EXHIBIT 2.1
EXECUTION COPY
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ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
by and among
XXXXXX CORPORATION,
XXXXXX INDUSTRIES, INC.,
PYRAMID COACH, INC.,
CHAMPION TRAILER, INC.,
UNITED ACQUISITION, INC.,
U.S. RUBBER RECLAIMING, INC.
OBSIDIAN CAPITAL PARTNERS, L.P.
AND
XXXXXXX X. XXXXXX
dated as of the 21st day of June, 2001
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TABLE OF CONTENTS
ARTICLE I. Certain Definitions......................................................................1
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1.1 Certain Definitions.....................................................................1
ARTICLE II. Terms of the Reorganization.............................................................3
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2.1 The Closing.............................................................................3
2.2 Acquisition.............................................................................4
2.3 Outstanding Options of Target Companies.................................................4
2.4 Effective Time of the Acquisition.......................................................4
2.5 Exchange of Ownership Interests.........................................................4
2.6 [Composition of Danzer's Board of Directors.............................................4
2.7 Executive Management Team of Xxxxxx.....................................................5
2.8 Executive Officers and Board of Directors of each Xxxxxx Subsidiary.....................5
2.9 Subsequent Actions......................................................................5
ARTICLE III. Representations and Warranties of each Target Company and the Partnership.............5
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3.1 Corporate Existence; Good Standing......................................................5
3.2 Power and Authority.....................................................................6
3.3 Ownership in the Target Companies.......................................................6
3.4 Transactions in Capital Stock, Options..................................................7
3.5 Subsidiaries............................................................................7
3.6 Corporate Records.......................................................................7
3.7 Predecessor Status; etc.................................................................7
3.8 Spin-off by the Target Companies........................................................7
3.9 Financial Statements....................................................................7
3.10 Liabilities and Obligations.............................................................8
3.11 Accounts and Notes Receivable...........................................................9
3.12 Permits and Intangibles.................................................................9
3.13 Intellectual Property Rights............................................................9
3.14 Environmental Matters..................................................................10
3.15 Leases.................................................................................10
3.16 Personal Property......................................................................10
3.17 Real Property..........................................................................11
3.18 Contracts..............................................................................11
3.19 Significant Customers; Commitments.....................................................12
3.20 Insurance; Bonds.......................................................................13
3.21 Compensation; Employment Agreements; Employee Manuals/Policies.........................13
3.22 Employee Plans.........................................................................14
3.23 Conformity with Law; Litigation........................................................14
3.24 Taxes..................................................................................15
3.25 Consents...............................................................................15
3.26 Commissions and Fees...................................................................16
3.27 Government Contracts...................................................................16
3.28 Absence of Changes.....................................................................16
3.29 Deposit Accounts; Powers of Attorney...................................................16
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3.30 Disclosure.............................................................................17
3.31 Options and Preemptive Rights..........................................................17
3.32 No Intention To Dispose of Stock.......................................................17
3.33 Anti-takeover Plan: State Takeover Statutes............................................17
3.34 Affiliate Transactions.................................................................17
3.35 Solicitation...........................................................................17
ARTICLE IV. Representations of Xxxxxx and DII......................................................17
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4.1 Due Organization.......................................................................17
4.2 Power and Authority....................................................................18
4.3 Capital Stock of Xxxxxx and DII........................................................18
4.4 Xxxxxx Preferred Stock.................................................................19
4.5 Subsidiaries...........................................................................19
4.6 Financial Statements...................................................................19
4.7 Absence of Certain Changes.............................................................19
4.8 Predecessor Status; etc................................................................20
4.9 Accounts and Notes Receivable..........................................................20
4.10 Permits and Intangibles................................................................20
4.11 Intellectual Property Rights...........................................................21
4.12 Environmental Matters..................................................................21
4.13 Leases.................................................................................21
4.14 Personal Property......................................................................22
4.15 Real Property..........................................................................22
4.16 Contracts..............................................................................22
4.17 Significant Customers; Commitments.....................................................23
4.18 Insurance; Bonds.......................................................................24
4.19 Compensation; Employment Agreements; Employee Manuals/Policies.........................24
4.20 Employee Plans.........................................................................25
4.21 Government Contracts...................................................................25
4.22 Litigation.............................................................................25
4.23 Taxes..................................................................................26
4.24 Commissions and Fees...................................................................26
4.25 Effect of Agreement....................................................................27
4.26 Liabilities and Obligations............................................................27
4.27 Consents...............................................................................28
4.28 Options and Preemptive Rights..........................................................28
4.29 Anti-takeover Plan; State Takeover Statutes............................................28
4.30 Affiliate Transactions.................................................................28
4.31 Solicitation...........................................................................28
4.32 No Untrue Representations..............................................................28
ARTICLE V. Covenants of the Partnership and each Target Company....................................28
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5.1 Conduct of Business Pending Closing....................................................28
5.2 Prohibited Activities..................................................................29
5.3 Consents...............................................................................30
5.4 Notification of Certain Matters........................................................30
ARTICLE VI. Covenants of Xxxxxx and DII............................................................30
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6.1 Conduct of Business Pending Closing....................................................30
6.2 Prohibited Activities..................................................................30
6.3 Consents...............................................................................31
6.4 Notification of Certain Matters........................................................31
ARTICLE VII. Covenants of Xxxxxx, DII, the Partnership and each Target Company.....................32
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7.1 Access and Cooperation.................................................................32
7.2 No Shop................................................................................32
7.3 Further Assurances.....................................................................32
ARTICLE VIII. Conditions Precedent to Obligations of the Partnership and the Target Companies.....32
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8.1 Representations and Warranties; Performance of Obligations.............................32
8.2 No Injunctions or Restraints...........................................................33
8.3 No Litigation..........................................................................33
8.4 Closing Deliveries.....................................................................33
8.5 Employment Agreements..................................................................33
8.6 No Material Adverse Change.............................................................33
8.7 Outstanding Shares of Xxxxxx...........................................................33
8.8 Certificate of Designations of Series B Preferred Stock................................33
8.9 Salary and Incentive Levels............................................................33
8.10 Due Diligence Review...................................................................34
8.11 Consents and Approvals.................................................................34
ARTICLE IX. Conditions Precedent to Obligations of Xxxxxx and DII..................................34
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9.1 Representations and Warranties; Performance of Obligations.............................34
9.2 Closing Deliveries.....................................................................34
9.3 No Material Adverse Change.............................................................34
9.4 Due Diligence Review...................................................................34
9.5 Termination of Management Fees.........................................................35
9.6 Purchase of United Expressline.........................................................35
9.7 United Expressline Financial Statements................................................35
9.8 Consents and Approvals.................................................................35
ARTICLE X. Closing Deliveries......................................................................35
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10.1 Deliveries of the Partnership and Target Companies.....................................35
10.2 Deliveries of Xxxxxx and DII...........................................................36
ARTICLE XI. Post-Closing Matters...................................................................37
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11.1 Xxxxxx Shareholders' Meeting...........................................................37
11.2 Conversion of Preferred Stock..........................................................37
11.3 Indemnification of Xxxxxx Officers and Directors.......................................38
11.4 Public Announcements...................................................................38
ARTICLE XII. Termination of Agreement..............................................................40
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12.1 Termination............................................................................40
12.2 Liabilities in Event of Termination....................................................40
ARTICLE XIII. Federal Securities Laws and Transfer Restrictions....................................40
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13.1 Compliance with Law....................................................................40
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13.2 Economic Risk; Sophistication..........................................................41
ARTICLE XIV. Covenants of Xxxxxx, DII, the Partnership and the Target Companies after Closing......41
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14.1 Section 368(a).........................................................................42
14.2 Preparation and Filing of Tax Returns..................................................42
ARTICLE XV. General................................................................................42
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15.1 Cooperation............................................................................42
15.2 Successors and Assigns.................................................................42
15.3 Entire Agreement.......................................................................43
15.4 Expenses...............................................................................43
15.5 Notices................................................................................43
15.6 Governing Law..........................................................................44
15.7 Choice of Forum........................................................................44
15.8 Survival of Representations and Warranties.............................................44
15.9 Exercise of Rights and Remedies........................................................44
15.10 Reformation and Severability...........................................................44
15.11 Parties In Interest; No Third Party Beneficiaries......................................45
15.12 Captions...............................................................................45
15.13 Counterparts...........................................................................45
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SCHEDULES
Schedule 2.5 Acquisition Consideration
Schedule 2.8 Executive Officers and Board of Directors
Schedule 3.3 Capital Stock of the Target Companies
Schedule 3.4 Options and other Capital Stock obligation of Target Companies
Schedule 3.5 Subsidiaries of the Partnership and Target Companies
Schedule 3.7 Predecessor Status of Target Companies
Schedule 3.9 Financial Statements
Schedule 3.10 Liabilities and Obligations; Litigation of the Target Companies
Schedule 3.11 Exceptions to Accounts and Notes Receivable of the Target
Companies
Schedule 3.12 Licenses and Permits of the Target Companies
Schedule 3.13 Intellectual Property Rights of the Target Companies
Schedule 3.14 Environmental Matters of Target Companies
Schedule 3.15 Leases - Personal and Real Property of the Target Companies
Schedule 3.16 Personal Property of the Target Companies
Schedule 3.17 Real Property of the Target Companies
Schedule 3.18 Contracts of the Target Companies
Schedule 3.19 Exceptions to Customers and Commitments of Target Companies
Schedule 3.20 Insurance of the Target Companies
Schedule 3.21 Compensation; Employment Agreements; Employee Manuals/Policies
of the Target Companies
Schedule 3.22 Employee Plans of the Target Companies
Schedule 3.23 Conformity with Law; Litigation of the Target Companies
Schedule 3.24 Tax Returns of Target Companies
Schedule 3.25 Consents of the Target Companies
Schedule 3.26 Commissions and Fees of Partnership and Target Companies
Schedule 3.28 Absence of Changes of the Target Companies
Schedule 3.29 Deposit Accounts; Powers of Attorney of the Target Companies
Schedule 3.31 Options and Preemptive Rights of Target Companies
Schedule 3.34 Affiliate Transactions of the Partnership and the Target
Companies
Schedule 4.3 Capital Stock of Xxxxxx and DII
Schedule 4.4 Xxxxxx and Xxxxxx Sub Stock Option and Stock Purchase Plans
Schedule 4.5 Subsidiaries of Xxxxxx and DII
Schedule 4.7 Xxxxxx Absence of Changes
Schedule 4.8 Predecessor Status of Xxxxxx and DII
Schedule 4.9 Accounts and Notes Receivable of Xxxxxx and DII
Schedule 4.10 License and Permits of Xxxxxx and DII
Schedule 4.11 Intellectual Property Rights of Xxxxxx and DII
Schedule 4.12 Environmental Permits and Approvals of Xxxxxx and DII
Schedule 4.13 Leases of Xxxxxx and DII
Schedule 4.14 Personal Property of Xxxxxx and DII
Schedule 4.15 Real Property of Xxxxxx and DII
Schedule 4.16 Contracts of Xxxxxx and DII
Schedule 4.17 Significant Customers; Commitments of Xxxxxx and DII
Schedule 4.18 Insurance; Bonds of Xxxxxx and DII
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Schedule 4.19 Compensation; Employment Agreements; Employee Manuals/Policies
of Xxxxxx and DII
Schedule 4.20 Employee Plans of Xxxxxx and DII
Schedule 4.22 Conformity with Law; Litigation of Xxxxxx and DII
Schedule 4.23 Tax Returns of Xxxxxx and DII
Schedule 4.25 Effect of Agreement on Xxxxxx and DII
Schedule 4.26 Liabilities and Obligations of Xxxxxx and DII
Schedule 4.27 Consents of Xxxxxx and DII
Schedule 4.28 Options and Preemptive Rights of Xxxxxx and DII
Schedule 4.30 Affiliate Transactions of Xxxxxx and DII
Schedule 11.1 Reverse Stock Split
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EXHIBITS
Exhibit "A" Certificate of Designations, Rights and Preferences of Xxxxxx
Series C Preferred Stock
Exhibit "B" Xxxxxxxx Employment Agreement
Exhibit "C" Registration Rights Agreement
Exhibit "D" Xxxxxx Xxxxx Warrant
Exhibit "E" Employee Options
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ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
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is made as of the ____ day of June, 2001, by and among Xxxxxx Corporation, a New
York corporation ("Xxxxxx"), Xxxxxx Industries, Inc., a Maryland corporation
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("DII") Pyramid Coach, Inc., a Tennessee corporation ("Pyramid"), Champion
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Trailer, Inc., an Indiana corporation ("Champion"), United Acquisition, Inc., an
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Indiana corporation ("United"), U.S. Rubber Reclaiming, Inc., an Indiana
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corporation ("U.S. Rubber") (Pyramid, OLC, Champion, United and U.S. Rubber are
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each a "Target Company" and are collectively the "Target Companies") and
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Obsidian Capital Partners, L.P., an Indiana limited partnership and the sole
shareholder of U.S. Rubber and United and the majority shareholder of Champion
("Partnership"), and Xxxxxxx X. Xxxxxx, an Individual representing the
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Shareholders of Pyramid, and Xxxxxx Xxxxxxx pursuant to Special Powers of
Attorney.
WHEREAS, the respective Boards of Directors of Xxxxxx, DII, the Target
Companies, United and the General Partner of Partnership deem it advisable and
in the best interests of their respective corporations, shareholders and
partners that the Target Companies be acquired by Xxxxxx pursuant to this
Agreement and the applicable provisions of the laws of the respective States of
incorporation of Xxxxxx and the Target Companies; and
WHEREAS, it is intended for Federal income tax purposes that the
reorganization contemplated by this Agreement shall qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
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NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
ARTICLE I.
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Certain Definitions
1.1 Certain Definitions.
In addition to terms otherwise defined in this Agreement, as used in this
Agreement, the following terms shall have the meanings set forth below:
(a) "1933 Act" means the Securities Act of 1933, as amended.
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(b) "Acquisition" has the meaning set forth in Section 2.2.
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(c) "Acquisition Consideration One" means 1,970,962 unregistered
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shares of Xxxxxx Preferred Stock.
(d) "Acquisition Consideration Two" means 2,206,893 unregistered
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shares of Xxxxxx Preferred Stock.
(e) "Acquisition Stock" means the Xxxxxx Preferred Stock to be
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exchanged for the Target Companies' capital stock as provided in Section
2.2.
(f) "Affiliate(s)" shall mean any person or entity directly or
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indirectly controlled by or under direct or indirect common control of such
party. For purposes of this definition, "control" means the power to
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direct the management and policies of such person or entity, whether
through the ownership of voting securities, by contract or otherwise.
(g) "Bank Legacy Commitment" means the commitments by the Partnership
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pursuant to a certain Capital Contribution Agreement by and among the
Partnership, U.S. Rubber and Bank One, Indiana, National Association dated
as of December 29, 2000, as the same may be replaced, concurrently
herewith, and that certain Capital Contribution Agreement by and among the
Partnership, United and United's Senior Lender, to be entered into upon the
acquisition of Expressline, as more fully set forth in Section 11.5.
(h) "Bank Legacy Contribution" has the meaning set forth in Section
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11.5
(i) "best knowledge", "have no knowledge of", or "do not know of" and
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similar phrases shall mean (i) in the case of a natural person, the
particular fact was known, or not known, as the context requires, to such
person after reasonable investigation and inquiry by such person, and (ii)
in the case of an entity, the particular fact was known, or not known, as
the context requires, to any partner, executive officer, shareholder,
director or member of such entity after reasonable investigation and
inquiry by the principal executive officer of such entity.
(j) "Closing" has the meaning set forth in Section 2.1.
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(k) "Closing Date" has the meaning set forth in Section 2.1.
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(l) "Committee" has the meaning set forth in Section 11.5.
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(m) "Current Balance Sheet Date" means April 30, 2001.
