EXHIBIT 10.15(a)
STOCK PURCHASE AGREEMENT
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Agreement (the "Agreement") made as of the 25th day of June 1999, by and
among the parties listed on Exhibit A attached hereto (the "Buyers"), MNP
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Corporation, a Michigan corporation ("MNP"), and Meridian National Corporation,
a Delaware corporation (the "Company").
RECITALS:
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1. The aggregate number of shares of stock which the Company has
authority to issue is 25,000,000 shares, divided into two classes as follows:
5,000,000 shares of preferred stock with a par value of $.001 per share (the
"Preferred Stock") and 20,000,000 shares of common stock with a par value of
$.01 per share (the "Common Stock").
2. There are 3,717,552 issued and outstanding shares of the Common Stock
as of the date of this Agreement.
3. The Buyers desire to purchase, and the Company desires to issue and
sell, shares of the Common Stock in the amounts and for the consideration set
forth below, subject to the terms and conditions of this Agreement.
4. MNP desires to loan, and the Company desires to borrow, funds in the
amounts and pursuant to the terms set forth below, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. Purchase and Sale of the Shares.
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1.01 Purchase and Sale. Subject to and upon the terms and conditions
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of this Agreement, at the closing of the transactions contemplated by this
Agreement (the "Closing"), the Company shall issue, sell, transfer, convey,
assign and deliver to the Buyers 4,200,000 shares (the "Shares") of the Common
Stock (to be divided among the Buyers in the amounts set forth opposite each of
the Buyers as set forth on Exhibit B attached hereto), and the Buyers shall
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purchase, acquire and accept from the Company, all of the Shares. At the
Closing, the Company shall deliver to the Buyers certificates evidencing the
Shares.
1.02 Further Assurances. At any time and from time to time after the
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Closing, at the Buyers' request and without further
consideration, the Company shall promptly execute and deliver such instruments
of sale, transfer, conveyance, assignment and confirmation, and take all such
other action as the Buyers may reasonably request to more effectively transfer,
convey and assign to the Buyers, and to confirm the Buyers' title to, all of the
Shares.
1.03 Purchase Price for the Shares.
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(a) The purchase price to be paid by the Buyers for the Shares
shall be Two Hundred Ninety Four Thousand Dollars ($294,000.00) (the "Purchase
Price"). The Purchase Price shall be payable at the Closing, in cash, by bank
check, or by wire transfer of immediately available funds to an account
designated by the Company.
1.04 Closing. The Closing shall take place at the offices of Jacob &
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Xxxxxxxxxx, P.C., at 10:00 a.m., Eastern Daylight Time, on September 1, 1999, or
at such other place, time or date as may be mutually agreed upon in writing by
the parties hereto (the "Closing Date"); provided, however, that such date may
be extended in accordance with the provisions of Subsection 11.01 hereof. The
issuance and sale of the Shares by the Company to the Buyers shall be deemed to
occur at 9:01 a.m., Eastern Daylight Time, on the Closing Date.
1.05 Disclosure Schedule. The following are the disclosure schedules
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to be delivered to the Buyers by the Company pursuant to Section 6.08 of this
Agreement and when so delivered will form part of this Agreement:
4.01 Organizational Matters
4.02 Options, Warrants and Other Rights
4.03 Subsidiaries
4.05 Absence of Undisclosed Liabilities
4.06 Litigation
4.07 Insurance
4.08 Tangible Personal Property
4.09 Intangible Property
4.10 Leases
4.11 Real Estate
4.13 Accounts Receivable
4.14 Tax Matters
4.16 Contracts and Commitments
4.17 Compliance with Agreements and Laws
4.18 Employee Relations
4.19 Employee Benefit Plans
4.20 Customers
4.22 Warranty and Product Liability Claims
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4.25 Indebtedness to and From Officers, Directors and Stockholders
4.26 Banking Facilities
4.27 Powers of Attorney and Suretyships
4.28 Conflicts of Interest
4.32 Environmental Matters
6.09 Secured Indebtedness
2. Representations of the Buyers.
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Each of the Buyers shall deliver to the Company as to himself/itself an
executed copy of the representations and warranties set forth in Exhibit C. Upon
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issuance of the Shares, the Buyers represent and warrant that they will not own
more than 53.05% of the issued and outstanding shares of the Common Stock of the
Company.
3. Representations Regarding the Shares.
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The Company represents and warrants to the Buyers with regard to the
issuance and sale of the Shares as follows:
(a) The Shares which are to be issued to the Buyers pursuant hereto
are free and clear of any and all covenants, conditions, restrictions, voting
trust arrangements, liens, charges, encumbrances, options and adverse claims or
rights whatsoever; and, upon consummation of the purchase contemplated hereby,
the Buyers will acquire from the Company good and marketable title to the
Shares, free and clear of all covenants, conditions, restrictions, voting trust
arrangements, liens, charges, encumbrances, options and adverse claims or rights
whatsoever, except restrictions imposed by law. Upon issuance, the Shares will
represent 53.05% of the issued and outstanding shares of the Common Stock of the
Company.
(b) Except as set forth on Exhibit 3 (b), the Company is not a party
to, subject to or bound by any agreement or any judgment, order, writ,
prohibition, injunction or decree of any court or other governmental body which
would prevent the execution or delivery of this Agreement by the Company or the
issuance, transfer, conveyance and sale of the Shares pursuant to the terms of
this Agreement.
(c) No investment banker, broker or finder has acted for the Company
in connection with this Agreement or the transactions contemplated hereby, and
no investment banker, broker or finder is entitled to any fee or other
commissions in respect of such transactions based upon agreements, arrangements
or understandings made by or on behalf of the Company.
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4. Representations Regarding the Company.
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The Company represents and warrants to the Buyers with regard to the
Company that:
4.01 Organization and Authority. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite power and authority (corporate and other) to own
its properties, to carry on its business as now being conducted, to execute and
deliver this Agreement and the agreements contemplated herein, and to consummate
the transactions contemplated hereby and thereby. The Company is duly qualified
to do business and in good standing in all jurisdictions in which its ownership
of property or the character of its business requires such qualification.
Certified copies of the Certificate of Incorporation and Bylaws of the Company,
as amended to date, have been previously delivered to the Buyers, are complete
and correct, and no amendments have been made thereto or have been authorized
since the date thereof. Schedule 4.01 sets forth a true, correct and complete
list of (a) the dates of all amendments to the Certificate of Incorporation,
Bylaws and other governing instruments of the Company, and (b) all consents and
approvals of third parties that are necessary for the consummation of the
transactions contemplated by this Agreement.
4.02 Capitalization of the Company.
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(a) As of the date of this Agreement, the Company's capital
stock consists of:
(i) Five Thousand (5,000) authorized shares of $100 Series
A Preferred Stock, Par Value $.001 per share (the "First Preferred Stock"), Four
Thousand (4,000) shares of which are issued and outstanding on the date hereof;
(ii) One Million Three Hundred Seventy Five Thousand
(1,375,000) authorized shares of Series B Convertible Voting Preferred Stock,
par value $.001 per share (the "Second Preferred Stock"), Two Hundred Six
Thousand Seven Hundred Fifty-Two (206,752) shares of which are issued and
outstanding on the date hereof;
(iii) Twenty Million (20,000,000) authorized shares of the
Common Stock, Three Million Seven Hundred Seventeen Thousand Five Hundred Fifty
Two (3,717,552) shares of which are issued and outstanding on the date hereof.
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(b) All such issued and outstanding shares of First Preferred
Stock, Second Preferred Stock, and Common Stock have been and on the Closing
Date will be duly and validly issued and are, or will be, fully paid and
nonassessable.
(c) Except as set forth in Schedule 4.02, there are not, and on
the Closing Date there will not be, outstanding:
(i) any options, warrants or other rights to purchase from
the Company any capital stock of the Company;
(ii) any securities convertible into or exchangeable for
shares of such stock; or
(iii) any other commitments of any kind for the issuance of
additional shares of capital stock or options, warrants or other securities of
the Company.
(d) No shares of the issued and outstanding shares of First
Preferred Stock, no shares of the issued and outstanding shares of Second
Preferred Stock, and no shares of the issued and outstanding shares of Common
Stock are held in the treasury of the Company.
4.03 Subsidiaries.
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(a) Schedule 4.03 sets forth:
(i) the name and percentage ownership by the Company of
each corporation, partnership, joint venture or other entity in which the
Company has, directly or indirectly, an equity interest representing 20% or more
of the capital stock thereof or other equity interests therein (individually, a
"Subsidiary" and collectively, the "Subsidiaries");
(ii) the jurisdiction of incorporation, capitalization and
ownership of each Subsidiary;
(iii) the names of the officers and directors of each
Subsidiary; and
(iv) the jurisdictions in which each Subsidiary is
qualified or holds licenses to do business as a foreign corporation.
