AGREEMENT AND PLAN OF MERGER
AMONG
CLARION HOUSE, INC.,
ROSE ACQUISITION CORP.,
ROSE & ASSOCIATES, INC. AND
THE STOCKHOLDER THEREOF
DATED JUNE 3, 1998
TABLE OF CONTENTS
1. MERGER AND EFFECTIVE TIME; Certificate OF INCORPORATION; BY-LAWS; DIRECTORS
AND OFFICERS; CONVERSION AND EXCHANGE OF SHARES......................2
1.1 THE MERGER......................................................2
1.2 THE EFFECTIVE TIME OF THE MERGER................................2
1.3 CLOSING.........................................................2
1.4 Certificate OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS...2
1.5 CONVERSION AND EXCHANGE OF SHARES...............................3
1.6 EXCHANGE OF CERTIFICATES........................................3
1.7 NO FURTHER OWNERSHIP RIGHTS IN ROSE COMMON STOCK................3
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF STOCKHOLDER AND COMPANY.....4
2.1 DUE ORGANIZATION OF COMPANY.....................................4
2.2 SUBSIDIARIES....................................................4
2.3 PROPERTIES AND ASSETS OF COMPANY................................4
2.4 ABSENCE OF MATERIAL CHANGES.....................................5
2.5 TAXES...........................................................6
2.6 CONTRACTS AND AGREEMENTS........................................6
2.7 LABOR, BENEFIT AND EMPLOYMENT AGREEMENTS........................6
2.8 LITIGATION; DISPUTED ITEMS......................................6
2.9 CAPITAL STRUCTURE...............................................7
2.10 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION....................7
2.11 BROKERAGE COMMISSIONS...........................................7
2.12 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES ON THE CLOSING DATE
...........................................................8
3. REPRESENTATIONS AND WARRANTIES OF PARENT..................................8
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION..................8
3.2 CORPORATE AUTHORITY............................................8
3.3 COMMON STOCK...................................................8
3.4 FINANCIAL STATEMENTS...........................................9
3.5 ABSENCE OF MATERIAL CHANGES SINCE DECEMBER 31,1997.............9
3.6 TAXES..........................................................10
3.7 CONTRACTS AND AGREEMENTS.......................................10
3.8 LABOR, BENEFIT AND EMPLOYMENT AGREEMENTS.......................11
3.9 LITIGATION; DISPUTED ITEMS.....................................11
3.10 CAPITAL STRUCTURE; TITLE TO STOCK...............................11
3.11 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES ON THE CLOSING DATE
...........................................................11
4. STOCKHOLDER'S AND COMPANY'S OBLIGATIONS BEFORE CLOSING DATE ..............12
4.1 PARENT'S ACCESS TO PREMISES AND INFORMATION.....................12
4.2 CONDUCT OF BUSINESS IN THE NORMAL COURSE........................12
4.3 PRESERVATION OF BUSINESS AND RELATIONSHIPS......................12
4.4 CORPORATE MATTERS...............................................12
4.5 EMPLOYEES AND COMPENSATION......................................12
4.6 NEW TRANSACTIONS................................................12
4.7 DIVIDENDS, DISTRIBUTIONS AND ACQUISITIONS OF STOCK..............13
4.8 EXISTING AGREEMENTS.............................................13
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5. COMMON STOCK NOT TO BE REGISTERED; REGISTRATION RIGHTS....................13
5.1 INVESTMENT REPRESENTATIONS......................................13
5.2 LEGEND ON SHARES................................................13
5.3 REGISTRATION RIGHTS.............................................13
6. CONDITIONS PRECEDENT TO PERFORMANCE BY PARENT.............................14
6.1 ACCURACY OF REPRESENTATIONS, WARRANTIES AND COVENANTS...........14
6.2 NO MATERIAL ADVERSE CHANGE; STOCKHOLDER'S CERTIFICATE...........14
6.3 ABSENCE OF LITIGATION...........................................14
6.4 APPROVAL OF DOCUMENTATION........................................14
7. CONDITIONS PRECEDENT TO PERFORMANCE BY STOCKHOLDER.........................14
7.1 ACCURACY OF REPRESENTATIONS, WARRANTIES AND COVENANTS...........14
7.2 NO MATERIAL ADVERSE CHANGE; PARENT'S CERTIFICATE................16
7.3 ABSENCE OF LITIGATION...........................................16
7.4 APPROVAL OF DOCUMENTATION.......................................16
8. ADDITIONAL AGREEMENTS......................................................17
8.1 RETENTION OF STOCKHOLDER AS COMPANY PRESIDENT....................17
8.2 TERMINATION OF SALES REPRESENTATIVE AGREEMENT....................17
8.3 WAIVERS OF OBLIGATIONS OF STOCKHOLDER AND PARENT.................17
8.4 DILUTION PROTECTION.............................................17
9. STOCKHOLDER'S AND PARENT'S OBLIGATIONS AFTER CLOSING DATE..................18
9.1 STOCKHOLDER'S INDEMNITIES........................................18
9.2 PARENT'S INDEMNITIES.............................................18
10. COSTS.....................................................................18
10.1 ATTORNEYS' FEES.................................................18
10.2 OTHER COSTS.....................................................18
11. MISCELLANEOUS PROVISIONS..................................................18
11.1 NOTICES.........................................................18
11.2 CAPTIONS........................................................19
11.3 EXHIBITS AND SCHEDULES..........................................19
11.4 NUMBER.........................................................19
11.5 SEVERABILITY....................................................19
11.6 AMENDMENT OR MODIFICATION.......................................19
11.7 COUNTERPARTS....................................................19
11.8 SUCCESSORS AND ASSIGNS..........................................20
11.9 GOVERNING LAW...................................................20
11.10 ATTORNEYS' FEES................................................20
11.11 JOINT AND SEVERAL OBLIGATIONS..................................20
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of June 3, 1998 (this
"Agreement"), by and among Clarion House, Inc., a Nevada corporation ("Parent"),
Rose Acquisition Corp., a Delaware corporation ("Sub"), Rose & Associates, Inc.,
a Delaware corporation ("Company"), and R. Xxxxxxx Xxxx, Jr. ("Stockholder").
