the parties hereto except only in circumstances
in which any party has a legally-enforceable right to rescind this Agreement
and the Contemplated Transactions, which right of rescission shall remain
available to such party.
11.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY
CLAIMS
(a) Promptly after receipt by an indemnified
party under Sections 11.2 or 11.3 of notice of the commencement of any
Proceeding against it, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the indemnified party's failure to give such notice.
(b) If any Proceeding referred to in Section
11.5(a) is brought against an indemnified party and it gives notice, to the
indemnifying party of the commencement of such Proceeding, the indemnifying
party will be entitled to participate in such Proceeding and, to the extent that
it wishes (unless (i) the indemnifying party is also a party to such Proceeding
and the indemnified party determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to provide
reasonable assurance to the indemnified party of its financial capacity to
defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 11 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding other than reasonable costs of
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investigation. If the indemnifying party assumes the defense of a Proceeding,
no compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (ii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of
the commencement of any Proceeding and the indemnifying party does not, within
thirty days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding
or any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise, or
settle such Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
11.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim may be asserted by notice to the party
from whom indemnification is sought.
11.7 CLAIM WITHIN SIXTEEN MONTHS
In the event that a good faith, reasonable claim,
is made by Buyer or Acquisition pursuant to Section 11.2 within sixteen (16)
months from the Closing Date, then, out of the Second Merger Consideration,
Buyer shall issue in the name of Sellers, but retain in an escrow, the number of
shares of Buyer's common stock which, at the IPO price, have a value equal to
the reasonably estimated Damages arising from the claim. Such shares shall
continue to be held in such escrow until the earlier of resolution of the claim
or fifty-nine (59) months after the Closing Date. Upon resolution of the claim,
if Sellers are found liable for an amount of Damages, the Merger Consideration
shall be reduced by the amount of the Damages and Buyer shall receive from the
escrow shares of its Common Stock valued at the IPO price in the amount of the
Damages, which shall constitute a
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reduction in the Merger Consideration. The foregoing provisions of this Section
11.7 shall terminate and all shares of Common Stock held in escrow shall be
distributed to Sellers no later than one (1) month before the fifth (5th)
anniversary of the Closing Date.
12. GENERAL PROVISIONS
12.1 EXPENSES
Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants.
12.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with
respect to this Agreement or the Contemplated Transactions will be issued, if at
all, at such time and in such manner as Buyer determines. Unless consented to by
Buyer in advance or required by Legal Requirements, prior to the Closing Sellers
shall, and shall cause the Company to, keep this Agreement strictly confidential
and may not make any disclosure of this Agreement to any Person other than their
professional advisors. Sellers and Buyer will consult with each other concerning
the means by which the Company's employees, customers, and suppliers and others
having dealings with the Company will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication.
12.3 CONFIDENTIALITY
(a) Between the date of this Agreement and the
Closing Date, Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer, Acquisition and
the Company to maintain in confidence, and not use to the detriment of another
party or the Company any written, oral, or other information obtained in
confidence from another party or the Company in connection with this Agreement
or the Contemplated Transactions, unless (a) such information is already known
to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by legal proceedings. Notwithstanding the foregoing, Buyer may disclose
information about this Agreement, the Sellers, or the Company in connection with
its initial public offering and any related obligations therewith.
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(b) If the Contemplated Transactions are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
12.4 NOTICES
All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand, (b) sent by telecopier (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as a party may designate by notice
to the other parties):
Seller or Company: Office Solutions, Inc.
0000 Xxxx Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Xxxx X. Xxxxxx
Xxxxxx & Xxxxxx, LLP 0000 Xxxxxxxxxx
Xxxxxx, Xxxxx 000 Xxxxxxxxx, XX
00000
Facsimile No.: (000) 000-0000
Buyer or Acquisition: Office Center Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Facsimile No.: (000) 000-0000
with a copy to: Atlas, Xxxxxxxx, Trop & Borkson, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
12.5 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
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12.6 WAIVER
Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
12.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements
between the parties with respect to its subject matter and constitutes (along
with the documents referred to in this Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
12.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY
RIGHTS
Neither party may assign any of its rights under
this Agreement without the prior consent of the other parties; provided,
however, that the rights of Sellers under Section 2.7 to the Second Merger
Consideration may not be voluntarily assigned by Sellers or either of them and
may be transferred only by operation of law, including, without limitation upon
death of one or both of the Sellers. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the heirs, successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their heirs,
successors and assigns.