(b) Except as set forth in Schedule 4.03, the Company owns of
record and beneficially all of the outstanding capital stock of each of the
Subsidiaries free and clear of all covenants, conditions, restrictions, liens,
charges and
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encumbrances.
(c) Each of the Subsidiaries is a corporation or other entity
duly organized and validly existing and in good standing under all applicable
laws and has all requisite power and authority to own its properties and carry
on its business as now being conducted. Each of the Subsidiaries is duly
qualified to do business and in good standing in all jurisdictions in which its
ownership of property or the character of its business requires such
qualification. Certified copies of the charter, bylaws and other governing
instruments of the Subsidiaries, each as amended to date, have been previously
delivered to the Buyers, are complete and correct, and no amendments have been
made thereto or have been authorized since the date thereof. Schedule 4.03 sets
forth a true, correct and complete list of the dates of all amendments to the
charter, bylaws and other governing instruments of each of the Subsidiaries. The
Company does not own any capital stock of or other equity interest in any
corporation, partnership or other entity, other than the Subsidiaries. The
shares of capital stock of each Subsidiary shown in Schedule 4.03 to be issued
and outstanding have been duly and validly issued and are fully paid and
nonassessable.
(d) Except as set forth in Schedule 4.03, none of the
Subsidiaries holds shares of its capital stock in its treasury, and there are
not, and on the Closing Date there will not be, outstanding any (i) options,
warrants or other rights with respect to the capital stock of any of the
Subsidiaries, (ii) any securities convertible into or exchangeable for shares of
such stock, or (iii) any other commitments of any kind for the issuance of
additional shares of capital stock or options, warrants or other securities of
any of them.
4.04 Financial Statements.
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(a) The Company has previously delivered to the Buyers the
audited consolidated financial statements of the Company as of February 28,
1999, which include the balance sheet and the related statements of income,
shareholders' equity, retained earnings and cash flow of the Company for the one
year period then ended and the footnotes thereto (collectively, the "Year End
Financial Statements"). The Year End Financial Statements have been audited and
certified by Xxxxxxx Xxxxxx, independent public accountants for the Company. The
Company has also previously delivered to the Buyers the unaudited consolidated
financial statements of the Company as of May 31, 1999, which include the
balance sheet (the "Current Balance Sheet") and the statement of operations of
the Company and the Subsidiaries for the 3-month period then ended
(collectively, the "Current Financial
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Statements"). The Year End Financial Statements and the Current Financial
Statements (collectively, the "Financial Statements") have been prepared in
accordance with generally accepted accounting principles (except the Current
Financial Statements are subject to normal year-end adjustments and lack
footnotes) applied consistently with past practices.
(b) The Financial Statements fairly present, as of their
respective dates, the financial condition, retained earnings, assets and
liabilities of the Company and the results of operations of the Company's
business for the periods indicated; with respect to the contracts and
commitments for the sale of goods or the provision of services by the Company,
the Financial Statements contain and reflect adequate reserves, which are
consistent with previous reserves taken, for all reasonably anticipated material
losses and costs and expenses; and the amount shown as accrued for current and
deferred income and other taxes in the Financial Statements are sufficient for
the payment of all accrued and unpaid income taxes, interest, penalties,
assessments or deficiencies applicable to the Company, whether disputed or not,
for the applicable period then ended and periods prior thereto.
4.05 Absence of Undisclosed Liabilities. To the best knowledge of
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the Company, except as and to the extent (a) reflected and reserved against in
the Current Balance Sheet, (b) set forth on Schedule 4.05, or (c) incurred in
the ordinary course of business after the date of the Current Balance Sheet and
not material in amount, either individually or in the aggregate, neither the
Company nor any of the Subsidiaries has any liability or obligation, secured or
unsecured, whether accrued, absolute, contingent, unasserted or otherwise, which
are material to the condition (financial or otherwise) of the assets,
properties, business or prospects of the Company or the Subsidiaries taken as a
whole. For purposes of this Subsection 4.05, "material" means any amount in
excess of $50,000.
4.06 Litigation. Except as set forth on Section 4.06 and except for
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actions involving less than $10,000 individually and $50,000 in one aggregate
and which are not covered by insurance and which are not being defended by
insurance carrier counsel:
(a) There is no action, suit or proceeding to which the Company
or any of the Subsidiaries is a party (either as a plaintiff or defendant)
pending or, to the best knowledge of the Company threatened before any court or
government agency, authority, body or arbitrator; and to the best knowledge of
the Company, there is no basis for any such action, suit or proceeding;
(b) Neither the Company nor any of the
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Subsidiaries, nor any officer, director or employee of any of the foregoing, has
been permanently or temporarily enjoined by any order, judgment or decree of any
court or any government agency, authority or body from engaging in or continuing
any conduct or practice in connection with the business, assets, or properties
of the Company or any of the Subsidiaries; and
(c) There is not in existence on the date hereof any order,
judgment or decree of any court, tribunal or agency enjoining or requiring the
Company or any of the Subsidiaries to take any action of any kind with respect
to its business, assets or properties.
4.07 Insurance. Schedule 4.07 sets forth a true, correct and
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complete list of all fire, theft, casualty, general liability, workers
compensation, business interruption, environmental impairment, product
liability, automobile and other insurance policies maintained by the Company or
any of the Subsidiaries and of all life insurance policies maintained for any of
their employees, specifying the type of coverage, the amount of coverage, the
premium, the insurer and the expiration date of each such policy (collectively,
the "Insurance Policies") and all claims made under such Insurance Policies
since January 1, 1998. The Insurance Policies are in full force and effect and
are in amounts of a nature which are adequate and customary for the Company's
and Subsidiaries' business. All premiums due on the Insurance Policies or
renewals thereof have been paid, and there is no default under the Insurance
Policies. Except as set forth on Schedule 4.07, neither the Company nor any of
the Subsidiaries has received any notice or other communication from any issuer
of the Insurance Policies since January 1, 1998 canceling or materially amending
any of the Insurance Policies, materially increasing any deductibles or retained
amounts thereunder, or materially increasing the annual or other premiums
payable thereunder, and, to the best knowledge of the Company, no such
cancellation, amendment or increase of deductibles, retainer or premiums is
threatened. Except as set forth on Schedule 4.07, neither the Company nor any
of the Subsidiaries has any dispute or claims with any insurance carrier
regarding claims, settlements or premiums and neither the Company nor any of the
Subsidiaries has failed to give any notice or present any claim under any
Insurance Policy in due and timely fashion. There are no outstanding
requirements or recommendations by any issuer of the Insurance Policies or by
any Board of Fire Underwriters or other similar body exercising similar
functions or by any governmental authority exercising similar functions which
requires or recommends any changes in the conduct of the business of, or any
repairs or other work to be done on or with respect to any of the properties or
assets of, the Company or any of the Subsidiaries.
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4.08 Personal Property.
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(a) Schedule 4.08 sets forth:
(i) a true, correct and complete list of all personal
property (the "Personal Property"), including a description and the book value
thereof, which is (A) owned by the Company or any of the Subsidiaries as of the
date hereof having a net book value per unit in excess of $50,000; or (B) in the
possession of or use in the business of the Company or any of the Subsidiaries
and having rental payments therefor in excess of $5,000 per month or $60,000 per
year; and
(ii) a description of the owner of, and any agreement
relating to the use of, each item of Personal Property not owned by the Company
or a Subsidiary and the circumstances under which such property is used.
(b) Except as disclosed in Schedule 4.08:
(i) the Company or the Subsidiary, as the case may be, has
good and marketable title to each item of Personal Property free and clear of
all liens, leases, encumbrances, claims under bailment and storage agreements,
equities, conditional sales contracts, security interests, charges and
restrictions, except for liens, if any, for personal property taxes not due;
(ii) no officer, director, stockholder or employee of the
Company or any Subsidiary, nor any spouse, child or other relative or affiliate
thereof, owns directly or indirectly, in whole or in part, any of the Personal
Property described in Schedule 4.08 ;
(iii) each item of Personal Property not owned by the
Company or a Subsidiary is in such condition on the date hereof that upon the
return of such property to its owner in its present condition at the end of the
relevant lease term or as otherwise contemplated by the applicable agreement
between the Company or the relevant Subsidiary, as the case may be, and the
owner or lessor thereof, the obligations of the Company or the relevant
Subsidiary, as the case may be, to such owner or lessor will be discharged;
(iv) the Personal Property actually used and useful in the
Company's business is in good operating condition and repair, normal wear and
tear excepted, is currently used by either the Company or the relevant
Subsidiary in the ordinary course of its business and in the production of
products of the Company or
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the relevant Subsidiary, and normal maintenance has been consistently performed
with respect to the Personal Property; and
(v) the Company and each Subsidiary own or otherwise have the
right to use all of the Personal Property now used by them in the operation of
their business or the use of which is necessary for the performance of any
material contract, letter of intent or proposal to which any of them is a party.
