1
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
VIEW TECH, INC.,
VIEW TECH ACQUISITION, INC.
AND
USTELECENTERS, INC.
September 5, 1996
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TABLE OF CONTENTS
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1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. BASIC TRANSACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) ACTION BY THE BUYER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) ACTIONS AT THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) EFFECT OF MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(ii) CERTIFICATE OF INCORPORATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(iii) BYLAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(iv) DIRECTORS AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(v) BUYER SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(vi) TARGET SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) CONVERSION OF TARGET SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) PROCEDURE FOR PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(h) CLOSING OF TRANSFER RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(i) DISSENTING SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3. REPRESENTATIONS AND WARRANTIES OF THE TARGET. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. . . . . . . . . . . . . . . . . . . . . 12
(b) CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) AUTHORIZATION OF TRANSACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) NONCONTRAVENTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) TITLE TO ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(g) FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(h) EVENTS SUBSEQUENT TO TARGET'S MOST RECENT FISCAL MONTH END. . . . . . . . . . . . . . . . 13
(i) UNDISCLOSED LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(j) LEGAL COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(k) TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(l) REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(m) INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(n) TANGIBLE ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(o) INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(p) CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(q) NOTES AND ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(r) POWERS OF ATTORNEY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(s) INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(t) LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(u) PRODUCT WARRANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(v) EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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(w) EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(x) GUARANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(y) ENVIRONMENTAL, HEALTH, AND SAFETY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(z) CERTAIN BUSINESS RELATIONSHIPS WITH THE TARGET. . . . . . . . . . . . . . . . . . . . . . 24
(aa) BROKERS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(ab) CONTINUITY OF BUSINESS ENTERPRISE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(ac) SUBSTANTIAL CUSTOMERS, BROKERS AND SUPPLIERS. . . . . . . . . . . . . . . . . . . . . . . 24
(ad) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. . . . . . . . . . . . . . . . . . . . . 25
(b) CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) AUTHORIZATION OF TRANSACTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(d) FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(e) EVENTS SUBSEQUENT TO THE BUYER'S MOST RECENT FISCAL YEAR END. . . . . . . . . . . . . . . 26
(f) UNDISCLOSED LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(g) LEGAL COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(h) NONCONTRAVENTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(i) TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(j) INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(k) CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(l) LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(m) PRODUCT WARRANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(n) EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(o) ENVIRONMENTAL, HEALTH, AND SAFETY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(p) ADVISORY FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(q) CONTINUITY OF BUSINESS ENTERPRISE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(r) DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(s) REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(t) SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(u) FILINGS WITH THE SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) NOTICES AND CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) REGULATORY MATTERS AND APPROVALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(i) SECURITIES ACT, SECURITIES EXCHANGE ACT, AND STATE SECURITIES LAWS. . . . . . . . . . . . . . . . 37
(ii) CALIFORNIA AND MASSACHUSETTS GENERAL CORPORATION LAW. . . . . . . . . . . . . . . . . . . . . . . 37
(c) LISTING OF BUYER SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(d) NO MATERIAL CHANGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(e) OPERATION OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(f) FULL ACCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(g) NOTICE OF DEVELOPMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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(h) EXCLUSIVITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(i) CONTINUITY OF BUSINESS ENTERPRISE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(j) EMPLOYMENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(k) DIRECTORSHIPS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(l) PRELIMINARY MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(m) BUSINESS COMBINATION UNDER RULE 145 . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(n) ANCILLARY AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(o) TARGET EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(p) D&O INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(q) NOTIFICATION OF BUYER DILUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(r) NOTIFICATION OF CHANGES IN REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 41
(s) TREATMENT OF CONVERSION OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(t) REGISTRATION OF CONVERSION OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(u) SETTLEMENT OF OPTIONS AND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(v) ESTOPPEL CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6. CONDITIONS TO OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(a) CONDITIONS TO OBLIGATION OF THE BUYER. . . . . . . . . . . . . . . . . . . . . . . . . . 42
(b) CONDITIONS TO OBLIGATION OF THE TARGET . . . . . . . . . . . . . . . . . . . . . . . . . 44
7. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(a) TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(b) EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 47
(c) ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(d) SUCCESSION AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(e) COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(f) HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(g) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(h) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(i) AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(j) SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(k) EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(l) CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(m) INCORPORATION OF EXHIBITS AND SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . 49
(n) VENUE; JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(o) ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(p) ATTORNEYS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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Exhibit A--Form of Merger Agreement
Exhibit B-1, B-2--Certificates of Merger
Exhibit C--Form of Letter of Transmittal
Exhibit D--Permitted Investments
Exhibit E--Target Financial Statements
Exhibit F--Buyer Financial Statements
Exhibit G--Agreement Regarding Target Shareholders
Exhibit H--Form of Registration Rights Agreement
Disclosure Schedule--Exceptions to Representations and Warranties
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER entered into as of September 5, 1996 by
and among View Tech, Inc., a California corporation (the "BUYER"), View Tech
Acquisition, Inc., a California corporation to be incorporated (the "TRANSITORY
SUBSIDIARY"), and USTeleCenters, Inc., a Massachusetts corporation (the
"TARGET"). The Buyer, the Transitory Subsidiary, and the Target are referred
to collectively herein as the "PARTIES."
WHEREAS, upon the terms and subject to the conditions of this
Agreement and of a Merger Agreement in the form attached hereto as Exhibit A
(the "Merger Agreement"), in accordance with the California General Corporation
Law and the Massachusetts General Corporation Law, the Buyer, the Target, and
the Transitory Subsidiary will carry out a business combination pursuant to
which the Target will merge with and into the Transitory Subsidiary, the
stockholders of the Target will convert all of their outstanding Target Shares
into Buyer Shares with an aggregate value of $20 million, subject to adjustment
in accordance with the provisions of Section 2(f) of this Agreement, all in
accordance with Code Section 368(a)(1)(A) and Section 368(a)(2)(E).
WHEREAS, the Boards of Directors of the Buyer and the Target
unanimously have determined that the Merger is fair to, and in the best
interests of, their respective companies and stockholders, and have approved
and adopted this Agreement and the Merger, and have recommended approval and
adoption of this Agreement and the Merger by their respective stockholders.
WHEREAS, the Buyer's Board of Directors has approved and adopted this
Agreement and has approved the Merger as the sole stockholder of the Transitory
Subsidiary.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the
meaning of Code Section 1504(a) or any similar group defined under a similar
provision of state, local, or foreign law.
"AVERAGE CLOSING BID PRICE" means the average of the closing
bid prices of the Buyer Shares as reported by Nasdaq during the Determination
Period.
"BUYER" has the meaning set forth in the preface above.
"BUYER FINANCIAL STATEMENTS" has the meaning set forth in
Section 4(d) below.
"BUYER-OWNED SHARE" means any Target Share that the Buyer owns
beneficially or of record.
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"BUYER SHARES" means shares of the Common Stock, $0.01 par
value per share, of the Buyer.
"BUYER'S MOST RECENT BALANCE SHEET" means the balance sheet
contained within the Buyer's Most Recent Financial Statements.
"BUYER'S MOST RECENT FINANCIAL STATEMENTS" has the meaning set
forth in Section 4(d) below.
"BUYER'S MOST RECENT FISCAL YEAR END" has the meaning set
forth in Section 4(d) below.
"CALIFORNIA GENERAL CORPORATION LAW" means the General
Corporation Law of the State of California, as amended.
"CERTIFICATE OF MERGER" has the meaning set forth in Section
2(d) below.
"CLOSING" has the meaning set forth in Section 2(c) below.
"CLOSING DATE" has the meaning set forth in Section 2(c)
below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning
the businesses and affairs of any of the Parties and their respective
Subsidiaries that is not already generally available to the public.
"CONTROLLED GROUP OF CORPORATIONS" has the meaning set forth
in Code Section 1563.
"CONVERSION OPTIONS" means the Target Options assumed by the
Buyer in the Merger.
"CONVERSION RATIO" has the meaning set forth in Section
2(f)(i) below.
"DEFINITIVE BUYER PROXY MATERIALS" means the definitive proxy
materials relating to the Special Buyer Meeting.
"DEFINITIVE TARGET PROXY MATERIALS" means the definitive proxy
materials relating to the Special Target Meeting.
"DETERMINATION PERIOD" shall mean the sixteen-day period
commencing on the tenth trading day immediately prior to the date of this
Agreement and terminating on the fifth trading day immediately thereafter.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 3
below.
"DISSENTING SHARES" has the meaning set forth in Section 2(i)
below.
"EFFECTIVE TIME" has the meaning set forth in Section 2(e)(i)
below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution
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retirement plan or arrangement which is an Employee Pension Benefit Plan, (c)
qualified defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan), or (d) Employee
Welfare Benefit Plan or material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in
ERISA Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in
ERISA Section 3(1).
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) concerning pollution or protection of
the environment, public health and safety, or employee health and safety,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE AGENT" has the meaning set forth in Section 2(g)(i)
below.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"GAAP" means United States generally accepted accounting
principles as in effect from time to time, applied on a consistent basis.
"XXXX-XXXXX-XXXXXX ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"INDEPENDENT AUDITORS" has the meaning set forth in Section
2(f)(iii) below.
"INITIAL CLOSING STATEMENT" has the meaning set forth in
Section 2(f)(iii) below.
"INITIAL CLOSING STATEMENT INCOME" has the meaning set forth
in Section 2(f)(iii) below.
"INITIAL CLOSING STATEMENT REVENUES" has the meaning set forth
in Section 2(f)(iii) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals
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in connection therewith, (e) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals), (f) all
computer software (including data and related documentation), (g) all other
proprietary rights, and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
"IRS" means the Internal Revenue Service.
"JOINT DISCLOSURE DOCUMENT" means the disclosure document
combining the Prospectus, the Definitive Buyer Proxy Materials, and the
Definitive Target Proxy Materials.
"LIABILITY" means any liability (whether absolute, accrued or
contingent), including any liability for Taxes.
"MASSACHUSETTS GENERAL CORPORATION LAW" means the General
Corporation Law of the Commonwealth of Massachusetts, as amended.
"MERGER" has the meaning set forth in Section 2(a) below.
"MERGER AGREEMENT" has the meaning set forth in the preamble
above.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA
Section 3(37).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA
Section 406 and Code Section 4975.
"PROSPECTUS" means the final prospectus relating to the
registration of the Buyer Shares issued in the Merger under the Securities Act.
"REGISTRATION STATEMENT" has the meaning set forth in Section
5(b)(i) below.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section
4043.
"REQUISITE BUYER STOCKHOLDER APPROVAL" means the affirmative
vote of the holders of a majority of the Buyer Shares entitled to vote thereon,
in favor of this Agreement and the Merger.
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"REQUISITE TARGET STOCKHOLDER APPROVAL" means the affirmative
vote of the holders of at least 90% of the Target Shares entitled to vote
thereon, in favor of this Agreement and the Merger.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for taxes not yet due and payable
or for taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"SPECIAL BUYER MEETING" has the meaning set forth in Section
5(b)(ii) below.
"SPECIAL TARGET MEETING" has the meaning set forth in Section
5(b)(ii) below.
"SUBCHAPTER S CORPORATION" has the meaning set forth in
Section 3(k) below.
"SUBSIDIARY" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"SURVIVING CORPORATION" has the meaning set forth in Section
2(a)(i) below.
"TARGET" has the meaning set forth in the preface above.
"TARGET ADVISORY FEE" means the transaction fee due Target's
investment banker, Concord Partners, Ltd., in connection with the Merger.
"TARGET DIRECTOR DESIGNEES" means Xxxxxxxx X. Xxxxx, III (to
be elected for a term of three years) and Xxxxx X. Xxxxxx (to be elected for a
term of two years), or if either Xx. Xxxxx or Xx. Xxxxxx is unable to complete
his respective term, the individual designated as a Target Director Designee to
complete such term by the surviving individuals who were members of the
Target's Board of Directors immediately prior to the Effective Time and
approved by the Buyer's Board of Directors, which approval shall not be
unreasonably withheld or delayed.
"TARGET FINANCIAL STATEMENTS" has the meaning set forth in
Section 3(g) below.
"TARGET OPTION PLAN" means the stock option plan under which
the Conversion Options are issued.
"TARGET OPTIONS" means the options to acquire shares of the
Target's common stock issued to the officers, directors, employees, and
consultants of the Target and identified on Schedule 2(f)(i) of the Disclosure
Schedule.
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"TARGET PROJECTED INCOME" means $1.532 million in before-tax
operating income for the nine month period ending September 30, 1996.
"TARGET PROJECTED REVENUES" means $15.192 million in revenues
for the nine month period ending September 30, 1996.
"TARGET SHARE" means any share of the Common Stock, $0.01 par
value per share, of the Target, including the shares of the Target Common Stock
issuable upon exercise of the Target Options.
"TARGET STOCKHOLDER" means any Person who or which holds any
Target Shares.
"TARGET'S MOST RECENT BALANCE SHEET" means the balance sheet
contained within the Target's Most Recent Financial Statements.
"TARGET'S MOST RECENT FINANCIAL STATEMENTS" has the meaning
set forth in Section 3(g) below.
"TARGET'S MOST RECENT FISCAL MONTH END" has the meaning set
forth in Section 3(g) below.
"TARGET'S MOST RECENT FISCAL YEAR END" has the meaning set
forth in Section 3(g) below.
"TARGET'S NOTICE" has the meaning set forth in Section 5(q)
hereof.
"TAX" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TO THE BUYER'S KNOWLEDGE" or other reference herein to the
Buyer's knowledge or awareness, means the actual knowledge of Xxxxxx X.