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12.9 SEVERABILITY
If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12.10 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement and all subsections or
subparts thereof. All words used in this Agreement will be construed to be of
such gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
Nothing set forth in this Agreement is intended
nor shall be interpreted to be a waiver by any party of the
attorney-client privilege in whole or in part.
12.11 TIME OF ESSENCE
With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
12.12 GOVERNING LAW
This Agreement will be governed by the laws of the
State of Delaware without regard to conflicts of laws principles.
12.13 DISPUTES
Except as set forth below, all disputes of any
nature arising out of or relating to this Agreement, any of the Contemplated
Transactions or any of the other documents or agreements related hereto and the
matters covered in any of them except the Employment Agreement shall be decided
by arbitration pursuant to the applicable Judicial Arbitration and Mediation
Service Rules and Procedures in effect in California at the time. Among the
disputes that must be submitted to arbitration are those concerning the
interpretation, enforcement or alleged breach of this Agreement, as well as
those based on the state and/or federal law. The arbitration shall be held in
Orange County, California and the substantive laws of the State of
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Delaware shall be applied without effect given to that State's or the State of
California's choice of law rules. Procedural matters will be governed by the
laws of the State of California. Absent manifest error, the decision of the
arbitrator shall be final and binding on all parties. The provisions of
California Code of Civil Procedure Section 1283.05 are incorporated herein and
made applicable to this Section 12.13. The parties agree the injunctive or
other equitable relief preventing any breach or otherwise enforcing or
rescinding this Agreement may be ordered by the arbitrator. Only matters
specifically designated to be determined by an independent accounting firm
under Sections 2.7 and 2.8 are exempt from this arbitration provision.
In furtherance and not in limitation of the mandatory
arbitration provisions set forth above, the parties hereby expressly and
irrevocably agree and consent that any legal action, suit or proceeding arising
out of or relating to any such arbitration shall be instituted exclusively in a
state court sitting in the County of Orange, State of California, and by
execution and delivery of this Agreement, each party expressly waives any
objection which such party may now have or hereafter may arise to the venue of
any such suit, action, or proceeding or to the jurisdiction of such court, and
irrevocably and unconditionally consents to the personal jurisdiction of such
court in such action, suit or proceeding. The parties each waive personal
service of any and all process upon them and consent to all such service of
process may be made by certified mail directed to such intended recipient at the
address given for notice to that party herein.
12.14 COUNTERPARTS
This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
BUYER: SELLERS:
OFFICE CENTRE CORPORATION /s/Xxxxxx X. Xxxxxxx
--------------------
XXXXXX X. XXXXXXX
By: /s/Xxxxxx X. Xxxxxx, Xx. /s/Xxxxxxx X. Xxxxxxx
---------------------------- ---------------------
Name: Xxxxxx X. Xxxxxx, Xx. XXXXXXX X. XXXXXXX
Title:
ACQUISITION:
OFFICE CENTRE XXXXX XXXXX
By: /s/Xxxxxx X. Xxxxxx, Xx.
----------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title:
COMPANY:
OFFICE SOLUTIONS, INC.
By: /s/Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
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OFFICE SOLUTIONS BUSINESS PRODUCTS AND
SERVICES, INC.
LIST OF DISCLOSURE SCHEDULES AND EXHIBITS
EXHIBITS
--------
Exhibit 7.2(b)(i) Employment Agreement
SCHEDULES
---------
Schedule 3.2 Authority; No conflict
Schedule 3.6 Real Property; Encumbrances
Schedule 3.8 Accounts Receivable
Schedule 3.10 Liabilities
Schedule 3.11 Taxes
Schedule 3.13 Employee Benefits
Schedule 3.14 Governmental Authorizations
Schedule 3.15 Legal Proceedings; Orders
Schedule 3.16 Absence of Certain Changes and Events
Schedule 3.17 Contracts; No Defaults
Schedule 3.18 Insurance
Schedule 3.19 Environmental Matters
Schedule 3.20 Employees
Schedule 3.21 Labor Relations; Compliance
Schedule 3.22 Intellectual Property
Schedule 3.25 Relationships with Related Persons
Schedule 5.2 Operation of the Business of the Company
The Company agrees to furnish supplementally a copy of any
omitted schedule to the Securities Exchange Commission upon request.