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(n) "Xxxxxx Common Stock" means the Common Stock of Xxxxxx, $0.0001
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per share.
(o) "Xxxxxx Preferred Stock" means the Series C Convertible Preferred
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Stock of Xxxxxx, $0.0001 par value per share, with such rights,
designations and preferences set forth in the Certificate of Designations,
Rights and Preferences of the Series C Convertible Preferred Stock attached
hereto as Exhibit "A", Xxxxxx Preferred Stock is also sometimes referred to
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herein as the Acquisition Stock.
(p) "DII" means Xxxxxx Industries, Inc., a Maryland corporation, and
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wholly owned subsidiary of Xxxxxx.
(q) "Durham" means Xxxxxxx X. Xxxxxx, who shall represent the
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Partnership at both the First and Second Closing and who pursuant to an
Irrevocable Power of Attorney shall represent various individual
Shareholders at Closing.
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(r) "Effective Time" has the meaning set forth in Section 2.4.
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(s) "Environmental Laws" has the meaning set forth in Section 3.14.
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(t) "Effective Time" means the consummation of the Acquisition
contemplated by this Agreement for each of Target Companies.
(u) "ERISA" has the meaning set forth in Section 3.22.
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(v) "First Closing" means the Acquisition by Xxxxxx of Pyramid,
Champion and U.S. Rubber
(w) "Limited Partnership Agreement" has the meaning set forth in
Section 11.7.
(x) "Material Adverse Effect" has the meaning set forth in Section
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3.1.
(y) "Plan of Reorganization" means the Type B Reorganization to be
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approved by the Board of Directors of Xxxxxx and filed with the Internal
Revenue Service pursuant to Section 368(a) of the Code.
(z) "Returns" means any returns, reports or statements (including any
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information returns) required to be filed for purposes of a particular Tax
(hereafter defined).
(aa) "Schedule" means each Schedule attached hereto, which shall
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reference the relevant section of this Agreement, on which the parties
hereto shall disclose information as part of their respective
representations, warranties and covenants.
(bb) "Second Closing" means the acquisition by Xxxxxx of United
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(cc) "Shareholders' Meeting" has the meaning set forth in Section
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11.1.
(dd) "Tax" or "Taxes" means all federal, state, local or foreign net
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or gross income, gross receipts, net proceeds, sales, use, ad valorem,
value added, franchise, withholding, employment, excise, property, deed,
stamp, alternative or add on minimum, or other taxes, assessments, duties,
fees, levies or other governmental charges, whether disputed or not,
together with any interest, penalties, additions to tax or additional
amounts with respect thereto.
(ee) "Xxxxxxxx" means M.E. "Xxx" Xxxxxxxx, the President of Xxxxxx.
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ARTICLE II.
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Terms of the Reorganization
2.1 The Closing.
The closing of each Acquisition (as defined herein) (each a "Closing" ) shall
take place as soon as reasonably practicable after the date hereof, at the
offices of Xxxxxxx Xxxxxx, L.L.P. at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000, or such other date as may
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be agreed upon in writing by the parties to this Agreement. The date on which a
Closing occurs is hereinafter referred to as a "Closing Date".
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2.2 Acquisition.
Subject to and upon the terms and conditions herein, at a Target Company's
respective Closing Date, (i) Xxxxxx shall acquire all of the outstanding capital
stock of Pyramid by an exchange of 810,099 shares of Xxxxxx Preferred Stock (the
"Acquisition Stock") for 100% of the issued and outstanding capital stock of
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Pyramid, (ii) Xxxxxx shall acquire all of the outstanding capital stock of
Champion by an exchange of 135,712 shares of Xxxxxx Preferred Stock (the
"Acquisition Stock") for 100% of the issued and outstanding capital stock of
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Champion, (iv) Xxxxxx shall acquire all of the outstanding capital stock of U.S.
Rubber by an exchange of 1,025,151 shares of Xxxxxx Preferred Stock (the
"Acquisition Stock") for 100% of the issued and outstanding capital stock of
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U.S. Rubber, and (v) Xxxxxx shall acquire all of the outstanding capital stock
of United by an exchange of 2,206,893 shares of Xxxxxx Preferred Stock (the
"Acquisition Stock") for 100% of the issued and outstanding capital stock of
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United. After such exchange of stock (each acquisition is referred herein as an
"Acquisition"), each respective Target Company shall be a wholly owned
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subsidiary of Xxxxxx and shall continue to be governed by the laws of each
respective Target Company's State of incorporation and the separate corporate
existence of each Target Company shall continue with all rights, privileges,
powers, immunities and purposes.
2.3 Outstanding Options of Target Companies.
At each Target Company's respective Closing, every option, right or commitment
of any kind which obligates such newly acquired Target Company to issue any of
its authorized but unissued capital stock shall automatically cease, terminate
and expire and/or be converted into an option or warrant at the Parent level or
be a compensation agreement for "Phantom Stock" pursuant to a written agreement.
2.4 Effective Time of the Acquisition.
Each Acquisition shall become effective on its Closing Date concurrently with
the exchange of Acquisition Stock for such Target Company's capital stock.
2.5 Exchange of Ownership Interests.
Pursuant to Section 2.2, on a Closing Date of an Acquisition, the Partnership
and shareholders of such newly acquired Target Company shall tender to Xxxxxx
their respective shares of capital stock of such Target Company and, receive
their pro rata share of the Acquisition Stock, and until the certificate or
certificates of common stock in such Target Company shall have been surrendered
by such shareholder and replaced by a certificate or certificates representing
Xxxxxx Preferred Stock, the certificate or certificates of common stock of such
Target Company shall, for all purposes be deemed to be the appropriate pro rata
portion of the Acquisition Stock. All shares of Xxxxxx Preferred Stock issuable
to the shareholders in the Acquisition shall be deemed for all purposes to have
been issued by Xxxxxx on such Closing Date. The Partnership and shareholders
shall promptly cure any deficiencies with respect to documents of conveyance
with respect to such transfer of such Target Company's common stock. The
Acquisition Consideration One and Acquisition Consideration Two for the First
Closing and Second Closing respectfully shall be as set forth in Schedule 2.5.
2.6 Composition of Danzer's Board of Directors.
Upon consummation of the First Closing, at the Effective Time, (a) Xxxxxx
shall cause Xxxxxxx Xxxxxxxxx ("Cleveland") to resign from Danzer's Board of
Directors, and (b) Xxxxxx shall nominate Xxxxxxx X. Xxxxxx
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("Durham") to fill the vacancy created by Cleveland's resignation. Upon
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consummation of the First Closing, at the Effective Time, each of the members of
Danzer's Board of Directors shall hold office until the next meeting of the
shareholders of Xxxxxx, until their successors have been duly elected and
qualified or until they resign. At the first meeting of Xxxxxx Shareholders
following Closing the Board of Directors shall be expanded to seven (7) members,
and a new slate of directors shall be nominated and elected. In accordance with
Danzer's articles of incorporation and bylaws, Danzer's Board of Directors shall
have the right to be indemnified to the fullest extent permitted by the New York
Business Corporation Law.
2.7 Executive Management Team of Xxxxxx.
Upon consummation of the first Closing, at the Effective Time, the Board of
Directors of Xxxxxx shall appoint the executive officers of Xxxxxx as follows:
(i) Durham, Chairman, and Chief Executive Officer; (ii) Xxxxx X. Xxxxxxxxx,
President and Chief Operating Officer, (iii) Xxxxxxx Xxxxx, Executive Vice
President, Secretary and Treasurer; (iv) Xxxxxxxx, President of DII.
2.8 Executive Officers and Board of Directors of each Xxxxxx Subsidiary.
Upon each Target Company's respective Closing, the executive officers and
directors of such Target Company shall be as shown on Schedule 2.8. Upon
consummation of the First Closing, at the Effective Time, the executive officers
and directors of DII shall be as shown on Schedule 2.8.
2.9 Subsequent Actions.
If, at any time after any Closing Date, Xxxxxx or any Target Company shall
consider or be advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in Xxxxxx or such Target Company its right, title
or interest in, to or under any of the assets in the Target Companies or
otherwise to carry out this Agreement, in return for the consideration set forth
in this Agreement, such Target Company and the Partnership shall execute and
deliver all such deeds, bills of sale, assignments and assurances and take and
do all such other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and under the
assets or stock in such Target Company in Xxxxxx or otherwise to carry out this
Agreement.
ARTICLE III.
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Representations and Warranties of each
Target Company and the Partnership
Each Target Company and the Partnership, hereby jointly and severally
represent and warrant to Xxxxxx as follows:
3.1 Corporate Existence; Good Standing.
Each Target Company is a corporation duly organized, validly existing and in
good standing under the laws of its respective state of incorporation, and each
has the requisite power and authority to own its assets and to carry on its
business as it is now being conducted. Each Target Company is duly qualified to
do business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary, except where the failure to be so authorized or
qualified would not have a material adverse effect on the business, operations,
properties, assets or condition (financial or otherwise), of such Target Company
(as used herein
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with respect to such Target Company, or with respect to any other person, a
"Material Adverse Effect"). Other than the States of Indiana, Tennessee,
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Mississippi, Texas and Michigan no Target Company is authorized or qualified to
do business in or has any assets, employees or offices in any other state,
except for consignment inventory at various locations from time to time.
3.2 Power and Authority.
(i) The representatives of the Target Companies and the Partnership executing
this Agreement have the authority to enter into and bind each Target Company and
the Partnership to the terms of this Agreement, (ii) each of the Target
Companies and the Partnership have the full legal right, power and authority to
enter into this Agreement, the Plan of Reorganization and all agreements and
other documents executed and delivered by them pursuant to this Agreement or to
be executed and delivered on its Closing Date, and (iii) each of the Target
Companies, the Partnership, its general partner and its representatives have
taken all action required by law, their articles of incorporation, bylaws,
certificate of limited partnership, partnership agreement or otherwise, to
authorize the execution, delivery and performance of this Agreement and such
related documents. The Board of Directors of each Target Company and the
general partner of the Partnership shall approve this Agreement and the
transactions contemplated hereby in all respects and copies of all such
resolutions shall be certified by the Secretary of each Target Company and the
general partner of the Partnership as being in full force and effect on its
respective Closing Date. Each Target Company and the general partner of the
Partnership has the legal capacity to enter into and perform this Agreement and
the other agreements to be executed and delivered to Xxxxxx and DII in
connection herewith. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of each respective
Closing Date, duly executed and delivered by such Target Company and the
Partnership, and constitute or will constitute the legal, valid and binding
obligations of such Target Company and the Partnership, enforceable against the
Partnership and such Target Company in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable remedies.
The execution and delivery of this Agreement, and the agreements executed and
delivered pursuant to this Agreement or to be executed and delivered on each
Target Company's respective Closing Date, do not, and subject to the receipt of
consents described on Schedule 3.25, the consummation of the actions
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contemplated hereby will not, violate any provision of the articles of
incorporation or bylaws of such Target Company or of the general partner of the
Partnership, or certificate of limited partnership or partnership agreement of
the Partnership or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which such Target Company or
Partnership is a party or by which such Target Company or Partnership is bound,
or violate any material restrictions of any kind to which such Target Company or
Partnership is subject, or result in any lien or encumbrance on any of the
Partnership's assets or any of such Target Company's assets.
3.3 Ownership in the Target Companies.
The authorized capital stock of each Target Company is as set forth on
Schedule 3.3. All of the issued and outstanding shares of the capital stock of
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each Target Company are owned by the Partnership and the shareholders in the
amounts set forth in Schedule 3.3. Other than the shares owned by the
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Partnership and the shareholders set forth on Schedule 3.3, there are no
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securities outstanding of any Target Company. The Partnership, severally,
represents and warrants that the shares of capital stock of each Target
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Company owned by the Partnership are owned of record and beneficially by the
Partnership free and clear of all liens, security interests, pledges, charges,
voting trusts, restrictions, encumbrances and claims of every kind. All of the
issued and outstanding shares of the capital stock of each Target Company have
been duly authorized and legally and validly issued, are fully paid and
nonassessable, and further, such shares were offered, issued, sold and delivered
by such Target Company in compliance with all applicable state and Federal laws
concerning the issuance of securities. Further, none of such shares were issued
in violation of any preemptive rights, rights of first refusal or similar rights
of any past or present shareholder. Except as set forth on Schedule 3.3, no
------------
shares of capital stock of any Target Company are owned by such Target Company
in treasury.
3.4 Transactions in Capital Stock, Options.
Except as set forth on Schedule 3.4, no option, right or commitment of any
------------
kind exists which obligates any Target Company to issue any of its authorized
but unissued capital stock; and each Target Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities therein or to pay any or make any distribution in respect
thereof; and neither the voting stock structure of any Target Company nor the
relative ownership of its shareholders have been altered or changed in
contemplation of the Acquisition. None of the Target Companies' capital stock
was issued pursuant to awards, grants or bonuses in contemplation of the
Acquisition. There are no bonds, debentures, notes or other obligations the
holders of which have the right to vote with the Partnership on any matter;
there are no securities of any Target Company convertible into equity interests
in such Target Company.
3.5 Subsidiaries.
Except as set forth on Schedule 3.5, the Target Companies have no
------------
subsidiaries. Except as set forth in Schedule 3.5, the Target Companies do not
------------
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity nor is any Target
Company, directly or indirectly, a participant in any joint venture, partnership
or other non-corporate entity.
3.6 Corporate Records.
True and correct copies of the articles of incorporation, bylaws and minutes
of each Target Company and the certificate of limited partnership and
partnership agreement of the Partnership, and all amendments thereto, have been
delivered to Xxxxxx and DII. The books of account of each Target Company have
been kept accurately in the ordinary course of business and the revenues,
expenses, assets and liabilities of each such Target Company has been properly
recorded in such books.
3.7 Predecessor Status; etc.
Except as set forth on Schedule 3.7, each Target Company has no predecessor
------------
companies and, except as disclosed herein, has never been a subsidiary or
division of another corporation or a part of an acquisition, which was later
rescinded.
3.8 Spin-off by the Target Companies.
From and after December 31, 2000, there has not been any sale, spin-off or
split-up of material assets of any Target Company or any of its Affiliates.
3.9 Financial Statements.
Subject to the limitations set forth in Schedule 3.9 describing the level of
accounting review and/or audit status, each Target Company has heretofore
furnished
7
Xxxxxx and DII with true, correct and complete copies of the following
financial statements of such Target Company (the "Target Company Financial
------------------------
Statements") (i) each Target Company's audited Balance Sheet as of December 31,
----------
2000 ("Balance Sheet") and (ii) Statements of Income and Retained Earnings for
-------------
December 31, 2000 ("Statements of Income"). Such Target Company Financial
--------------------
Statements have been prepared on a consistent basis throughout the periods
indicated. The Balance Sheet presents fairly in all material respects the
financial position of each such Target Company as of the dates indicated
thereon, and such Statements of Income present fairly in all material respects
the results of operations for the periods indicated thereon and reflect all
fixed and contingent liabilities of each such Target Company. The Target
Company Financial Statements are true, correct and complete in all material
aspects, are in accordance with the books of each such Target Company, fairly
represent the financial condition and operations of each such Target Company as
of the date and periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis with
prior periods.
3.10 Liabilities and Obligations.
Each Target Company has delivered to Xxxxxx and DII an accurate list (which is
set forth on Schedule 3.10) of (i) all liabilities of each such Target Company
-------------
or otherwise reflected in the Target Company Financial Statements at April 30,
2001 (the "Current Balance Sheet Date"), and which are not disclosed on any of
--------------------------
the other Schedules to this Agreement, and (ii) all loan agreements, indemnity
or guaranty agreements, bonds, mortgages, pledges or other security agreements
to which such Target Company is a party or by which its properties may be bound.