RECITALS
A. The authorized capital stock of Parent consists of 10,000,000 shares
of Common Stock, $.01 par value ("Parent Common Stock"), of which on the close
of business on May 27, 1998, 5,999,500 shares were issued and outstanding, and
no shares were held as treasury stock.
B. The authorized capital stock of Sub consists of 100 shares of Common
Stock, $.01 par value ("Sub Common Stock"), all of which are issued and
outstanding.
C. The authorized capital stock of the Company consists of 1,000 shares
of $.01 par value common stock ("Rose Common Stock"), of which, at the close of
business on the date hereof, 100 shares were issued and outstanding.
D. All of the issued and outstanding shares of Sub Common Stock are
owned by Parent. All of the issued and outstanding shares of Rose Common Stock
(the "Shares") are owned by Stockholder.
E. The respective Boards of Directors of Parent, Sub and the Company
deem it advisable and in the best interests of their respective stockholders
that the Company shall merge into Sub pursuant to the certificate of merger
attached hereto as EXHIBIT A (the "Certificate of Merger") and the applicable
provisions of the laws of the State of Delaware and have, by resolutions duly
adopted, approved the principal terms of such merger which are herein set forth,
and Sub and the Company have directed that the principal terms of such merger be
submitted to their respective stockholders for approval.
F. The parties desire to state the terms and conditions of such merger,
the mode of carrying the same into effect, the consideration which the holders
of Rose Common Stock and Sub Common Stock are to receive in exchange for such
shares upon the merger and such other details and provisions as are deemed
necessary or desirable.
G. The parties intend that such merger be treated as a reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Code").
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. MERGER AND EFFECTIVE TIME; CERTIFICATE OF INCORPORATION; BYLAWS;
DIRECTORS AND OFFICERS; CONVERSION AND EXCHANGE OF SHARES.
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2
hereof), the Company shall be merged (the "Merger") into Sub, which shall be
(and is hereinafter sometimes referred to as) the "Surviving Corporation." The
corporate existence of Sub with all its rights, privileges, powers and
franchises shall continue unaffected and unimpaired by the Merger, and as the
Surviving Corporation it shall be governed by the laws of the State of Delaware
and succeed to all rights, privileges, powers, franchises, assets, liabilities
and obligations of the Company in accordance with the Delaware General
Corporation Law (the "DGCL"). The separate existence and corporate organization
of the Company shall cease at the Effective Time and thereupon the Company and
Sub shall be a single corporation, Sub. The Merger shall have the effects
specified in the DGCL.
1.2 THE EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective, following the filing with the Delaware Secretary of State of a
Certificate of Merger in such form as is required by, and executed in accordance
with, the applicable provisions of the DGCL, on June 15, 1998 (the "Effective
Time") or at such later time as may be agreed to by Parent and the Company and
specified in the Certificate of Merger. The parties will cause the Certificate
of Merger to be filed with the Delaware Secretary of State as soon as
practicable after the Closing.
1.3 CLOSING. On the same day as, but immediately prior to the filing
of the Certificate of Merger, a closing (the "Closing") will take place for the
purpose of confirming the satisfaction or waiver of the conditions set forth in
Sections 6 and 7 hereof. The Closing will take place as soon as practicable
after the satisfaction or waiver of the conditions set forth in such Sections
(the date and time of the Closing being hereinafter referred to as the "Closing
Date"), at the offices of Xxxxxxxx & Xxxxxx, 000 X. Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, unless another place is agreed to by the parties hereto.
1.4 CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS.
(a) Certificate of Incorporation. The Certificate of Incorporation of
Sub, as in effect at the Effective Time, shall continue to be the Certificate of
Incorporation of the Surviving Corporation, until amended as provided by law,
except that the name of Sub shall be changed to "Rose & Associates, Inc.".
(b) By-laws. The By-laws of Sub, as in effect at the Effective Time,
shall continue to be the By-laws of the Surviving Corporation, until altered,
amended or repealed in accordance with law, the Certificate of Incorporation of
the Surviving Corporation and such By-laws.
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(c) Directors and Officers. The directors of the Surviving Corporation
at and immediately following the Effective Time shall be R. Xxxxxxx Xxxx, Jr.
and Xxxx X. Xxxxxxx, to serve in accordance with the By-laws of the Surviving
Corporation. The officers of the Surviving Corporation at and immediately
following the Effective Time shall be R. Xxxxxxx Xxxx, Jr., President, and Xxxx
X. Xxxxxxx, Secretary and Treasurer, to serve in accordance with the By-laws of
the Surviving Corporation.
1.5 CONVERSION AND EXCHANGE OF SHARES. The manner and basis of
converting at the Effective Time Rose Common Stock into Parent Common Stock and
the Note, as hereafter defined, and the exchange of certificates therefor shall
be as set forth herein.
(a) The 100 shares of Rose Common Stock which are issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive (i) 950,000 fully paid and nonassessable shares of
Parent Common Stock and (ii) the promissory note of Parent (the "Note") in the
principal amount of $1,900,000 in the form of EXHIBIT B attached hereto.
(b) Each share of Sub Common Stock issued and outstanding as of the
Effective Time, shall, by virtue of the Merger and without any action on the
part of Parent, the sole stockholder of Sub, be converted into one share of
legally and validly issued, fully paid and nonassessable Common Stock, $.01 par
value, of the Surviving Corporation. Each stock certificate of Sub evidencing
ownership of Sub Common Stock shall by virtue of the Merger evidence ownership
of Common Stock of the Surviving Corporation.