4.09 Intangible Property.
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(a) Schedule 4.09 sets forth:
(i) a true, correct and complete list and, where
appropriate, a description of, all items of intangible property owned by, or
used in the business of, the Company or any of the Subsidiaries, including, but
not limited to, United States and foreign patents, patent applications, trade
names, trademarks, trade name and trademark registrations, copyright
registrations and applications for any of the foregoing (the "Intangible
Property"); and
(ii) a true, correct and complete list of all licenses or
similar agreements or arrangements to which the Company or any of the
Subsidiaries is a party, either as licensee or licensor, with respect to the
Intangible Property.
(b) Except as otherwise disclosed in Schedule 4.09:
(i) the Company or a Subsidiary is the sole and exclusive
owner of all right, title and interest in and to the Intangible Property and all
designs, permits, labels and packages used on or in connection therewith, free
and clear of all liens, security interests, charges, encumbrances, equities and
other adverse claims;
(ii) no officer, director, stockholder or employee of the
Company or any Subsidiary, nor any spouse, child or other relative or affiliate
thereof, owns directly or indirectly, in whole or in part, any of the Intangible
Property;
(iii) no actions or other judicial or adversary proceedings
concerning any of the Intangible Property have been initiated, there is no basis
for any such action or proceeding and, to the best knowledge of the Company, no
such action or proceeding is threatened;
(iv) the Company or the relevant Subsidiary has the right
and authority to use the Intangible Property in
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connection with the conduct of its business in the manner presently conducted,
and, to the best knowledge of the Company, such use does not conflict with,
infringe upon or violate any rights of any other person, corporation or entity;
(v) there are no outstanding, nor any threatened disputes
or other disagreements with respect to any licenses or similar agreements or
arrangements described in Schedule 4.09;
(vi) to the best knowledge of the Company, the Intangible
Property owned by the Company or the relevant Subsidiary is sufficient to
conduct the Company's or the relevant Subsidiary's business as presently
conducted; and
(vii) to the best knowledge of the Company, the Company or
the relevant Subsidiary has taken all steps reasonably necessary to protect its
right, title and interest in and to Intangible Property.
4.10 Leases. Schedule 4.10 sets forth (a) a true, correct and
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complete list as of the date hereof of all leases of real property, identifying
separately each ground lease, to which the Company or any of the Subsidiaries is
a party and (b) a description, specifying the terms thereof in reasonable
detail, of all oral leases of real property (collectively, the "Leases"). True,
correct and complete copies of all Leases which are reduced to writing, and all
amendments, modifications and supplemental agreements thereto, have previously
been delivered by the Company to the Buyers. To the best knowledge of the
Company, the Leases are in full force and effect, are binding and enforceable
against each of the parties thereto in accordance with their respective terms
and, except as set forth on Schedule 4.10, have not been modified or amended
since the date of delivery to the Buyers. No party to any Lease has sent
written notice to the other claiming that such party is in default thereunder,
which remains uncured. Except as set forth on Schedule 4.10, to the best
knowledge of the Company, there has not occurred any event which would
constitute a breach of or default in performance of any covenant, agreement or
condition contained in any Lease, nor has there occurred any event which with
the passage of time or the giving of notice or both would constitute such a
breach or material default. Neither the Company nor any of the Subsidiaries is
obligated to pay any leasing or brokerage commission relating to any Lease and,
except as set forth on Schedule 4.10, will not have any enforceable obligation
to pay any leasing or brokerage commission upon the renewal of any Lease.
Except as set forth on Schedule 4.10, no construction, alteration or other
leasehold improvement work with respect to any of the Leases remains to be paid
for or to be performed by the
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Company or any of the Subsidiaries.
4.11 Real Estate.
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(a) Schedule 4.11 contains a true, correct and complete list of
the addresses of all real property (the "Real Estate"), and legal descriptions
thereof, owned (the "Owned Real Estate") or leased by the Company or any
Subsidiary. Schedule 4.11 sets forth a true, correct and complete list of all
liabilities, liens, encumbrances, tenancies, and to the best knowledge of the
Company, easements, restrictions, reservations, agreements or other obligations
affecting the Owned Real Estate (collectively, the "Exceptions"). On the Closing
Date, the Company or the relevant Subsidiary will have good, clear, record and
marketable title to the Owned Real Estate, free and clear of all such
Exceptions, other than those Exceptions marked as permitted exceptions on
Schedule 4.11 (the "Permitted Exceptions").
(b) Except as set forth on Schedule 4.11, no work has been
performed on or materials supplied to the Real Estate at the request of the
Company within any applicable statutory period which could give rise to
mechanics, construction, or materialman's liens.
(c) To the best knowledge of the Company, there is no pending or
threatened condemnation or eminent domain proceeding with respect to the Real
Estate.
(d) Except as set forth on Schedule 4.11, there are no taxes or
betterment assessments other than ordinary real estate taxes pending or payable
against the Real Estate and there are no contingencies existing under which any
assessment for real estate taxes may be retroactively filed against the Real
Estate; there are no taxes or levies, permit fees or connection fees which must
be paid respecting existing curb cuts, sewer hook-ups, water-main hook-ups or
services of a like nature.
(e) [intentionally omitted]
(f) Except as set forth on Schedule 4.11, all utility systems
serving the Real Estate, public or private, are in good operating condition, all
installation charges therefor have been fully paid and all service charges
therefor have been or will be paid by the Company or the relevant Subsidiary up
to and including the Closing Date. Since January 1, 1998, neither the Company
nor any of the Subsidiaries has experienced any material interruption in the
delivery of adequate quantities of any utilities (including, without limitation,
electricity, natural gas, potable water, water for cooling or similar purposes
and fuel oil)
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or other public services (including, without limitation, sanitary and industrial
sewer service) required in the operation of its business during such period.
(g) Except as set forth on Schedule 4.11, the Real Estate is not
located in any special flood hazard area designated by any government agencies
having jurisdiction over the Real Estate (collectively, the "Government
Agencies").
(h) To the best knowledge of the Company, the Real Estate
complies in all material respects with the requirements of all building, zoning,
subdivision, health, safety, environmental, pollution control, waste products,
sewage control and all other applicable statutes, laws, codes, ordinances,
rules, orders, regulations and decrees (collectively, the "Government
Regulations") of any and all Government Agencies. There is no action pending or,
to the best knowledge of the Company, threatened by any Government Agencies
claiming that the Real Estate violates such Governmental Regulations or
threatening to shut down the business of the Company or any of the Subsidiaries.
(i) There are no suits, petitions, notices or proceedings
pending, given or, to the best knowledge of the Company, threatened by any
persons or Government Agencies before any court, Governmental Agencies or
instrumentalities, administrative or otherwise, which if given, commenced or
concluded would have an adverse effect on the Company's title or leasehold
interest to the Real Estate or the operation of the business of the Company or
any Subsidiary as presently operated.
(j) Neither the Company nor any of the Subsidiaries has received
notice from any insurer of the Real Estate threatening to cancel any insurance
coverage or requiring any changes or corrective work to the Real Estate which
has not been complied with.
(k) All of the buildings, fixtures and other improvements
located on the Real Estate are in good operating condition and repair, and the
operation thereof as presently conducted is not in violation of any applicable
building code, zoning ordinance or other law or regulation.
(l) Schedule 4.11 sets forth a true, correct and complete list
of all title insurance policies, surveys, engineering reports and hazardous
waste reports prepared with respect to the Real Estate since January 1, 1994,
copies of which have previously been delivered by the Company to the Buyers.
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4.12 Inventory. To the best knowledge of the Company, a true, correct
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and complete list of the steel inventory of the Company and the Subsidiaries
(the "Inventory") as of May 31, 1999 has previously been delivered by the
Company to the Buyers.
4.13 Accounts Receivable.
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(a) To the best knowledge of the Company, a true, correct and
complete list of the accounts and notes receivable of the Company and the
Subsidiaries (the "Accounts Receivable") as of May 31, 1999 has previously been
delivered by the Company to the Buyers.
(b) Except as set forth on Schedule 4.13, all Accounts
Receivable in excess of $5,000.00 arose out of the sales of inventory or
services in the ordinary course of business.