Each Target Company has not incurred any material liabilities of any kind,
character or description, whether accrued, absolute, secured or unsecured,
contingent or otherwise, other than liabilities incurred in the ordinary course
of business consistent with past practices. Each Target Company has also
delivered to Xxxxxx and DII on Schedule 3.10, in the case of those contingent
-------------
liabilities related to pending or threatened litigation, or other liabilities
which are not fixed, a good faith and reasonable estimate of the maximum amount
which such Target Company reasonably expects will be payable and the amount, if
any, accrued or reserved for each such potential liability on the Target Company
Financial Statements. For each such contingent liability or liability for which
the amount is not fixed or is contested, such Target Company has provided to
Xxxxxx and DII the following information:
(a) a summary description of the liability together with the
following:
(i) copies of all relevant documentation relating thereto;
(ii) amounts claimed and any other action or relief sought; and
(iii) name of claimant and all other parties to the claim, suit
or proceeding;
(b) the name of each court or agency before which such claim, suit or
proceeding is pending;
(c) the date such claim, suit or proceeding was instituted; and
8
(d) a good faith and reasonable estimate of the maximum amount, if
any, which is likely to become payable with respect to each such liability.
If no estimate is provided, the estimate shall for purposes of this
Agreement be deemed to be zero.
3.11 Accounts and Notes Receivable.
Each Target Company has delivered to Xxxxxx and DII an accurate list of the
accounts and notes receivable of such Target Company, as of the Current Balance
Sheet Date, including any such amounts which are not reflected in the balance
sheet as of the Current Balance Sheet Date, and including receivables from and
advances to employees. Except to the extent reflected on Schedule 3.11, such
-------------
accounts, notes and other receivables represent bona-fide obligations and are
and shall be collectible, except where the failure to collect would not have a
Material Adverse Effect on such Target Company, net of reserves reflected in the
Current Balance Sheet as of the Current Balance Sheet Date with respect to
accounts receivable as of the Current Balance Sheet Date, and net of reserves
reflected in the books and records of such Target Company (consistent with the
methods used for the Current Balance Sheet) with respect to accounts receivable
of such Target Company after the Current Balance Sheet Date.
3.12 Permits and Intangibles.
Each Target Company, or such Target Company's employees, as appropriate, hold
all licenses, certificates of occupancy, concessions, grants, certificates of
need, franchises, permits and other governmental authorizations ("Licenses")
--------
necessary to conduct their business as presently conducted, the absence of
which, alone or in the aggregate, would not have a Material Adverse Effect on
such Target Company. Each Target Company has delivered to Xxxxxx and DII an
accurate list and summary description (which is set forth on Schedule 3.12) of
-------------
all such Licenses (including identification of the person holding the License)
(it being understood and agreed that a list of all environmental permits and
other environmental approvals is set forth on Schedule 3.14 and a list of
-------------
intellectual property licenses is set forth on Schedule 3.13). The Licenses and
-------------
other rights listed on Schedules 3.13 and 3.14 are valid, and no Target Company
-------------- ----
has received any notice that any person intends to cancel, terminate or not
renew any such License or other right. Each Target Company has conducted and is
conducting its business in material compliance with the requirements, standards,
criteria and conditions set forth in the Licenses and other rights listed on
Schedules 3.13 and 3.14 and is not in violation of any of the foregoing except
-------------- ----
where such non-compliance or violation would not have a Material Adverse Effect
on such Target Company. The transactions contemplated by this Agreement will
not result in a default under or a breach or violation of, or adversely affect
the rights and benefits afforded to any Target Company by, any such Licenses or
other rights. There are no proceedings pending, or, to the best knowledge of
the Partnership or any Target Company, threatened, which may result in the
revocation, cancellation or suspension, or any adverse modification, of any of
the Licenses.
3.13 Intellectual Property Rights.
Except as set forth on Schedule 3.13, each Target Company has no right, title
-------------
or interest in or to patents, patent rights, corporate names, assumed names,
manufacturing processes, trade names, trademarks, service marks, inventions,
specialized treatment protocols, copyrights, formulas, trade secrets and
internet domain names or similar items. Except for off-the-shelf software
licenses and except as set forth on Schedule 3.13, no Target Company is a
-------------
licensee in respect of any patents, trademarks, service marks, trade names,
copyrights or applications therefor, or manufacturing processes, formulas or
trade secrets or similar items and no such licenses are necessary for the
conduct of their businesses or the use of
9
their assets. No claim is pending or has been made to the effect that the assets
of any Target Company or the present or past operations of any Target Company in
connection with its assets or business infringes upon or conflicts with the
asserted rights of others to any patents, patent rights, manufacturing
processes, trade names, trademarks, service marks, inventions, licenses,
specialized treatment protocols, copyrights, formulas, know-how and trade
secrets. To the best knowledge of the Partnership and each Target Company, each
Target Company has the sole and exclusive right to use all of its assets
constituting proprietary rights without infringing or violating the rights of
any third parties and no consents of any third parties are required for the use
thereof by Xxxxxx.
3.14 Environmental Matters.
Except as specified in Schedule 3.14, and except where any failure to comply
-------------
or action would not have a Material Adverse Effect, (i) each such Target Company
has complied with and is in compliance with all Federal, state, local and
foreign statutes (civil and criminal), laws, ordinances, regulations, rules,
notices, permits, judgments, orders and decrees applicable to any of them or any
of its respective properties, assets, operations and businesses relating to
environmental protection (collectively "Environmental Laws"); (ii) the
------------------
Partnership and the Target Companies have not received any notices, demand
letters or requests for information from any Federal, state, local or foreign
governmental entity or third party indicating that any of the Target Companies
may be in violation of, or liable under, any Environmental Law in connection
with the ownership or operation of its business, and (iii) to the best knowledge
of the Partnership and each of the Target Companies, no Target Company has any
contingent liability in connection with any release of any hazardous materials
into the environment.
3.15 Leases.
Schedule 3.15 attached hereto sets forth a list of all leases pursuant to
-------------
which each Target Company, or any Affiliate or employee of such Target Company,
leases, as lessor or lessee, real or personal property used in operating the
business of such Target Company or related to the assets of such Target Company.
All such leases listed on Schedule 3.15 are valid and enforceable in accordance
-------------
with their respective terms, and there is not under any such lease any existing
default by such Target Company, or any Affiliate or employees of such Target
Company, as lessor or lessee, or any condition or event of which such Target
Company has knowledge which with notice or lapse of time or both, would
constitute a default, in respect of which such Target Company has not taken
adequate steps to cure such default or prevent a default from occurring.
3.16 Personal Property.
(a) The Partnership and each Target Company has delivered to Xxxxxx
and DII an accurate list (which is set forth on Schedule 3.16) of (x) all
-------------
personal property material to the operations of each Target Company
included (or that will be included) in "depreciable plant, property and
equipment" on the balance sheet of such Target Company and (y) all other
personal property owned by such Target Company with an individual value in
excess of $5,000 (i) as of the Current Balance Sheet Date and (ii) acquired
since the Current Balance Sheet Date. Included on Schedule 3.16 is all
-------------
material personal property used or leased by such Target Company pursuant
to the leases described on Schedule 3.15.
-------------
10
(b) All of the personal property listed on Schedule 3.16, except as
-------------
noted on such Schedule, is in good working order and condition, ordinary
wear and tear expected and conforms with all applicable ordinances,
regulations and other laws and neither the Partnership nor any Target
Company has any knowledge of any latent defects therein. Each Target
Company has good and marketable title to all such personal property free
and clear of all charges, claims, liens, exceptions or encumbrances except
for those, if any, which are set forth on Schedule 3.16 attached hereto.
-------------
(c) Except as noted on Schedule 3.16, all assets of each Target
-------------
Company constituting inventory are owned or used by such Target Company are
in good, current, standard and merchantable condition and are not obsolete
or defective.
3.17 Real Property.
Except as set forth on Schedule 3.17, no Target Company owns any real
-------------
property.
3.18 Contracts.
(a) The Partnership and each Target Company have delivered to Xxxxxx
and DII true and correct copies of all written, and disclosed to Xxxxxx and
DII, all oral contracts, obligations and commitments of each Target Company
("Contracts") entered into in connection with or related to such Target
---------
Company, all of which are listed or incorporated by reference on Schedule
--------
3.13 (in the case of intellectual property rights), Schedule 3.15 (in the
---- -------------
case of leases), Schedule 3.18 (in the case of Contracts other than
-------------
intellectual property, leases or employment agreements) attached hereto,
Schedule 3.21 (in the case of employment agreements). Except as otherwise
-------------
indicated on such Schedules, all of such Agreements are valid, binding and
enforceable in accordance with their terms and are in full force and
effect, and to the Partnership and each Target Company's best knowledge, no
defenses, offsets or counterclaims have been asserted or may be made by any
party thereto.
(b) There is not under any Contract any existing default by any Target
Company, or any condition or event of which the Partnership or any Target
Company has knowledge which with notice or lapse of time, or both, would
constitute a default. The Partnership and the Target Companies have no
knowledge of any default by any other party to such Contracts. The
Partnership and the Target Companies have not received notice of the
intention of any party to any Contract to cancel or terminate any Contract
and have no reason to believe that any amendment or change to any Contract
is contemplated by any party thereto. Other than those contracts,
obligations and commitments listed on Schedule 3.13, Schedule 3.15,
------------- -------------
Schedule 3.18 and Schedule 3.21, the Partnership and the Target Companies
------------- -------------
are not a party to any material written or oral agreement contract, lease
or arrangement, including without limitation, any:
(i) Contract related to the merger of the Partnership or any
Target Company, or the sale of the stock of or assets of the
Partnership or any Target Company other than this Agreement;
11
(ii) Employment, independent contractor, consulting or
compensation agreement or arrangement;
(iii) Labor or collective bargaining agreement;
(iv) Lease agreement with respect to any property, whether as
lessor or lessee;
(v) Deed, xxxx of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal
property;
(vi) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of the business
of such Target Company now booked or for normal operating inventories,
(ii) which is not terminable upon notice of thirty (30) days or less,
or (iii) which has not been entered into in the ordinary course of
business;
(vii) Agreement for the purchase from a supplier of all or
substantially all of the requirements of such Target Company of a
particular product or service;
(viii) Loan agreement or other contract for money borrowed or
lent or to be borrowed or lent to another;
(ix) Contracts containing non-competition covenants; or
(x) Other contracts or agreements that involve either an
unperformed commitment in excess of $1,000 or that terminate or can
only be terminated by such Target Company on more than thirty (30)
days after the date hereof.
3.19 Significant Customers; Commitments.
(a) The Partnership and each Target Company has delivered to Xxxxxx
and DII an accurate list of (i) all significant customers, it being
understood and agreed that a "significant customer," for purposes of this
Section 3.19, means a customer (or person or entity) representing five
percent (5%) or more of such Target Company's annual revenues for its most
recently completed fiscal year. None of the Target Companies' significant
customers have canceled or substantially reduced or, to the best knowledge
of the Partnership and the Target Companies, are currently attempting or
threatening to cancel a contract or substantially reduce utilization of the
services provided by any Target Company.
(b) To the best knowledge of the Partnership and the Target Companies,
except as described on Schedule 3.19, no partner, employee or officer of
-------------
the Partnership or any of the Target Companies, or any Affiliate thereof
(i) possesses, directly or indirectly, any financial interest in, or is a
director, officer, employee or Affiliate of, any corporation, firm,
association or business organization that is a client, supplier, customer,
lessor, lessee or competitor of the Partnership or any of the Target
Companies, or (ii) is a party to an agreement or relationship that involves
the receipt by such person of compensation
12
or property from the Partnership or any of the Target Companies other than
through a customary employment relationship.
(c) Except as set forth on Schedule 3.19, none of the Target Companies
-------------
have experienced any difficulties in obtaining any inventory items
necessary to the operation of its business, and, to the best knowledge of
the Partnership and each of the Target Companies, no such shortage of
supply of inventory items is threatened or pending. To the best knowledge
of the Partnership and the Target Companies, no customer or supplier of any
of the Target Companies will cease to do business with, or substantially
reduce its purchases from, any Target Company after the consummation of the
transactions contemplated hereby, which cessation or reduction would
reasonably be expected to have a Material Adverse Effect on such Target
Company.
3.20 Insurance; Bonds.
The Partnership and each Target Company has delivered to Xxxxxx and DII (i) an
accurate list of all insurance policies carried by each Target Company, (ii) an
accurate list of all insurance loss runs or workers compensation claims and
(iii) true, complete and correct copies of all insurance policies currently in
effect (which are set forth on Schedule 3.20). Such insurance policies evidence
-------------
all of the insurance that each Target Company is required to carry pursuant to
all of its contracts, loan agreements and other agreements and pursuant to all
applicable laws. All of such insurance policies are currently in full force and
effect and shall remain in full force and effect through each Target Company's
respective Closing Date. No insurance carried by any Target Company has been
canceled by the insurer and no Target Company has been denied coverage. No
Target Company has performance or other bonds securing obligations of such
Target Company.
3.21 Compensation; Employment Agreements; Employee Manuals/Policies.
(a) Set forth on Schedule 3.21 is an accurate list of all officers,
-------------
and directors of each Target Company, listing all employment, non-compete
or other agreements with such officers, directors and key employees (and
the portions thereof attributable to salary, bonus and other compensation,
respectively), and promised increases in compensation that have not yet
been effected, of each of such persons. The Partnership and each Target
Company has provided to Xxxxxx and DII true, complete and correct copies of
any employment, non-compete or other agreements for persons listed on
Schedule 3.21. Since the Current Balance Sheet Date, there have been no
-------------
material increases in the compensation payable or any special bonuses to
any officer, director, key employee or other employee, except ordinary
salary increases implemented on a basis consistent with past practices and
described on Schedule 3.21. Schedule 3.21 contains a true and complete list
------------- -------------
of all employee manuals, materials, policies, procedures and work-related
rules, copies of which have been delivered to Xxxxxx and DII.
(b) To the best knowledge of the Partnership and the Target Companies,
each Target Company is in compliance with all applicable laws, rules,
regulations and ordinances respecting employment and employment practices.
To the best knowledge of the Partnership and the Target Companies, each
Target Company has not engaged in any unfair labor practice. There are no
unfair labor practice charges or complaints pending or threatened against
any Target Company and no Target Company has ever been a party to
13
any agreement with any union, labor organization or collective bargaining
unit. The Target Companies have not experienced any labor interruptions.
There are no significant controversies pending or, to the best knowledge of
the Partnership and the Target Companies, threatened, between the Target
Companies and any of their employees.
3.22 Employee Plans.
Except as set forth on Schedule 3.22, there are no employee benefit plans (the
-------------
"Employee Benefit Plans") (within the meaning of Section 3(3) of the Employee
----------------------
Retirement Income Security Act of 1974, as amended ("ERISA")) sponsored by any
-----
Target Company or to which a Target Company contributes on behalf of its
employees nor have there been any Employee Benefit Plans previously sponsored or
contributed to on behalf of its employees within the three years preceding the
date hereof. The Target Companies have not incurred any material liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due) to the Pension Benefit Guaranty Corporation or
otherwise under Title IV of ERISA or under the Code with respect to any Employee
Benefit Plan.
3.23 Conformity with Law; Litigation.
(a) Except as set forth on Schedule 3.23, to the best knowledge of the
-------------
Partnership and the Target Companies, the Target Companies are not in
violation of, nor have they been given notice of the violation of, or
charged with any violation of, any law, rule, regulation, statute,
ordinance of the type normally applicable to the Target Companies or order
of any court or Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction
over the Target Companies which would have a Material Adverse Effect on the
Target Companies;
(b) Except to the extent set forth on Schedule 3.23, there are no
-------------
claims, actions, suits or proceedings, pending or, to the best knowledge of
the Partnership and the Target Companies, threatened, against or affecting,
the Target Companies, at law or in equity, before or by any Federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over any of them and no
notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received by the Partnership or the Target Companies.