1.6 EXCHANGE OF CERTIFICATES. Parent Common Stock into which Rose
Common Stock shall be converted pursuant to the Merger shall be deemed to have
been issued at the Effective Time. At the Closing, Parent shall deliver to
Stockholder certificates evidencing the shares of Parent Common Stock to which
Stockholder is entitled under Section 1.5, and Stockholder shall deliver to
Parent Stockholder's certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Rose Common Stock, together
with a blank stock power and such other transmittal letters, documents and
instruments as Parent or Parent's transfer agent may reasonably request, each in
form reasonably acceptable to Parent or such transfer agent.
1.7 NO FURTHER OWNERSHIP RIGHTS IN ROSE COMMON STOCK. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of Rose
Common Stock in accordance with the terms hereof and the Note shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares of
Rose Common Stock, and, on and after the Effective Time, there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Rose Common Stock which were outstanding
immediately prior to the Effective Time.
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2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF STOCKHOLDER AND
COMPANY. As an inducement to Parent to enter into this Agreement and to
consummate the Merger contemplated herein, Stockholder and Company hereby
severally and not jointly represent and warrant to Parent and agree as follows:
2.1 Due Organization of Company.
2.1.1 Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has full
corporate power and authority to own or lease its properties and conduct the
business in which it is presently engaged.
2.1.2 Without limiting the generality of the foregoing,
Stockholder has full power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby. This Agreement is the legal,
valid and binding obligation of Stockholder enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the rights of creditors generally. No action, consent or
approval by or filing with any person or entity, including, without limitation,
any federal, territorial, state, municipal, foreign or other court or
governmental or administrative body or agency is required in connection with the
execution, delivery and performance by Stockholder of this Agreement, and
consummation by Stockholder of the transactions contemplated by him herein.
2.1.3 Company does not own any property or conduct any
activities in any state other than Illinois which would require qualification to
do business in any such other state.
2.1.4 Copies of the Certificate of Incorporation of Company,
certified by the Secretary of State of Delaware, and the Bylaws of Company,
certified by the secretary of Company, which are attached hereto as EXHIBITS C
and D respectively, are complete and accurate as of the date hereof. The minute
book of Company contains sufficient and accurate records of all meetings of the
stockholders and directors of Company and of all other corporate action taken by
its shareholders and directors.
2.2 SUBSIDIARIES. Company has no subsidiary corporations and owns
no shares of stock or other securities in any other corporations, nor is Company
a partner, venturer or associate in any other business with any other person or
firm.
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2.3 PROPERTIES AND ASSETS OF COMPANY. Company was incorporated on
October 2, 1997. The principal assets of Company are its rights under the Sales
Representative Agreement (the "Sales Representative Agreement") and the
Memorandum of Agreement (the "Memorandum of Agreement"), each dated November 18,
1997, by and between Company and Parent. Company has good title to such assets,
subject to no mortgages, liens, claims or encumbrances. Company neither owns nor
leases any real property or tangible personal property and has no accounts
receivable or inventory. The only contracts to which Company is a party are the
Sales Representative Agreement and the Memorandum of Agreement which have not
been assigned or encumbered. Company has no insurance policies or bonds. No
financial statements have been prepared respecting the operations or financial
position of Company for any period. Company owns outright, free and clear of all
liens and encumbrances, all contract rights and intangible personal property
used by it in the operation of its business. To its knowledge, no governmental
permit or license is required by Company for the operation of its business.
2.4 ABSENCE OF MATERIAL CHANGES. Since the date of organization of
Company, there has not been, occurred or arisen any:
2.4.1 Transaction by Company except in the ordinary course of
business, other than the execution of the Sales Representative Agreement and the
Memorandum of Agreement;
2.4.2 Material adverse change to the financial condition,
liabilities, assets, business, properties, earnings or net worth of Company;
2.4.3 Destruction, damage to, or loss of any assets of Company,
whether or not covered by insurance, that materially and adversely affects the
financial condition, business or property of Company;
2.4.4 Declaration, setting aside, or payment of a dividend or
other distribution in respect of the shares of Company or any direct or indirect
redemption, purchase or other acquisition by Company of any of its capital
stock;
2.4.5 Increase in the salary or other compensation payable or
to become payable by Company to any of its officers, directors or employees or
the declaration, payment, or commitment or obligation of any kind for the
payment by Company of a bonus or other additional salary or compensation to any
such person;
2.4.6 Sale or transfer of any asset of Company except in the
ordinary course of business;
2.4.7 Amendment or termination of any contract, agreement or
license to which Company is a party, except in the ordinary course of business;
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2.4.8 Loan by Company to any person or entity or guaranty by
Company of any loan;
2.4.9 Waiver or release of any right or claim of Company,
except in the ordinary course of business;
2.4.10 Mortgage, pledge or other encumbrance of any asset of
Company;
2.4.11 Issuance or sale by Company of any of its shares; or
2.4.12 Agreement by Company to do any of the things described
in the preceding clauses 2.4.1 through 2.4.11.
2.5 TAXES. Company has filed all Federal, state and local income,
payroll, excise, franchise and property tax returns or other reports, and has
paid in full all federal, state and local taxes to the extent such filings and
payments are required prior to the date of this Agreement, each of said returns
or reports are true and correct, there are no outstanding claimed deficiencies
or assessments for taxes, interest or penalties with respect to any prior tax
period or for the current period. Neither Stockholder nor Company knows of any
basis for any such claim or assessment.
2.6 CONTRACTS AND AGREEMENTS. Other than the Sales Representative
Agreement and the Memorandum of Agreement, there are no contracts or agreements,
written or oral, or other documents to which Company is as of this date a party.
2.7 LABOR, BENEFIT AND EMPLOYMENT AGREEMENTS. Company has no
employees. There are no labor agreements, pension plans or other employment,
profit sharing, deferred compensation, bonus, stock option, stock purchase,
retainer, consultant, retirement, welfare or incentive plans or contracts or
other "fringe benefits" or other compensation plans.