Xxxxxxxx, Xxxx X. Xxxxxx and Xxxxxxx X. XxXxx, after due inquiry of the
officers and directors of the Buyer and after reasonable investigation of the
books, records and files of the Buyer.
"TO THE TARGET'S KNOWLEDGE" or other reference herein to the
Target's knowledge or awareness, means the actual knowledge of Xxxxxxxx X.
Xxxxx, III, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxx, after due inquiry of the
officers and directors of the Target and after reasonable investigation of the
books, records and files of the Target.
"TOTAL TARGET VALUATION" means the maximum number of Buyer
Shares issuable to Target Stockholders in the Merger, following the adjustments
described in Section 2(f) below, multiplied by the Average Closing Bid Price.
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"TRADING DAY" means any day on which the New York Stock
Exchange is open for business.
"TRANSACTION FEES" has the meaning set forth in Section
2(f)(iv) below.
"TRANSITORY SUBSIDIARY" has the meaning set forth in the
preface above.
2. BASIC TRANSACTION.
(a) THE MERGER.
(i) On and subject to the terms and conditions of
this Agreement and the Merger Agreement, and in accordance with the
Massachusetts General Corporation Law and the California General
Corporation Law, the Target will merge with and into the Transitory
Subsidiary (the "MERGER") at the Effective Time. The Transitory
Subsidiary shall be the corporation surviving the Merger as a
wholly-owned subsidiary of the Buyer (the "SURVIVING CORPORATION").
(ii) The Target hereby represents that its Board
of Directors, at a meeting duly called and held at which a quorum was
present and acting throughout, has unanimously (A) determined that
this Agreement, the Merger Agreement and the Merger are fair to and in
the best interests of, the Target and its stockholders, (B) approved
this Agreement, the Merger Agreement and the Merger, and (C) resolved
to recommend approval and adoption by the stockholders of the Target
of this Agreement, the Merger Agreement and the Merger to the extent
required and in a manner permitted by the Massachusetts General
Corporation Law and the California General Corporation Law.
(b) ACTION BY THE BUYER. The Buyer, acting through its
Board of Directors, shall, in accordance with the California General
Corporation Law and the Securities Exchange Act: (i) as soon as practicable,
duly call, give notice of, convene and hold the Special Buyer Meeting for the
purpose of adopting and approving this Agreement, the Merger Agreement and the
Merger; (ii) include in the Definitive Buyer Proxy Materials the conclusion and
recommendation of the Board of Directors to the effect that the Board of
Directors, having determined that this Agreement, the Merger Agreement and the
Merger are in the best interests of the Buyer and its stockholders, has
approved this Agreement, the Merger Agreement and the Merger and recommends
that the stockholders of the Buyer vote in favor of the approval and adoption
of this Agreement, the Merger Agreement and the Merger; (iii) use its
reasonable best efforts to obtain the necessary approval and adoption of this
Agreement, the Merger Agreement and the Merger by the stockholders of the
Buyer; and (iv) as sole stockholder of the Transitory Subsidiary, shall adopt
and approve this Agreement, the Merger Agreement and the Merger.
(c) THE CLOSING. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Xxxxx & Xxxxxxxx LLP in Boston, Massachusetts, commencing at 9:00 a.m. local
time on the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the "CLOSING DATE").
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(d) ACTIONS AT THE CLOSING. At the Closing, (i) the
Target will deliver to the Buyer the various certificates, instruments, and
documents referred to in Section 6(a) below, (ii) the Buyer and the Transitory
Subsidiary will deliver to the Target the various certificates, instruments,
and documents referred to in Section 6(b) below, (iii) the Transitory
Subsidiary and the Buyer will file with the Secretary of State of the State of
California and the Target will file with the Secretary of State of the
Commonwealth of Massachusetts Certificates and Articles of Merger, as
applicable, in the forms attached hereto as Exhibits B-1 and B-2 (collectively
referred to herein as the "CERTIFICATE OF MERGER"), and (iv) the Buyer will
deliver to the Exchange Agent in the manner provided below in this Section 2
the certificates evidencing the Buyer Shares issued in the Merger.
(e) EFFECT OF MERGER.
(i) GENERAL. The Merger shall become effective
at the time (the "EFFECTIVE TIME") the Transitory Subsidiary and the
Target file the Certificate of Merger with the Secretary of State of
the Commonwealth of Massachusetts and the Secretary of State of the
State of California. The Merger shall have the effect set forth in
the Massachusetts General Corporation Law. The Surviving Corporation
may, at any time after the Effective Time, take any action (including
executing and delivering any document) in the name and on behalf of
either the Buyer or the Target in order to carry out and effectuate
the transactions contemplated by this Agreement.
(ii) CERTIFICATE OF INCORPORATION. The
Certificate of Incorporation of the Transitory Subsidiary in effect at
and as of the Effective Time will remain the Certificate of
Incorporation of the Surviving Corporation without any modification or
amendment in the Merger.
(iii) BYLAWS. The Bylaws of the Transitory
Subsidiary in effect at and as of the Effective Time will remain the
Bylaws of the Surviving Corporation without any modification or
amendment in the Merger.
(iv) DIRECTORS AND OFFICERS. The directors and
officers of the Transitory Subsidiary in office at and as of the
Effective Time will remain the directors and officers of the Surviving
Corporation (retaining their respective positions and terms of
office), together with the Target Director Designees.
(v) BUYER SHARES. Each Buyer Share issued and
outstanding at and as of the Effective Time will remain issued and
outstanding.
(vi) TARGET SHARES. No Target Share shall be
deemed to be outstanding or to have any rights other than those set
forth in Section 2(f) and Section 2(i) below after the Effective Time.
(f) CONVERSION OF TARGET SHARES. At the Effective Time,
by virtue of the Merger and without any action on the part of the Buyer, the
Target, the Transitory Subsidiary, or the holders of any of the foregoing
securities:
(i) Every option (other than the Target Options
identified in Section 2(f)(i) of the Disclosure Schedule), warrant, or
other right to acquire a share of Target Stock, and every share of
Target Stock issued and outstanding and owned by the Buyer immediately
prior to the Effective Time, shall automatically be canceled and
retired and shall cease to exist, and no cash or Buyer Shares, or
other consideration shall be delivered or deliverable or exchanged
therefor. For
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purposes of this Section 2(f)(i) and the calculation of the Conversion
Ratio, it is assumed that there are 9,884,157 Target Shares and the
Average Closing Bid Price is $8.00. At and as of the Effective Time,
(1) each Target Share (other than any Dissenting Shares or Buyer-owned
Shares) shall be converted into the right to receive .25293 Buyer
Shares (the ratio of .25293 Buyer Shares to one Target Share is
referred to herein as the "CONVERSION RATIO"), (2) each Dissenting
Share shall be converted into the right to receive payment from the
Buyer with respect thereto in accordance with the provisions of the
Massachusetts General Corporation Law, and (3) each Buyer-owned Share
shall be canceled; provided, however, that the Conversion Ratio shall
be subject to equitable adjustment in the event of any stock split,
stock dividend, reverse stock split, or other change in the number of
Target Shares outstanding; provided, however, that the Conversion
Ratio shall be subject to adjustments, if applicable, provided in
Section 2(f)(ii), (iii) and (iv) below. No fractional Buyer Shares
shall be issued. Any conversion which would otherwise result in a
fractional share shall be rounded up to the nearest whole Buyer Share.
(ii) The Conversion Ratio determined in accordance
with Section 2(f)(i) shall be adjusted (A) upward if the Average
Closing Bid Price is less than $7.00 so that the Total Target
Valuation is $17.5 million, and (B) downward if the Average Closing
Bid Price is more than $9.00 so that the Total Target Valuation is
$22.5 million; provided, however, that the Conversion Ratio shall be
subject to the downward adjustment provided in Section 2(f)(iii)
below, after the adjustment, if any, pursuant to this Section
2(f)(ii). By way of example, if the Average Closing Bid Price is
$6.00, then the Conversion Ratio shall be adjusted upward to .295085
so that the Target Stockholders receive up to 2,916,667 shares, which
when multiplied by $6.00 provides a Total Target Valuation of $17.5
million. Conversely, if the Average Closing Bid Price is $10.00, the
Conversion Ratio shall be adjusted downward to .227637 so that the
Target Stockholders receive up to 2,250,000 shares, which when
multiplied by $10.00 provides a Total Target Valuation of $22.5
million.
(iii) At least twenty (20) days prior to the
Special Buyer Meeting but no earlier than October 15, 1996, the Target
shall have prepared and delivered to the Buyer (A) an unaudited
statement of operations of the Target, for the nine-month period
ending September 30, 1996, prepared in accordance with GAAP (the
"INITIAL CLOSING STATEMENT") applied on the basis consistent with the
unaudited statement of operations of the Target for the six months
ended June 30, 1996, and (B) a certificate of the President and Chief
Financial Officer of Target, in their capacities as such, certifying
that the Initial Closing Statement was prepared on the basis described
above and as to the amount of the Target's revenues (the "INITIAL
CLOSING STATEMENT REVENUES") and the amount of the Target's before-
tax operating income (the "INITIAL CLOSING STATEMENT INCOME"). If,
within five (5) business days after receiving such Initial Closing
Statement, the Buyer notifies the Target that it disputes items
therein (and in such notice states the nature of the dispute in
reasonable detail), and if the Buyer and the Target are unable, within
five (5) business days after receipt by the Target of the Buyer's
notice of such dispute, to resolve such disputed items, then the Buyer
shall select a firm of nationally recognized certified public
accountants (other than such firms as are then engaged by the Target
or the Buyer) (the "INDEPENDENT AUDITORS"), who shall resolve all
remaining disputed items and its resolution shall be final and binding
on the Parties and enforceable in a court of law. The fees and
expenses of such Independent Auditors, if required hereunder, shall be
apportioned between the Parties to reflect the relative differences
between the position asserted by each party with respect to each
disputed item referred to such firm and the resolution reached by such
firm, with each party bearing the fees and expenses of such disputed
items that is further from the Independent
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Auditor's resolution. The Conversion Ratio determined in accordance
with the provisions of Section 2(f)(i) and (ii) and the applicable
Total Target Valuation shall be further adjusted downward by the
greater of the percentage that Initial Closing Statement Revenues or
Initial Closing Statement Income are less than 80% of the Target
Projected Revenues and Target Projected Income, respectively.
Following the $6.00 Average Closing Bid Price example provided in
Section 2(f)(ii) above, if the Initial Closing Statement Revenues and
the Initial Closing Statement Income are 15% and 20% less than 80% of
the Target Projected Revenues and the Target Projected Income,
respectively, then the Conversion Ratio shall be reduced by 20% to
.236068, which will provide a Total Target Valuation of $13,999,998,
based upon up to 2,333,333 Buyer Shares being issued.
(iv) The Conversion Ratio, after adjustment, if
any, pursuant to Section 2(f)(ii) and 2(f)(iii), shall be adjusted
downward so that the Total Target Valuation equals the Total Target
Valuation as determined under Section 2(f)(i)-(iii), less the sum of
(1) 66 2/3% of the Target Advisory Fee and (2) 100% of the legal and
accounting expenses of the Target incurred in connection with the
Merger. The sum of Section 2(f)(iv)(1) and Section 2(f)(iv)(2) above
are collectively referred to herein as the "TRANSACTION FEES."
Assuming that there are no adjustments pursuant to the provisions of
Section 2(f)(ii) and (iii) above, and that the Target Shares remain at
9,884,157 shares and that the Average Closing Bid Price remains at
$8.00, i.e. is not subject to the adjustments in Section 2(f)(ii)
above, and further assuming that the Transaction Fees are $500,000,
then the Total Target Valuation shall be reduced to $19,500,000,
reducing the Conversion Ratio to .2466067. This adjusted Conversion
Ratio is arrived at by taking the net value of the Target, i.e.
$19,500,000, dividing it by $8.00, which quotient of 2,437,500 equals
the total number of Buyer Shares to be issued hereunder, and dividing
such quotient by the Target Shares, i.e. 9,884,157.
(g) PROCEDURE FOR PAYMENT.
(i) Immediately after the Effective Time, (A) the
Buyer will furnish to U.S. Stock Transfer Corporation (the "EXCHANGE
AGENT") instructions directing the Exchange Agent to issue to each
Target Shareholder (other than holders of Dissenting Shares and
Buyer-owned Shares) their pro rata share of Buyer Shares equal to the
product of (I) the Conversion Ratio as adjusted in accordance with the
provisions of Section 2(f)(ii), (iii) and (iv) above times (II) the
number of Target Shares such shareholder owns, and (B) the Buyer will
cause the Exchange Agent to mail a letter of transmittal (with
instructions for its use) in the form attached hereto as Exhibit C to
each record holder of outstanding Target Shares for the holder to use
in surrendering the certificates which represented his, her, or its
Target Shares in exchange for a certificate representing the number of
Buyer Shares to which he, she, or it is entitled.
(ii) The Buyer will not pay any dividend or make
any distribution on Buyer Shares (with a record date at or after the
Effective Time) to any record holder of outstanding Target Shares
until the holder surrenders for exchange his, her, or its certificates
which represented Target Shares. The Buyer instead will pay the
dividend or make the distribution to the Exchange Agent in trust for
the benefit of the holder pending surrender and exchange. The Buyer
may cause the Exchange Agent to invest any cash the Exchange Agent
receives from the Buyer as a dividend or distribution in one or more
of the permitted investments set forth on Exhibit D attached hereto;
provided, however, that the terms and conditions of the investments
shall be such as to permit the Exchange Agent to make prompt payments
of cash to the holders of outstanding Target Shares as necessary. The
Buyer may cause the Exchange Agent to pay over to the Buyer any net
earnings with respect to the investments, and the Buyer will replace
promptly
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any cash which the Exchange Agent loses through investments. In no
event, however, will any holder of outstanding Target Shares be
entitled to any interest or earnings on the dividend or distribution
pending receipt.