4.14 Tax Matters.
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(a) Except as set forth on Schedule 4.14:
(i) Within the times and in the manner prescribed by law,
the Company and each of the Subsidiaries have filed all tax returns and all tax
returns for foreign countries, provinces and other governing bodies having
jurisdiction to levy taxes upon them which are required to be filed;
(ii) The Company and each of the Subsidiaries have paid all
taxes, interest, penalties, assessments and deficiencies which have become due
or which have been claimed to be due;
(iii) All tax returns filed by the Company and the
Subsidiaries for the taxable years ending February 28, 1996 through February 28,
1998 constitute complete and accurate representations of the respective tax
liabilities of the Company and the Subsidiaries for such years and accurately
set forth all items (to the extent required to be included or reflected in such
returns) relevant to their future tax liabilities;
(iv) Neither the Company nor any of the Subsidiaries has
waived or extended any applicable statute of limitations relating to the
assessment of federal, state, local or foreign taxes;
(v) No examinations of the federal, state, local or
foreign tax returns of the Company or any of the Subsidiaries is currently in
progress or, to the best knowledge of Company, threatened; and
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(vi) The Company and the Subsidiaries are current in the
payment of income, franchise, real estate, sales and withholding taxes and other
employee benefits or taxes.
(b) Schedule 4.14 sets forth those taxable years for which the
tax returns of the Company and the Subsidiaries have been reviewed or audited by
applicable federal, state, local and foreign taxing authorities and those tax
years for which such tax returns have received clearances or other indications
of approval from applicable federal, state, local and foreign taxing
authorities. No issue or issues have been raised in connection with any prior or
pending review or audit of such federal, state, local or foreign tax returns
which the Company reasonably believes may be expected to be raised in the future
by such taxing authorities in connection with the audit or review of the tax
returns of the Company or any of the Subsidiaries.
4.15 Books and Records. The general ledgers and books of account of
-----------------
the Company and the Subsidiaries, all federal, state and local income,
franchise, property and other tax returns filed by the Company and the
Subsidiaries, and all other books and records of the Company and the
Subsidiaries are in all material respects complete and correct and have been
maintained in accordance with good business practice and in accordance with all
applicable procedures required by laws and regulations.
4.16 Contracts and Commitments.
-------------------------
(a) Schedule 4.16 contains, as of the date of this Agreement, a
true, complete and correct list of the following (collectively, the
"Contracts"):
(i) all loan agreements, indentures, mortgages and
guaranties for amounts in excess of $50,000 to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
any of their property is bound;
(ii) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, personal property leases
and lease purchase agreements for amounts in excess of $50,000 to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their property is bound;
(iii) all contracts, agreements, commitments, purchase
orders or other understandings or arrangements to which the Company or any of
the Subsidiaries is a party or by which the
-15-
Company or any of the Subsidiaries or any of their property is bound which
exceed $50,000.00 and have not been entered into in the ordinary course of
business (for purposes of this subsection, contracts, agreements, commitments,
orders or other understandings or arrangements for the purchase of inventory at
a price higher than market price, and contracts, agreements, commitments, orders
or other understandings or arrangements for the sale of products at a price
lower than market price, are not in the ordinary course of business);
(iv) all collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, deferred
compensation agreements, pension plans, retirement plans, employee stock option
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, arrangements or commitments to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their property is bound;
(v) all agency agreements or franchise agreements to
which the Company or any of the Subsidiaries is a party or by which the Company
or any of the Subsidiaries or any of their property is bound;
(vi) all material contracts, agreements or other
understandings or arrangements between the Company and any of the Subsidiaries,
or affiliates of the Company or any of the Subsidiaries, including, but not
limited to, any tax sharing arrangements;
(vii) all leases, whether operating, capital or otherwise,
under which the Company or any of the Subsidiaries is lessor or lessee;
(viii) all contracts, agreements and other documents or
information relating to past disposal of waste (whether or not hazardous), which
the Company does not maintain and retain in the ordinary course of business; and
(ix) any other material agreements or contracts entered
into by the Company or any of the Subsidiaries.
(b) Except as set forth on Schedule 4.16:
(i) each Contract is a valid and binding agreement of the
Company or the relevant Subsidiary, enforceable against the Company or the
relevant Subsidiary in accordance with its terms, and the Company or the
relevant Subsidiary does not have
-16-
any knowledge that any Contract is not a valid and binding agreement of the
other parties thereto;
(ii) the Company or the relevant Subsidiary has fulfilled
all material obligations required pursuant to the Contracts to have been
performed by the Company or the relevant Subsidiary, as the case may be, on its
part prior to the date hereof, and the Company or the relevant Subsidiary, as
the case may be, has no reason to believe that it will not be able to fulfill,
when due, all of its obligations under the Contracts which remain to be
performed after the date hereof;
(iii) the Company or the relevant Subsidiary is not in
breach of or default under any Contract, and no event has occurred which with
the passage of time or giving of notice or both would constitute such a default,
result in a loss of rights or result in the creation of any lien, charge or
encumbrance, thereunder or pursuant thereto;
(iv) there is no existing breach or default by any other
party to any Contract, and no event has occurred which with the passage of time
or giving of notice or both would constitute a default by such other party,
result in a loss of rights or result in the creation of any lien, charge or
encumbrance thereunder or pursuant thereto;
(v) there are and, since January 1, 1998, have been no
claims of a non-routine nature relating to the Company or any Subsidiary by
customers of the Company or any of the Subsidiaries under any warranties,
whether express or implied;
(vi) the Company and the Subsidiaries are not restricted
by any Contract from carrying on their business anywhere in the world;
(vii) neither the Company nor any of the Subsidiaries has
any written or oral Contracts to sell products or perform services which are
expected to be performed at, or to result in, a loss; and
(viii) neither the Company nor any of the Subsidiaries has
experienced any shortages of components or other supplies (collectively
"Supplies") within the twelve (12) month period preceding the date hereof, and
the Company and the Subsidiaries have on hand, or have reason to believe they
can timely obtain, a sufficient quantity of Supplies to satisfy all orders
heretofore received and all orders anticipated to be received during the
remainder of calendar year 1999.
-17-
4.17 Compliance with Agreements and Laws. To the best knowledge of
-----------------------------------
the Company, except as set forth on Schedule 4.17, the Company and the
Subsidiaries each have all requisite licenses, permits and certificates,
including environmental, health and safety permits, from all governmental
authorities necessary to conduct its business and own and operate its assets for
which the failure to have would have a material adverse affect on the Company or
any of the Subsidiaries (collectively, the "Permits"). To the best knowledge of
the Company, neither the Company nor any of the Subsidiaries is in violation of
any law, regulation or ordinance (including, without limitation, laws,
regulations or ordinances relating to building, zoning, environmental, disposal
of hazardous substances, land use or similar matters) relating to its
properties, the enforcement of which would have a material adverse affect on the
Company or any of the Subsidiaries. The business of the Company and the
Subsidiaries as conducted since January 1, 1994 has not violated, and on the
date hereof does not violate, in any material respect, any federal, state, local
or foreign laws, regulations or orders (including, but not limited to, any of
the foregoing relating to employment discrimination, occupational safety,
environmental protection, and hazardous waste) the enforcement of which would
have a material adverse effect on the results of operations, condition
(financial or otherwise), assets, properties or business of the Company or any
of the Subsidiaries. Except as set forth on Schedule 4.17, neither the Company
nor any of the Subsidiaries has received notice or communication from any
governmental or regulatory authority or otherwise since January 1, 1994 of any
such violation or noncompliance.
4.18 Employee Relations.
------------------
(a) To the best knowledge of the Company, the Company and each
of the Subsidiaries is in compliance with all laws respecting employment and
employment practices, terms and conditions of employment, and wages and hours,
the enforcement of which would have a material adverse affect on the Company or
any of the Subsidiaries.
(b) Except as set forth on Schedule 4.18:
(i) none of the employees of the Company or the
Subsidiaries is represented by any labor union;
(ii) there is no unfair labor practice complaint against
the Company or any of the Subsidiaries pending before any governmental authority
or agency;
(iii) there is no pending labor strike or other material
labor trouble affecting the Company or any of the
-18-
Subsidiaries (including, without limitation, any organizational drive);
(iv) there is no material labor grievance pending against
the Company or any of the Subsidiaries;
(v) there is no pending representation question respecting
the employees of the Company or any of the Subsidiaries;
(vi) there are no pending arbitration proceedings arising
out of or under any collective bargaining agreement to which the Company or any
of the Subsidiaries is a party, nor, to the best knowledge of the Company, is
there any basis for which a claim may be made under any collective bargaining
agreement to which the Company or any of the Subsidiaries is a party; and
(vii) neither the Company nor any of the Subsidiaries has
any continuing obligation for health, life, medical insurance or other similar
fringe benefits to any former employee of the Company or any Subsidiary.