2.8 LITIGATION; DISPUTED ITEMS.
2.8.1 Other than respecting Plastech Engineered Products, Inc.
and its subsidiaries, neither Company nor any of the officers, directors or
partners of Company are now engaged in any pending or threatened litigation or
other proceeding or investigation in connection with the affairs of Company, nor
is Company subject to any existing judgment, order or decree or other
governmental action or any proceeding affecting the operation of its businesses
or assets, or which would prevent, hamper or make illegal the transactions
contemplated by this Agreement.
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2.8.2 Company has no material liabilities or obligations
(whether accrued, absolute, contingent or otherwise). There are no known or
undisclosed contingent liabilities or obligations of Company which might result
in any material adverse change in the business, prospects or financial condition
of Company nor any claim with respect to any properties or assets owned, held or
used by Company.
2.9 CAPITAL STRUCTURE.
2.9.1 One hundred percent (100%) of the issued and outstanding
shares of Rose Common Stock are owned by Stockholder free and clear of all
liens, encumbrances, security agreements, equities, options, claims, charges and
restrictions.
2.9.2 All of the issued and outstanding shares of Rose Common
Stock are validly issued, fully paid and nonassessable. There are no outstanding
subscriptions, options, rights, warrants, convertible securities or other
agreements or commitments obligating Company to issue or to transfer from
treasury any additional shares.
2.10 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION.
2.10.1 The Merger will not result in or constitute any of the
following: (i) a default or an event that, with notice or lapse of time or both,
would be a default, breach or violation of the Certificate of Incorporation or
Bylaws of Company or any lease, license, promissory note, conditional sales
contract, commitment, indenture, mortgage, deed of trust or other agreement,
instrument or arrangement to which Stockholder or Company is a party or by which
either of them or the property of either of them is bound; (ii) an event that
would permit any party to terminate any agreement or to accelerate the maturity
of any indebtedness or other obligation of Company; (iii) the creation or
imposition of any lien, charge or encumbrance on any of the properties of
Company; or (iv) the violation of any law, judgment, order or decree affecting
the business of Company.
2.10.2 Company and Stockholder have the right, power, legal
capacity and authority to enter into and perform their respective obligations
under this Agreement, and no approvals or consents of persons other than Company
and Stockholder are necessary in connection with it. The execution and delivery
of this Agreement by Company has been duly authorized by its board of directors.
2.11 BROKERAGE COMMISSIONS. No persons have acted on behalf of
Stockholder or Company as agent, finder or broker in negotiating or bringing
about this transaction and neither Stockholder nor Company have agreed to pay to
any person any fee or commission in the nature of a finder's, broker's or
originator's fee or commission in connection with this Agreement, or the
transactions contemplated hereby. Stockholder and Company shall indemnify and
hold Parent harmless from and against any other claims for finder's, broker's or
originator's fees based upon the acts of Stockholder, Company or its officers,
directors and agents or upon agreements or arrangements made by Stockholder,
Company or its officers, directors and agents.
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2.12 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES ON THE CLOSING
DATE. At the date of this Agreement, Stockholder has, and on the Closing Date
will have, disclosed to Parent all events, conditions and facts known to
Stockholder, materially affecting the business, properties and prospects of
Company. No representation or warranty made by Stockholder in this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary to make such representation or warranty not misleading. All of
the facts recited in any of the Schedules or Exhibits attached hereto shall be
deemed to be representations as to fact and shall be as if recited in this
Agreement, and all the representations and warranties of Stockholder herein
contained shall be true and correct as of such Closing Date, with the same
effect as if made on and as of such Closing Date, and shall survive the Closing
Date and any investigation made by or on behalf of Parent.
3. REPRESENTATIONS AND WARRANTIES OF PARENT. As an inducement to
Stockholder to enter into this Agreement and to consummate the transactions
contemplated herein, Parent represents and warrants to Stockholder and agrees as
follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Parent and Sub
are corporations duly organized, existing and in good standing under the laws of
Nevada and Delaware, respectively, and each has full corporate power and
authority to own or lease its properties and to carry on its business as now
conducted.
3.2 CORPORATE AUTHORITY. The execution and delivery of this
Agreement and the consummation of this transaction by Parent and Sub have been,
or prior to the Closing Date will have been, duly authorized by Parent's and
Sub's boards of directors and by Parent, as sole stockholder of Sub, and neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance with nor fulfillment of the
terms and provisions herein, will: (i) conflict with or result in a breach of
the terms, conditions or provisions of or constitute a default under the
Certificate of Incorporation or Bylaws of Parent or Sub, any material agreement,
instrument or judgment to which either of them is a party or by which either of
them is bound or any statute or regulatory provisions affecting Parent or Sub;
(ii) give any party to or with rights under any such agreement, instrument or
judgment the right to terminate, modify or otherwise change the material rights
or obligations of Parent or Sub under such agreement, instrument or judgment; or
(iii) require the approval, consent or authorization of any federal, state or
local court, governmental authority or regulatory body, other than in connection
with or in compliance with the provisions of law. Each of Parent and Sub has,
and will have at the Closing Date, full corporate power and corporate authority
to do and perform all acts and things required to be done by Parent and Sub
under this Agreement, subject to compliance with the provisions of law.
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3.3 COMMON STOCK. The shares of Parent Common Stock, when issued to
Stockholder pursuant to the terms of this Agreement, will be fully paid, validly
issued and nonassessable.
3.4 FINANCIAL STATEMENTS.
3.4.1 Attached hereto as EXHIBIT E are the audited financial
statements of Parent as of and for the year ended December 31, 1997 and the
compiled financial statements of Parent as of and for the year ended December
31, 1996 (collectively, the "Financial Statements").