(c) Except as set forth on Schedule 3.23, neither the Partnership nor
-------------
any of the Target Companies are subject to any judgment, decree,
injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator which
prohibits or restricts the consummation of the transactions contemplated
hereby or would have a Material Adverse Effect on any Target Company. To
the best knowledge of the Partnership and the Target Companies, each Target
Company has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in applicable
Federal, state and local statutes, ordinances, orders, approvals,
variances, rules and regulations, including all orders and other approvals
set forth on Schedule 3.23, except where any such noncompliance,
-------------
individually or in the aggregate, would not have a Material Adverse Effect
on such Target Company.
14
3.24 Taxes.
(a) Schedule 3.24 is a list of all Returns required to be filed by
-------------
each Target Company.
(b) Each Target Company has elected to be taxed under Subchapter C of
the Code.
(c) Each Target Company has duly and timely filed with the appropriate
governmental agencies all Returns (including information Returns), reports,
declarations, statements and other documents required to be filed by the
United States or any state or any political subdivision thereof or any
foreign jurisdiction in respect of all income, gross income, gross
receipts, excise, corporate, franchise, property, sales, use, ad valorem,
transfer, payroll, withholding, occupation, premium, customs, duties,
stamp, service, service use, profits, license, lease or other Taxes. All
such Returns as of the time of their filing, were complete and accurate and
properly reflect the Taxes of such Target Company for the periods covered
thereby.
(d) All Taxes related to taxable periods or portions thereof ending on
or prior to each Target Company's respective Closing Date, including
without limitation governmental charges, assessments and required
contributions of such Target Company with respect to its business that may
result in the filing of a lien on the assets of such Target Company or that
may result in the imposition of transferee or other liability on such
Target Company for the payment of such Taxes, have been accurately recorded
and duly paid, collected or withheld and remitted to the appropriate
governmental agency or other entity, except for current Taxes not due and
payable on or prior to its respective Closing Date (such Taxes to be paid
when due by such Target Company).
(e) There are no liens for Taxes (other than for current Taxes not yet
due and payable) on the assets of the Target Companies.
(f) No Returns of any of the Target Companies are currently being
audited by any taxing authority nor to the best knowledge of the
Partnership and the Target Companies, is such audit threatened. No waivers
of statutes of limitation with respect to any of the Returns have been
given by or requested from any Target Company. All deficiencies asserted
or assessments made as a result of any examinations have been fully paid,
or are fully reflected as a liability in the Financial Statements, or are
being contested and an adequate reserve therefor has been established as is
fully reflected in the Financial Statements.
3.25 Consents.
Except as set forth on Schedule 3.25, no consent, authorization, permit,
-------------
license or filing with any governmental authority, any lender, lessor,
manufacturer, supplier, shareholder, or any other person or entity is required
to authorize, or is required in connection with, the execution, delivery and
performance of this Agreement and the agreements and documents contemplated
hereby on the part of the Partnership or any of the Target Companies. The
consummation of the transactions contemplated hereby will not give rise to any
15
right to termination, cancellation or acceleration or loss of any material right
or benefit of the Partnership or any Target Company.
3.26 Commissions and Fees.
Except as set forth on Schedule 3.26, there are no contracts, agreements or
-------------
claims for brokerage commissions or finder's or similar fees arising from, or in
connection with, the transactions contemplated by this Agreement which currently
exist or may now or hereafter be asserted against Xxxxxx, DII the Partnership,
the Target Companies, or any of their shareholders or partners resulting from
any action taken by the Partnership, the Target Companies or their respective
agents or employees, or any of them.
3.27 Government Contracts.
No Target Company is a party to any governmental contracts subject to price
redetermination or renegotiation.
3.28 Absence of Changes.
Except as set forth in Schedule 3.28, since the Current Balance Sheet Date, no
-------------
Target Company has (a) suffered any material adverse change, whether or not
caused by any deliberate act or omission of such Target Company, in its
condition (financial or otherwise), operations, assets, liabilities, business or
prospects; (b) suffered any damage or destruction to or loss of any assets
(whether or not covered by insurance) that has materially and adversely
affected, or could materially and adversely affect, its business; (c) acquired
or disposed of any assets except in the ordinary course of business; (d) written
up or written down the carrying value of any of its assets; (e) incurred or
discharged any liabilities or obligations except in the ordinary course of
business; (f) paid any amount on any indebtedness prior to the due date,
forgiven or canceled any debts or claims or released or waived any rights or
claims; (g) mortgaged or pledged or subjected to any other encumbrance any of
its properties or assets; (h) changed the costing system or depreciation methods
of accounting for its assets; (i) lost or terminated any employee, the loss or
termination of which has materially and adversely affected, or could materially
and adversely affect, its business or assets; (j) lost any customer or supplier,
or received any written or verbal notice from any customer or supplier of its
intent to terminate, modify, cancel or fail to renew any contract or agreement
for services or supplies which would have a Material Adverse Effect on such
Target Company; or (k) entered into any other commitment or transaction or
experienced any other event that is material to this Agreement or to any of the
other agreements and documents executed or to be executed pursuant to this
Agreement or to the transactions contemplated hereby or thereby, or that has
materially and adversely affected, or could materially and adversely affect, the
condition (financial or otherwise), operations, assets, liabilities, business or
prospects of such Target Company.
3.29 Deposit Accounts; Powers of Attorney.
The Partnership and Target Companies have delivered to Xxxxxx and DII an
accurate schedule (which is set forth on Schedule 3.29) as of the date of this
-------------
Agreement of:
(a) the name of each financial institution in which the Target Company
has accounts or safe deposit boxes;
(b) the names in which the accounts or boxes are held;
(c) the type of account and account number; and
16
(d) the name of each person authorized to draw thereon or have access
thereto. Schedule 3.29 also sets forth the name of each person,
-------------
corporation, firm or other entity holding a general or special power of
attorney from each Target Company and a description of the terms of such
power.
3.30 Disclosure.
Subject to the provisions of Section 12.2, this Agreement, including the
Schedules hereto, and the other agreements executed or to be executed in
connection herewith do not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements herein and
therein, in light of the circumstances under which they were made, not
misleading.
3.31 Options and Preemptive Rights.
Except as set forth on Schedule 3.31 and other than as may be set forth on
---------------------------------------------------
Schedule 3.4, no person has any option, warrant or other right to acquire shares
------------
of any Target Company's capital stock and no shareholder has any preemptive or
other right to acquire shares of any Target Company's capital stock.
3.32 No Intention To Dispose of Stock.
The Partnership and shareholders of the Target Companies are not under any
binding commitment or contract to sell, exchange or otherwise dispose of any
shares of Xxxxxx Preferred Stock to be received pursuant to this Agreement.
3.33 Anti-takeover Plan: State Takeover Statutes.
No Target Company has in effect any plan, scheme, device or arrangement,
commonly or colloquially known as a "poison pill" or "anti-takeover" plan or any
similar plan, scheme, device or arrangement. No other state takeover statute or
similar statute or regulation applies or purports to apply to the Acquisition,
this Agreement or any of the transactions contemplated by this Agreement.
3.34 Affiliate Transactions.
Except as set forth on Schedule 3.34, there are no transactions, agreements,
-------------
arrangements or understandings between the Target Companies, on the one hand,
and the Partnership or its Affiliates, on the other hand.
3.35 Solicitation.
Neither the Partnership, Target Companies nor any of their officers,
directors, members, Affiliates or agents, nor any other person acting on their
behalf have been solicited, directly or indirectly, by any person to enter into
a merger or similar business combination transaction with Xxxxxx and/or DII by
any form of general solicitation, including, without limitation, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
ARTICLE IV.
-----------
Representations of Xxxxxx and DII
Xxxxxx DII, jointly and severally, represent and warrant to the Partnership
and each Target Company, as follows:
4.1 Due Organization.
Xxxxxx and DII are each corporations duly organized, validly existing and in
good standing under the laws of its state of incorporation, respectively, and
each
17
has the requisite power and authority to own its assets and to carry on its
business as it is now being conducted. Xxxxxx and DII are each qualified to do
business and are each in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification necessary, except where the failure to be so authorized or
qualified would not have a Material Adverse Effect on Xxxxxx or DII. Xxxxxx and
DII are not authorized or qualified to do business in or have any assets,
employees or offices in any other states other than the State of New York and
Maryland respectively.
4.2 Power and Authority.
(i) The respective representatives of Xxxxxx and DII executing this Agreement
have the authority to enter into and bind Xxxxxx and DII to the terms of this
Agreement, (ii) Xxxxxx and DII have the full legal right, power and authority to
enter into this Agreement and with respect to Xxxxxx and DII, to consummate the
Acquisition, and all agreements and documents delivered by them pursuant to this
Agreement or to be executed and delivered on each Closing Date, and (iii) Xxxxxx
and DII have taken all action required by law, their respective articles of
incorporation, their bylaws or otherwise, to authorize the execution, delivery
and performance of this Agreement and such related documents. The Board of
Directors of Xxxxxx and DII shall approve this Agreement and the transactions
contemplated hereby in all respects and copies of all such resolutions shall be
certified by the Secretary of Xxxxxx and DII, respectively, as being in full
force and effect on each Closing Date. All corporate acts and other proceedings
required to have been taken by Xxxxxx and DII to authorize the execution,
delivery and performance of this Agreement and the consummation of the
Acquisition have been duly and properly taken. Upon obtaining the necessary
approvals and consents set forth on Schedule 4.27 or otherwise contemplated
-------------
herein, this Agreement and all agreements and documents executed and delivered
in connection herewith have been, or will be as of each respective Closing Date,
duly executed and delivered by Xxxxxx and DII, as appropriate, and constitute or
will constitute the legal, valid and binding obligations of Xxxxxx and DII,
enforceable against Xxxxxx and DII in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable remedies.
The execution and delivery of this Agreement, and the agreements executed and
delivered pursuant to this Agreement or to be executed and delivered on a
Closing Date, do not, and subject to the receipt of consents described on
Schedule 4.27, the consummation of the actions contemplated hereby will not,
-------------
violate any provision of the articles of incorporation or bylaws of Xxxxxx or
DII or any provisions of, or result in the acceleration of, any obligation under
any mortgage, lien, lease, agreement, rent, instrument, order, arbitration
award, judgment or decree to which Xxxxxx or DII is a party or by which Xxxxxx
or DII is bound, or violate any material restrictions of any kind to which
Xxxxxx or DII is subject, or result in any lien or encumbrance on any of the
assets of Xxxxxx or DII.
4.3 Capital Stock of Xxxxxx and DII.
The authorized capital stock of Xxxxxx and DII is set forth on Schedule 4.3.
------------
All of the issued and outstanding shares of the capital stock of DII is owned by
Xxxxxx in the amounts set forth in Schedule 4.3. All of the issued and
------------
outstanding shares of the capital stock of Xxxxxx and DII has been duly
authorized and legally and validly issued, are fully paid and nonassessable.
Further, none of such shares were issued in violation of any preemptive rights,
rights of first refusal or similar rights of any past or present shareholder.
No shares of capital stock of Xxxxxx or DII are owned by Xxxxxx or DII in
treasury.
18
4.4 Xxxxxx Preferred Stock.
At the time of issuance thereof and delivery to the Partnership and the
shareholders of the Target Companies, the Xxxxxx Preferred Stock to be delivered
to the Partnership and the shareholders of the Target Companies pursuant to this
Agreement will constitute valid and legally issued shares of Xxxxxx, fully paid
and nonassessable. The shares of Xxxxxx Preferred Stock to be issued to the
Partnership and the shareholders of the Target Companies pursuant to this
Agreement will not be registered under the 1933 Act or any state securities law.
Except for the Acquisition Consideration contemplated by this Agreement and
Options granted to Xxx Xxxxxxxx, no option, warrant, call, conversion right or
commitment of any kind exists which obligates Xxxxxx or DII to issue any of its
authorized but unissued capital stock; neither Xxxxxx nor DII has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof; and neither the voting stock structure of
Xxxxxx or DII nor the relative ownership of shares of its shareholders have been
altered or changed in contemplation of the Acquisitions. None of Xxxxxx or
DII's capital stock was issued pursuant to awards, grants or bonuses in
contemplation of the Acquisition. There are no bonds, debentures, notes or
other obligations the holders of which have the right to vote with the
shareholders of either Xxxxxx or DII on any matter; there are no securities of
Xxxxxx or DII convertible into equity interests in Xxxxxx or DII, respectively.
Except as set forth in Schedule 4.4, neither Xxxxxx nor DII has any stock option
------------
or stock purchase plans.
4.5 Subsidiaries.
Except as set forth on Schedule 4.5, Xxxxxx and DII have no subsidiaries.
------------
Except as set forth in Schedule 4.5, Xxxxxx and DII do not presently own, of
------------
record or beneficially, or control, directly or indirectly, any capital stock,
securities convertible into capital stock or any other equity interest in any
corporation, association or business entity nor is Xxxxxx or DII, directly or
indirectly, a participant in any joint venture, partnership or other non-
corporate entity.
4.6 Financial Statements.
Xxxxxx has furnished to the Partnership and each Target Company true, correct
and complete copies of the following financial statements of Xxxxxx
(collectively, the "Xxxxxx Financial Statements") its audited balance sheet for
---------------------------
the period ending October 31, 2000 (the "Xxxxxx Balance Sheet") and related
--------------------
audited statements of income and retained earnings as of or for the period ended
October 31, 2000 (the "Xxxxxx Statement of Income"). Such Xxxxxx Financial
--------------------------
Statements have been prepared on a consistent basis throughout the periods
indicated. The Xxxxxx Balance Sheet presents fairly in all material respects
the financial position of Xxxxxx as of the dates indicated thereon, and such
Xxxxxx Statement of Income presents fairly in all material respects the results
of operations for the periods indicated thereon and reflect all fixed and
contingent liabilities of Xxxxxx. To the best knowledge of Xxxxxx and DII, the
Xxxxxx Financial Statements are true, correct and complete in all material
aspects, are in accordance with the books of Xxxxxx, fairly represent the
financial condition and operations of Xxxxxx as of the dates and periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis with prior periods.
4.7 Absence of Certain Changes.
Except as set forth in Schedule 4.7, since the date of the Xxxxxx Balance
------------
Sheet, Xxxxxx has not (a) suffered any material adverse change, whether or not
caused by any deliberate act or omission of Xxxxxx or DII, in its condition
(financial or otherwise), operations, assets, liabilities, business or
prospects; (b) suffered any damage or
19
destruction to or loss of any assets (whether or not covered by insurance) that
has materially and adversely affected, or could materially and adversely affect,
its business; (c) acquired or disposed of any assets except in the ordinary
course of business; (d) written up or written down the carrying value of any of
its assets; (e) incurred or discharged any liabilities or obligations except in
the ordinary course of business; (f) paid any amount on any indebtedness prior
to the due date, forgiven or canceled any debts or claims or released or waived
any rights or claims; (g) mortgaged or pledged or subjected to any other
encumbrance any of its properties or assets; (h) changed the costing system or
depreciation methods of accounting for its assets; (i) lost or terminated any
employee, the loss or termination of which has materially and adversely
affected, or could materially and adversely affect, its business or assets; (j)
lost any customer or supplier, or received any written or verbal notice from any
customer or supplier of its intent to terminate, modify, cancel or fail to renew
any contract or agreement for services or supplies which would have a Material
Adverse Effect on Xxxxxx or DII; or (k) entered into any other commitment or
transaction or experienced any other event that is material to this Agreement or
to any of the other agreements and documents executed or to be executed pursuant
to this Agreement or to the transactions contemplated hereby or thereby, or that
has materially and adversely affected, or could materially and adversely affect,
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of Xxxxxx or DII.
4.8 Predecessor Status; etc.
Except as set forth on Schedule 4.8, each of Xxxxxx and DII has no predecessor
------------
companies and, except as disclosed herein, has never been a subsidiary or
division of another corporation or a part of an acquisition which was later
rescinded.