(c) Schedule 4.18 sets forth a true, correct and complete list
of (i) the employee benefits provided by the Company and the Subsidiaries to
their employees and all contracts or agreements between the Company and the
Subsidiaries on the one hand, and their respective employees, on the other hand
and (ii) the current payroll of the Company and the Subsidiaries, including the
job titles and salary, of such persons who received an annual salary in excess
of $75,000, including the amounts paid or payable as bonus payments for the
fiscal year ended February 28, 1999 and to end February 28, 2000.
4.19 Employee Benefit Plans.
----------------------
(a) Schedule 4.19 contains a true, correct and complete list of
all pension, benefit, profit sharing, retirement, deferred compensation,
welfare, insurance, disability, bonus, vacation pay, severance pay and other
similar plans, programs and agreements, whether reduced to writing or not,
relating to the employees of the Company and the Subsidiaries (the "Employee
Plans"). Neither the Company nor any of the Subsidiaries has contributed to, or
has any past or present obligation to contribute to, any stock option or stock
purchase plan or other plan designed to hold the stock of the Company or any of
the Subsidiaries or any of their affiliates.
(b) With respect to all Employee Plans, the Company
-19-
or the relevant Subsidiary is in substantial compliance with the requirements
prescribed by any and all statutes, orders or governmental rules or regulations
currently in effect. The Company or the relevant Subsidiary has in all material
respects performed all obligations required to be performed by it under, and is
not in violation in any respect of, and there has been no default or violation
by any other party with respect to, any of the Employee Plans.
(c) The Company has previously delivered to the Buyers true,
correct and complete copies of all Employee Plans which have been reduced to
writing and written descriptions of all Employee Plans which have not been
reduced to writing, and all agreements, including trust agreements and insurance
contracts, related to such Employee Plans, and the Summary Plan Description and
all modifications thereto for each Employee Plan communicated to employees.
4.20 Customers. Except as set forth on Schedule 4.20, none of the
---------
customers representing sales in excess of $250,000 in the most recent fiscal
year of either the Company or any of the Subsidiaries has notified the Company
or the relevant Subsidiary, as the case may be, that it intends to discontinue
its relationship with the Company or the relevant Subsidiary, as the case may
be. Except as set forth on Schedule 4.20, or in the ordinary course of
business, neither the Company nor any of the Subsidiaries has any outstanding
disputes with any such customers for an amount, either individually or in the
aggregate, in excess of $25,000.
4.21 [Intentionally omitted]
4.22 Warranty and Product Liability Claims. Schedule 4.22 contains a
-------------------------------------
true, correct and complete list of all warranty and product liability claims in
excess of $100,000 made against the Company or any of the Subsidiaries from
January 1, 1998 through the date hereof, the current status of all such claims
and the costs of all actions taken in satisfaction of such claims. All
information relative to such claims and those arising thereafter shall be
available to the Buyers from and after the date hereof.
4.23 [Intentionally omitted]
4.24 [Intentionally omitted]
4.25 Indebtedness To and From Officers, Directors and Stockholders.
-------------------------------------------------------------
Except as set forth on Schedule 4.25 and except for intercompany indebtedness
payable among the Company and any Subsidiary or among the Subsidiaries, neither
the Company nor any
-20-
of the Subsidiaries is indebted, directly or indirectly, to any person who is an
officer, director or stockholder of any of the foregoing or any affiliate of any
such person in any amount whatsoever other than for salaries for services
rendered, and no such officer, director, stockholder or affiliate is indebted to
the Company or any of the Subsidiaries except for advances made to employees of
the Company or any of the Subsidiaries in the ordinary course of business.
4.26 Banking Facilities. Schedule 4.26 sets forth a true, correct
------------------
and complete list of:
(a) each bank, savings and loan or similar financial institution
in which the Company or any of the Subsidiaries has an account or safety deposit
box and the numbers of the accounts or safety deposit boxes maintained by the
Company or any of the Subsidiaries thereat; and
(b) the names of all persons authorized to draw on each such
account or to have access to any such safety deposit box facility, together with
a description of the authority (and conditions therefor, if any) of each such
person with respect thereto.
4.27 Powers of Attorney and Suretyships. Except as set forth on
----------------------------------
Schedule 4.27, neither the Company nor any of the Subsidiaries has any general
or special powers of attorney outstanding (whether as grantor or grantee
thereof) or has any obligation or liability (whether actual, accrued, accruing,
continent or otherwise) as guarantor, surety, co-signer, endorser, co-maker,
indemnitor or otherwise outside the ordinary course of business in respect of
the obligation of any person, corporation, partnership, joint venture,
association, organization or other entity, except as endorser or maker of checks
or letters of credit, respectively, endorsed or made in the ordinary course of
business.
4.28 Conflicts of Interest. To the best knowledge of the Company,
---------------------
except as set forth on Schedule 4.28, no officer or director of the Company,
any Subsidiary, nor any affiliate of any such person or entities, now has or
within the last three (3) years had, either directly or indirectly:
(a) an equity or debt interest in any corporation, partnership,
joint venture, association, organization or other person or entity which
furnishes or sells or during such period furnished or sold services or products
to the Company or any of the Subsidiaries, or purchases or during such period
purchased from the Company or any of the Subsidiaries any goods or services, or
otherwise does or during such period did business with the Company
-21-
or any of the Subsidiaries; or
(b) a beneficial interest in any contract, commitment or
agreement to which the Company or any of the Subsidiaries is or was a party or
under which any of them is or was obligated or bound or to which any of their
respective properties may be or may have been subject, other than stock options
and other contracts, commitments or agreements between the Company or any of the
Subsidiaries and such persons in their capacities as employees, officers or
directors of the Company or such Subsidiary.
4.29 Disclosure. The information concerning the Company and the
----------
Subsidiaries set forth in this Agreement, the Exhibits and Schedules to this
Agreement and any document, statement or certificate furnished or to be
furnished to the Buyers pursuant hereto, does not and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated herein or therein or necessary to make the statements and facts
contained herein or therein, in light of the circumstances in which they are
made, not false or misleading. To the best knowledge of the Company, the
Company has disclosed to the Buyers all material facts pertaining to the
transactions contemplated by this Agreement and the Exhibits hereto. Copies of
all documents heretofore or hereafter delivered or made available to the Buyers
pursuant to this Agreement were or will be complete and accurate copies of such
documents.
4.30 Agreement Not in Breach of Other Instruments. Except for the
--------------------------------------------
National Bank of Canada, neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will violate, or
result in a breach of, any of the terms and provisions of, or constitute a
default under, or conflict with, (a) any agreement, indenture or other
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them is bound, (b) the charter documents or bylaws of the Company
or any of the Subsidiaries, or (c) any judgment, decree, order or award of any
court, governmental body or arbitrator applicable to the Company or any of the
Subsidiaries.
4.31 Authority; Approvals. The Company has the requisite power and
--------------------
authority to execute, deliver and carry out this Agreement. This Agreement and
all other instruments and agreements contemplated hereby constitute (or will
constitute) legal, valid and binding obligations of the Company enforceable in
accordance with their respective terms. All consents, approvals (including,
without limitation, any approvals of the shareholders, directors, and/or
officers of the Company required under the Certificate of Incorporation, Bylaws
and other governing instruments of the Company or any of the Subsidiaries),
authorizations or other
-22-
requirements prescribed by any law, rule or regulation which must be obtained or
satisfied by the Company or any of the Subsidiaries and which are necessary for
the execution and delivery by the Company of this Agreement, the issuance and
delivery of the Shares to the Buyers, or the execution and delivery of any other
documents or instruments to be executed and delivered by the Company in
connection herewith have been, or prior to the Closing Date will be, obtained
and satisfied (including, without limitation, all requisite consents and
approvals of all lenders, lessors and other third parties whose consent or
approval is required in order for the Company and the Subsidiaries to consummate
the transactions contemplated by this Agreement).
4.32 Environmental Matters. To the best knowledge of the Company,
---------------------
except as set forth on Schedule 4.32, neither the Company nor any of the
Subsidiaries is in violation of any law, ruling, order, decree, regulation,
permit, or other environmental or hazardous waste requirement applicable to the
Company, any of the Subsidiaries, or any of the Real Estate, or any part
thereof, relating to health, safety, pollution, hazardous waste, environmental
or other similar matters, which has not been substantially corrected and the
enforcement of which would have a material adverse affect on the Company or any
of the Subsidiaries. Neither the Company nor any of the Subsidiaries has
received notice from any governmental authority alleging any such violation in
respect to any of the Real Estate or any part thereof.