3.4.2 The Financial Statements as of and for the year ended
December 31, 1997 have been prepared in conformity with generally accepted
accounting principles consistently applied and the Financial Statements as of
and for the year ended December 31, 1996 have been compiled in accordance with
Statement on Standards for Accounting and Review Services. The Financial
Statements present fairly the financial condition of Parent as of their
respective dates, reflect all known claims against, debts and liabilities of
Parent and do not contain any untrue statement of a material fact or any
omission to state a material fact, and are not misleading in any material
respect.
3.5 ABSENCE OF MATERIAL CHANGES SINCE DECEMBER 31, 1997. Since
December 31, 1997, there has not been, occurred or arisen any:
3.5.1 Transaction by Parent except in the ordinary course of
business as conducted on that date, other than: (1) the acquisition of Triangle
Plastics, Inc. ("Triangle"); (2) the hiring by Parent of six employees of
Triangle; and (3) the incurrence by Parent of current operating losses due to
the payment of salaries of employees and other costs incurred in connection with
the projected expansion of the business of Parent;
3.5.2 Material adverse change to the financial condition,
liabilities, assets, business, properties, earnings or net worth of Parent,
other than as provided in subsection 3.5.1 above;
3.5.3 Destruction, damage to, or loss of any assets of Parent,
whether or not covered by insurance, that materially and adversely affects the
financial condition, business or property of Parent;
3.5.4 Change in accounting methods or practices including,
without limitation, any change in depreciation or amortization policies or rates
by Parent;
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3.5.5 Declaration, setting aside, or payment of a dividend or
other distribution in respect of the shares of Parent or any direct or indirect
redemption, purchase or other acquisition by Parent of any of its capital stock;
3.5.6 Other than as referred to in Section 3.5.1 above and
pursuant to the Employment Agreement being entered into with Stockholder and the
Consulting Agreement being entered into with Xxxxx X. Xxxx effective as of the
date hereof, increase in the salary or other compensation payable or to become
payable by Parent to any of its officers, directors or employees or the
declaration, payment, or commitment or obligation of any kind for the payment by
Parent of a bonus or other additional salary or compensation to any such person;
3.5.7 Sale or transfer of any asset of Parent except in the
ordinary course of business;
3.5.8 Amendment or termination of any contract, agreement or
license to which Parent is a party, except in the ordinary course of business;
3.5.9 Loan by Parent to any person or entity or guaranty by
Parent of any loan;
3.5.10 Waiver or release of any right or claim of Parent,
except in the ordinary course of business;
3.5.11 Mortgage, pledge or other encumbrance of any asset of
Parent;
3.5.12 Issuance or sale by Parent of any of its shares; or
3.5.13 Agreement by Parent to do any of the things described in
the preceding clauses 3.5.1 through 3.5.12.
3.6 TAXES. Parent has filed all Federal, state and local income,
payroll, excise, franchise and property tax returns or other reports, and has
paid in full all federal, state and local taxes to the extent such filings and
payments are required prior to the date of this Agreement, each of said returns
or reports are true and correct and there are no outstanding claimed
deficiencies or assessments for taxes, interest or penalties with respect to any
prior tax period or for the current period. Neither Stockholder nor Parent knows
of any basis for any such claim or assessment.
3.7 CONTRACTS AND AGREEMENTS.
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3.7.1 Schedule 3.7.1 hereto lists or refers to any and all
material contracts or agreements, written or oral, or other documents, if any,
to which Parent is as of this date a party. Contracts to which subsidiaries of
Parent are a party are not listed.
3.7.2 Copies of any agreements or contracts mentioned in
Section 3.7.1 shall be made available to Stockholder for examination promptly
after execution of this Agreement if requested. All of the agreements and
contracts listed in Section 3.7.1 are valid and binding obligations of the
parties thereto in accordance with their respective terms, and there are no
liabilities arising from any default by Parent heretofore in any of such
agreements and/or contracts.
3.8 LABOR, BENEFIT AND EMPLOYMENT AGREEMENTS. There are no
collective bargaining agreements, employment agreements or other labor
agreements to which Parent is a party, nor are there any pension plans or other
employment, profit sharing, deferred compensation, bonus, stock option, stock
purchase, retainer, consultant, retirement, welfare or incentive plans or
contracts or other "fringe benefits" to employees, other than the hiring of six
(6) employees of Triangle, the terms of which Stockholder is aware.
3.9 LITIGATION; DISPUTED ITEMS.
3.9.1 Except as set forth on Schedule 3.9, neither Parent nor
any of the officers, directors or partners of Parent are now engaged in any
pending or threatened litigation or other proceeding or investigation in
connection with the affairs of Parent, nor is Parent subject to any existing
judgment, order or decree or other governmental action or any proceeding
affecting the operation of its businesses or assets, or which would prevent,
hamper or make illegal the transactions contemplated by this Agreement, nor does
Parent know of any grounds for any such litigation, proceeding or investigation.
3.9.2 Except as set forth in the Financial Statements or on any
Schedule hereto, as of December 31, 1997, Parent has no material liabilities or
obligations (whether accrued, absolute, contingent or otherwise). There are no
known or undisclosed contingent liabilities or obligations of Parent which might
result in any material adverse change in the business, prospects or financial
condition of Parent nor any claim with respect to any properties or assets
owned, held or used by Parent.
3.10 CAPITAL STRUCTURE; TITLE TO STOCK. Parent owns 100% of the
capital stock of its only subsidiary, Clarion Plastics Technologies, Inc. A true
and correct listing of the holders of the Parent Common Stock as of December 31,
1997 is attached hereto as Schedule 3.10 A. A true and correct listing of the
holders of options to acquire Parent Common Stock as of the date of this
Agreement is attached hereto as Schedule 3.10 B.
3.11 CORRECTNESS OF REPRESENTATIONS AND WARRANTIES ON THE CLOSING
DATE.