4.9 Accounts and Notes Receivable.
Xxxxxx and DII has delivered to the Partnership and Target Companies an
accurate list (which is set forth on Schedule 4.9) of the accounts and notes
------------
receivable of Xxxxxx and DII, as of the Balance Sheet Date, including any such
amounts which are not reflected in the balance sheet as of the Balance Sheet
Date, and including receivables from and advances to employees. Except to the
extent reflected on Schedule 4.9, such accounts, notes and other receivables
------------
represent bona-fide obligations and are and shall be collectible, except where
the failure to collect would not have a Material Adverse Effect on Xxxxxx and
DII, respectively, in the amounts shown on Schedule 4.9, net of reserves
------------
reflected in the Balance Sheet as of the Balance Sheet Date with respect to
accounts receivable as of the Balance Sheet Date, and net of reserves reflected
in the books and records of Xxxxxx and DII (consistent with the methods used for
the balance sheet) with respect to accounts receivable of Xxxxxx and DII,
respectively after the Balance Sheet Date.
4.10 Permits and Intangibles.
Xxxxxx and/or DII, or such Xxxxxx and/or DII's employees, as appropriate, hold
all licenses, certificates of occupancy, concessions, grants, certificates of
need, franchises, permits and other governmental authorizations ("Licenses")
--------
necessary to conduct their business as presently conducted, the absence of
which, alone or in the aggregate, would not have a Material Adverse Effect on
Xxxxxx and/or DII. Each Xxxxxx and/or DII has delivered to the Partnership and
Target Companies an accurate list and summary description (which is set forth on
Schedule 4.10) of all such Licenses (including identification of the person
-------------
holding the License) (it being understood and agreed that a list of all
environmental permits and other environmental approvals is set forth on Schedule
--------
4.12 and a list of intellectual property licenses is set forth on Schedule
---- --------
4.11). The Licenses and other rights listed on Schedules 4.11 and 4.12 are
---- -------------- ----
valid, and neither Xxxxxx nor DII has received any notice that any
20
person intends to cancel, terminate or not renew any such License or other
right. Each of Xxxxxx and DII has conducted and is conducting its business in
material compliance with the requirements, standards, criteria and conditions
set forth in the Licenses and other rights listed on Schedules 4.11 and 4.12 and
-------------- ----
is not in violation of any of the foregoing except where such non-compliance or
violation would not have a Material Adverse Effect on either Xxxxxx or DII. The
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded to Xxxxxx or DII by, any such Licenses or other rights. There are no
proceedings pending, or, to the best knowledge of Xxxxxx or DII, threatened,
which may result in the revocation, cancellation or suspension, or any adverse
modification, of any of the Licenses.
4.11 Intellectual Property Rights.
Except as set forth on Schedule 4.11, each of Xxxxxx and DII has no right,
-------------
title or interest in or to patents, patent rights, corporate names, assumed
names, manufacturing processes, trade names, trademarks, service marks,
inventions, specialized treatment protocols, copyrights, formulas, trade secrets
and internet domain names or similar items. Except for off-the-shelf software
licenses and except as set forth on Schedule 4.11, neither Xxxxxx nor DII is a
-------------
licensee in respect of any patents, trademarks, service marks, trade names,
copyrights or applications therefor, or manufacturing processes, formulas or
trade secrets or similar items and no such licenses are necessary for the
conduct of their businesses or the use of their assets. No claim is pending or
has been made to the effect that the assets of Xxxxxx and/or DII or the present
or past operations of Xxxxxx and/or DII in connection with their respective
assets or business infringes upon or conflicts with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. To the best
knowledge of Xxxxxx and DII, each of Xxxxxx and DII has the sole and exclusive
right to use all of its assets constituting proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by Xxxxxx or DII.
4.12 Environmental Matters.
Except where any failure to comply or action would not have a Material Adverse
Effect, (i) each of Xxxxxx and DII has complied with and is in compliance with
all Federal, state, local and foreign statutes (civil and criminal), laws,
ordinances, regulations, rules, notices, permits, judgments, orders and decrees
applicable to any of them or any of their respective properties, assets,
operations and businesses relating to environmental protection (collectively
"Environmental Laws"); (ii) Xxxxxx and DII have not received any notices, demand
-------------------
letters or requests for information from any Federal, state, local or foreign
governmental entity or third party indicating that either of Xxxxxx or DII may
be in violation of, or liable under, any Environmental Law in connection with
the ownership or operation of its business, and (iii) to the best knowledge of
Xxxxxx and DII, neither Xxxxxx nor DII has any contingent liability in
connection with any release of any hazardous materials into the environment. A
list of all environmental permits and other approvals of Xxxxxx and DII is set
forth on Schedule 4.12.
-------------
4.13 Leases.
Schedule 4.13 attached hereto sets forth a list of all leases pursuant to
-------------
which each of Xxxxxx and/or DII, or any Affiliate or employee of Xxxxxx and/or
DII, leases, as lessor or lessee, real or personal property used in operating
the business of Xxxxxx and/or DII or related to the assets of Xxxxxx and/or DII.
All such leases listed on Schedule 4.13 are valid and
-------------
21
enforceable in accordance with their respective terms, and there is not under
any such lease any existing default by either Xxxxxx or DII, or any Affiliate or
employees of either Xxxxxx or DII, as lessor or lessee, or any condition or
event of which Xxxxxx or DII has knowledge which with notice or lapse of time or
both, would constitute a default, in respect of which Xxxxxx and/or DII has not
taken adequate steps to cure such default or present a default from occurring.
4.14 Personal Property.
(a) Xxxxxx and DII have delivered to the Partnership and Target
Companies an accurate list (which is set forth on Schedule 4.14) of (x) all
-------------
personal property material to the operations of Xxxxxx and/or DII included
(or that will be included) in "depreciable plant, property and equipment"
on the balance sheet of Xxxxxx and/or DII, respectively and (y) all other
personal property owned by Xxxxxx and/or DII with an individual value in
excess of $5,000 (i) as of the Balance Sheet Date and (ii) acquired since
the Balance Sheet Date. All material personal property used or leased by
Xxxxxx and/or DII pursuant to a lease is described on Schedule 4.13.
-------------
(b) All of the personal property listed on Schedule 4.14 is in good
-------------
working order and condition, ordinary wear and tear excepted and conforms
with all applicable ordinances, regulations and other laws and neither
Xxxxxx nor DII has any knowledge of any latent defects therein. Each of
Xxxxxx and DII has good and marketable title to all such personal property
free and clear of all charges, claims, liens, exceptions or encumbrances
except for those, if any, which are set forth on Schedule 4.14 attached
-------------
hereto.
4.15 Real Property.
Except as set forth on Schedule 4.15, Xxxxxx and DII own no real property.
-------------
4.16 Contracts.
(a) Xxxxxx and DII have delivered to the Partnership and Target
Companies true and correct copies of all written, and disclosed to the
Partnership and Target Companies, all oral, contracts, obligations and
commitments of Xxxxxx and/or DII ("Contracts") entered into in connection
---------
with or related to such DII, all of which are listed or incorporated by
reference on Schedule 4.11 (in the case of intellectual property rights),
-------------
Schedule 4.13 (in the case of leases), Schedule 4.19 (in the case of
------------- -------------
employment agreements), and Schedule 4.16 (in the case of Contracts other
-------------
than intellectual property rights, leases, employment agreements) attached
hereto. Except as otherwise indicated on such Schedules, all of such
Agreements are valid, binding and enforceable in accordance with their
terms and are in full force and effect, and to Xxxxxx and DII's best
knowledge, no defenses, offsets or counterclaims have been asserted or may
be made by any party thereto.
(b) There is not under any Contract any existing default by Xxxxxx
and/or DII, or any condition or event of which Xxxxxx or DII has knowledge,
which with notice or lapse of time, or both, would constitute a default.
Xxxxxx and DII have no knowledge of any default by any other party to such
Contracts. Xxxxxx and DII have not received notice of
22
the intention of any party to any Contract to cancel or terminate any
Contract and have no reason to believe that any amendment or change to any
Contract is contemplated by any party thereto. Other than those contracts,
obligations and commitments listed on Schedule 4.11, Schedule 4.13,
------------- -------------
Schedule 4.19 and Schedule 4.16, the Xxxxxx and the DII are not a party to
------------- -------------
any material written or oral agreement contract, lease or arrangement,
including without limitation, any:
(i) Contract related to the merger of Xxxxxx or DII, or the
sale of the stock of or assets of Xxxxxx or DII other than this
Agreement;
(ii) Employment, independent contractor, consulting or
compensation agreement or arrangement;
(iii) Labor or collective bargaining agreement;
(iv) Lease agreement with respect to any property, whether as
lessor or lessee;
(v) Deed, xxxx of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal
property;
(vi) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of the business
of Xxxxxx and/or DII now booked or for normal operating inventories,
(ii) which is not terminable upon notice of thirty (30) days or less,
or (iii) which has not been entered into in the ordinary course of
business;
(vii) Agreement for the purchase from a supplier of all or
substantially all of the requirements of Xxxxxx and/or DII of a
particular product or service;
(viii) Loan agreement or other contract for money borrowed or
lent or to be borrowed or lent to another;
(ix) Contracts containing non-competition covenants; or
(x) Other contracts or agreements that involve either an
unperformed commitment in excess of $1,000 or that terminate or can
only be terminated by Xxxxxx and/or DII on more than thirty (30) days
after the date hereof.
4.17 Significant Customers; Commitments.
(a) Xxxxxx and DII have delivered to the Partnership and Target
Companies an accurate list of (i) all significant customers, it being
understood and agreed that a "significant customer," for purposes of this
Section 4.17, means a customer (or person or entity) representing five
percent (5%) or more of either Danzer's or DII's annual revenues for its
most recently completed fiscal year. Except as set forth in Schedule 4.17,
none of Xxxxxx and/or DII's significant customers have canceled or
substantially reduced or, to the best knowledge of Xxxxxx and DII, are
currently attempting or threatening to
23
cancel a contract or substantially reduce utilization of the services
provided by Xxxxxx and/or DII.
(b) To the best knowledge of Xxxxxx and DII, except as described on
Schedule 4.17, no partner, employee or officer of Xxxxxx or DII, or any
-------------
Affiliate thereof (i) possesses, directly or indirectly, any financial
interest in, or is a director, officer, employee or Affiliate of, any
corporation, firm, association or business organization that is a client,
supplier, customer, lessor, lessee or competitor of Xxxxxx or DII, or (ii)
is a party to an agreement or relationship that involves the receipt by
such person of compensation or property from Xxxxxx or DII other than
through a customary employment relationship.
(c) Except as set forth on Schedule 4.17, neither Xxxxxx nor DII have
-------------
experienced any difficulties in obtaining any inventory items necessary to
the operation of its business, and, to the best knowledge of Xxxxxx and
DII, no such shortage of supply of inventory items is threatened or
pending. To the best knowledge of Xxxxxx and DII, no customer or supplier
of either Xxxxxx or DII will cease to do business with, or substantially
reduce its purchases from, Xxxxxx and/or DII after the consummation of the
transactions contemplated hereby, which cessation or reduction would
reasonably be expected to have a Material Adverse Effect on such DII.
4.18 Insurance; Bonds.
The Xxxxxx and DII have delivered to the Partnership and Target Companies (i)
an accurate list of all insurance policies carried by the Xxxxxx and DII, (ii)
an accurate list of all insurance loss runs or workers compensation claims and
(iii) true, complete and correct copies of all insurance policies currently in
effect (which are set forth on Schedule 4.18). Such insurance policies evidence
-------------
all of the insurance that Xxxxxx and DII are required to carry pursuant to all
of their contracts and other agreements and pursuant to all applicable laws.
All of such insurance policies are currently in full force and effect and shall
remain in full force and effect through the Effective Time. No insurance
carried by Xxxxxx and/or DII has been canceled by the insurer and neither Xxxxxx
and/or DII has been denied coverage. Xxxxxx and/or DII have performance or
other bonds securing obligations of DII.
4.19 Compensation; Employment Agreements; Employee Manuals/Policies.
(a) Set forth on Schedule 4.19 is an accurate list of all officers,
-------------
directors and employees of Xxxxxx and DII, listing all employment, non-
compete or other agreements with such officers, directors and key employees
and the rate of compensation (and the portions thereof attributable to
salary, bonus and other compensation, respectively), and promised increases
in compensation that have not yet been effected, of each of such persons.
Xxxxxx and DII have provided to the Partnership and Target Companies true,
complete and correct copies of any employment, non-compete or other
agreements for persons listed on Schedule 4.19. Since the Balance Sheet
-------------
Date, there have been no material increases in the compensation payable or
any special bonuses to any officer, director, key employee or other
employee, except ordinary salary increases implemented on a basis
consistent with past practices and described on Schedule 4.19. Schedule
------------- --------
4.19 contains a true and complete list of all employee manuals, materials,
----
policies, procedures
24
and work-related rules, copies of which have been delivered to the
Partnership and Target Companies.
(b) To the best knowledge of Xxxxxx and DII, each of Xxxxxx and DII is
in compliance with all applicable laws, rules, regulations and ordinances
respecting employment and employment practices. To the best knowledge of
Xxxxxx and DII, neither Xxxxxx nor DII has engaged in any unfair labor
practice. There are no unfair labor practice charges or complaints pending
or threatened against Xxxxxx and/or DII and neither Xxxxxx nor DII has ever
been a party to any agreement with any union, labor organization or
collective bargaining unit. Xxxxxx and DII have not experienced any labor
interruptions. There are no significant controversies pending or, to the
best knowledge of Xxxxxx and DII, threatened, between neither Xxxxxx nor
DII and any of their employees.
4.20 Employee Plans.
Except as set forth on Schedule 4.20, there are no employee benefit plans (the
-------------
"Employee Benefit Plans") (within the meaning of Section 3(3) of the Employee
----------------------
Retirement Income Security Act of 1974, as amended ("ERISA")) sponsored by
-----
Xxxxxx and/or DII or to which DII contributes on behalf of its employees nor
have there been any Employee Benefit Plans previously sponsored or contributed
to on behalf of its employees within the three years preceding the date hereof.
Neither DII has incurred any material liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due) to the Pension Benefit Guaranty Corporation or otherwise under Title IV of
ERISA or under the Code with respect to any Employee Benefit Plan.
4.21 Government Contracts.
Neither Xxxxxx nor DII is a party to any governmental contracts subject to
price redetermination or renegotiation.
4.22 Litigation.
(a) To the best knowledge of Xxxxxx and DII, neither Xxxxxx nor DII is
in violation of, nor have they been given notice of the violation of, or
charged with any violation of, any law, rule, regulation, statute,
ordinance of the type normally applicable to Xxxxxx or DII or order of any
court or Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction
over Xxxxxx or DII which would have a Material Adverse Effect on Xxxxxx or
DII;
(b) Except to the extent set forth on Schedule 4.22, there are no
-------------
claims, actions, suits or proceedings, pending or, to the best knowledge of
Xxxxxx or DII, threatened, against or affecting Xxxxxx or DII, at law or in
equity, before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over any of them and no notice of any claim, action, suit or
proceeding, whether pending or threatened, has been received by Xxxxxx or
DII.
(c) Neither Xxxxxx or DII is subject to any judgment, decree,
injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator, which
prohibits or restricts the consummation of the
25
transactions contemplated hereby or would have a Material Adverse Effect on
Xxxxxx or DII. To the best knowledge of Xxxxxx and DII, each of Xxxxxx and
DII has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in applicable
Federal, state and local statutes, ordinances, orders, approvals,
variances, rules and regulations, including all orders and other approvals
set forth on Schedule 4.27, except where any such noncompliance,
-------------
individually or in the aggregate, would not have a Material Adverse Effect
on Xxxxxx or DII.
4.23 Taxes.
(a) Xxxxxx and DII have each elected to be taxed under Subchapter C of
the Code.