(iii) The Buyer may cause the Exchange Agent to
return any Buyer Shares and dividends and distributions thereon
remaining unclaimed 180 days after the Effective Time, and thereafter
each remaining record holder of outstanding Target Shares shall be
entitled to look to the Buyer (subject to abandoned property, escheat,
and other similar laws) as a general creditor thereof with respect to
the Buyer Shares and dividends and distributions thereon to which he,
she, or it is entitled upon surrender of his, her, or its
certificates.
(iv) The Buyer shall pay all charges and expenses
of the Exchange Agent.
(h) CLOSING OF TRANSFER RECORDS. After the close of
business on the Closing Date, transfers of Target Shares outstanding prior to
the Effective Time shall not be made on the stock transfer books of the
Surviving Corporation. On or after the Closing Date, any Target Share
presented to the Buyer, the Exchange Agent, or the Surviving Corporation, as
the case may be, shall be converted into the applicable number of Buyer Shares.
(i) DISSENTING SHARES.
(i) Notwithstanding any other provision of this
Agreement to the contrary, shares of Target Stock that are outstanding
immediately prior to the Effective Time and which are held by Target
Stockholders who shall not have voted in favor of the Merger or
consented thereto in writing and who shall be entitled to and shall
have demanded properly in writing appraisal for such shares in
accordance with the Massachusetts General Corporation Law and who
shall not have withdrawn such demand or otherwise have forfeited
appraisal rights (collectively, the "DISSENTING SHARES") shall not be
converted into or represent the right to receive Buyer Shares. Such
stockholders shall be entitled to receive payment of the appraised
value of such Target Shares held by them in accordance with the
provisions of the Massachusetts General Corporation Law, except that
all Dissenting Shares held by such stockholders, who shall have failed
to perfect or who effectively shall have withdrawn, forfeited, or lost
their rights to appraisal of such Target Shares under the
Massachusetts General Corporation Law, shall thereupon be deemed to
have been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive, the Buyer Shares, upon
surrender, in the manner provided in Section 2(f) above.
(ii) The Target shall give the Buyer prompt notice
of any demands for appraisal received by it, withdrawals of such
demands, and any other instruments served pursuant to the
Massachusetts General Corporation Law and received by the Target and
relating thereto. The Target (and after the Closing, the Transitory
Subsidiary) shall direct all negotiations and proceedings with respect
to demand for appraisal rights under the Massachusetts General
Corporation Law.
3. REPRESENTATIONS AND WARRANTIES OF THE TARGET. The Target
represents and warrants to the Buyer that the statements contained in this
Section 3 are correct and complete as of the date of this Agreement and,
subject to amendment by Target for events occurring after the date of this
Agreement, will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3), except as set forth in the disclosure
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schedule accompanying this Agreement and initialed by the Parties (the
"DISCLOSURE SCHEDULE"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
3.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER.
The Target is a corporation duly organized, validly existing, and in corporate
good standing under the laws of the jurisdiction of its incorporation. The
Target is duly qualified as a foreign corporation in each jurisdiction where
its ownership or leasing of property or where the nature of its activities
requires such qualification, except to the extent that the failure to so
qualify would not have a material adverse effect on the business, operations,
condition (financial or otherwise), assets or Liabilities of the Target. The
Target has full corporate power and authority to carry on the businesses in
which it is engaged and to own, lease, and use the properties owned, leased,
and used by it, and has in full force and effect all authorizations and has
made all filings to the extent required for such ownership, lease, and use of
its properties and the conduct of its business, except to the extent that the
failure to obtain such authorizations or to make such filings would not have a
material adverse effect on the operations of the Target.
(b) CAPITALIZATION. The entire authorized capital stock
of the Target consists of 11,000,000 Target Shares, of which 9,021,657 shares
of common stock of Target are issued and outstanding and no Target Shares are
held in treasury. All of the issued and outstanding Target Shares have been
duly authorized and are validly issued, fully paid, and nonassessable. There
are also outstanding Target Options for the purchase of 862,500 Target Shares,
excluding 15,000 Target Options to be canceled prior to the Effective Time.
Except for the Target Options, there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require the Target to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to the Target.
(c) AUTHORIZATION OF TRANSACTION. The Target has the
requisite corporate power and authority to execute and deliver this Agreement
and the Merger Agreement and to perform its obligations hereunder and
thereunder; provided, however, that the Target cannot consummate the Merger
unless and until it receives the Requisite Target Stockholder Approval. This
Agreement constitutes the valid and legally binding obligation of the Target,
enforceable against Target in accordance with its terms and conditions, except
as such enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratoriums or other similar laws affecting the enforcement of
creditors' rights generally and the availability of equitable remedies
(regardless of whether enforceability is considered in a proceeding at law or
in equity).
(d) NONCONTRAVENTION. To the Target's Knowledge, neither
Target's execution and the delivery of this Agreement, nor Target's
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Target is subject or any provision of the charter or bylaws
of the Target, which would have a material adverse effect on the Target, or
(ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any material agreement,
contract, lease, license, instrument or other arrangement to which the Target
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets). To
the Target's Knowledge, and other than in connection with the Massachusetts
General Corporation Law, the Target does not need to give any notice to, make
any
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filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
any such notice, to make any such filing, or obtain any such authorization,
consent, or approval would not have a material adverse effect on the ability of
Target to consummate the transactions contemplated by this Agreement or have a
material adverse effect on the Target's business, operations, condition
(financial or otherwise), assets or Liabilities as in existence immediately
prior to the Closing.
(e) TITLE TO ASSETS. The Target has good title to, or a
valid leasehold interest in, the tangible properties and assets used by the
Target, located on its premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Target's Most Recent Balance Sheet.
(f) SUBSIDIARIES. There are no Subsidiaries of the
Target.
(g) FINANCIAL STATEMENTS. Attached hereto as Exhibit E
are the following financial statements (collectively the "TARGET FINANCIAL
STATEMENTS"): (i) audited balance sheets and statements of operations or
income, stockholders' deficit or investment, and cash flows as of and for the
fiscal years ended December 31, 1993, 1994, and 1995 (the "TARGET'S MOST RECENT
FISCAL YEAR END") for the Target; and (ii) unaudited balance sheet and
statements of operations and cash flows (the "TARGET'S MOST RECENT FINANCIAL
STATEMENTS") as of and for the six months ended June 30, 1996 (the "TARGET'S
MOST RECENT FISCAL MONTH END") for the Target. The Target Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, present
fairly the financial condition of the Target as of such dates and the results
of operations of the Target for such periods, are correct and complete in all
material respects and are consistent in all material respects with the books
and records of the Target; provided, however, that the Target's Most Recent
Financial Statements are subject to normal year-end adjustments and lack
footnotes and other presentation items.
(h) EVENTS SUBSEQUENT TO TARGET'S MOST RECENT FISCAL
MONTH END. Since the Target's Most Recent Fiscal Month End and continuing up
to and including the date of this Agreement, there has not been any material
adverse change in the business, financial condition, operations or results of
operations of the Target. Without limiting the generality of the foregoing,
since that date:
(i) the Target has not sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than in
the Ordinary Course of Business;
(ii) the Target has not entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving more
than $50,000 or outside the Ordinary Course of Business;
(iii) the Target has not and to the Target's
Knowledge, no other party has accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more
than $50,000 to which the Target is a party or by which the Target is
bound;
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(iv) the Target has not imposed any Security
Interest upon any of its assets, tangible or intangible, except in
favor of Buyer;
(v) the Target has not made any capital
expenditure (or series of related capital expenditures) either
involving more than $50,000 or outside the Ordinary Course of
Business;
(vi) the Target has not made any capital
investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments,
loans, and acquisitions) either involving more than $50,000 or outside
the Ordinary Course of Business;
(vii) the Target has not issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation either
involving more than $50,000 singly or $100,000 in the aggregate,
except with respect to the Buyer;
(viii) the Target has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) the Target has not canceled, compromised,
waived, or released any right or claim (or series of related rights
and claims) either involving more than $50,000 or outside the Ordinary
Course of Business;
(x) the Target has not granted any license or
sublicense of any rights under or with respect to any Intellectual
Property;
(xi) there has been no change made or authorized
in the charter or bylaws of the Target;
(xii) the Target has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock, except in
connection with the exercise of the Target Options;
(xiii) the Target has not declared, set aside, or
paid any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock;
(xiv) the Target has not experienced any material
damage, destruction, or loss (whether or not covered by insurance) to
its property;
(xv) the Target has not made any loan to, or
entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of Business;
(xvi) the Target has not entered into any
employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or
agreement;
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(xvii) the Target has not granted any increase in
the base compensation of any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xviii) the Target has not adopted, amended, modified
or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with
respect to any other Employee Benefit Plan);
(xix) the Target has not made any other change in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xx) the Target has not made or pledged to make
any charitable or other capital contribution outside the Ordinary
Course of Business;
(xxi) there has not been any other material
occurrence, event, incident, action, failure to act, or transaction
outside the Ordinary Course of Business involving the Target; and
(xxii) the Target has not committed to any of the
foregoing, except in respect to the transactions contemplated by this
Agreement.
(i) UNDISCLOSED LIABILITIES. The Target has no material
Liability except for (i) Liabilities reflected on the Target's Most Recent
Balance Sheet (and in any notes thereto and under the capital leases set forth
in the notes to the Target Financial Statements for the Target's Most Recent
Fiscal Year End) and (ii) Liabilities which have arisen after the Target's Most
Recent Fiscal Month End in the Ordinary Course of Business, none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law.
(j) LEGAL COMPLIANCE. To the Target's Knowledge, the
Target has complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), except to the extent any such failure would not have a material
adverse effect on the operations of the Target, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against the Target alleging any failure so to
comply and, to the Target's Knowledge, there is no basis for any such action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice to be filed or to be commenced against any of them alleging any failure
so to comply.
(k) TAX MATTERS.
(i) The Target elected at inception to be treated
as a corporation taxed under Subchapter S of the Code (a "SUBCHAPTER S
CORPORATION") and to the Target's Knowledge has been qualified as a
Subchapter S Corporation thereunder throughout its existence. The
Target has filed all Tax Returns required to be filed by it. All such
Tax Returns were correct and complete in all material respects. All
Taxes owed by the Target (whether or not shown on any Tax Return) have
been paid. The Target currently is not the beneficiary of any
extension of time within which to file any Tax Return. No claim has
ever been made by an authority in a jurisdiction where the Target does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction.
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There are no Security Interests on any of the assets of the Target
that arose in connection with any failure (or alleged failure) to pay
any Tax.
(ii) The Target has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(iii) The Target does not expect any authority to
assess any additional Taxes for any period for which Tax Returns have
been filed. There is no dispute or claim, and to the Target's
Knowledge there is no basis for any such dispute or claim, concerning
any Tax Liability of the Target. Section 3(k) of the Disclosure
Schedule lists all federal, state, local, and foreign income Tax
Returns filed with respect to the Target for taxable periods ended on
or after December 31, 1993, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the
subject of audit. The Target has delivered to the Buyer correct and
complete copies of all state, local, and federal income Tax Returns,
examination reports, and statements of deficiencies assessed against
or agreed to by the Target since December 31, 1993.
(iv) The Target has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(v) The unpaid Taxes of the Target (A) did not,
as of the Target's Most Recent Fiscal Month End, exceed the reserve
for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income)
reflected in the Target's Most Recent Balance Sheet (and in any notes
thereto) and (B) will not exceed that reserve as adjusted for the
passage of time up to and including the Closing Date in accordance
with the past custom and practice of the Target in filing its Tax
Returns.
(vi) The Target has not filed a consent under Code
Section 341(f) concerning collapsible corporations. The Target has
not made any payments, is not obligated to make any payments, nor is
the Target a party to any agreement that under certain circumstances
would obligate it to make any payments that will not be deductible
under Code Section 280G. The Target has not been a United States real
property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). The Target has disclosed on its federal income Tax
Returns all positions taken therein that would give rise to a
substantial understatement of federal income Tax within the meaning of
Code Section 6662. The Target is not a party to any Tax allocation or
sharing agreement. The Target (A) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was the Target) nor (B)
does the Target have any Liability for the Taxes of any Person (other
than the Target) under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(vii) Section 3(k) of the Disclosure Schedule sets
forth the following information with respect to the Target as of the
most recent practicable date (as well as on an estimated pro forma
basis as of the Closing giving effect to the consummation of the
transactions contemplated hereby): (A) the basis of the Target in its
assets; and (B) to the extent applicable, the amount of any net
operating loss, net capital loss, unused investment or other credit,
unused foreign tax, or excess charitable contribution allocable to the
Target.
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(l) REAL PROPERTY.
(i) The Target does not own any real property:
(ii) Section 3(l)(ii) of the Disclosure Schedule
lists and describes briefly all real property leased or subleased to
the Target. The Target has delivered to the Buyer correct and
complete copies of the leases and subleases listed in Section 3(l)(ii)
of the Disclosure Schedule (as amended to date). With respect to each
lease and sublease listed in Section 3(l)(ii) of the Disclosure
Schedule,
(A) the lease or sublease is in full
force and effect and constitutes a legal, valid and binding
agreement of the Target, enforceable in accordance with its
terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratoriums
or other similar laws affecting the enforcement of creditors'
rights generally and the availability of equitable remedies
(regardless of whether enforceability is considered in a
proceeding at law or in equity);
(B) the Target is not and to the
Target's Knowledge, no other party to the lease or sublease is
in material breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a
material breach or default or permit termination,
modification, or acceleration thereunder;
(C) there are no oral agreements,
forebearance programs in effect or material disputes as to the
lease or sublease;
(D) the Target has not assigned,
transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or subleasehold;
(E) (i) to the Target's Knowledge, the
Target is not in violation of any applicable laws or
governmental rules and regulations in regard to the use of the
facilities leased or subleased thereunder, and (ii) the Target
has not received any written notice from any governmental
authority of any such violation; and
(F) all facilities leased or subleased
thereunder are supplied with or have available utilities and
other services suitable for the operation of said facilities.