4.33 Knowledge. The phrase "to the best knowledge of the Company" or
---------
similar language as used in this Agreement means the actual present knowledge of
Xxxxxxx X. Xxxxxxx or Xxxxx X. Xxxxxx, after reasonable investigation.
-23-
5. Access to Information; Public Announcements.
-------------------------------------------
5.01 Access to Management, Properties and Records.
(a) From the date of this Agreement until the Closing Date, the
Company shall afford the officers, attorneys, accountants and other authorized
representatives of the Buyers free and full access upon reasonable notice and
during normal business hours to all management personnel, offices, properties,
books and records of the Company and the Subsidiaries, so that the Buyers may
have full opportunity to make such investigation as it shall desire to make of
the management, business, properties and affairs of the Company and the
Subsidiaries, and the Buyers shall be permitted to make abstracts from, or
copies of, all such books and records. The Company shall furnish to the Buyers
such financial and operating data and other information as to the business of
the Company and the Subsidiaries as the Buyers shall reasonably request.
(b) All information furnished pursuant to Section 5.01(a) (the
"Information"), including but not limited to Information furnished to agents,
representatives, attorneys and accountants (collectively "Representatives"), by
the Company or any of its representatives shall be used solely in connection
with the consummation of the transactions contemplated by this Agreement and the
Buyers shall transmit the Information only to those Representatives of the
Buyers who have a need to know the Information. If the transactions
contemplated by this Agreement do not occur, the Information and all copies
thereof, except for that portion of the Information which consists of analyses,
compilations, data, studies or other documents prepared by the Buyers and the
Representatives, shall be returned by the Buyers and the Representatives without
retaining any copies thereof, to the Company.
(c) If the Buyers, at their option and expense, elect within fifteen
days following the date hereof, to have a report or reports prepared by an
engineer or other professional selected by the Buyers, certifying that the Real
Estate (i) materially complies with all applicable environmental and wetlands
laws, rules and regulations and that there is not now, and never has been,
manufacture, storage, or disposal of hazardous wastes at the Real Estate in
violation of such laws, rules and regulations, (ii) materially complies with all
applicable building, health and fire codes, and subdivision control laws, rules
and regulations, and (iii) does not contain any friable asbestos, the Company
shall cooperate with such engineer or professional to the extent necessary to
prepare such reports, including, without limitation, providing such engineer or
professional access to the Real Estate and necessary records, and arranging
interviews with employees of
-24-
the Company and the Subsidiaries.
(d) The Company shall authorize the release to the Buyers of all
files pertaining to the business or operations of the Company and the
Subsidiaries held by any governmental authorities, agencies or
instrumentalities. The Company's authorization shall specifically waive all
previous claims of privilege or other restrictions, and in any case where a
release by a present or former employee of the Company or any Subsidiary is
necessary, the Company shall exercise its best efforts to obtain such a release.
5.02 Public Announcements. Prior to the Closing Date, any and all general
--------------------
public announcements or other general public communications concerning this
Agreement and the purchase and sale of the Shares by the Buyers, and the timing,
manner and content of such disclosures, shall be subject to the mutual agreement
of the Company and the Buyers; provided, however, that the Company may make any
public disclosure it believes in good faith is required by law or regulation (in
which case the Company will advise and give the Buyers an opportunity to review
and comment prior to making the disclosure).
6. Pre-Closing and Closing Covenants.
---------------------------------
From and after the date hereof and until the Closing Date:
6.01 Conduct of Business. The Company and the Subsidiaries shall carry on
-------------------
their business diligently and substantially in the same manner as heretofore and
shall not make or institute any unusual or new methods of manufacture, purchase,
sale, shipment or delivery, lease, management, accounting or operation, and
shall not ship or deliver any quantity of products in excess of normal shipment
or delivery levels, except as agreed to in writing by the designated
representative of the Buyers. All of the property of the Company and the
Subsidiaries shall be used, operated, repaired and maintained in a normal
business manner consistent with past practice.
6.02 Absence of Material Changes. Without the prior written consent by
---------------------------
the designated representative of the Buyers (currently Xxxxx X. Xxxxxx, who may
designate another representative of the Buyers in his place by delivering
written notice of the name of such person to the Company), but subject at all
times to the exercise by the Company's Board of Directors of its fiduciary
duties to all of the Company's shareholders, neither the Company nor any of the
Subsidiaries shall:
(a) Take any action to amend its charter documents or bylaws;
-25-
(b) Issue any stock, bonds or other corporate securities or grant any
option or issue any warrant to purchase or subscribe to any of such securities
or issue any securities convertible into such securities;
(c) Incur any obligation or liability (absolute or contingent),
including any mortgage, equipment loan or other long-term debt obligation or
increased borrowing under any existing lines of credit, except current
liabilities incurred and obligations under contracts entered into in the
ordinary course of business and except for increases in the credit lines with
steel xxxxx;
(d) Declare or make any payment or distribution to its stockholders
with respect to its stock or purchase or redeem any shares of its capital stock;
(e) Except to the extent required by the terms under which the
Company's preferred stock was issued and except as required by written
employment agreements, make, accrue or become liable for any payment to any
officer, director, or stockholder of the Company or any affiliate of any such
person or entity, other than (i) payment under existing supply contracts and
leases, and (ii) payments of compensation and benefits consistent with the past
practices of the Company and Subsidiaries;
(f) Mortgage, pledge, or subject to any lien, charge or any other
encumbrance any of their respective assets or properties;
(g) Sell, assign, or transfer any of its assets, except for products
sold in the ordinary course of business;
(h) Cancel any debts or claims, except in the ordinary course of
business;
(i) Merge or consolidate with or into any corporation or other entity;
(j) Make, accrue or become liable for any bonus, profit sharing or
incentive payment, except for accruals under existing plans, if any, or increase
the rate of compensation payable or to become payable by it to any of its
officers, directors or employees;
(k) Waive any rights of material value;
(l) Modify, amend, alter or terminate any of its executory contracts
of a material value or which are material in
-26-
amount;
(m) Take or permit any act or omission constituting a breach or
default under any material contract, indenture or agreement by which it or its
properties are bound, which has not been previously disclosed in writing to the
Buyer;
(n) Fail to use reasonable efforts to (i) preserve the possession and
control of its assets and business, (ii) keep in faithful service its present
officers and key employees, (iii) preserve the goodwill of its customers,
suppliers, agents, brokers and others having business relations with it, and
(iv) keep and preserve its business existing on the date hereof until after the
Closing Date;
(o) Fail to operate its business and maintain its books, accounts and
records in the customary manner and in the ordinary or regular course of
business and maintain in reasonably good repair its business premises, fixtures,
machinery, furniture and equipment;
(p) Enter into any lease, contract, agreement or understanding other
than those entered into in the ordinary course of business providing for
payments in excess of $50,000 in an instance or $150,000 in the aggregate;
(q) Incur any capital expenditure in excess of $25,000 in an instance
or $100,000 in the aggregate;
(r) Engage any new employee for a salary in excess of $75,000 per
annum;
(s) Materially alter the terms, status or funding condition of any
Employee Plan; or
(t) Commit or agree to do any of the foregoing in the future.
6.03 Compliance with Laws. The Company and each of the Subsidiaries will
--------------------
comply in all material respects with all laws and regulations which are
applicable to it or to the conduct of its business and will perform and comply
with all contracts, commitments and obligations by which they are bound.
6.04 Continued Truth of Representations and Warranties. The Company nor
-------------------------------------------------
any Subsidiary will take any actions which would result in any of the
representations or warranties set forth in Sections 3 and 4 hereof being untrue.
-27-
6.05 Continuing Obligation to Inform. From time to time prior to the
-------------------------------
Closing, the Company will deliver to the Buyers supplemental information
concerning events subsequent to the date hereof which would render any
statement, representation or warranty in this Agreement or any information
contained in any Schedule to this Agreement inaccurate or incomplete in any
material respect at any time after the date hereof until the Closing Date.
6.06 Exclusive Dealing. The Company will not (a) solicit acquisition or
-----------------
investment proposals relating to the assets or the stock of the Company or any
of the Subsidiaries from any outside sources; (b) entertain or discuss any
acquisition or investment proposals relating to the assets or the stock of the
Company or any of the Subsidiaries from any unsolicited outside sources, or (c)
disclose (other than in the ordinary course of business, or to its attorneys,
accountants or investment advisors) to any outside sources any non-published
information concerning the Company or the Subsidiaries, or their business and/or
financial condition, other than to the Buyers; provided, however, that the
Company may make any public disclosure it believes in good faith is required by
law or regulation (in which case the Company will advise and give the Buyers an
opportunity to review and comment prior to making the disclosure).