(b) Schedule 4.23 is a list of all Returns required to be filed by
-------------
Xxxxxx and DII.
(c) Xxxxxx and DII have duly and timely filed with the appropriate
governmental agencies all Returns (including information Returns), reports,
declarations, statements and other documents required to be filed by the
United States or any state or any political subdivision thereof or any
foreign jurisdiction in respect of all income, gross income, gross
receipts, excise, corporate, franchise, property, sales, use, ad valorem,
transfer, payroll, withholding, occupation, premium, customs, duties,
stamp, service, service use, profits, license, lease or other Taxes). All
such Returns as of the time of their filing, were complete and accurate and
properly reflect the Taxes of Xxxxxx and DII for the periods covered
thereby.
(d) All Taxes related to taxable periods or portions thereof ending on
or prior to a Closing Date, including without limitation governmental
charges, assessments and required contributions of Xxxxxx and DII with
respect to each of their businesses that may result in the filing of a lien
on their assets or that may result in the imposition of transferee or other
liability on Xxxxxx or DII for the payment of such Taxes, have been
accurately recorded and duly paid, collected or withheld and remitted to
the appropriate governmental agency or other entity, except for current
Taxes not due and payable on or prior to each Closing Date (such Taxes to
be paid when due by Xxxxxx and DII).
(e) There are no liens for Taxes (other than for current Taxes not yet
due and payable) on the assets of Xxxxxx or DII.
(f) No Returns for Xxxxxx or DII are currently being audited by any
taxing authority nor to the best knowledge of Xxxxxx and DII is such audit
threatened. No waivers of statutes of limitation with respect to any of
the Returns have been given by or requested from Xxxxxx or DII. All
deficiencies asserted or assessments made as a result of any examinations
have been fully paid, or are fully reflected as a liability in the Xxxxxx
Financial Statements, or are being contested and an adequate reserve
therefor has been established as is fully reflected in the Xxxxxx Financial
Statements.
4.24 Commissions and Fees.
There are no contracts, agreements or claims for brokerage commissions or
finder's or similar fees arising from, or in connection with, the transactions
contemplated by this Agreement which currently exist, or may now or hereafter be
26
asserted against the Partnership or the Target Companies resulting from any
action taken by Xxxxxx or DII or their respective agents or employees, or any of
them.
4.25 Effect of Agreement.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not violate any provision of the articles
of incorporation or other charter documents or bylaws of Xxxxxx or DII; result
in any violation of any law, statute, regulation, ordinance or court or
administrative agency order applicable to Xxxxxx or DII, or their respective
assets; conflict with, or result in any breach of, or default or loss of any
right under (or an event or circumstance that, with notice or the lapse of time,
or both, would result in a default), or the creation of an encumbrance pursuant
to, or cause or permit the acceleration prior to maturity or "put" right with
respect to, any obligation under, any contract, indenture, mortgage, deed of
trust, lease, loan agreement or other agreement or instrument to which Xxxxxx or
DII is a party or to which any of their respective assets or businesses are
subject; or require notice to or the consent, authorization, approval,
clearance, waiver or order of any person (except as specified in Schedule 4.25).
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The execution, delivery and performance of this Agreement by Xxxxxx and DII will
not result in the loss of any governmental license, franchise or permit
possessed by Xxxxxx or DII.
4.26 Liabilities and Obligations.
Xxxxxx has delivered to the Partnership and each Target Company an accurate
list (which is set forth on Schedule 4.13) of (i) all liabilities of Xxxxxx or
-------------
otherwise reflected in the Xxxxxx Financial Statements at October 31, 2000 (the
"Xxxxxx Balance Sheet Date"), and which are not disclosed on any of the other
-------------------------
Schedules to this Agreement, and (ii) all loan agreements, indemnity or guaranty
agreements, bonds, mortgages, pledges or other security agreements to which
Xxxxxx is a party or by which its properties may be bound. Xxxxxx has not
incurred any material liabilities of any kind, character or description, whether
accrued, absolute, secured or unsecured, contingent or otherwise, other than
liabilities incurred in the ordinary course of business consistent with past
practices. Xxxxxx has also delivered to the Partnership and each Target Company
on Schedule 4.26 in the case of those contingent liabilities related to pending
-------------
or threatened litigation, or other liabilities which are not fixed, a good faith
and reasonable estimate of the maximum amount which Xxxxxx reasonably expects
will be payable and the amount, if any, accrued or reserved for each such
potential liability on the Xxxxxx Financial Statements. For each such
contingent liability or liability for which the amount is not fixed or is
contested, Xxxxxx has provided to the Partnership and each Target Company the
following information:
(a) a summary description of the liability together with the
following:
(i) copies of all relevant documentation relating thereto;
(ii) amounts claimed and any other action or relief sought; and
(iii) name of claimant and all other parties to the claim, suit
or proceeding;
(b) the name of each court or agency before which such claim, suit or
proceeding is pending;
(c) the date such claim, suit or proceeding was instituted; and
27
(d) a good faith and reasonable estimate of the maximum amount, if
any, which is likely to become payable with respect to each such liability.
If no estimate is provided, the estimate shall for purposes of this
Agreement be deemed to be zero.
4.27 Consents.
Except as set forth on Schedule 4.27, no consent, authorization, permit,
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license or filing with any governmental authority, any lender, lessor,
manufacturer, supplier, shareholder or any other person or entity is required to
authorize, or is required in connection with, the execution, delivery and
performance of this Agreement and the agreements and documents contemplated
hereby on the part of Xxxxxx or DII. The consummation of the transactions
contemplated hereby will not give rise to any right to termination, cancellation
or acceleration or loss of any material right or benefit of Xxxxxx or DII.
4.28 Options and Preemptive Rights.
Except as set forth on Schedule 4.28, no person has any option, warrant or
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other right to acquire shares of Xxxxxx or DII capital stock and no shareholder
has any preemptive or other right to acquire shares of Xxxxxx or any of DII's
capital stock.
4.29 Anti-takeover Plan; State Takeover Statutes.
Neither Xxxxxx or DII has in effect any plan, scheme, device or arrangement,
commonly or colloquially known as a "poison pill" or "anti-takeover" plan or any
similar plan, scheme, device or arrangement. No other state takeover statute or
similar statute or regulation applies or purports to apply to the Acquisition,
this Agreement or any of the transactions contemplated by this Agreement.
4.30 Affiliate Transactions.
Except as set forth on Schedule 4.30, there are no transactions, agreements,
-------------
arrangements or understandings between Xxxxxx or DII, on the one hand, and their
shareholders or their Affiliates, on the other hand.
4.31 Solicitation.
Neither Xxxxxx nor DII nor any of their officers, directors, Affiliates or
agents, nor any other person acting on their behalf have solicited, directly or
indirectly, any person to enter into a merger or similar business combination
transaction with Xxxxxx or DII by any form of general solicitation, including,
without limitation, any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
4.32 No Untrue Representations.
Subject to the provisions of Section 12.2, this Agreement, including the
Schedules hereto, and the other agreements executed or to be executed in
connection herewith do not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements herein and
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE V.
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Covenants of the Partnership and each Target Company
5.1 Conduct of Business Pending Closing.
Between the date hereof and the Closing Date of the acquisition of each Target
Company, the Partnership and each Target Company shall
28
operate their respective businesses in the ordinary course, consistent with
past-practice, except as contemplated by the Limited Partnership Agreement by
and among the partners of the Partnership. The Partnership and each Target
Company shall use its best efforts to preserve the business of each Target
Company intact, to retain its present customers and suppliers so that they will
be available to each Target Company after its respective Closing. The
Partnership and each Target Company shall not take any action that could
adversely affect the condition (financial or otherwise), operations, assets,
liabilities, business or prospects of any Target Company prior to its
acquisition by Xxxxxx and DII without the prior written consent of Xxxxxx and
DII or take or fail to take any action that would cause or permit the
representations made in Article III to be inaccurate at the time of its
respective Closing or preclude the Partnership or any Target Company from making
such representations and warranties at the its respective Closing.
5.2 Prohibited Activities.
Between the date hereof and the Closing Date of such Target Company, the
Partnership and such Target Company shall not (except as provided in this
Agreement), without prior written consent of Xxxxxx and DII, which consent will
not be unreasonably withheld or delayed:
(a) make any change in its articles of incorporation, bylaws,
certificates of limited partnership or partnership agreements;
(b) issue any securities, options, rights or commitments relating to
its securities of any kind;
(c) declare or pay any dividend or make any distribution with respect
to any Target Company stock whether now or hereafter outstanding, or
purchase, redeem or otherwise acquire or retire for value any shares of
Target Company stock;
(d) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures, except if it is in the
ordinary course of business (consistent with past practice) or involves an
amount not in excess of $10,000 individually or $100,000 in the aggregate;
(e) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or
hereafter acquired;
(f) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(g) except with respect to the acquisition of the assets of
Expressline, negotiate for the acquisition of any business or the start-up
of any new business;
(h) merge or consolidate or agree to merge or consolidate with or into
any other corporation;
(i) waive any material rights or claims of any Target Company,
provided that the Target Company may negotiate and adjust bills and
accounts in the course of good faith disputes with customers in a manner
consistent with past practice;
29
(j) commit a material breach or amend or terminate any material
agreement, permit, license or other right of any Target Company; or
(k) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder.
5.3 Consents.
The Partnership and each Target Company shall use its best efforts to secure
all necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Schedule 3.25.
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5.4 Notification of Certain Matters.
The Partnership and each Target Company not yet acquired by Xxxxxx and DII
shall give prompt written notice to Xxxxxx and DII of (i) the occurrence or non-
occurrence of any event the occurrence or nonoccurrence of which would be likely
to cause any representation or warranty of the Partnership or any such not yet
acquired Target Company contained herein to be untrue or inaccurate in any
respect at or prior to the any Closing and (ii) any failure of the Partnership
or any not yet acquired Target Company to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such person
hereunder. Notwithstanding the disclosure to Xxxxxx and DII of any such
material adverse change, the Partnership or any not yet acquired Target Company
shall not be relieved of any liability for, nor shall the providing of such
information by the Partnership or any such not yet acquired Target Company to
Xxxxxx and DII be deemed a waiver by Xxxxxx or DII of, the breach of any
representation or warranty of the Partnership or any such not yet acquired
Target Company contained in this Agreement.
ARTICLE VI.
------------
Covenants of Xxxxxx and DII
6.1 Conduct of Business Pending Closing.
Between the date hereof and the Closing Date of the acquisition of each Target
Company, each of Xxxxxx and DII shall operate its business in its ordinary
course. Xxxxxx and DII shall not take any action that could adversely affect the
condition (financial or otherwise), operations, assets, liabilities, business or
prospects of Xxxxxx or DII without the prior written consent of the Partnership
and the Target Companies or take or fail to take any action that would cause or
permit the representations made in Article IV to be inaccurate at the time of
any Closing or preclude Xxxxxx or DII from making such representations and
warranties at any Closing.
6.2 Prohibited Activities.
Except as contemplated herein, between the date hereof and the Effective Time
neither Xxxxxx nor DII will (except as provided in this Agreement), without
prior written consent of the Partnership and the Target Companies, which consent
will not be unreasonably withheld or delayed:
(a) make any change to their respective articles of incorporation or
bylaws;
(b) issue any securities, options, warrants, calls, conversion rights
or commitments relating to their respective securities of any kind other
than contemplated by this Agreement.
30
(c) declare or pay any dividend, or make any distribution in respect
of its stock whether now or hereafter outstanding, or purchase, redeem or
otherwise acquire or retire for value any shares of their respective stock;
(d) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures, except if it is in the
normal course of business (consistent with past practice) or involves an
amount not in excess of $10,000 individually or $100,000 in the aggregate;
(e) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or
hereafter acquired;
(f) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(g) negotiate for the acquisition of any business or the start-up of
any new business;
(h) merge or consolidate or agree to merge or consolidate with or into
any other corporation;
(i) waive any material rights or claims of Xxxxxx or DII, provided
that Xxxxxx and DII may negotiate and adjust bills and accounts in the
course of good faith disputes with customers in a manner consistent with
past practice;
(j) commit a material breach or amend or terminate any material
agreement, permit, license or other right of Xxxxxx or DII; or
(k) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder.
6.3 Consents.
Xxxxxx and DII shall use its best efforts to secure all necessary approvals
and consents of third parties to the consummation of the transactions
contemplated hereby, including consents described on Schedule 4.27.
-------------
6.4 Notification of Certain Matters.
Xxxxxx and DII shall give prompt written notice to the Partnership and each
Target Company not yet acquired by Xxxxxx and DII of (i) the occurrence or non-
occurrence of any event the occurrence or nonoccurrence of which would be likely
to cause any representation or warranty of Xxxxxx or DII contained herein to be
untrue or inaccurate in any respect at or prior to any remaining Closing and
(ii) any failure of Xxxxxx or DII to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such person
hereunder. Notwithstanding the disclosure to the Partnership and the Target
Companies of any such material adverse change, Xxxxxx and DII shall not be
relieved of any liability for, nor shall the providing of such information by
Xxxxxx or DII to the Partnership and the such not yet acquired Target Companies
be deemed a waiver by the Partnership of, the breach of any representation or
warranty of Xxxxxx or DII contained in this Agreement.
31
ARTICLE VII.
------------
Covenants of Xxxxxx, DII, the Partnership and each Target Company
7.1 Access and Cooperation.
Xxxxxx, DII, the Partnership and each Target Company will each use their best
efforts to cause the consummation of the transactions contemplated hereby in
accordance with their terms and conditions. Between the date of this Agreement
and the Effective Time, Xxxxxx, DII, the Partnership and each Target Company
will afford to the officers and authorized representatives of each other access
to all of their sites, properties, books and records and will furnish to each
other, with such additional financial and operating data and other information
as to the business and properties of each other, as such party may from time to
time reasonably request. Each party hereto will treat all information obtained
in connection with the negotiation and performance of this Agreement as
confidential in accordance with the provisions of this Agreement.
7.2 No Shop.
Unless terminated in accordance with the provisions of Article XII hereof,
neither Xxxxxx, DII, the Partnership, any Target Company or any officer,
director, agent, employee or partner thereof, shall solicit or participate in
negotiations with any third party with respect to the sale of the business or
merger of Xxxxxx, DII, the Partnership or any Target Company or any transaction
inconsistent with those contemplated hereby without the prior written consent of
the other parties hereto; provided, however, Xxxxxx, DII and each of their
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respective officers and directors shall remain free to participate in any
discussions or negotiations regarding, furnishing any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by and person or entity to or seek the foregoing to the extent their
fiduciary duties may require. In the event Xxxxxx or DII receives any
unsolicited offers with respect to a sale of the business or merger of Xxxxxx or
DII, Xxxxxx and DII shall notify the Partnership and the Target Companies within
five (5) business days of such solicitation.
7.3 Further Assurances.
The parties hereto agree to execute and deliver, or cause to be executed and
delivered, such further instruments or documents or take such other action as
may be reasonably necessary or convenient to carry out the transactions
contemplated hereby.
ARTICLE VIII.
--------------
Conditions Precedent to Obligations of
the Partnership and the Target Companies
The obligations of the Partnership and each Target Company with respect to
actions to be taken on its respective Closing Date are subject to the
satisfaction or waiver on or prior to such date of all of the following
conditions.
8.1 Representations and Warranties; Performance of Obligations.
All representations and warranties of Xxxxxx and DII contained herein shall be
true and correct in all material respects when initially made and shall be true
and correct in all respects as of each respective Closing Date. All of the
terms, covenants and conditions of this Agreement to be complied with and
performed by Xxxxxx and DII shall have been complied with and performed in all
respects prior to each respective Closing Date.
32
8.2 No Injunctions or Restraints.
No statute, rule, regulation, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Acquisition shall be in effect; provided, however, that the party
invoking this condition shall use its best efforts to have any such temporary
restraining order, injunction, order, restraint or prohibition vacated.