-11-
At the date of this Agreement, Parent has, and on the Closing Date will have,
disclosed to Stockholder all events, conditions and facts known to Parent,
materially affecting the business, properties and prospects of Parent. No
representation or warranty made by Parent in this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to make
such representation or warranty not misleading. All of the facts recited in any
of the Schedules or Exhibits attached hereto shall be deemed to be
representations as to fact and shall be as if recited in this Agreement, and all
the representations and warranties of Parent herein contained shall be true and
correct as of such Closing Date, with the same effect as if made on and as of
such Closing Date, and shall survive the Closing Date and any investigation made
by or on behalf of Stockholder.
4. STOCKHOLDER'S AND COMPANY'S OBLIGATIONS BEFORE CLOSING DATE.
Stockholder and Company covenant that from the date of this Agreement until the
Closing Date:
4.1 PARENT'S ACCESS TO PREMISES AND INFORMATION. Parent and its
counsel, accountants and other representatives shall have full access during
normal business hours to all properties, books, accounts, records, contracts and
documents of or relating to Company. Stockholder shall furnish or cause to be
furnished to Parent and its representatives all data and information concerning
the business, finances and properties of Company that may reasonably be
requested.
4.2 CONDUCT OF BUSINESS IN THE NORMAL COURSE. Company will carry on
its business and activities diligently and in substantially the same manner as
they previously have been carried out, and shall not make or institute any
unusual or novel methods of purchase, sale, lease, management, accounting or
operation that will vary materially from those methods used by Company as of the
date of this Agreement.
4.3 PRESERVATION OF BUSINESS AND RELATIONSHIPS. Company and
Stockholder will use their best efforts, without making any commitments on
behalf of Parent, to preserve Company's business organizations intact, and to
preserve its present relationships with suppliers, customers and others having
business relationships with Company.
4.4 CORPORATE MATTERS. Company will not do, or agree to do, any of
the following acts: (i) amend its Certificate of Incorporation or Bylaws; (ii)
issue any shares; or (iii) issue or create any warrants, obligations,
subscriptions, options, convertible securities or other commitments under which
any additional shares might be directly or indirectly authorized, issued or
transferred from treasury.
4.5 EMPLOYEES AND COMPENSATION. Company will not do, or agree to do,
any of the following acts: (i) hire any employee or grant any increase in
compensation payable or to become payable to any officer, sales agent or
representative; or (ii) increase benefits payable to any officer, sales agent or
representative under any bonus or pension plan or other contract or commitment.
-12-
4.6 NEW TRANSACTIONS. Company will not, without Parent's written
consent, do or agree to do any of the following acts: (i) enter into any
contract, commitment or transaction not in the usual and ordinary course of its
business; (ii) make any capital expenditures in excess of $5,000 for any single
item or $5,000 in the aggregate, or enter into any leases of capital equipment
or property under which the annual lease charge is in excess of $5,000; (iii)
sell or dispose of any capital assets with a net fair market value in excess of
$5,000, individually, or $5,000 in the aggregate; or (iv) borrow any funds from
any person other than Stockholder.
4.7 DIVIDENDS, DISTRIBUTIONS AND ACQUISITIONS OF STOCK. Company will
not do, or agree to do, any of the following acts: (i) declare, set aside or pay
any dividend or take any distribution in respect of its shares; or (ii) directly
or indirectly purchase, redeem or otherwise acquire any of its shares.
4.8 EXISTING AGREEMENTS. Company will not modify, amend, cancel or
terminate any of its existing contracts or agreements or agree to do any of
those acts.
5. COMMON STOCK NOT TO BE REGISTERED; REGISTRATION RIGHTS.
5.1 INVESTMENT REPRESENTATIONS. Stockholder acknowledges that the
shares of Parent Common Stock to be acquired by him pursuant to this Agreement
are being issued by Parent without registration under the Securities Act of
1933, as amended (the "Act"), in reliance upon an exemption available under the
Act for non-public offerings. Stockholder represents and warrants to Parent that
he is acquiring Parent Common Stock for investment and not with a view to the
public resale or distribution thereof, that he has no contract, undertaking,
agreement or arrangement with any person to sell, transfer or pledge to such
person or anyone else such shares or any portion thereof or interest therein,
and that he has no present plans to enter into such contract, undertaking,
agreement or arrangement.
5.2 LEGEND ON SHARES. Stockholder acknowledges that the certificate
evidencing the shares of Parent Common Stock acquired by him pursuant to this
Agreement, and any and all replacements thereof, shall bear and be subject to a
legend in substantially the following form affecting the transferability of such
shares, and that Parent will place appropriate stop transfer orders with its
transfer agent and registrar:
"THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN
ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REQUIREMENTS FOR SUCH
REGISTRATION FOR NON-PUBLIC OFFERINGS. ACCORDINGLY, THE SALE,
TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES
EVIDENCED HEREBY OR ANY PORTION THEREOF OR INTEREST THEREIN MAY NOT BE
ACCOMPLISHED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THAT ACT, OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND
SUBSTANCE TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED."