Notwithstanding anything contained herein to the contrary, in the event that the
Company is in receipt of a Superior Proposal (as hereinafter defined) and the
Board of Directors of the Company determines, in consultation with legal
counsel, that the failure to take action with respect to such Superior Proposal
would constitute a breach by the Board of Directors of the Company of their
fiduciary duties under applicable laws, including their duties under Section 141
of the Delaware General Corporation Law, then the Company's Board of Directors
shall be free, without encumbrance under this Agreement, to entertain or discuss
any acquisition or investment proposals relating to the assets or the stock of
the Company or any of the Subsidiaries and to terminate this Agreement. As used
in this Section 6.06, the term "Superior Proposal" shall mean a bona fide
written proposal from a third party for a competing transaction, which the
Company's Board of Directors and/or financial advisor determines is reasonably
capable of being financed, on terms which the Board of Directors of the Company
reasonably determines to be more favorable than the issuance of the Shares to
the Buyer, in accordance with and having regard to the interests of the
Company's stockholders.
6.07 Reports, Taxes, etc. The Company and the Subsidiaries will duly and
-------------------
timely file all reports or returns required to be filed with all governmental
authorities, will promptly pay all federal, state, local and foreign taxes,
assessments and governmental charges levied or assessed upon them or any of
their properties (unless contesting such in good faith and adequate
-28-
provision has been made therefor), and will duly observe and conform to all
lawful requirements of any governmental authority relating to any of their
properties or to the operation and conduct of their business and all covenants,
terms and conditions upon or under which any of their properties are held.
6.08 Disclosure Schedules. The Company shall deliver complete and
--------------------
accurate copies of the schedules listed in Section 1.05 to the Buyers no later
than fourteen (14) days from the date of this Agreement (or such other date as
the parties may agree) and shall provide copies to the Buyer of all documents
listed thereon, provided that failure to do so within such period will not give
rise to any claim for breach of covenant by the Company if the Company has made
reasonable efforts to so deliver such schedules. The Buyers shall, not later
than ten (10) days following the date on which it is provided with all
information which it has requested in connection with its due diligence review
notify the Company as to whether or not it is satisfied with such due diligence
review.
6.09 Debt Infusion. On or before the Closing Date, the Company and MNP
-------------
shall enter into a loan agreement (the "Loan Agreement") pursuant to which the
Company shall borrow (the "Loan") an amount equal to One Million Two Hundred Six
Thousand Dollars ($1,206,000). The Loan Agreement shall be upon such terms and
conditions reasonably negotiated by the Company and MNP Corporation; provided,
in all circumstances, the Loan Agreement shall provide: (a) that MNP
Corporation, on a totally discretionary basis, may loan up to an additional Two
Million Dollars ($2,000,000) to the Company; (b) that the Loan (and any
additional loans) shall be on a demand basis; (c) that interest shall accrue at
a rate equal to the interest rate being paid by the Company to National Bank of
Canada (the "Bank"); (d) that the Loan (and any additional loans) shall be
secured by a security interest and lien on all the assets of the Company and the
Subsidiaries, subject only to the security interests and liens set forth on
Schedule 6.09; (e) that MNP shall negotiate and execute an Intercreditor
Agreement with the Bank; and (f) for customary affirmative and negative
covenants, including, without limitation, negative covenants of the type set
forth in Section 6.02 (a) through (m) of this Agreement. MNP acknowledges that
the granting of such security interest to it may be in violation of certain
covenants contained within the obligations set forth on Schedule 6.09.
7. Best Efforts to Obtain Satisfaction of Conditions.
-------------------------------------------------
The Company, the Subsidiaries and the Buyers covenant and agree to use
their best efforts to obtain the satisfaction of the conditions specified in
this Agreement.
-29-
8. Conditions to Obligations of the Buyers.
---------------------------------------
The obligations of the Buyers and MNP under this Agreement are subject to
the fulfillment, at the Closing Date, of the following conditions precedent,
each of which may be waived in writing in the sole discretion of the Buyers and
MNP:
8.01 Continued Truth of Representations and Warranties of the Company and
--------------------------------------------------------------------
Compliance with Covenants and Obligations. The representations and warranties
-----------------------------------------
of the Company as qualified by the Disclosure Schedules, as supplemented from
time to time, shall be true on and as of the Closing Date as though such
representations and warranties were made on and as of such date (except for
representations made as a specified date), except for any changes permitted by
the terms hereof or consented to in writing by the Buyers. The Company and the
Subsidiaries shall have performed and complied with all terms, conditions,
covenants, obligations, agreements and restrictions required by this Agreement
to be performed or complied with by each of them prior to or at the Closing
Date.
8.02 Performance by the Company. At the Closing, the Company shall have
--------------------------
delivered to the Buyers a certificate signed by an officer of the Company as to
the compliance with Subsection 8.01 hereof.
8.03 Governmental Approvals. All governmental agencies, departments,
----------------------
bureaus commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Company or the Subsidiaries of the transactions
contemplated by this Agreement and the operation of the business of the Company
and the Subsidiaries by the Buyers shall have consented to, authorized,
permitted or approved such transactions.
8.04 Adverse Proceedings. No action or proceeding by or before any court
-------------------
or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Buyers to own the Shares or own or operate the business of the
Company and the Subsidiaries after the Closing.
8.05 Opinion of Counsel. The Buyers shall have received an opinion of
------------------
Xxxxxxxx, Loop & Xxxxxxxx, LLP, counsel to the Company and the Subsidiaries,
dated as of the Closing Date, in substantially the form attached hereto as
Exhibit D, and as to such
---------
-30-
other matters as may be reasonably requested by the Buyers or its counsel.
8.06 Intercreditor Agreement. MNP shall have received an executed
-----------------------
Intercreditor Agreement with the Bank.
9. Conditions to Obligations of the Company.
----------------------------------------
The obligations of the Company under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Company:
9.01 Continued Truth of Representations and Warranties of the Buyers:
----------------------------------------------------------------
Compliance with Covenants and Obligations. The representations and warranties of
-----------------------------------------
the Buyers in this Agreement shall be true on and as of the Closing Date as
though such representations and warranties were made on and as of such date,
except for any changes consented to in writing by the Company. The Buyers and
MNP shall have performed and complied with all terms, conditions, covenants,
obligations, agreements and restrictions required by this Agreement to be
performed or complied with by each of them prior to or at the Closing Date.
9.02 Governmental Approvals. All governmental agencies, departments,
----------------------
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Buyers of the transactions contemplated by this
Agreement shall have consented to, authorized, permitted or approved such
transactions.
9.03 Adverse Proceedings. No action or proceeding by or before any court
-------------------
or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Company to issue and deliver the Shares.
9.04 Opinion of Counsel. The Company shall have received an opinion of
------------------
Jacob & Xxxxxxxxxx, P.C., counsel to the Buyers, dated as of the Closing Date,
in substantially the form attached hereto as Exhibit E, and as to such other
---------
matters as may be reasonably requested by the Company or its counsel.
9.05 Forbearance Agreement. The Company shall have received an executed
---------------------
extension to its existing Forbearance Agreement with the Bank.
-31-
9.06 Favorable Opinion. The Company shall have received a favorable
-----------------
opinion from an investment banking firm acceptable to the Company's Board of
Directors to the effect that the consideration being paid by the Buyers for the
Shares is fair from a financial point of view to the Company.
10. Post Closing Matters.
--------------------
10.01 Survival of Representations. All representations and warranties
---------------------------
made in Sections 3 or 4 hereof by the Company, or in any instrument or document
furnished in connection therewith, shall survive the Closing and any
investigation at any time made by or on behalf of the Buyers.
10.02 Securities Filings. Buyers acknowledge that the Company is a
------------------
registered under Section 12(g) of the Securities Exchange Act of 1934 (the
"Act") having minority shareholders, and that the Company has certain
obligations pursuant to such Act, including the obligation to file periodic
reports in compliance with such Act and the rules and interpretations of the
Securities and Exchange Commission (the "Commission") pursuant to the Act.
Buyers shall cooperate with the Company to enable the Company to fulfill its
obligations pursuant to the Act and the rules of the Commission.
10.03 No Additional Purchases. Buyers shall not purchase additional
-----------------------
shares of the Company's common stock until at least two weeks after the Company
files its Annual Report on Form 10-K for its fiscal year ended February 29,
2000, without the consent of a majority vote of the Company's shareholders other
than the Buyers pursuant to a special meeting at which proxies are solicited in
accordance with the Act.