8.3 No Litigation.
No action, proceeding or order by any court or governmental body shall have
been threatened orally or in writing, asserted, instituted or entered to
restrain or prohibit the carrying out of the transactions contemplated hereby.
8.4 Closing Deliveries.
The Partnership and the Target Company to be acquired at such Closing shall
have received all documents, duly executed in form satisfactory to the
Partnership and its counsel, referred to in Section 10.2.
8.5 Employment Agreements.
Xxxxxxxx shall have entered into an Employment Agreement in the form of
Exhibit "B" as of the first Closing.
-----------
8.6 Registration Rights Agreement.
Xxxxxx and the Partnership shall have entered into the Registration Rights
Agreement in substantially the form of Exhibit "C", which Registration Rights
-----------
Agreement shall be executed and delivered simultaneously herewith.
8.7 No Material Adverse Change.
No material adverse change in the condition (financial or otherwise),
operations, assets, liabilities, business or prospects of Xxxxxx or DII shall
have occurred since the Xxxxxx Balance Sheet Date.
8.8 Xxxxxx shall have issued a warrant to Xxxxxx Xxxxx Co. to purchase a
32,500 shares of the Xxxxxx Preferred Stock at $0.10 per share in substantially
the form attached hereto as Exhibit "D" in consideration of the termination of
Xxxxxx Xxxxx Co.'s rights with respect to any other outstanding option or
warrant to purchase the equity securities of Xxxxxx existing as of the date
hereof (the "Xxxxxx Xxxxx Warrant").
8.9 Employee Options.
Each of Messrs. M. E. Xxxxxxxx and Xxxxx XxXxxxxxxx shall have executed and
delivered an agreement in substantially the form attached hereto as Exhibit "E"
agreeing to refrain from exercising options to purchase the Xxxxxx Common Stock
pending the satisfaction of certain conditions.
8.10 Outstanding Shares of Xxxxxx.
Immediately prior to the Effective Time of this Agreement, there shall be
issued and outstanding 19,510,015 shares of Xxxxxx Common Stock.
8.11 Certificate of Designations of Series C Preferred Stock.
Xxxxxx shall have filed the Certificate of Designations, Rights and
Preferences of the Series C Convertible Preferred Stock attached hereto as
Exhibit "A" with the Secretary of State of the State of New York prior to the
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First Closing.
8.12 Salary and Incentive Levels.
The Partnership, Target Companies, Xxxxxx and DII shall have agreed to salary
and incentive levels for Durham, Xxxxxxxxx and Xxxxx and certain other
Partnership staff upon consummation of the Acquisition prior to the First
Closing.
33
8.13 Due Diligence Review.
By the First Closing Date, the Partnership and each Target Company shall have
completed a due diligence review of the business, operations and financial
statements of Xxxxxx and DII and each of their businesses and assets, the
results of which shall be satisfactory to the Partnership and the Target
Companies.
8.14 Consents and Approvals.
All necessary consents of and filings with any governmental authority or
agency relating to the consummation of the Acquisition of such Target Company
shall have been obtained and made; all consents and approvals of third parties
listed on Schedule 4.27 with respect to the Acquisition of such Target Company
-------------
shall have been obtained; and no action or proceeding shall have been instituted
or threatened to restrain or prohibit such Acquisition and no governmental
agency or body shall have taken any other action or made any request of the
Partnership or any Target Company as a result of which the Partnership or any
Target Company deems it inadvisable to proceed with the transactions hereunder.
ARTICLE IX.
-----------
Conditions Precedent to Obligations of Xxxxxx and DII
The obligations of Xxxxxx and DII with respect to actions to be taken at
each respective Closing Date are subject to the satisfaction or waiver on or
prior to such date of all of the following conditions.
9.1 Representations and Warranties; Performance of Obligations.
All representations and warranties of the Partnership and each Target Company
not yet acquired by Xxxxxx and DII contained herein shall be true and correct in
all respects when initially made and shall be true and correct in all respects
as of the each Closing Date. All of the representations and warranties of the
Target Company being acquired shall be true and correct in all respects when
initially made and shall be true and correct in all respects as of its Closing
Date and all of the terms, covenants and conditions of this Agreement to be
complied with and performed by the Partnership and the Target Company being
acquired by Xxxxxx and DII shall have been complied with and performed in all
respects prior to such Closing Date.
9.2 Closing Deliveries.
Xxxxxx and DII shall have received all documents, duly executed in form
satisfactory to Xxxxxx and its counsel, referred to in Section 10.1.
9.3 No Material Adverse Change.
No material adverse change in the condition (financial or otherwise),
operations, assets, liabilities, business or prospects of any Target Company not
yet acquired by Xxxxxx and DII shall have occurred since such Target Company's
Balance Sheet Date.
9.4 Due Diligence Review.
By each Target Company's respective Closing Date, Xxxxxx and DII shall have
completed a due diligence review of the business, operations and financial
statements of such Target Company being acquired and its business and assets,
the results of which shall be satisfactory to Xxxxxx and DII.
34
9.5 Assignment of Management Fees.
Each Target Company and Obsidian Capital Company, LLC shall have assigned its
Management Fee Agreements to Xxxxxx, prior to its respective Closing.
9.6 Purchase of United Expressline.
The Partnership shall have acquired substantially all of the assets of United
Expressline, Inc. through its subsidiary United Acquisition, Inc. and United
Acquisition, Inc. shall have amended its Articles of Incorporation to change its
name to "United Expressline, Inc." prior to the Second Closing.
9.7 United Expressline Financial Statements.
Xxxxxx and DII shall have received audited and/or compiled and reviewed
financial statements for December 31, 2000 for Expressline, and audited or
compiled but unaudited financial statements for the preceding two (2) years, in
a form acceptable to Xxxxxx, DII and its counsel prior to the Second Closing.
It being understood and agreed that the fulfillment of this Section 9.7 shall be
a condition only of the Second Closing.
9.8 Consents and Approvals.
All necessary consents of and filings with any governmental authority or
agency relating to the consummation of the transactions contemplated with
respect to a Target Company's Closing shall have been obtained and made; all
consents and approvals of third parties listed on Schedule 3.25 shall have been
-------------
obtained; and no action or proceeding shall have been instituted or threatened
to restrain or prohibit such Acquisition and no governmental agency or body
shall have taken any other action or made any request of Xxxxxx or DII as a
result of which Xxxxxx or DII deems it inadvisable to proceed with the
transactions hereunder. The Board of Directors of Xxxxxx shall have approved
this Agreement and authorized the consummation of the transaction contemplated
herein.
9.9 Markpoint Warrant.
Markpoint shall have executed an amendment to its Warrant in Champion or such
similar instrument acceptable to Xxxxxx or Champion shall have issued and
delivered to Markpoint a new warrant in lieu and substitution thereof which
limits such warrant to cash or Xxxxxx common stock upon exercise based upon
twenty-five percent (25%) of the enterprise value of Champion at time of
exercise.
ARTICLE X.
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Closing Deliveries
10.1 Deliveries of the Partnership and Target Companies.
At each respective Closing, the Partnership and such Target Company shall
deliver to Xxxxxx and DII the following, all of which shall be in a form
satisfactory to counsel to Xxxxxx and DII:
(a) certificates representing all of the outstanding common stock of
each such Target Company;
(b) a copy of the resolutions of the Board of Directors of such Target
Company and the general partner of the Partnership authorizing the
execution, delivery and performance of this Agreement and all related
documents and agreements, each certified by its Secretary as being true and
correct copies of the original thereof;
35
(c) certificates of a duly authorized officer or the Chairman of each
Target Company and the general partner of the Partnership dated as of the
Closing Date, (i) as to the truth and correctness of the representations
and warranties of each such party contained herein; (ii) as to the
performance of and compliance by each such party with all covenants
contained herein; and (iii) certifying that all conditions precedent of
each such party to the Closing have been satisfied;
(d) a certificate of the Secretary of such Target Company certifying
as to: (i) the incumbency of the officers of such Target Company and as to
the signatures of such officers who have executed documents delivered at
the Closing on behalf of such Target Company, (ii) the articles of
incorporation, certified by the Secretary of State of its state of
incorporation, and bylaws;
(e) a certificate of the Secretary of the general partner of the
Partnership certifying as to: (i) the incumbency of the officers of the
general partner of the Partnership and as to the signatures of such
officers who have executed documents delivered at the Closing on behalf of
the Partnership, (ii) the articles of organization, certified by the
Secretary of State of the state of its organization, and Operating
Agreement of the general partner of the Partnership, and (iii) the
partnership agreement of the Partnership, as amended, and a certificate of
limited partnership of the Partnership certified by the Secretary of State
of the state of its formation;
(f) a certificate, dated within thirty (30) days of such Closing Date,
of the Secretary of the State of the state of incorporation of the general
partner of the Partnership, the Partnership and such Target Company, and
any state of required foreign qualification of the Partnership and such
Target Company establishing that such entity is in existence and is in good
standing to transact business in such State, as applicable;
(g) Powers of Attorney authorizing Xxxxxxx X. Xxxxxx to deliver
Target Company shares granted by Xxxxxx Xxxxxxx, Durham Xxxxxxxxx and
Associates, LLC, Xxxxx X. Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxx XxXxxx and
Xxxxxxx Xxxxxxxx;
(h) at the first Closing, the executed Employment Agreement of
Xxxxxxxx in the form of Exhibit "B";
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(i) a list of accounts receivable and payables of such Target Company
as of April 30, 2001;
(j) such other instruments and documents as reasonably requested by
Xxxxxx or DII to carry out and effect the purpose and intent of this
Agreement;
(k) the Registration Rights Agreement executed by the Partnership and
Xxxxxx.
10.2 Deliveries of Xxxxxx and DII.
At each respective Closing, Xxxxxx and DII shall deliver to the Partnership
and such Target Company being acquired the following:
36
(a) stock certificates in the name of the Partnership or other
shareholders of such Target Company for their pro rata shares of Xxxxxx
Preferred Stock;
(b) a copy of the resolutions of the Board of Directors of Xxxxxx and
DII authorizing the execution, delivery and performance of this Agreement
and all related documents and agreements each certified by its Secretary as
being true and correct copies of the original thereof;
(c) certificates of a duly authorized officer of Xxxxxx and DII, dated
as of such Closing Date, (i) as to the truth and correctness of the
representations and warranties of Xxxxxx and DII contained herein; (ii) as
to the performance of and compliance by Xxxxxx and DII with all covenants
contained herein; and (iii) certifying that all conditions precedent of
Xxxxxx and DII to such Closing have been satisfied;
(d) a certificate of the Secretary of Xxxxxx and DII certifying as to
the incumbency of the officers of Xxxxxx and DII and as to the signatures
of such officers who have executed documents delivered at such Closing on
behalf of Xxxxxx and DII, and the bylaws and articles of incorporation of
Xxxxxx and DII, certified by the Secretary of State of the state of its
incorporation, respectively;
(e) certificates, based within thirty (30) days of such Closing Date,
of the Secretary of State of the state of its incorporation establishing
that Xxxxxx and DII are in existence and are in god standing to transact
business in the State of its incorporation and in all locations where the
nature of their respective businesses or the ownership of their respective
assets or properties requires such qualification;
(f) executed counterparts of the Registration Rights Agreement; and
(g) execution copies of the agreements contemplated in Section 8.8
and 8.9.
ARTICLE XI.
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Post-Closing Matters
11.1 Xxxxxx Shareholders' Meeting.
Xxxxxx agrees it shall as soon as reasonably practicable after the Effective
Time hold a shareholders' meeting (the "Shareholders' Meeting") and propose and
---------------------
recommend to its shareholders: (i) the authorization of 100,000,000 additional
shares of Xxxxxx common stock (ii) following the authorization of the additional
Xxxxxx shares, and the conversion of Xxxxxx Preferred Stock to Xxxxxx Common
Stock, a reverse-stock split of the Xxxxxx Common Stock in the ratio and amounts
to be determined by the Xxxxxx Board of Directors in light of market conditions
at the time of the reverse stock split, (iii) necessary amendments to the
articles of incorporation and bylaws of Xxxxxx to facilitate this Agreement, and
(iv) an expansion of the Board of Directors to consist of seven members, and the
election of a slate of Directors nominated by Xxxxxx,
11.2 Conversion of Preferred Stock.
Within thirty (30) days from the adjournment of the Shareholders' Meeting and
the approval of the matters contemplated in Section 11.1 hereof, but in no event
later than October 1, 2001. Obsidian shall convert, and shall cause all
37
former shareholders of the Target Companies to convert, the shares of Xxxxxx
Preferred Stock into Xxxxxx Common Stock.
11.3 Indemnification of Xxxxxx Officers and Directors.
Xxxxxx and DII, jointly and severally, covenant and agree to indemnify, defend
and hold harmless each individual who served as an officer and director of
Xxxxxx or DII at any time prior to the Effective Time from and against any and
all actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including all court costs
and reasonable attorneys' fees and expenses, resulting from, arising out of, or
relating to his service as an officer or director of Xxxxxx or DII, or resulting
from, arising out of, relating to, in the nature of, or caused by this Agreement
or any of the transactions contemplated herein, except that nothing contained in
this Section 11.3 shall limit the liability of the officers and directors of
Xxxxxx and DII, nor shall they be entitled to indemnity under this Section 11.3,
for misrepresentations or omissions of material matters in Article IV knowingly
made or omitted by such officer and/or director. The Partnership and the Target
Companies each covenant and agree not take any action to alter or impair any
exculpatory or indemnification provisions now existing in Xxxxxx or DII's
articles of incorporation, bylaws or this Agreement for the benefit of any
individual who served as an officer or director of Xxxxxx or DII at any time
prior to the Effective Time.
11.4 Public Announcements.
The Partnership and the Target Companies, on the one hand, and Xxxxxx and DII,
on the other hand, will consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, including the Acquisition, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or automated quotation
system.
11.5 Bank Legacy Commitments.
The Partnership may from time to time be required to contribute to the capital
of or to provide funds in respect of the Senior Credit Facilitites of the Xxxxxx
subsidiaries U.S. Rubber and United respectively pursuant to the terms of
certain Capital Contribution Agreements by and among U.S. Rubber, the
Partnership, Xxxxxx and Bank One, Indiana, N.A. in respect of U.S. Rubber and by
and among United, the Partnership, Xxxxxx and the Senior Lender to United
selected by the Partnership. Such capital contributions are limited in amount to
$1,620,000 in respect of U.S. Rubber and $1,000,000 in respect of United. The
Partnership and Xxxxxx each agree to enter into the respective Capital
Contribution Agreements, and Xxxxxx to the extent it receives funds from the
Partnership in respect of these Bank Legacy Commitments and the Partnership to
the extent it pays funds in respect thereof (a "Bank Legacy Contribution") agree
to pay over such funds as the bank requesting the contribution may direct. In
each instance in which the Partnership makes a Bank Legacy contribution, Xxxxxx
will as soon as reasonably practicable thereafter issue to the Partnership that
number of shares of Common Stock of Xxxxxx at a value equal to the lesser of the
average trading price of such stock on the immediately preceding trading day or
$0.10 per share, having an aggregate value equal to the amount of the Bank
Legacy Contribution made by the Partnership.
38
11.6 Expense Transactions. At any time and from time to time prior to
the dissolution of the Partnership in accordance with the terms of the Limited
Partnership Agreement of the Partnership, as amended through the date hereof
(the "Limited Partnership Agreement"), following a capital call by the
Partnership for the purpose of paying expenses in compliance with the Limited
Partnership Agreement, (i) the Partnership will contribute the funds received as
a result of each such capital call to Xxxxxx, which will use such funds to pay
such expenses, and (ii) Xxxxxx will as soon as reasonably practicable thereafter
issue to the Partnership that number of shares of Common Stock of Xxxxxx, at a
value equal to the lesser of the average trading price of such stock on the
immediately preceding trading day or $0.10 per share, having an aggregate value
as so calculated equal to the amount of such expenses.