-13-
5.3 REGISTRATION RIGHTS. Stockholder shall have the right to require
Parent to register the shares of Parent Common Stock already owned by
Stockholder and the shares of Parent Common Stock acquired by Stockholder under
Section 1 of this Agreement in any public offering of Parent Common Stock,
whether such offering is by Parent, by shareholders of Parent or both. However,
if in the written opinion of the underwriter for the offering the inclusion of
all the shares which Stockholder desires to sell in the offering creates a
substantial risk that the price per share in the offering will be reduced, or
will have any other material detrimental effect on the offering or the market
for the Parent Common Stock, which reason shall be specified by the underwriter,
then a portion specified by the underwriter as necessary to avoid such
detrimental effect of the shares which Stockholder desires to sell in the
offering shall be excluded. If shares of any other shareholder are to be
registered in such offering and if in the written opinion of the underwriter the
inclusion of all shares which Stockholder and the other shareholder or
shareholders desire to sell in the offering creates a substantial risk that the
price per share in the offering will be reduced, or will have any other material
detrimental effect on the offering or the market for the Parent Common Stock,
which reason shall be specified by the underwriter, then shares of Stockholder
and such other shareholder or shareholders shall be excluded from the offering
pro rata based upon the number of shares which Stockholder and such other
shareholder or shareholders desired to register in the offering. Parent shall
bear all expenses (other than underwriting discounts and commissions related to
Stockholder's shares) of the offering unless the offering is by shareholders
only, in which case each shareholder shall pay a pro rata portion of such
expenses based upon the number of shares which such shareholder is selling in
the offering. Parent shall indemnify Stockholder for any liability arising out
of any untrue or alleged untrue statement of a material fact, or omission or
alleged omission to state a material fact, in the registration statement or
prospectus for the offering. While Parent is a public company, Parent shall also
file all necessary reports in compliance with the securities laws required to
permit Stockholder to sell Parent Common Stock under Rule 144.
6. CONDITIONS PRECEDENT TO PERFORMANCE BY PARENT. The obligations of
Parent hereunder are subject to the satisfaction at or prior to the Closing Date
of all of the following conditions, compliance with which or the occurrence of
which may be waived in whole or in part by Parent in writing provided, however,
that no such waiver of a condition shall constitute a waiver by Parent of any of
its other rights or remedies at law or in equity, if Stockholder or Company
shall be in default of any of the representations, warranties or covenants under
this Agreement.
-14-
6.1 ACCURACY OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, covenants and warranties of Stockholder and Company contained
in this Agreement shall be true and correct on and as of the Closing Date, with
the same effect as though the same had been made on and as of the Closing Date.
The Schedules and Exhibits attached hereto shall likewise be true and correct as
of the Closing Date, and if there are any changes therein and such changes are
approved by Parent, the same shall be amended or supplemented as appropriate, so
that they shall be true as of the Closing Date.
6.1.1 Stockholder and Company shall have performed and satisfied
all covenants and conditions required by this Agreement to be performed or
satisfied by it or them on or prior to the Closing Date.
6.1.2 Parent shall not have discovered any material error,
misstatement or omission in any of the Schedules, Exhibits, representations or
warranties contained herein or material failure on the part of Stockholder or
Company to perform or satisfy any such covenants or conditions.
6.1.3 There shall have been delivered to Parent on the Closing
Date a certificate of Stockholder dated the Closing Date certifying compliance
with this Section 6.1 and such other certificates and other documents with
respect to the foregoing as Parent, consistent with the terms of this Agreement,
may request. The delivery of such certificate shall in no way diminish the
warranties and representations of Stockholder and Company made in this
Agreement.
6.2 NO MATERIAL ADVERSE CHANGE; STOCKHOLDER'S CERTIFICATE. During
the period from the date of organization of Company to the Closing Date, there
shall not have been any material adverse change in the financial condition or
results of operations or business prospects of Company, and Company shall not
have sustained any material destruction, loss or damage to its properties,
whether or not insured, which affects its ability to conduct its businesses.
Parent shall have received a certificate dated the Closing Date, signed by
Stockholder certifying to the foregoing effect and to the further effect that
any liabilities of Company as of the Closing Date are only liabilities incurred
in the ordinary course of business or as otherwise contemplated by this
Agreement or the Schedules or Exhibits hereto. The delivery of such certificate
shall in no way diminish the warranties and representations of Stockholder and
Company made in this Agreement.
6.3 ABSENCE OF LITIGATION. No action or proceedings shall have been
instituted or threatened prior to or on the Closing Date before any court or
governmental body or authority pertaining to the transactions contemplated by
this Agreement, or the result of which could prevent or make illegal the
consummation of such transactions or which could be materially adverse to the
business of Company.
-15-
6.4 APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments and other documents delivered to Parent under this
Agreement shall be satisfactory to Parent.
7. CONDITIONS PRECEDENT TO PERFORMANCE BY STOCKHOLDER. The obligations
of Stockholder and Company to consummate the transactions contemplated by this
Agreement are subject to the following conditions, compliance with which or the
occurrence of which may be waived in whole or in part by Stockholder in writing.
7.1 ACCURACY OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
7.1.1 All representations, covenants and warranties of Parent
contained in this Agreement shall be true and correct on and as of the Closing
Date, with the same effect as though the same had been made on and as of the
Closing Date.
7.1.2 Parent shall have performed and complied with all
covenants and agreements, and satisfied all conditions that it is required by
this Agreement to perform, comply with or satisfy, before or on the Closing
Date.
7.1.3 Company shall not have discovered any material error,
misstatement or omission in any of the Schedules, Exhibits, representations or
warranties contained herein or material failure on the part of Parent to perform
or satisfy any such covenants or conditions.
7.1.4 There shall have been delivered to Company on the Closing
Date a certificate of Stockholder dated the Closing Date certifying compliance
with this Section 7.1 and such other certificates and other documents with
respect to the foregoing as Company and Stockholder, consistent with the terms
of this Agreement, may request. The delivery of such certificate shall in no way
diminish the warranties and representations of Parent made in this Agreement.
7.2 NO MATERIAL ADVERSE CHANGE; PARENT'S CERTIFICATE. Except as
specified in Section 3.5.1, during the period from December 31, 1997 to the
Closing Date, there shall not have been any material adverse change in the
financial condition or results of operations or business prospects of Parent,
and Parent shall not have sustained any material destruction, loss or damage to
its properties, whether or not insured, which affects its ability to conduct its
businesses. Stockholder shall have received a certificate dated the Closing
Date, signed by Parent certifying to the foregoing effect and to the further
effect that any liabilities of Parent as of the Closing Date which were not
reflected on the Financial Statements are only liabilities incurred in the
ordinary course of business subsequent to the date of the Financial Statements
or as otherwise contemplated by this Agreement or the Schedules or Exhibits
hereto. The delivery of such certificate shall in no way diminish the warranties
and representations of Parent made in this Agreement.