(m) INTELLECTUAL PROPERTY.
(i) The Target owns or has the right to use
pursuant to license, sublicense, agreement, or permission all
Intellectual Property sufficient for the operation of the businesses
of the Target as presently conducted and as presently proposed to be
conducted. The Target has taken sufficient protective measures to
maintain and protect each item of Intellectual Property that it owns
or uses.
(ii) To the Target's Knowledge, the Target has not
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of third parties,
and the Target has not received any charge, complaint, claim, demand,
or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim
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that the Target must license or refrain from using any Intellectual
Property rights of any third party). To the Target's Knowledge, no
third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
the Target.
(iii) The Target does not own any patent or
application therefor. Section 3(m)(iii) of the Disclosure Schedule
identifies each material license, agreement, or other permission which
the Target has granted to any third party with respect to any of its
Intellectual Property. The Target has delivered to the Buyer correct
and complete copies of all material licenses, agreements, and
permissions (as amended to date) and has made available to the Buyer
correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such
item. Section 3(m)(iii) of the Disclosure Schedule also identifies
each trade name or unregistered trademark used by the Target in
connection with any of its businesses. With respect to each item of
Intellectual Property required to be identified in Section 3(m)(iii)
of the Disclosure Schedule,
(A) to the Target's Knowledge, the
Target possesses all right, title, and interest in and to the
item, free and clear of any Security Interest, license, or
other restriction;
(B) the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge; and
(C) no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is
pending or, to the Target's Knowledge, threatened which
challenges the legality, validity, enforceability, use, or
ownership of the item, and there is no basis for any such
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand; and
(D) the Target has never agreed to
indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect
to the item pursuant to any material agreement relating to the
Intellectual Property.
(iv) Section 3(m)(iv) of the Disclosure Schedule
identifies each material item of Intellectual Property that any third
party owns and that the Target uses pursuant to license, sublicense,
agreement, or permission. The Target has delivered to the Buyer
correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to
each item of Intellectual Property required to be identified in
Section 3(m)(iv) of the Disclosure Schedule,
(A) the license, sublicense, agreement,
or permission covering the item is in full force and effect
and constitutes a legal, valid and binding agreement of the
Target, enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratoriums or other similar laws
affecting the enforcement of creditors' rights generally and
the availability of equitable remedies (regardless of whether
enforceability is considered in a proceeding at law or in
equity);
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(B) to the Target's Knowledge, (i) the
Target is not in material breach or default, and (ii) no event
has occurred which with notice or lapse of time would
constitute a material breach or default or permit termination,
modification, or acceleration thereunder;
(C) the Target is not a party to any
sublicense material to the business of the Target;
(D) to the Target's Knowledge, the
underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
(E) no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is
pending or is threatened which challenges the legality,
validity, or enforceability of the underlying item of
Intellectual Property; and
(F) the Target has not granted any
sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
(v) To the Target's Knowledge, the Target will
not interfere with, infringe upon, misappropriate, or otherwise come
into conflict with, any Intellectual Property rights of third parties
as a result of the continued operation of its businesses as presently
conducted and as presently proposed to be conducted.
(n) TANGIBLE ASSETS. Section 3(n) of the Disclosure
Schedule lists the Target's tangible assets. The Target owns or leases all
buildings, machinery, equipment, and other tangible assets adequate for the
conduct of the business as presently conducted and as presently proposed to be
conducted. Each such tangible asset is free from material defects (patent and
latent), has been maintained in all material respects in accordance with normal
industry practice, is in reasonable operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it presently
is used and presently is proposed to be used.
(o) INVENTORY. The inventory of the Target consists of
purchased parts and finished goods, all of which is presently usable and
salable for the purpose for which it was procured, except for obsolete items
and items of below standard quality, all of which have been written off or
written down to their net realizable value as reflected in the aggregate on the
Target's Most Recent Balance Sheet, to be adjusted for the passage of time up
to and including the Closing Date in accordance with past custom and practice
of the Target.
(p) CONTRACTS. Section 3(p) of the Disclosure Schedule
lists the following contracts and other agreements to which the Target is a
party, except contracts and other agreements involving a potential acquisition
of the capital stock or assets of Target, which by their terms are subject to a
non-disclosure covenant:
(i) any agreement (or group of related
agreements) for the lease of personal property to or from any Person
providing for lease payments in excess of $25,000 per annum;
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(ii) any agreement (or group of related
agreements) for the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for the furnishing
or receipt of services, the performance of which will extend over a
period of more than one year, involve consideration in excess of
$50,000 per year, or to the Target's Knowledge, result in a material
loss to the Target;
(iii) any agreement concerning a partnership or
joint venture;
(iv) any agreement (or group of related
agreements) under which it has created, incurred, assumed, or
guaranteed any indebtedness for borrowed money, or any capitalized
lease obligation, in excess of $25,000 or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
non-competition, except as hereinabove provided;
(vi) any agreement involving any of the Target
Stockholders and their Affiliates (other than the Target);
(vii) any profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation, severance, or
other material plan or arrangement for the benefit of its current or
former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis, not
cancelable on 30 days or less notice, and which provides for annual
compensation in excess of $25,000 or provides severance benefits;
(x) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xi) except as otherwise listed pursuant to this
Section 3(p), any agreement under which the consequences of a default
or termination could have a material adverse effect on the business,
operations, condition (financial or otherwise), assets or Liabilities
of the Target, other than client or customer sales contracts entered
into in the Ordinary Course of Business of the Target;
(xii) any other agreement (or group of related
agreements) the performance of which involves annual consideration in
excess of $50,000.
The Target has delivered to the Buyer a correct and complete copy of each
written agreement listed in Section 3(p) of the Disclosure Schedule (as amended
to date) and a written summary setting forth the material terms and conditions
of each oral agreement referred to in Section 3(p) of the Disclosure Schedule.
With respect to each such agreement, to the Target's Knowledge: (A) the
agreement is in full force and effect and constitutes a legal, valid and
binding agreement of the Target, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratoriums or other similar laws affecting the
enforcement of creditors' rights generally and the availability of equitable
remedies (regardless of whether enforceability is considered in a proceeding at
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law or inequity); and (B) no party is in material breach or default, and no
event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under the agreement.
(q) NOTES AND ACCOUNTS RECEIVABLE. All notes and
accounts receivable of the Target are reflected properly on its books and
records, are valid receivables and are collectible in the aggregate, net of
reserves for bad debts, pending sales, and cancellations, as reflected in the
Target's Most Recent Balance Sheet (or in any notes thereto), to be adjusted
for the passage of time up to and including the Closing Date in accordance with
the past custom and practice of the Target.
(r) POWERS OF ATTORNEY. There are no outstanding powers
of attorney executed on behalf of the Target.
(s) INSURANCE. Section 3(s) of the Disclosure Schedule
sets forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the Target has
been a party, a named insured, or otherwise the beneficiary of coverage at any
time within the past three years:
(i) the name, address, and telephone number of
the agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) a description of any retroactive premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy, to the Target's Knowledge: (A) the
policy is in full force and effect and constitutes a legal, valid and binding
agreement, enforceable in accordance with its terms, of the Target, except as
such enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratoriums or other similar laws affecting the enforcement of
creditors' rights generally and the availability of equitable remedies
(regardless of whether enforceability is considered in a proceeding at law or
inequity); and (B) neither the Target nor any other party to the policy is in
material breach or default (including with respect to the payment of premiums
or the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a material breach or default, or permit
termination, modification, or acceleration, under the policy.
(t) LITIGATION. Section 3(t) of the Disclosure Schedule
sets forth in each instance in which the Target (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or, to the Target's Knowledge, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. To the Target's Knowledge,
there is no basis for any present or future action, suit, proceeding, hearing
and investigation that could result in any material adverse change in the
business, operations, condition (financial or otherwise), assets or Liabilities
of the Target.
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(u) PRODUCT WARRANTY. Within the last 48 months, each
product sold, leased, or delivered by the Target has been in conformity with
all express and implied warranties of the Target, and the Target does not have
any Liability (and to the Target's Knowledge, there is no basis for any present
or future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability) for
replacement or repair thereof or other damages in connection therewith, subject
only to the reserve for product warranty claims reflected in the Target's Most
Recent Balance Sheet to be adjusted for the passage of time up to and including
the Closing Date in accordance with the past custom and practice of the Target.
Section 3(u) of the Disclosure Schedule includes copies of the standard terms
and conditions of sale or lease for the Target (containing applicable guaranty,
warranty, and indemnity provisions).
(v) EMPLOYEES. To the Target's Knowledge, no executive,
key employee, or group of employees has tendered resignations or expressed
their intentions to terminate employment with the Target. The Target is not a
party to or bound by any collective bargaining agreement, nor has the Target
experienced any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. To the Target's Knowledge, there is no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Target.
(w) EMPLOYEE BENEFITS.
(i) Section 3(w) of the Disclosure Schedule lists
each Employee Benefit Plan that the Target maintains or as to which
the Target contributes.
(A) Each such Employee Benefit Plan (and
each related trust, insurance contract, or fund) complies in
material form and in operation in all material respects with
the applicable requirements of ERISA, the Code, and other
applicable laws.
(B) All reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1's, and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Section 4980B will have been met
in all material respects prior to the Closing Date with
respect to each applicable Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) All contributions (including all
employer contributions and employee salary reduction
contributions) which are due have been paid to each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan and any and all contributions for any period ending on or
before the Closing Date which are not yet due have been paid
to each such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of the Target.
All premiums or other payments for all periods ending on or
before the Closing Date have been paid or accrued in
accordance with the past custom and practice of the Target
with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan
which is an Employee Pension Benefit Plan meets the material
formal requirements of a "qualified plan" under Code Section
401(a) and has received, within the last two years, an updated
favorable determination letter from the Internal Revenue
Service.
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(E) The Target does not maintain and has
not maintained any Employee Pension Benefit Plan which is a
defined benefit type plan.
(F) The Target has delivered to the
Buyer correct and complete copies of the plan documents and
summary plan descriptions, the most recent determination
letter received from the IRS, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts,
and other funding agreements which implement each such
Employee Benefit Plan.
(ii) The Target is not a member of a Controlled
Group of Corporations. With respect to each Employee Benefit Plan
that the Target maintains or ever has maintained or to which the
Target contributes, ever has contributed, or ever has been required to
contribute:
(A) No such Employee Benefit Plan which
is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or partially
terminated or been the subject of a Reportable Event as to
which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been
instituted or, to the Target's Knowledge, threatened.
(B) To the Target's Knowledge, there
have been no Prohibited Transactions with respect to any such
Employee Benefit Plan. To the Target's Knowledge, no
Fiduciary has any Liability for breach of fiduciary duty or
any other failure to act or comply in connection with the
administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing,
or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or, to the
Target's Knowledge, threatened. To the Target's Knowledge,
there is no basis for any such action, suit, proceeding,
hearing, or investigation.
(C) The Target has not incurred, nor to
the Target's Knowledge, is there any reason to expect that the
Target will incur any Liability to the PBGC (other than PBGC
premium payments) or otherwise under Title IV of ERISA
(including any withdrawal Liability) or under the Code with
respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(iii) The Target does not contribute to, never has
contributed to, and never has been required to contribute to any
Multiemployer Plan, nor does it have any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iv) The Target does not maintain and never has
maintained and does not contribute, never has contributed, and never
has been required to contribute to any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other welfare-type
benefits for current or future retired or terminated employees, their
spouses, or their dependents (other than in accordance with Code
Section 4980B).
(x) GUARANTIES. The Target is neither a guarantor nor
liable for any Liability or obligation (including indebtedness) of any other
Person.
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(y) ENVIRONMENTAL, HEALTH, AND SAFETY. The Target has
complied in all material respects with all Environmental, Health, and Safety
Laws, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against the
Target alleging any failure so to comply. Without limiting the generality of
the preceding sentence, the Target has obtained and been in compliance with all
of the terms and conditions of all material permits, licenses, and other
authorizations which are required under, and has complied with all other
material limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained in,
all Environmental, Health, and Safety Laws, except where such non-compliance
would not have a material adverse effect on the operations of the Target.
(z) CERTAIN BUSINESS RELATIONSHIPS WITH THE TARGET. None
of the Target Stockholders and their Affiliates has been involved in any
business or contractual (whether written or oral) arrangement or relationship
with the Target within the past 12 months involving aggregate annual payments
in excess of $50,000, and none of the Target Stockholders and their Affiliates
owns any asset, tangible or intangible, which is used in the business of the
Target.
(aa) BROKERS' FEES. Except with respect to Concord
Partners, Ltd., and as otherwise as provided in Section 8(k), the Target has no
liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement.
(ab) CONTINUITY OF BUSINESS ENTERPRISE. The Target
operates at least one significant historic business line, or owns at least a
significant portion of its historic business assets, in each case within the
meaning of Treas. Reg. Section 1.368-1(d).
(ac) SUBSTANTIAL CUSTOMERS, BROKERS AND SUPPLIERS.
(i) Section 3(ac) of the Disclosure Schedule
lists the 10 customers of the Target with the highest volume of
purchases from the Target during the six-month period ending June 30,
1996, and the amount for which each such customer was invoiced during
such period.
(ii) The Target has not been declared ineligible
to bid on a state or federal government contract.