11.7 Elimination of Legacy Commitments. Following the Effective Time,
Xxxxxx and the Partnership shall use their respective commercially reasonable
best efforts to eliminate the obligations of the Partnership and each of the
partners of the Partnership with respect to the Legacy Commitments.
11.8 Corporate Actions. Xxxxxx agrees it shall as soon as reasonably
practicable after the Effective Time hold a meeting of its Board of Directors
(the "Board Meeting") to propose, ratify and confirm the following: (i) approval
to register the Xxxxxx Preferred Stock or the Xxxxxx Common Shares issued on
conversion thereof under the 1933 Act after execution of the matters
contemplated in Section 11.2 herein, (ii) to appoint Xxxxxxx X. Xxxxxx as
Chairman of the Board of Xxxxxx, (iii) the pledge of all U.S. Rubber capital
stock to SerVaas, Inc. as security for that certain $1,750,000 Promissory Note
owed by U.S. Rubber to SerVaas, Inc., (iv) the pledge of all Champion capital
stock to Markpoint Equity Growth Fund, J.V., as security for that certain
$1,250,000 Promissory Note owed by Champion to Markpoint; and the Guarantee of
the Markpoint Note by Xxxxxx, (v) the agreement with the Partnership to convert
to common stock all funds advanced by the Partnership in respect of Transaction
and Registration costs loaned to Xxxxxx by the Partnership at the lesser of the
then current fair market value of one share of Xxxxxx common stock, or $.10 per
common share, (vi) a proposal by an Affiliate of Renaissance Capital Group, Inc.
to provide a $500,000 convertible loan to Xxxxxx (convertible at $.10 per Xxxxxx
common share) to complete the acquisition of Expressline assets, (vii) the
execution of a Capital Contribution Agreement with each of Bank One, Indiana,
N.A. and the senior lender to United in respect of the Legacy Commitments; and
(viii) the agreement with the Partnership to convert to common stock any capital
contributions made to Xxxxxx and/or the Target Companies by the Partnership in
respect of the Legacy Commitments and certain Xxxxxx Expense Transactions at a
conversion rate of the lesser of the then current fair market value of one share
of Xxxxxx common stock, or $.10 per common share.
11.9 Registration Rights Agreement. Xxxxxx shall circulate the
Registration Rights Agreement to the Partnership's Limited Partners, and all
other parties thereto for signature.
11.10 Second Closing. At the Second Closing, the Partnership shall cause
the United Schedules to be appended hereto and when the Xxxxxx Board ratifies
and approves the Second Closing such Schedules shall be deemed effective.
39
ARTICLE XII.
------------
Termination of Agreement
12.1 Termination.
This Agreement may be terminated at any time prior to the Effective Time (and no
further Closings shall occur upon such a termination) solely:
(a) by mutual consent of Xxxxxx, DII, the Partnership and the Target
Companies;
(b) by the Partnership and the Target Companies, on the one hand, or
by Xxxxxx or DII (acting through their board of directors), on the other
hand, if all of the transactions contemplated by this Agreement to take
place by the Second Closing shall not have been consummated by September
30,2001, unless the failure of such transactions to be consummated is due
to the willful failure of the party seeking to terminate this Agreement to
perform any of its obligations under this Agreement to the extent required
to be performed by it prior to or on September 30, 2001;
(c) by the Partnership and the Target Companies, on the one hand, or
by Xxxxxx or the DIIs, on the other hand, if a material breach or default
shall be made by the other party in the observance or in the due and timely
performance of any of the covenants or agreements contained herein, and the
curing of such default shall not have been made on or before thirty (30)
days following written notice of such breach or default; or
(d) by Xxxxxx or DII in the event the board of directors of Xxxxxx or
DII, in accordance with its fiduciary duties, concludes that the
termination of this Agreement would be in the best interests of Xxxxxx, DII
or its shareholders.
12.2 Liabilities in Event of Termination.
The termination of this Agreement will in no way limit any obligation or
liability of any party based on or arising from a breach or default by such
party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement including, but not limited to, legal and
audit costs and out of pocket expenses. Any other provision of this Agreement
notwithstanding, the inaccuracy or incompleteness of any representation or
warranty made by any party under this Agreement shall not constitute a breach of
warranty or a misrepresentation by such party, and shall not give rise to a
claim for indemnity against such party if the information necessary to correct
such inaccuracy or incompleteness is set forth in any other provision of this
Agreement or in any Schedule to this Agreement, if such other provision or
Schedule bears a reasonable relationship or applicability to the warranty as
representation claimed to be breached.
ARTICLE XIII.
-------------
Federal Securities Laws and Transfer Restrictions
13.1 Compliance with Law.
The Partnership and each of the Target Companies acknowledge that the shares
of Xxxxxx Preferred Stock to be delivered to the Partnership and the
shareholders pursuant to this Agreement, and the shares of Xxxxxx Common Stock
issued upon a conversion of the Xxxxxx Preferred Stock (collectively, the
"Securities"), have not been and will not be registered under the 1933 Act and
-----------
therefore may not be resold without compliance with the 1933 Act. The
Securities to be acquired by the Partnership and the shareholders, pursuant to
40
this Agreement are being acquired solely for its/their own account, for
investment purposes only, and with no present intention of distributing, selling
or otherwise disposing of it in connection with a distribution, other than a
distribution of Xxxxxx shares to the Limited Partners of the Partnership;
provided that, such distribution will not violate any State or Federal
Securities Laws. The Partnership and Target Companies covenant, warrant and
represent that none of the Securities issued to the Partnership and the
shareholders, will be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except after full compliance with all of
the applicable provisions of the 1933 Act and the rules and regulations of the
SEC. All the Securities shall bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT (i) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (ii)
WITH AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER
LAWS."
13.2 Economic Risk; Sophistication.
The Partnership and the Target Companies, on their own behalf and on behalf of
their partners and shareholders, represent and warrant that the Partnership and
each such partner or shareholder is able to bear the economic risk of an
investment in the Securities to be acquired pursuant to this Agreement and can
afford to sustain a total loss of such investment and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the proposed investment in the Securities. The
Partnership, its partners, the Target Companies and the shareholders of each
Target Company has had an adequate opportunity to ask questions and receive
answers from the officers of Xxxxxx and DII concerning any and all matters
relating to the transactions described herein including, without limitation, the
background and experience of the current and proposed officers and directors of
Xxxxxx and DII, the plans for the operations of the business of Xxxxxx and DII,
the business, operations and financial condition of Xxxxxx and DII, and any
plans for additional acquisitions and the like. The Partnership and the Target
Companies, on their own behalf and on behalf of their partners and shareholders,
have asked any and all questions in the nature described in the preceding
sentence and all questions have been answered to its satisfaction.
ARTICLE XIV.
------------
Covenants of Xxxxxx, DII, the Partnership and the Target Companies after Closing
41
14.1 Section 368(a).
Xxxxxx, DII, the Partnership and the Target Companies shall comply with the
tax reporting requirements of Section 1.368(a) of the Treasury Regulations
promulgated under the Code, and shall treat the transaction as a tax-free
reorganization under Section 368(a) of the Code unless otherwise required by
law. The parties have independently determined and hereby agree that the
transaction constitutes a tax-free reorganization under Section 368(a) of the
Code, and that the parties shall join in a written Plan of Reorganization that
shall provide among other things for (i) continuity of interest, (ii) continuity
of business enterprise and (iii) the business purpose of the reorganization.
14.2 Preparation and Filing of Tax Returns.
(a) Each party hereto shall, and shall cause its subsidiaries and
Affiliates to, provide to each of the other parties hereto such cooperation
and information as any of them reasonably may request in filing any Return,
amended Return or claim for refund, determining a liability for Taxes or a
right to a refund of Taxes or in conducting any audit or other proceeding
in respect of Taxes. Such cooperation and information shall include
providing copies of all relevant portions of relevant Returns, together
with relevant accompanying schedules and relevant work papers, relevant
documents relating to rulings or other determinations by taxing authorities
and relevant records concerning the ownership and Tax basis of property,
which such party may possess. Each party shall make its employees
reasonably available on a mutually convenient basis at its cost to provide
explanation of any documents or information so provided. Subject to the
preceding sentence, each party required to file Returns pursuant to this
Agreement shall bear all costs of filing such Returns.
(b) Xxxxxx, DII, the Partnership and each Target Company shall comply
with the tax reporting requirements of Section 1.368 of the Treasury
Regulations promulgated under the Code, and treat the transaction as a
series of tax-free reorganizations under Section 368(a)(1)(B).
ARTICLE XV.
-----------
General
15.1 Cooperation.
Xxxxxx, DII, the Partnership and each Target Company shall each deliver or
cause to be delivered to the other on each Closing Date, and at such other times
and places as shall be reasonably agreed to, such additional instruments as the
other may reasonably request for the purpose of carrying out this Agreement. The
Partnership and each Target Company will cooperate and use its reasonable
efforts to have its partners, the present officers, directors and employees of
such entity cooperate with Xxxxxx and the Surviving Corporations on and after
the Effective Time in furnishing information, evidence, testimony and other
assistance in connection with any tax return filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Effective Time.
15.2 Successors and Assigns.
Except with the written consent of all of the parties hereto, this Agreement
and the rights of the parties hereunder may not be assigned (except by
42
operation of law) and shall be binding upon and shall inure to the benefit of
the parties hereto and the successors of Xxxxxx and DII.
15.3 Entire Agreement.
This Agreement (including the Schedules, exhibits and annexes attached hereto)
and the documents delivered pursuant hereto constitute the entire agreement and
understanding among each Target Company, the Partnership, Xxxxxx and DII, and
supersede any prior agreement and understanding relating to the subject matter
of this Agreement, including but not limited to, any letter of intent entered
into by the parties hereto. This Agreement upon execution, constitutes a valid
and binding agreement of the parties hereto enforceable in accordance with its
terms and may be modified or amended only by a written instrument executed by
all of the parties hereto, acting through their respective officers or trustees,
duly authorized by their respective Boards of Directors.
15.4 Expenses.
All expenses incident to the transactions contemplated by this Agreement,
whether or not completed, will be borne exclusively by the party making the
expenditure or incurring the expense, including any expenses incurred prior to
any Closing Date, as well as those incurred after the Effective Time.
15.5 Notices.
All notices given with respect to this Agreement shall be in writing and shall
be deemed to have been properly given or served for all purposes (i) if sent by
a nationally recognized overnight carrier for next business day delivery, on the
first business day following deposit of such notice with such carrier unless
such carrier confirms such notice was not delivered, then on the day such
carrier actually delivers such notice, or (ii) if personally delivered, on the
actual date of delivery, or (iii) if sent by certified U.S. Mail, return receipt
requested postage prepaid, on the fifth business day following the date of
mailing, or (iv) if sent by facsimile, then on the actual date of delivery (as
evidenced by a facsimile confirmation) provided that a copy of the facsimile and
confirmation is also sent by U.S. Mail, addressed as follows:
If to Xxxxxx Xxxxxx Corporation
------------ 00000 Xxxx Xxxx
or DII:. Xxxxxxxxxx, XX 00000
------- Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx
with a copy to: Xxxxxxx Xxxxxx L.L.P.
-------------- 000 Xxxx Xxxxxx, Xxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
If to the Partnership or: Obsidian Capital Partners, L.P.
------------------------ 000 Xxxxxxxx Xxxxxx, Xxxxx 0000
the Target Companies Xxxxxxxxxxxx, XX 00000
-------------------- Fax No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
43
with a copy to Xxxxxxx Xxxxxxx & Associates
-------------- 000 Xxxxxxxx Xxxxxx Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx
15.6 Governing Law.
This Agreement shall be construed in accordance with the laws of the State of
Indiana.
15.7 Choice of Forum.
The parties hereto agree that should any suit, action or proceeding arising
out of this Agreement be instituted by any party hereto (other than a suit,
action or proceeding to enforce or realize upon any final court judgment arising
out of this Agreement), such suit, action or proceeding shall be instituted only
in a state or federal court in the State of Indiana. Each of the parties hereto
consents to the in personam jurisdiction of any state or federal court in the
State of Indiana and waives any objection to the venue of any such suit, action
or proceeding. The parties hereto recognize that courts outside the State of
Indiana may also have jurisdiction over suits, actions or proceedings arising
out of this Agreement, and in the event that any party hereto shall institute a
proceeding involving this Agreement in a jurisdiction outside the State of
Indiana, the party instituting such proceeding shall indemnify any other party
hereto for any losses and expenses that may result from the breach of the
foregoing covenant to institute such proceeding only in a state or federal court
in the State of Indiana, including without limitation any additional expenses
incurred as a result of litigating in another jurisdiction, such as reasonable
fees and expenses of local counsel and travel and lodging expenses for parties,
witnesses, experts and support personnel.
15.8 Survival of Representations and Warranties.
The representations, warranties and covenants contained herein shall survive
the Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of such Target Company, the Partnership,
Xxxxxx or such DII pursuant to this Agreement shall be deemed to have been
representations and warranties by such Target Company, the Partnership, Xxxxxx
or such DII, as the case may be, and, notwithstanding any provision in this
Agreement to the contrary, shall survive the Closing for a period of one (1)
year, except for representations and warranties with respect to any matters
relating to Taxes, ERISA or the environment, which shall survive the Closing
until the running of any applicable statutes of limitation.
15.9 Exercise of Rights and Remedies.
Except as otherwise provided herein, no delay of or omission in the exercise
of any right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in any
such breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver.
15.10 Reformation and Severability.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to
44
be valid, legal and enforceable but so as to most nearly retain the intent of
the parties, and if such modification is not possible, such provision shall be
severed from this Agreement, and in either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
15.11 Parties In Interest; No Third Party Beneficiaries.
Neither this Agreement nor any other agreement contemplated hereby shall be
deemed to confer upon any person not a party hereto or thereto any rights or
remedies hereunder or thereunder, except that the general partner and the
limited partners of the partnership shall be deemed to be third party
beneficiaries of, and shall be entitled to enforce Sections 11.5, 11.6 and 11.7
of this agreement.
15.12 Captions.
The headings of this Agreement are inserted for convenience only, shall not
constitute a part of this Agreement or be used to construe or interpret any
provision hereof.
15.13 Counterparts.
This Agreement may be executed simultaneously in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute but one and the same instrument, and facsimile signatures shall be
given the same effect as original signatures.
45
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
XXXXXX CORPORATION,
a New York corporation
By: /s/ M.E. Xxxxxxxx
-----------------
Printed Name: M.E. Xxxxxxxx
Title: President
XXXXXX INDUSTRIES, INC.
a Maryland corporation
By: /s/ M.E. Xxxxxxxx
-----------------
Printed Name: M.E. Xxxxxxxx
Title: President
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------
XXXXXXX X. XXXXXX,
for himself and as attorney-in-fact for
Durham Xxxxxxxxx and Associates, LLC,
Xxxxx X. Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxx XxXxxx,
Xxxxxxx Xxxxxxxx, and Xxxxxx Xxxxxxx
PYRAMID COACH, INC.,
a Tennessee corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Printed Name: Xxxxxxx X. Xxxxxx
Title: Chairman
CHAMPION TRAILER, INC.,
a Indiana corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Printed Name: Xxxxxxx X. Xxxxxx
Title: Chairman
UNITED ACQUISITION, INC.,
an Indiana corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Printed Name: Xxxxxxx X. Xxxxxx
Title: Chairman
U.S. RUBBER RECLAIMING, INC.,
a Indiana corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Printed Name: Xxxxxxx X. Xxxxxx
Title: Chairman
OBSIDIAN CAPITAL PARTNERS, L.P.,
a Delaware limited partnership
By: Obsidian Capital Company, LLC
Its: General Partner
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Printed Name: Xxxxxxx X. Xxxxxx
Title: Managing Member