10.04 Compliance With Securities Regulations. Buyers shall operate the
--------------------------------------
Company on an arms length basis, in recognition of its status as a company
registered pursuant to Section 12(g) under the Act having minority shareholders,
including, but not limited to, compliance with (to the extent applicable)
Regulation S-X of the Commission and Rule 14f-1 of the rules of the Commission
promulgated pursuant to the Act and applicable laws of the State of Delaware.
11. Termination of Agreement; Option to Proceed; Damages.
----------------------------------------------------
11.01 Termination by Lapse of Time. This Agreement shall terminate at
----------------------------
5:00 p.m., Eastern Standard Time, on September 1, 1999, if the transactions
contemplated hereby have not been
-32-
consummated, unless such date is extended by the written consent of all the
parties hereto.
11.02 Termination by Agreement of the Parties. This Agreement may be
---------------------------------------
terminated by the mutual written agreement of the parties hereto. In the event
of such termination by agreement, the Buyers shall have no further obligation or
liability to the Company under this Agreement, and the Company shall have no
further obligation or liability to the Buyers under this Agreement.
11.03 Termination by the Company. This Agreement may be terminated by the
--------------------------
Company if: (a) at any time prior to the Closing there shall occur a breach of
any of the representations, warranties or covenants of the Buyers, or (b) the
conditions precedent set forth in Section 9 of this Agreement are not fulfilled
at the Closing Date.
11.04 Termination by the Buyers. This Agreement may be terminated by the
-------------------------
Buyers if: (a) at any time prior to the Closing there shall occur a breach of
any of the representations, warranties or covenants of the Company, or (b) the
conditions precedent set forth in Section 8 of this Agreement are not fulfilled
at the Closing Date, or (c) the due diligence review conducted by the Buyers
shall reveal any matter which, in the opinion of the Buyers, is materially
adverse or the Schedules shall contain disclosure of and matter which, in the
opinion of the Buyers, is materially adverse, and of which the Buyers have not
had full and accurate disclosure on the date hereof, provided that the Buyers
shall deliver such notice within ten (10) days of the completion of their due
diligence review or receipt by them of the complete and final Schedules, as the
case may be.
11.05 Remedies. If this Agreement is terminated by the Company pursuant
--------
to Section 11.03 (a) above, the Company shall have available to it all remedies
afforded to it by applicable law. If this Agreement is terminated because (1)
the Company's Board of Directors accepts a Superior Proposal as provided in
Section 6.06, or (ii) the Buyer is unwilling to close because of a willful or
fraudulent statement in any of the representations or warranties made in
Sections 4.01 through 4.32 of this Agreement, then the Company, upon demand by
the Buyers, shall reimburse the Buyers the amount of One Hundred Thousand
Dollars ($100,000) for their costs in connection with this Agreement (the
"Break-Up Fee"). If this Agreement is terminated for any other reason (except
pursuant to Section 11.02, 11.03, or 11.04 (c)), then the Company, upon demand
by the Buyers, shall reimburse the Buyers for their direct out-of-pocket
expenses, up to the amount of Forty Thousand Dollars ($40,000) for their costs
in connection with this Agreement (the
-33-
"Reimbursement Amount"). THE COMPANY ACKNOWLEDGES AND AGREES THAT: (i) EACH OF
THE BREAK-UP FEE AND THE REIMBURSEMENT AMOUNT IS A REASONABLE ESTIMATE OF AND
BEARS A REASONABLE RELATIONSHIP TO THE COSTS (INCLUDING THE VALUE OF TIME AND
LOST OPPORTUNITIES) INCURRED BY THE BUYERS AS A RESULT OF THE FAILURE OF THE
CLOSING TO OCCUR; (ii) THE ACTUAL COSTS INCURRED BY THE BUYERS AS A RESULT OF
THE FAILURE TO CLOSE UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICAL TO DETERMINE; (iii) THE COMPANY SEEKS TO LIMIT ITS LIABILITY UNDER
THIS AGREEMENT TO THE AMOUNT OF THE BREAK-UP FEE AND THE REIMBURSEMENT AMOUNT IN
THE EVENT THE CLOSING DOES NOT OCCUR; AND (iv) EACH OF THE BREAK-UP FEE AND THE
REIMBURSEMENT AMOUNT SHALL BE AND CONSTITUTE A VALID LIQUIDATED AMOUNT.
12. Notices.
-------
Any notices or other communications required or permitted hereunder shall
be sufficiently given if delivered personally or sent by Federal Express (or any
other nationally recognized overnight delivery service), addressed as follows or
to such other address of which the parties may have given notice:
To the Buyers: See Exhibit A
---------
To MNP: MNP Corporation
Xxxxx X. Xxxxxxx
00000 Xxxxx Xxxx
X.X. Xxx 000000
Xxxxx, XX 00000-0000
With a copy to: Xxxxxx X. Xxxxxxxxx, Esq.
Jacob & Xxxxxxxxxx, P.C.
0000 Xxxx Xxx Xxxxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxxxx 00000
To the Company: Xxxxxxx X. Xxxxxxx
Meridian National Corporation
000 Xxxxxxx Xx.
Xxxxxx, XX 00000
With a copy to: Xxxx X. Xxxxxxx, XX
Xxxxxxxx, Loop & Xxxxxxxx, LLP
0000 Xxxxxxx
Xxxxxx, XX 00000-0000
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally, or (b) on
the next business day, if sent
-34-
by a nationally recognized overnight delivery service such as Federal Express.
13. Successors and Assigns.
----------------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that no party
may not assign its obligations hereunder without the prior written consent of
the other parties. Any assignment in contravention of this provision shall be
void. No assignment shall release the Buyers or the Company from any obligation
or liability under this Agreement.
14. Entire Agreement; Amendments; Attachments.
-----------------------------------------
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties. The parties hereto may amend or modify this Agreement, in
such manner as may be agreed upon, by a written instrument executed by all of
them.
(b) If the provisions of any Schedule or Exhibit to this Agreement
are inconsistent with the provisions of this Agreement, the provision of the
Agreement shall prevail. The Exhibits and Schedules attached hereto or to be
attached hereafter are hereby incorporated as integral parts of this Agreement.
15. Severability.
------------
Any provision of this Agreement which is invalid, illegal or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provision of this Agreement invalid, illegal or unenforceable in any other
jurisdiction.
-35-
16. Legal Fees.
----------
In the event that legal proceedings are commenced by the Buyers against the
Company, or by the Company against the Buyers, in connection with this Agreement
or the transactions contemplated hereby, the party or parties which do not
prevail in such proceedings shall pay the reasonable attorneys' fees and other
costs and expenses, including investigation costs, incurred by the prevailing
party in such proceedings.
17. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
18. Section Headings.
----------------
The section headings are for the convenience of the parties and in no way
alter, modify, amend, limit, or restrict the contractual obligations of the
parties.
19. Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which shall be one and the same
document.
-36-
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
COMPANY
-------
MERIDIAN NATIONAL CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Its: Chief Executive Officer
-------------------------------------
MNP
---
MNP CORPORATION, a
Michigan corporation
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Its: Vice President
-------------------------------------
BUYERS
------
MNP EXECUTIVE HOLDINGS, LLC, a
Michigan limited liability company
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Its: Member
-------------------------------------
THE XXXXXX FAMILY, LLC, a
Michigan limited liability company
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx, Trustee
Its: Manager
[signatures continued on following page]
-37-
XXXXX X. XXXXXXX, DECLARATION
OF TRUST DATED 7/25/95
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx, Trustee
XXXXXX X. XXXXX, DECLARATION
OF TRUST DATED 3/6/97
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx, Trustee
-38-
EXHIBIT A
---------
BUYERS:
------
THE XXXXXX FAMILY, LLC
00000 Xxxxx Xxxx
X.X. Xxx 000000
Xxxxx, XX 00000-0000
MNP EXECUTIVE HOLDINGS, LLC
00000 Xxxxx Xxxx
X.X. Xxx 000000
Xxxxx, XX 00000-0000
XXXXX X. XXXXXXX, DECLARATION
OF TRUST DATED 7/25/95
00000 Xxxxx Xxxx
X.X. Xxx 000000
Xxxxx, XX 00000-0000
XXXXXX X. XXXXX, DECLARATION
OF TRUST DATED 3/6/97
00000 Xxxxx Xxxx
X.X. Xxx 000000
Xxxxx, XX 00000-0000
EXHIBIT B
---------
3,570,000 shares: The Xxxxxx Family LLC
210,000 shares: MNP Executive Holdings LLC
210,000 Shares: Xxxxx X. Xxxxxxx, Declaration
of Trust Dated 7/25/95
210,000 shares: Xxxxxx X. Xxxxx, Declaration
of Trust Dated 3/6/9