(iii) No customer listed on Section 3(ac) of the
Disclosure Schedule has (A) ceased, or notified the Target in writing
of an intention to cease dealing with or through the Target; (B)
reduced or notified the Target in writing of an intention to reduce,
substantially its dealings with or through the Target; or (C) changed,
or notified the Target in writing of an intention to change,
substantially the terms on which it is prepared to deal with or
through the Target. To the Target's Knowledge all of the customers
listed in Section 3(ac) of the Disclosure Schedule will continue to be
a customer of the Transitory Subsidiary after the Closing.
(ad) DISCLOSURE. None of the information that Target has
provided in connection with the representations and warranties provided for
herein contain or that the Target will supply specifically for use in the
Registration Statement, the Prospectus, or the Definitive Buyer Proxy Materials
will contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they are or will be made, not
misleading.
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4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Target that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout
this Section 4), except as set forth in the Disclosure Schedule. The
Disclosure Schedule will be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Section 4.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER.
The Buyer is a corporation duly organized, validly existing, and in corporate
good standing under the laws of the jurisdiction of its incorporation. The
Buyer is duly qualified as a foreign corporation in each jurisdiction where its
ownership or leasing of property or where the nature of its activities requires
such qualification, except to the extent that the failure to so qualify would
not have a material adverse effect on the business, operations, condition
(financial or otherwise), assets or Liabilities of the Buyer. The Buyer has
full corporate power and authority to carry on the businesses in which it is
engaged and to own, lease, and use the properties owned, leased, and used by
it, and has in full force and effect all authorizations and has made all
filings to the extent required for such ownership, lease, and use of its
properties and the conduct of its business, except to the extent that the
failure to obtain such authorizations or to make such filings would not have a
material adverse effect on the operations of the Buyer.
(b) CAPITALIZATION. The entire authorized capital stock
of the Buyer consists of 5,000,000 shares of preferred stock, none of which is
outstanding, and 10,000,000 Buyer Shares, of which 3,243,057 Buyer Shares are
issued and outstanding (including 300,000 Buyer Shares currently being offered
in a non-related private placement of common stock) and no Buyer Shares are
held in treasury. All of the issued and outstanding Buyer Shares have been
duly authorized and are validly issued, fully paid, and nonassessable (except
for the Buyer Shares currently offered, which will be fully paid and non-
assessable when issued). All of the Buyer Shares to be issued in the Merger
have been duly authorized and, upon consummation of the Merger, will be validly
issued, fully paid, and nonassessable. Except for the options and warrants
listed on Section 4(b) to the Disclosure Schedule, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Buyer to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Buyer.
(c) AUTHORIZATION OF TRANSACTION. The Buyer has the
requisite corporate power and authority to execute and deliver this Agreement
and the Merger Agreement and to perform its obligations hereunder and
thereunder; provided, however, that the Buyer cannot consummate the Merger
unless and until it receives the Requisite Buyer Stockholder Approval. This
Agreement constitutes the valid and legally binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms and conditions,
except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratoriums or other similar laws affecting the
enforcement of creditors' rights generally and the availability of equitable
remedies (regardless of whether enforceability is considered in a proceeding at
law or in equity).
(d) FINANCIAL STATEMENTS. Attached hereto as Exhibit F
are the following financial statements (collectively the "BUYER FINANCIAL
STATEMENTS"): (i) audited balance sheets and statements of operations,
stockholders' equity (deficit), and cash flows as of and for the fiscal years
ended June 30, 1994, 1995, and 1996 (the "BUYER'S MOST RECENT FISCAL YEAR
END"). The Buyer Financial Statements as of and for the fiscal year ended June
30, 1996 shall be referred to as the "BUYER'S MOST RECENT
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FINANCIAL STATEMENTS." The Buyer Financial Statements (including the Notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of the Buyer as of such dates and the results of operations of the
Buyer for such periods, are correct and complete in all material respects, and
are consistent in all material respects with the books and records of the
Buyer.
(e) EVENTS SUBSEQUENT TO THE BUYER'S MOST RECENT FISCAL
YEAR END. Since the Buyer's Most Recent Fiscal Year End and continuing up to
and including the date of this Agreement, there has not been any material
adverse change in the business, financial condition, operations or results of
operations of the Buyer. Without limiting the generality of the foregoing,
since that date:
(i) the Buyer has not sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than in
the Ordinary Course of Business;
(ii) the Buyer has not entered into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either involving more than $50,000 or
outside the Ordinary Course of Business;
(iii) the Buyer has not and to the Buyer's
Knowledge, no other party has accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more
than $50,000 to which the Buyer is a party or by which the Buyer is
bound;
(iv) the Buyer has not imposed any Security
Interest upon any of its assets, tangible or intangible;
(v) the Buyer has not made any capital
expenditure (or series of related capital expenditures) either
involving more than $50,000 or outside the Ordinary Course of
Business;
(vi) the Buyer has not made any capital investment
in, any loan to, or any acquisition of the securities or assets of,
any other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $50,000 or outside the
Ordinary Course of Business;
(vii) the Buyer has not issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation either
involving more than $50,000 singly or $100,000 in the aggregate;
(viii) the Buyer has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) the Buyer has not canceled, compromised,
waived, or released any right or claim (or series of related rights
and claims) either involving more than $50,000 or outside the Ordinary
Course of Business;
(x) the Buyer has not granted any license or
sublicense of any rights under or with respect to any Intellectual
Property;
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(xi) there has been no change made or authorized
in the charter or bylaws of the Buyer;
(xii) the Buyer has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock;
(xiii) the Buyer has not declared, set aside, or
paid any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock;
(xiv) the Buyer has not experienced any material
damage, destruction, or loss (whether or not covered by insurance) to
its property;
(xv) the Buyer has not made any loan to, or
entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of Business;
(xvi) the Buyer has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvii) the Buyer has not granted any increase in the
base compensation of any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xviii) the Buyer has not adopted, amended, modified
or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with
respect to any other Employee Benefit Plan);
(xix) the Buyer has not made any other change in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xx) the Buyer has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course
of Business;
(xxi) there has not been any other material
occurrence, event, incident, action, failure to act, or transaction
outside the Ordinary Course of Business involving the Buyer; and
(xxii) the Buyer has not committed to any of the
foregoing, except in respect to the transactions contemplated by this
Agreement.
(f) UNDISCLOSED LIABILITIES. The Buyer has no material
Liability except for (i) Liabilities reflected on the Buyer's Most Recent
Balance Sheet (and in any notes thereto) and (ii) Liabilities which have arisen
after the Buyer's Most Recent Fiscal Year End in the Ordinary Course of
Business, none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law.
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(g) LEGAL COMPLIANCE. To the Buyer's Knowledge, the
Buyer has complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), except to the extent any such failure would not have a material
adverse effect on the operations of the Buyer, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against the Buyer alleging any failure so to comply and, to
the Buyer's Knowledge, there is no basis for any such action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice to be filed
or to be commenced against any of them alleging any failure so to comply.
(h) NONCONTRAVENTION. To the Buyer's Knowledge, neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the Buyer
is subject or any provision of the charter or bylaws of the Buyer, or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any material agreement,
contract, lease, license, instrument or other arrangement to which the Buyer is
a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets). To
the Buyer's Knowledge, and other than in connection with the California General
Corporation Law, the Securities Exchange Act, the Securities Act, and the state
securities laws, the Buyer does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give any such
notice, to make any such filing, or obtain any such authorization, consent, or
approval would not have a material adverse effect on the ability of the Buyer
to consummate the transactions contemplated by this Agreement or have a
material adverse effect on the Buyer's business, operations, condition
(financial or otherwise), assets or Liabilities as in existence immediately
prior to the Closing.
(i) TAX MATTERS.
(i) The Buyer has filed all Tax Returns required
to be filed by it. All such Tax Returns were correct and complete in
all material respects. All Taxes owed by the Buyer (whether or not
shown on any Tax Return) have been paid. The Buyer currently is not
the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where the Buyer does not file Tax Returns that it is or may be subject
to taxation by that jurisdiction. There are no Security Interests on
any of the assets of the Buyer that arose in connection with any
failure (or alleged failure) to pay any Tax.
(ii) The Buyer has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(iii) The Buyer does not expect any authority to
assess any additional Taxes for any period for which Tax Returns have
been filed. There is no dispute or claim, and to the Buyer's
Knowledge there is no basis for any such dispute or claim, concerning
any Tax Liability of the Buyer. Section 4(i) of the Disclosure
Schedule lists all federal, state, local, and foreign income Tax
Returns filed with respect to the Buyer for taxable periods ended on
or after June 30, 1993,
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indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. The Buyer
has delivered to the Target correct and complete copies of all state,
local, and federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Buyer
since June 30, 1993.
(iv) The Buyer has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(v) The unpaid Taxes of the Buyer (A) did not, as
of the Buyer's Most Recent Fiscal Year End, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) expected to be
set forth on the face of the Buyer's Most Recent Balance Sheet (rather
than in any notes thereto) and (B) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Buyer in filing
its Tax Returns.
(vi) The Buyer has not filed a consent under Code
Section 341(f) concerning collapsible corporations. The Buyer has not
made any payments, is not obligated to make any payments, nor is the
Buyer a party to any agreement that under certain circumstances would
obligate it to make any payments that will not be deductible under
Code Section 280G. The Buyer has not been a United States real
property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). The Buyer has disclosed on its federal income Tax
Returns all positions taken therein that would give rise to a
substantial understatement of federal income Tax within the meaning of
Code Section 6662. The Buyer is not a party to any Tax allocation or
sharing agreement. The Buyer (A) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was the Buyer) nor (B)
does the Buyer have any Liability for the Taxes of any Person (other
than the Target) under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(vii) Section 4(i) of the Disclosure Schedule sets
forth the following information with respect to the Buyer as of the
most recent practicable date (as well as on an estimated pro forma
basis as of the Closing giving effect to the consummation of the
transactions contemplated hereby): (A) the basis of the Buyer in its
assets; (B) to the extent applicable, the amount of any net operating
loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to the Buyer.
(j) INTELLECTUAL PROPERTY.
(i) The Buyer owns or has the right to use
pursuant to license, sublicense, agreement, or permission all
Intellectual Property sufficient for the operation of the businesses
of the Buyer as presently conducted and as presently proposed to be
conducted. The Buyer has taken sufficient protective measures to
maintain and protect each item of Intellectual Property that it owns
or uses.
(ii) To the Buyer's Knowledge, the Buyer has not
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of third parties,
and the Buyer has not received any charge, complaint, claim, demand,
or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim
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that the Buyer must license or refrain from using any Intellectual
Property rights of any third party). To the Buyer's Knowledge, no
third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
the Buyer.
(iii) The Buyer does not own any patent or
application therefor. Section 4(j)(iii) of the Disclosure Schedule
identifies each material license, agreement, or other permission which
the Buyer has granted to any third party with respect to any of its
Intellectual Property. The Buyer has delivered to the Target correct
and complete copies of all material licenses, agreements, and
permissions (as amended to date) and has made available to the Target
correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such
item. Section 4(j)(iii) of the Disclosure Schedule also identifies
each trade name or unregistered trademark used by the Buyer in
connection with any of its businesses. With respect to each item of
Intellectual Property required to be identified in Section 4(j)(iii)
of the Disclosure Schedule,
(A) to the Buyer's Knowledge, the Buyer
possesses all right, title, and interest in and to the item,
free and clear of any Security Interest, license, or other
restriction;
(B) the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge; and
(C) no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is
pending or, to the Buyer's Knowledge, threatened which
challenges the legality, validity, enforceability, use, or
ownership of the item, and there is no basis for any such
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand; and
(D) the Buyer has never agreed to
indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect
to the item pursuant to any material agreement relating to the
Intellectual Property.
(iv) Section 4(j)(iv) of the Disclosure Schedule
identifies each material item of Intellectual Property that any third
party owns and that the Buyer uses pursuant to license, sublicense,
agreement, or permission. The Buyer has delivered to the Target
correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to
each item of Intellectual Property required to be identified in
Section 4(j)(iv) of the Disclosure Schedule,
(A) the license, sublicense, agreement,
or permission covering the item is in full force and effect
and constitutes a legal, valid and binding agreement of the
Buyer, enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratoriums or other similar laws
affecting the enforcement of creditors' rights generally and
the availability of equitable remedies (regardless of whether
enforceability is considered in a proceeding at law or
inequity);
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(B) to the Buyer's Knowledge, the Buyer
is not in material breach or default, and no event has
occurred which with notice or lapse of time would constitute a
material breach or default or permit termination,
modification, or acceleration thereunder;
(C) the Buyer is not a party to any
sublicense material to the business of the Buyer;
(D) to the Buyer's Knowledge, the
underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
(E) no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is
pending or is threatened which challenges the legality,
validity, or enforceability of the underlying item of
Intellectual Property; and
(F) the Buyer has not granted any
sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
(v) To the Buyer's Knowledge, the Buyer will not
interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any Intellectual Property rights of third parties as a
result of the continued operation of its businesses as presently
conducted and as presently proposed to be conducted.
(vi) To the Buyer's Knowledge, there are no new
products, inventions, procedures, or methods of manufacturing or
processing that any competitors or other third parties have developed
which reasonably could be expected to supersede or make obsolete any
product or process of any of the Buyer.
(k) CONTRACTS. Section 4(k) of the Disclosure Schedule
lists the following contracts and other agreements to which the Buyer is a
party, except contracts and other agreements involving a potential acquisition
of the capital stock or assets of the Buyer, which by their terms are subject
to a non-disclosure covenant:
(i) any agreement (or group of related
agreements) for the lease of personal property to or from any Person
providing for lease payments in excess of $25,000 per annum;
(ii) any agreement (or group of related
agreements) for the purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for the furnishing
or receipt of services, the performance of which will extend over a
period of more than one year, result in a material loss to the Buyer,
or involve consideration in excess of $50,000 per year;
(iii) any agreement concerning a partnership or
joint venture;
(iv) any agreement (or group of related
agreements) under which it has created, incurred, assumed, or
guaranteed any indebtedness for borrowed money, or any capitalized
lease obligation, in excess of $25,000 or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
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(v) any agreement concerning confidentiality or
non-competition, except as hereinabove provided;
(vi) any agreement involving any of the Buyer's
stockholders and their Affiliates (other than the Buyer);
(vii) any profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation, severance, or
other material plan or arrangement for the benefit of its current or
former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis not
cancelable on 30 days or less notice providing annual compensation in
excess of $25,000 or providing severance benefits;
(x) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xi) except as otherwise listed pursuant to this
Section 4(k), any agreement under which the consequences of a default
or termination could have a material adverse effect on the business,
financial condition, operations, results of operations of the Buyer,
other than client or customer sales contracts entered into in the
Ordinary Course of Business of the Buyer;
(xii) any other agreement (or group of related
agreements) the performance of which involves annual consideration in
excess of $50,000.
The Buyer has delivered to the Target a correct and complete copy of each
written agreement listed in Section 4(k) of the Disclosure Schedule (as amended
to date) and a written summary setting forth the material terms and conditions
of each oral agreement referred to in Section 4(k) of the Disclosure Schedule.
With respect to each such agreement, to the Buyer's Knowledge: (A) the
agreement is in full force and effect and constitutes a legal, valid and
binding agreement of the Buyer, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratoriums or other similar laws affecting the
enforcement of creditors' rights generally and the availability of equitable
remedies (regardless of whether enforceability is considered in a proceeding at
law or inequity); and (B) no party is in material breach or default, and no
event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under the agreement.
(l) LITIGATION. Section 4(l) of the Disclosure Schedule
sets forth in each instance in which the Buyer (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or, to the Buyer's Knowledge, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. To the Buyer's Knowledge, there
is no basis for any present or future action, suit, proceeding, hearing and
investigation that could result in any material adverse change in the business,
condition (financial or otherwise), operations, assets or Liabilities of the
Buyer.
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(m) PRODUCT WARRANTY. Within the last 48 months, each
product sold, leased, or delivered by the Buyer has been in conformity with all
express and implied warranties of the Buyer, and the Buyer does not have any
Liability (and to the Buyer's Knowledge, there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability) for
replacement or repair thereof or other damages in connection therewith, subject
only to the reserve for product warranty claims set forth on the face of the
Buyer's Most Recent Balance Sheet to be adjusted for the passage of time up to
and including the Closing Date in accordance with the past custom and practice
of the Buyer. Section 4(m) of the Disclosure Schedule includes copies of the
standard terms and conditions of sale or lease for the Buyer (containing
applicable guaranty, warranty, and indemnity provisions).
(n) EMPLOYEE BENEFITS.
(i) Section 4(n) of the Disclosure Schedule lists
each Employee Benefit Plan that the Buyer maintains or as to which the
Buyer contributes.
(A) Each such Employee Benefit Plan (and
each related trust, insurance contract, or fund) complies in
material form and in operation in all material respects with
the applicable requirements of ERISA, the Code, and other
applicable laws.
(B) All reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1's, and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Section 4980B will have been met
in all material respects prior to the Closing Date with
respect to each applicable Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) All contributions (including all
employer contributions and employee salary reduction
contributions) which are due have been paid to each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan and any and all contributions for any period ending on or
before the Closing Date which are not yet due have been paid
to each such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of the Buyer.
All premiums or other payments for all periods ending on or
before the Closing Date have been paid or accrued in
accordance with GAAP with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan
which is an Employee Pension Benefit Plan meets the material
formal requirements of a "qualified plan" under Code Section
401(a) and has received, within the last two years, a
favorable determination letter from the Internal Revenue
Service.
(E) The Buyer does not maintain and has
not maintained any Employee Pension Benefit Plan which is a
defined benefit type plan.
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(F) The Buyer has delivered to the
Target correct and complete copies of the plan documents and
summary plan descriptions, the most recent determination
letter received from the IRS, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts,
and other funding agreements which implement each such
Employee Benefit Plan.
(ii) The Buyer is not a member of a Controlled
Group of Corporations. With respect to each Employee Benefit Plan
that the Buyer and the Controlled Group of Corporations which includes
the Buyer maintains or ever has maintained or to which the Buyer
contributes, ever has contributed, or ever has been required to
contribute:
(A) No such Employee Benefit Plan which
is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or partially
terminated or been the subject of a Reportable Event as to
which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been
instituted or, to the Buyer's Knowledge threatened.
(B) To the Buyer's Knowledge there have
been no Prohibited Transactions with respect to any such
Employee Benefit Plan. To the Buyer's Knowledge no Fiduciary
has any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration
or investment of the assets of any such Employee Benefit Plan.
No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims
for benefits) is pending or, to the Buyer's Knowledge
threatened. To the Buyer's Knowledge, there is no basis for
any such action, suit, proceeding, hearing, or investigation.
(C) The Buyer has not incurred, nor to
the Buyer's Knowledge, is there any reason to expect that the
Buyer will incur any Liability to the PBGC (other than PBGC
premium payments) or otherwise under Title IV of ERISA
(including any withdrawal Liability) or under the Code with
respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(iii) The Buyer does not contribute to, never has
contributed to, and never has been required to contribute to any
Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(iv) The Buyer does not maintain and never has
maintained and does not contribute, never has contributed, and never
has been required to contribute to any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other welfare-type
benefits for current or future retired or terminated employees, their
spouses, or their dependents (other than in accordance with Code
Section 4980B).
(o) ENVIRONMENTAL, HEALTH, AND SAFETY. The Buyer has
complied in all material respects with all Environmental, Health, and Safety
Laws, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against the
Buyer alleging any failure so to comply. Without limiting the generality of
the preceding sentence, the
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Buyer has obtained and been in compliance with all of the terms and conditions
of all material permits, licenses, and other authorizations which are required
under, and has complied with all other material limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and Safety Laws,
except where such non-compliance would not have a material adverse effect on
the operations of the Buyer.
(p) ADVISORY FEES. Except with respect to Concord
Partners, Ltd., Xxxxxx Securities Corporation, and Windermere Holdings,
Incorporated, and as otherwise provided in Section 8(k) and in Section 4(p) of
the Disclosure Schedule, the Buyer does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(q) CONTINUITY OF BUSINESS ENTERPRISE. It is the present
intention of the Buyer to continue at least one significant historic business
line of the Target, or to use at least a significant portion of the Target's
historic business assets in a business, in each case within the meaning of
Treas. Reg. Section 1.368-1(d).
(r) DISCLOSURE. The Registration Statement, the
Prospectus, and the Definitive Buyer Proxy Materials will comply with the
Securities Act and the Securities Exchange Act in all material respects. The
Registration Statement, the Prospectus, and the Definitive Buyer Proxy
Materials will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they will be made, not
misleading; provided, however, that the Buyer makes no representation or
warranty with respect to any information that the Target will supply
specifically for use in the Registration Statement, the Prospectus, and the
Definitive Buyer Proxy Materials. None of the information that the Buyer will
supply specifically for use in the Definitive Target Proxy Materials will
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in the light of
the circumstances under which they will be made, not misleading.
(s) REAL PROPERTY.
(i) The Buyer does not own any real property:
(ii) Section 4(s)(ii) of the Disclosure Schedule
lists and describes briefly all real property leased or subleased to
the Buyer. The Buyer has delivered to the Target correct and complete
copies of the leases and subleases listed in Section 4(s)(ii) of the
Disclosure Schedule (as amended to date). With respect to each lease
and sublease listed in Section 4(s)(ii) of the Disclosure Schedule,
(A) the lease or sublease is in full
force and effect and constitutes a legal, valid and binding
agreement of the Buyer, enforceable in accordance with its
terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratoriums
or other similar laws affecting the enforcement of creditors'
rights generally and the availability of equitable remedies
(regardless of whether enforceability is considered in a
proceeding at law or in equity);
(B) the Buyer is not and to the Buyer's
Knowledge, no other party to the lease or sublease is in
material breach or default, and no event has occurred which,
with
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notice or lapse of time, would constitute a material breach or
default or permit termination, modification, or acceleration
thereunder;
(C) there are no oral agreements,
forebearance programs in effect or material disputes as to the
lease or sublease;
(D) the Buyer has not assigned,
transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or subleasehold;
(E) (i) to the Buyer's Knowledge, the
Buyer is not in violation of any applicable laws or
governmental rules and regulations in regard to the use of the
facilities leased or subleased thereunder, and (ii) the Buyer
has not received any written notice from any governmental
authority of any such violation; and
(F) all facilities leased or subleased
thereunder are supplied with or have available utilities and
other services suitable for the operation of said facilities.
(t) SUBSIDIARIES. The Transitory Subsidiary, when
incorporated, will be the only Subsidiary of the Buyer. Section 4(t) of the
Disclosure Schedule sets forth for the Transitory Subsidiary (i) its name and
expected jurisdiction of incorporation, (ii) the number of shares of authorized
capital stock of each class of its capital stock, (iii) the number of shares of
each class of its capital stock to be issued to the Buyer, and (iv) the
proposed directors and officers of the Transitory Subsidiary. As of the
Closing, the Transitory Subsidiary will be a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation. The Transitory Subsidiary will be duly authorized to
conduct business and will be in good standing under the laws of each
jurisdiction where such qualification is required. Prior to the Closing, the
Transitory Subsidiary will not conduct any business. At the time of the
Closing, the Transitory Subsidiary will have full corporate power and authority
to ratify this Agreement and carry out the transactions contemplated herein.
On or before October 31, 1996, the Buyer will deliver to the Target correct and
complete copies of the charter and bylaws of the Transitory Subsidiary. As of
the Closing, all of the issued and outstanding shares of capital stock of the
Transitory Subsidiary will have been duly authorized and will be validly
issued, fully paid, and nonassessable. The Buyer will hold of record and own
beneficially all of the outstanding shares of the Transitory Subsidiary, free
and clear of any restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require the Buyer to sell, transfer, or
otherwise dispose of any capital stock of any of the Transitory Subsidiary.
There are no outstanding stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Transitory Subsidiary.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of any capital stock of the Transitory Subsidiary. As of
the Closing, the minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of the
Transitory Subsidiary will be correct and complete. As of the Closing, the
Transitory Subsidiary will not be in default under or in violation of any
provision of its charter or bylaws. As of the Closing, the Transitory
Subsidiary will not control directly or indirectly or have any direct or
indirect equity participation in any corporation, partnership, trust, or other
business association.
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(u) FILINGS WITH THE SEC. The Buyer has filed with the
SEC all reports, registrations, and statements, together with any amendments
thereto, required to be made therewith, all of which as the respective dates
were in full compliance with the rules and regulations of the SEC.
5. COVENANTS. The Parties agree as follows with respect to the
period from and after the execution of this Agreement.
(a) NOTICES AND CONSENTS. The Target and the Buyer will
give any notices to third parties, and will use its respective reasonable best
efforts to obtain any third party consents, that the Buyer or the Target
reasonably may request in connection with the matters referred to in Section
3(d) or Section 4(h) above.
(b) REGULATORY MATTERS AND APPROVALS. Each of the
Parties will give any notices to, make any filings with, and use its reasonable
best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters referred
to in Section 3(d) and Section 4(h) above. Without limiting the generality of
the foregoing:
(i) SECURITIES ACT, SECURITIES EXCHANGE ACT, AND
STATE SECURITIES LAWS. The Buyer will prepare and file with the SEC a
registration statement on Form S-4 or any successor form under the
Securities Act relating to the offering and issuance of the Buyer
Shares issued in the Merger (and the Buyer Shares, if any, issued to
Concord Partners, Ltd. as contemplated by Section 8(k) (the
"REGISTRATION STATEMENT") and preliminary proxy materials under the
Securities Exchange Act relating to the Special Buyer Meeting. The
Buyer in each instance will use its reasonable best efforts to respond
to the comments of the SEC thereon and will make any further filings
(including amendments and supplements) in connection therewith that
may be necessary, proper, or advisable. The Buyer will file any post-
effective amendments and take whatever actions that may be necessary,
proper or advisable to keep the Registration Statement (and any
related filings and registrations under state securities laws)
effective during the period of distribution of the Buyer Shares
covered thereby. The Buyer will provide the Target, and the Target
will provide the Buyer, with whatever information and assistance in
connection with the foregoing filings that the filing party reasonably
may request. The Buyer will take all reasonable actions that may be
necessary, proper, or advisable under state securities laws in
connection with the offering and issuance of the Buyer Shares.
(ii) CALIFORNIA AND MASSACHUSETTS GENERAL
CORPORATION LAW. The Target will call a special meeting of its
stockholders (the "SPECIAL TARGET MEETING") as soon as reasonably
practicable, but such notice for the meeting will be sent no earlier
than the date the SEC declares effective the Registration Statement,
in order that the Target Stockholders may consider and vote upon the
adoption of this Agreement and the approval of the Merger in
accordance with the Massachusetts General Corporation Law. The Buyer
will call a special meeting of its stockholders (the "SPECIAL BUYER
MEETING") as soon as reasonably practicable in order that the
stockholders of Buyer may consider and vote upon the approval of this
Agreement, the Merger Agreement and the Merger in accordance with the
California General Corporation Law. The Parties will mail the Joint
Disclosure Document to their respective stockholders simultaneously
and as soon as reasonably practicable. It is understood that the
Definitive Target Proxy Materials will include, among other things,
the Prospectus and other information contained in the Registration
Statement, and the Parties will use their reasonable best efforts to
obtain the consent of all third parties (including their respective
accountants) for the use thereof. The Joint Disclosure Document will
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contain the unanimous affirmative recommendations of the respective
boards of directors of the Parties in favor of the approval of this
Agreement, the Merger Agreement and the Merger; provided however, that
no director or officer of either Party shall be required to violate
any fiduciary duty or other requirement imposed by law in connection
therewith.
(c) LISTING OF BUYER SHARES. The Buyer will use its
reasonable best efforts to cause the Buyer Shares that will be issued in the
Merger to be approved for listing on the Nasdaq National Market, subject to
official notice of issuance, prior to the Effective Time.
(d) NO MATERIAL CHANGES. The Target agrees that prior to
the Closing Date it will not make or permit to be made any material change
affecting any bank, trust company, savings and loan association, brokerage
firm, or safe deposit box or in the names of the persons authorized to draw
thereon, to have access thereto or to authorize transactions therein or in any
powers of attorney, or open additional accounts or boxes or grant any
additional powers of attorney, without in each case obtaining the prior written
consent of the Buyer, such consent not be unreasonably withheld or delayed.
(e) OPERATION OF BUSINESS. The Target will not engage in
any practice, take any action, or enter into any transaction, in any material
respect, outside the Ordinary Course of Business, without the prior written
consent of the Buyer. Without limiting the generality of the foregoing:
(i) the Target will not authorize or effect any
change in its charter or bylaws;
(ii) the Target will not grant any options,
warrants, or other rights to purchase or obtain any of its capital
stock or issue, sell, or otherwise dispose of any of its capital stock
(except upon the conversion or exercise of options, warrants, and
other rights currently outstanding);
(iii) except as required in connection with its
status as an S Corporation and as required in connection with tax
payments on income earned for the present tax year, the Target will
not declare, set aside, or pay any dividend or distribution with
respect to its capital stock (whether in cash or in kind), or redeem,
repurchase, or otherwise acquire any of its capital stock, in either
case outside the Ordinary Course of Business;
(iv) the Target will not issue any note, bond, or
other debt security or create, incur, assume, or guarantee any
indebtedness for borrowed money or capitalized lease obligation
outside the Ordinary Course of Business;
(v) the Target will not impose any Security
Interest upon any of its assets outside the Ordinary Course of
Business;
(vi) the Target will not make any capital
investment in, make any loan to, or acquire the securities or assets
of any other Person outside the Ordinary Course of Business;
(vii) the Target will not initiate any changes in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business; and
(viii) the Target will not commit to any of the
foregoing.
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(f) FULL ACCESS. The Parties will permit representatives
of the other Party to have full access at all reasonable times, and in a manner
so as not to interfere with the normal business operations of the Parties, to
all premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to each of the Parties. The Parties
will treat and hold as such any Confidential Information they receive in the
course of the reviews contemplated by this Section 5(f), will not use any of
the Confidential Information except in connection with this Agreement, and, if
this Agreement is terminated for any reason whatsoever, agree to return to the
respective Party all tangible embodiments (and all copies) thereof which are in
their respective possession. The Parties acknowledge and agree that the
Confidentiality and Non-Disclosure Agreement executed by Buyer and dated May
24, 1996 shall remain in full force and effect, without modification hereby.
(g) NOTICE OF DEVELOPMENTS. Each Party will give prompt
written notice to the other of the occurrence of any event that would
constitute a breach of any of its own representations and warranties in Section
3 and Section 4 above. No disclosure by any Party pursuant to this Section
5(g), however, shall be deemed to amend or supplement the Disclosure Schedule
or to prevent or cure any misrepresentation, breach of warranty, or breach of
covenant, except as otherwise provided in Section 3 or Section 4 above.
(h) EXCLUSIVITY. The Target will not solicit, initiate,
or encourage the submission of any proposal or offer, and will not entertain,
pursue, consider or accept any proposal or offer from any Person relating to
the acquisition of all or substantially all of the capital stock or assets of
any of the Target (including any acquisition structured as a merger,
consolidation, or share exchange). The Target shall notify the Buyer
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing and will provide the Buyer with a written copy
of any such proposal, offer, inquiry, or contact.
(i) CONTINUITY OF BUSINESS ENTERPRISE. The Buyer will
continue at least one significant historic business line of the Target, or use
or lease a significant portion of the Target's historic business assets in a
business, in each case within the meaning of Treas. Reg. Section 1.368-1(d).
(j) EMPLOYMENT AGREEMENTS. The Buyer will use its best
efforts to enter into an employment agreement with Xxxxxxxx X. Xxxxx, III and
Xxxxxx X. Xxxxxxx on mutually acceptable terms to the respective employee and
the Buyer.
(k) DIRECTORSHIPS. The Buyer will recommend to its
stockholders the Target Director Designees for nomination to positions as
directors of the Buyer in the Definitive Buyer Proxy Materials (and any other
proxy materials, if necessary), to serve for a term of three and two years,
respectively, and to any vacancy created by the death or withdrawal of any
incumbent Target Director Designee during such three or two year term. As the
sole stockholder of Transitory Subsidiary, the Buyer shall elect the Target
Director Designees as directors of the Transitory Subsidiary for a period of
three and two years, respectively, and to any vacancy created by the death or
withdrawal of any incumbent Target Director Designee during such three or two
year term. The Buyer will also take all actions necessary to amend the Buyer's
bylaws and charter, if necessary or advisable, to provide for staggered terms
of Board members.
(l) PRELIMINARY MEETING. Following execution of this
Agreement, the Target will organize an informal meeting of its stockholders to
preliminarily discuss the Merger and the other transactions contemplated
herein, subject to final approval at the Special Target Meeting. The Target
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will notify the Buyer of the time and place of such meeting so that the Buyer's
agents and/or other representatives may attend the meeting.
(m) BUSINESS COMBINATION UNDER RULE 145. Each of the
Parties will use their reasonable best efforts to take such actions in order to
provide that the Merger and the transactions contemplated by this Agreement
satisfy the requirements of a business combination under Rule 145 of the
Securities Act.
(n) ANCILLARY AGREEMENTS.
(i) The Buyer shall enter into a mutually
acceptable Registration Rights Agreement, a form of which is attached
hereto as Exhibit H which shall, among other things, grant the Target
Stockholders, "piggyback" registration rights with respect to the
Buyer Shares issued in the Merger, for a period of 42 months after the
Closing Date, require prompt publication of financial results that
report at least thirty days of combined operations of Buyer and
Target, require continued compliance by Buyer with the public
information requirements of Rule 144 in order to afford the Target
Stockholders the benefits thereof in connection with the resale of
Buyer Shares issued in the Merger, require compliance with the
reporting requirements under the Securities Exchange Act and with
listing requirements of the NASDAQ National Market and shall timely
file all reports required thereunder and require Buyer to keep the
Registration Statement, and any state securities law filings and
registrations relating thereto, effective for the period of
distribution of the Buyer Shares issued in the Merger.
(ii) The Target shall use its reasonable best
efforts to cause the Target Stockholders to enter into the agreements
referred to in Section 6(a)(xvi) below.
(o) TARGET EMPLOYEES. The Buyer shall cause the
Transitory Subsidiary to (i) employ each person employed by Target on the
Closing Date on at least an "employment-at-will" basis as of the first business
day after the Closing Date, (ii) provide such benefits and salary to such
person who accepts the offer of employment with the Transitory Subsidiary
comparable to the benefits and salary previously provided or paid by Target as
of the Closing Date, and (iii) grant to each such person credit for his/her
years of service with the Target for purposes of calculating such person's
right to participate in applicable benefit plans and programs and the level of
such participation.
(p) D&O INSURANCE. The Buyer shall obtain directors and
officers insurance coverage for the directors and officers of the Buyer and the
Transitory Subsidiary that will be in place and provide coverage prior to the
Closing Date.
(q) NOTIFICATION OF BUYER DILUTION. The Buyer will
provide written notice to the Target of any proposed issuance of Buyer Shares
(other than the Buyer Shares issuable (i) in the non-related private placement
as disclosed in Section 4(b) hereof, (ii) upon exercise of the rights listed in
Section 4(b) of the Disclosure Schedule, (iii) upon completion of the Merger,
or (iv) upon assumption of the Conversion Options) or of securities
exchangeable for or convertible or exercisable into Buyer Shares, or any
commitment or agreement which could give rise to issuance of any such
securities, and if any such proposed issuance would cause the aggregate number
of Buyer Shares issued or issuable thereby to exceed by 500,000 (or more) in
the aggregate the sum of the number of Buyer Shares disclosed in Section 4(b)
above and issuable upon exercise of the options, warrant, rights, and other
commitments disclosed in Section 4(b) of the Buyer's Disclosure Schedule. The
Target may object to such issuance by written notice
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within five (5) business days of receipt of the Buyer's written notice of such
proposed issuance (the "TARGET'S NOTICE"); it being the intent of the Parties
to discuss during this period the proposed issuance and the underlying
transaction. Following receipt of the Target's Notice, the Buyer shall have
five (5) business days to withdraw its written notice and notify the Target in
writing that it does not intend to go forward with the proposed stock issuance.
(r) NOTIFICATION OF CHANGES IN REPRESENTATIONS AND
WARRANTIES. The Parties will notify each other of any material changes in the
representations and warranties provided in Section 3 and Section 4 hereof as
soon as reasonably practicable after the respective Party first discovers such
changed circumstances.
(s) TREATMENT OF CONVERSION OPTIONS. At the Effective
Time, the Target Option Plan and each Target Option, whether vested or
unvested, which is not exercised at or before the Effective Time, will be
assumed by the Buyer (each such option assumed by the Buyer is referred to in
this Agreement as a "CONVERSION OPTION"). Section 2(f)(i) of the Target's
Disclosure Schedule sets forth a true and complete list as of the date hereof
of all Target Options under the Target Option Plan, including the name of the
respective holder, the number of Target Shares subject to each such option, the
exercise or vesting schedule, the exercise price per share, the term of each
such option, and Target Options to be canceled prior to the Closing. On the
Closing Date, the Target shall deliver to the Buyer an updated Section 2(f)(i)
of the Target Disclosure Schedule current as of such date, including the number
of Target Options to be exercised at and as of the Effective Time, the number
of Target Options exercised prior to the Effective Time, and the number of
Conversion Options. Each Conversion Option assumed by the Buyer under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Target Option Plan and any option agreement
relating thereto, at and as of the Effective Time, except that (i) such option
will be exercisable for that number of Buyer Shares equal to the product of the
number of Target Shares that were issuable upon exercise of such option
(whether vested or unvested) immediately prior to the Effective Time multiplied
by the Conversion Ratio and rounded up to the nearest whole Buyer Share, (ii)
the per share exercise price for the Buyer Shares issuable upon exercise of
such assumed option shall be equal to the exercise price of such Conversion
Option, and (iii) each Conversion Option shall be fully vested and immediately
exercisable. The Merger will not terminate any of the outstanding options
under such plan. It is the intention of the Parties that the options so
assumed by the Buyer retain their status as incentive stock options as defined
in Section 422 of the Code following the Effective Time to the extent such
options qualified as incentive stock options prior to the Effective Time.
Within ten (10) business days after the Effective Time, the Buyer will issue to
each Person who, immediately prior to the Effective Time was a holder of a
Conversion Option under the Target Option Plan a document in form and substance
satisfactory to such Person evidencing the foregoing assumption of such option
by the Buyer.
(t) REGISTRATION OF CONVERSION OPTIONS. As soon as
reasonably practicable after the Effective Time, the Buyer will prepare and
file with the SEC a registration statement on Form S-8 or any successor form
under the Securities Act relating to the offering and issuance of the Buyer
Shares to be issued upon the exercise of the Conversion Options.
(u) SETTLEMENT OF OPTIONS AND RIGHTS. Other than the
Conversion Options and the Target Options exercised on or before the Closing,
the Target shall cause any other options, rights or agreements of any kind to
acquire the Target Common Stock or other securities of the Target to have been
either canceled, terminated, modified or exchanged on terms and conditions
reasonably satisfactory to the Buyer prior to the Effective Time.
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(v) ESTOPPEL CERTIFICATES. The Target shall use its
reasonable best efforts to obtain Estoppel Certificates (the "Estoppel
Certificates") in form and substance mutually acceptable to the Parties from
the lessors of the properties listed in Schedule 3(l)(ii) of the Target's
Disclosure Schedule prior to the Closing.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The
obligation of the Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) this Agreement, the Merger Agreement and the
Merger shall have received the Requisite Target Stockholder Approval;
(ii) the Target shall have procured all of the
third party consents specified in Section 5(a) above;
(iii) each representation and warranty set forth in
Section 3 above shall be true and correct in all material respects at
and as of the Closing Date, subject to any amendments thereto as
permitted under Section 3 above;
(iv) the Target shall have performed and complied
with all of its covenants hereunder through the Closing;
(v) no action, suit, or proceeding shall be
pending or threatened before any court or quasijudicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge could (A)
prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (C) materially
and adversely affect the right of the Surviving Corporation to own the
former assets and to operate the former businesses of the Target, and
(D) and no such injunction, judgement, order, decree, ruling or charge
shall be in effect;
(vi) the Target shall have delivered to the Buyer
a certificate to the effect that each of the conditions specified
above in Section 6(a)(i)-(v) is satisfied;
(vii) this Agreement, the Merger Agreement and the
Merger shall have received the Requisite Buyer Stockholder Approval;
(viii) the Registration Statement and any applicable
state securities filings and registrations shall be effective under
the Securities Act and any applicable state securities laws or
regulations at and as of the Effective Time, and no stop order shall
have been issued by the SEC or any state regulatory agency;
(ix) the Buyer Shares that will be issued in the
Merger shall have been approved for listing on the Nasdaq National
Market, subject to official notice of issuance;
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(x) the Parties shall have received all
authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(d) and Section 4(h)
above;
(xi) the Buyer shall have received from counsel to
the Target an opinion in form and substance reasonably acceptable to
the Buyer, addressed to the Buyer, and dated as of the Closing Date;
(xii) the Buyer shall have received the
resignations, effective as of the Closing, of each director and
officer of the Target other than those whom the Buyer shall have
specified in writing at least three business days prior to the
Closing;
(xiii) the Buyer shall have received from the
Target's independent auditors' their consent to the use by the Buyer
of such auditors' audit report in the Registration Statement and their
agreement to provide such consent in any other filing by the Buyer
that may require reference to the Target's audited financial
statements;
(xiv) the Buyer shall have received from its
independent accountants an opinion dated as of the Closing, in form
and substance reasonably satisfactory to the Buyer, that this
Agreement and the transactions contemplated herein qualify for pooling
of interests accounting treatment under Accounting Principles Board
Opinion No. 16;
(xv) the Buyer shall have completed its due
diligence and all outstanding issues relating thereto shall have been
satisfactorily resolved by the Parties;
(xvi) the Buyer shall have received from each of
the Target Stockholders an agreement in the form of Exhibit G
attached hereto that: (i) if such Target Stockholder was an officer,
director, or the holder of 10% or more of the Target Shares
immediately prior to the Merger, he or she will not sell or arrange
for the sale of any of the Buyer Shares until the first day following
publication of financials reporting not less than 30 days of combined
operations of the Buyer and the Target; and (ii) he or she does not
intend to take any actions that will jeopardize the tax-free nature of
this transaction;
(xvii) the Buyer shall have received from Xxxxxxxx
X. Xxxxx, III and Xxxxxx X. Xxxxxxx executed employment agreements as
provided for in Section 5(j) hereof;
(xviii) the Target shall have delivered the Estoppel
Certificates executed by the lessors of the properties listed in
Schedule 3(l)(ii) of the Target's Disclosure Schedule;
(xix) the Buyer shall have obtained directors and
officers insurance coverage in accordance with the provisions of
Section 5(p) hereof;
(xx) the Target shall have canceled all
outstanding or authorized options (other than the Target Options and
the Conversion Options identified in Section 2(f)(i) of the Disclosure
Schedule), warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could
require the Target to issue, sell, or otherwise cause to become
outstanding any of its capital stock;
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(xxi) all actions to be taken by the Target in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Buyer; and
(xxii) from the date hereof through the Effective
Time, there shall have been no material adverse change (or
developments involving a prospective material adverse change) in the
business, condition (financial or otherwise), operations, properties,
or prospects of the Target.
The Buyer may waive any condition specified in this Section 6(a) if it executes
a writing so stating at or prior to the Closing other than Section 6(a)(xvi)
which is not waivable.
(b) CONDITIONS TO OBLIGATION OF THE TARGET. The
obligation of the Target to consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of the following
conditions:
(i) this Agreement, the Merger Agreement and the
Merger shall have received the Requisite Buyer Stockholder Approval
and the Buyer's Approval as the sole stockholder of the Transitory
Subsidiary;
(ii) the Registration Statement and any applicable
state securities filings and registrations shall be effective under
the Securities Act and any applicable state securities laws or
regulations at and as of the Effective Time, and no stop order shall
have been issued by the SEC or any state regulatory agency;
(iii) the Buyer Shares that will be issued in the
Merger shall have been approved for listing on the Nasdaq National
Market, subject to official notice of issuance;
(iv) each representation and warranty set forth in
Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
(v) the Buyer shall have performed and complied
with all of its covenants hereunder through the Closing;
(vi) no action, suit, or proceeding shall be
pending or threatened before any court or quasijudicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge could (A)
prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (C) materially
and adversely affect the right of the Surviving Corporation to own the
former assets and to operate the former businesses of the Target; and
(D) no such injunction, judgement, order, decree, ruling or charge
shall be in effect;
(vii) the Buyer shall have delivered to the Target
a certificate to the effect that each of the conditions specified
above in Section 6(b)(i)-(vi) and Section 6(b)(ix), (xiii) and (xiv)
below, is satisfied;
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(viii) this Agreement, the Merger Agreement and the
Merger shall have received the Requisite Target Stockholder Approval;
(ix) the Target Director Designees shall be
elected directors of the Buyer at the Special Buyer Meeting for terms
of two and three years, respectively, contingent only upon the
Closing, and the by-laws of the Buyer, and any other appropriate
charter documents of the Buyer, shall be amended to provide for
staggered terms of Directors to permit such elections as provided in
Section 5(k);
(x) the Parties shall have received all
authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(d) and Section 4(h)
above;
(xi) the Target shall have received from counsel
to the Buyer an opinion in form and substance reasonably acceptable to
the Target, addressed to the Target, and dated as of the Closing Date;
(xii) the Target shall have received from its
counsel an opinion dated as of the Closing, in form and substance
reasonably satisfactory to the Target, that this Merger and the
transactions contemplated hereby qualify as a tax-free reorganization
under Code Section 368(a)(1)(A) and Section 368(a)(2)(E);
(xiii) the Target Director Designees shall be
elected directors of the Transitory Subsidiary, prior to the Closing,
for terms of three and two years, respectively, from the date of their
election;
(xiv) the Buyer and each of the Target Stockholders
shall have entered into the Registration Rights Agreement referred to
in Section 5(n)(i) above;
(xv) the Buyer shall have received from Xxxxxxxx
X. Xxxxx, III and Xxxxxx X. Xxxxxxx executed employment agreements as
provided for in Section 5(j) hereof;
(xvi) the Target shall have completed its due
diligence and all outstanding issues relating thereto shall have been
satisfactorily resolved by the Parties;
(xvii) the Buyer shall have procured all of the
third party consents specified in Section 5(a) above;
(xviii) the Target shall have received the consent of
the Bank of Boston to the Merger and the transactions contemplated
hereby, and the unconditional release of the personal guaranties by
certain Target Directors of the Target's liabilities and obligations
to said Bank of Boston;
(xix) the Target shall have received from X. X.
Xxxxxxxxxx an opinion in form and substance acceptable to the Target
that the Merger and the consideration offered to the Target
Stockholders thereunder is fair from a financial point of view to the
Target Stockholders;
(xx) the Buyer shall have obtained the directors
and officers insurance coverage in accordance with the provisions of
Section 5(p) hereof;
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(xxi) the Merger and the transactions contemplated
hereby shall qualify as a business combination under Rule 145 of the
Securities Act;
(xxii) the Target shall have received from the
Buyer's independent auditors' their consent to the use by the Target
of such auditors audit report in the Joint Disclosure Document and
their agreement to provide such consent in any other filing and/or
mailing by the Target that may require reference to the Buyer's
audited financial statements;
(xxiii) all actions to be taken by the Buyer in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Target; and
(xxiv) from the date hereof through the Effective
Time, there shall have been no material adverse change (or
developments involving a prospective material adverse change) in the
business, condition (financial or otherwise), operations, properties,
or prospects of the Buyer.
The Target may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
7. TERMINATION.
(a) TERMINATION OF AGREEMENT. Either the Buyer or the
Target may terminate this Agreement with the prior authorization of its Board
of Directors (whether before or after stockholder approval) as provided below:
(i) the Buyer and the Target may terminate this
Agreement by mutual written consent at any time prior to the Effective
Time;
(ii) the Buyer may terminate this Agreement by
giving written notice to the Target at any time prior to the Effective
Time (A) in the event the Target has breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, the Buyer has notified the Target of this breach, in writing,
and the breach has continued without cure for a period of five (5)
business days after the written notice of breach or (B) if the Closing
shall not have occurred on or before November 30, 1996, by reason of
the failure of any condition precedent under Section 6(a) hereof that
cannot be satisfied through the exercise of reasonable best efforts
within five (5) business days following November 30, 1996 (unless the
failure results primarily from the Buyer breaching any representation,
warranty, or covenant contained in this Agreement);
(iii) the Target may terminate this Agreement by
giving written notice to the Buyer at any time prior to the Effective
Time (A) in the event the Buyer has breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, the Target has notified the Buyer of the breach, in writing,
and the breach has continued without cure for a period of five (5)
business days after the written notice of breach or (B) if the Closing
shall not have occurred on or before November 30, 1996, by reason of
the failure of any condition precedent under Section 6(b) hereof that
cannot be satisfied through the exercise of reasonable best efforts
within five (5) business days following November 30, 1996 (unless the
failure results
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primarily from the Target breaching any representation, warranty, or
covenant contained in this Agreement);
(iv) any Party may terminate this Agreement by
giving written notice to the other Party at any time after the Special
Buyer Meeting or the Special Target Meeting in the event this
Agreement, the Merger Agreement and the Merger fail to receive the
Requisite Buyer Stockholder Approval or the Requisite Target
Stockholder Approval, respectively;
(v) The Target may terminate this Agreement by
giving written notice to the Buyer on the 10th business day following
the date of delivery of Target's Notice if Buyer has not retracted its
notice of proposed issuance of stock within five (5) business days of
receipt of the Target Notice in accordance with Section 5(q) hereof;
(b) EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 7(a) above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in Section 5(f) above
and the Confidentiality and the Non-Disclosure Agreement referenced therein
shall survive any such termination; provided further, however, that any such
termination will have no effect on amounts that the Target currently owes or
may owe in the future to the Buyer. Anything herein to the contrary
notwithstanding, termination of this Agreement pursuant to Section 7(a) above
shall be the sole and exclusive remedy for the breach of any representation or
warranty by a Party under Section 3 or Section 4 above.
8. MISCELLANEOUS.
(a) SURVIVAL. None of the representations, warranties,
covenants and agreements in this Agreement, including without limitation the
representations and warranties of the Parties in Section 3 and Section 4 of
this Agreement, shall survive the Effective Time, except for those covenants
and agreements contained herein which by their terms apply in whole or in part
after the Effective Time.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the
other Party; provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable efforts to advise the other Party
prior to making the disclosure).
(c) ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement between the
Parties and supersedes any prior understandings, agreements, or representations
by or between the Parties, written or oral, to the extent they related in any
way to the subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Party.
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(e) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given if
(and then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Target:
Xxxxxxxx X. Xxxxx, III
USTeleCenters, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Copy to:
Xxxxxx X. Xxxxx, Xx., Esq.
Xxxxx & Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
If to the Buyer:
Xxxxxx X. Xxxxxxxx
View Tech, Inc.
000 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Copies to:
V. Xxxxxx Xxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Xxxxxx X. Xxxx, Esq.
Law Offices of Xxxxxx X. Xxxx
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such
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notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with applicable federal laws and the domestic laws
of the State of California without giving effect to any choice or conflict of
law provision or rule (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of California.
(i) AMENDMENTS AND WAIVERS. The Parties may mutually
amend any provision of this Agreement at any time prior to the Effective Time
with the prior authorization of their respective boards of directors; provided,
however, that any amendment effected subsequent to stockholder approval will be
subject to the applicable restrictions contained in the California General
Corporation Law and in the Massachusetts General Corporation Law. No amendment
of any provision of this Agreement shall be valid unless the same shall be in
writing and signed by both of the Parties. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
(k) EXPENSES. Except as herein provided, each of the
Parties will bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement. However, the Buyer will
pay at the Closing (i) the fees of Concord Partners, Ltd., forty percent of
which shall be paid in either additional Buyer Shares (to be issued with the
other Buyer Shares to be issued hereunder) (valued in accordance with the
provisions of Section 2(f)(i)-(iii) above) or in cash, at Buyer's option, and
the balance in cash and (ii) the fees of the Target's legal counsel and
accountants in cash. The payments to Concord Partners, Ltd. and the Target's
legal counsel and accountants will reduce the Total Target Valuation as
provided for in Section 2(f)(iv) above.
(l) CONSTRUCTION. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(m) INCORPORATION OF EXHIBITS AND SCHEDULES. The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) VENUE; JURISDICTION. All actions with respect to
this Agreement will be instituted in a state court sitting in Ventura County,
California or Suffolk County, Massachusetts or in a federal court for the
Central District of California, or the Eastern Division of the District of
Massachusetts, subject to the provisions on arbitration in Section 8(o) below.
By the execution of this Agreement, each Party irrevocably and unconditionally
submits to the jurisdiction (both subject matter and personal) of each such
court and irrevocably and unconditionally waives: (a) any objection such Party
might now or hereafter
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have to the venue in any such court; and (b) any claim that any action or
proceeding brought in any such court has been brought in an inconvenient forum.
(o) ARBITRATION. Any disputes arising out of this
Agreement and the transactions among the Parties contemplated by this Agreement
shall be settled by binding arbitration to be held in (i) Ventura County,
California if such arbitration proceeding is initiated by Target and (ii) in
Suffolk County, Massachusetts if such arbitration proceeding is initiated by
Buyer, in each case in accordance with the rules of the American Arbitration
Association. Judgment upon any award rendered by any arbitrator may be entered
in any court having jurisdiction. The statute of limitations, estoppel,
waiver, laches, and similar doctrines which would otherwise be applicable in an
action brought by a party shall be applicable in any arbitration proceeding,
and the commencement of an arbitration proceeding shall be deemed the
commencement of an action for these purposes. This Section 8(o) is not
intended to limit, expand, or otherwise affect the rights, remedies, or
obligations that the Buyer, the Target, or any other Person may have pursuant
to other written agreements referred to in this Agreement or otherwise.
(p) ATTORNEYS' FEES. Each Party agrees that the losing
party in any suit or action shall reimburse the prevailing party for its
reasonable costs, expenses, and attorney's fees incurred in any action brought
to determine the rights of the Parties hereunder.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
View Tech, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
View Tech Acquisition, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
USTeleCenters, Inc.
By: /s/ Xxxxxxxx X. Xxxxx
---------------------------------
Xxxxxxxx X. Xxxxx, III
Title: President
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