-16-
7.3 ABSENCE OF LITIGATION. No action or proceedings shall have been
instituted or threatened prior to or on the Closing Date before any court or
governmental body or authority pertaining to the transactions contemplated by
this Agreement, or the result of which could prevent or make illegal the
consummation of such transactions or which could be materially adverse to the
business of Parent.
7.4 APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments and other documents delivered to Parent under this
Agreement shall be satisfactory to Company.
8. ADDITIONAL AGREEMENTS.
8.1 RETENTION OF STOCKHOLDER AS COMPANY PRESIDENT. Parent shall
cause Stockholder to be retained in the position of President of Company
following the Closing Date pursuant to an employment agreement in the form
attached hereto as EXHIBIT F. In addition, Stockholder shall serve as Executive
Vice President and a member of the Board of Directors of Parent.
8.2 TERMINATION OF SALES REPRESENTATIVE AGREEMENT. Stockholder,
Company and Parent acknowledge and agree that the consummation of the
transaction contemplated by this Agreement shall constitute an exercise of the
"Merger Option" as defined in the Sales Representative Agreement. As a result,
on the Closing Date, the Sales Representative Agreement shall terminate.
Stockholder and Company further acknowledge and agree that the Memorandum of
Understanding shall be canceled concurrently with the consummation of the
transaction contemplated by this Agreement.
8.3 WAIVERS OF OBLIGATIONS OF STOCKHOLDER AND PARENT. Stockholder
and Parent acknowledge that under the Sales Representative Agreement certain
commissions were due from Parent to Stockholder and that certain reimbursement
obligations were owed from Stockholder to Parent. As part of this Agreement, it
is understood and agreed that Stockholder and Parent are waiving any and all
monies required to be paid from November 18, 1997 under the Sales Representative
Agreement and amendment thereto.
8.4 DILUTION PROTECTION. The intent of the parties hereto is that no
transfer of assets to a related or affiliated corporation or other entity or
similar transaction shall dilute the equity interest that Stockholder will
attain pursuant to Section 1 hereof. Therefore, in the event of any transfer of
assets to a related or affiliated entity or other similar transaction, if the
related or affiliated entity is not wholly owned by Parent, Stockholder shall be
awarded the same percentage equity interest in such entity that Stockholder has
-17-
in Parent, without the payment of further consideration. Alternatively,
Stockholder shall have the right, at his election, to receive additional shares
of Parent to compensate him for the diminution in value of the assets of Parent
resulting from such transfer of assets or similar transaction. This section does
not apply to any offering of shares by Parent at fair market value, such as
stock offerings on the open market, the use of Parent stock as consideration in
acquisitions or transfers of assets for fair market value.
In any issuance of Parent Common Stock in a public offering, secondary
offering or any form of private placement, including offerings to affiliates, if
Parent authorizes the issuance and sale of any shares of Parent Common Stock or
securities containing options or rights to acquire any shares of Parent Common
Stock ("New Stock"), Parent will first offer Stockholder a portion of the New
Stock equal to the number of shares of New Stock multiplied by a fraction, the
numerator of which is the number of shares of Parent Common Stock held by
Stockholder and the denominator of which is the number of shares of Parent
Common Stock outstanding. Stockholder will be entitled to purchase up to such
portion of New Stock at the same price, terms and conditions as the New Stock is
to be offered to any other persons. Stockholder must exercise such option to
purchase, if Stockholder desires to do so, within 15 business days of receipt of
the offer from Parent. If Stockholder elects to exercise his option under this
paragraph, he shall be given 30 additional days to close with Parent.
9. STOCKHOLDER'S AND PARENT'S OBLIGATIONS AFTER CLOSING DATE.
9.1 STOCKHOLDER'S INDEMNITIES. Stockholder shall indemnify, defend
and hold harmless Parent against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorneys' fees, that
it shall incur or suffer, which arise, result from or relate to any breach of or
failure by Stockholder or Company to perform any of their representations,
warranties, covenants or agreements in this Agreement or in any Schedule,
certificate, Exhibit or other instrument furnished or to be furnished by
Stockholder.
9.2 PARENT'S INDEMNITIES. Parent shall indemnify, defend and hold
harmless Stockholder against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorneys' fees, that
he shall incur or suffer, which arise, result from or relate to any breach of or
failure by Parent to perform any of its representations, warranties, covenants
or agreements in this Agreement or in any Schedule, certificate, Exhibit or
other instrument furnished or to be furnished by Parent.
-18-
10. COSTS.
10.1 ATTORNEYS' FEES. The attorneys' fees of Company and
Stockholder incurred in negotiating and preparing this Agreement and in
connection with the transaction contemplated by this Agreement, shall be paid by
Parent.
10.2 OTHER COSTS. Except as provided in Section 11.1, each of the
parties hereto shall pay all costs and expenses incurred by it in negotiating
and preparing this Agreement and in closing and carrying out the transactions
contemplated hereby.
11. MISCELLANEOUS PROVISIONS.
11.1 NOTICES. Any notice or demand required or permitted to be
given hereunder shall be in writing and shall be deemed effective forty-eight
(48) hours after having been deposited in the United States mail, postage
prepaid, registered or certified, return receipt requested, addressed to each
party in the following manner:
TO PARENT: CLARION HOUSE, INC.
0000 Xxxxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
TO COMPANY: ROSE & ASSOCIATES, INC.
000 Xxxxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
TO STOCKHOLDER: R. XXXXXXX XXXX, JR.
000 Xxxxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Any party may change the address to which such notices are to be
addressed by giving the other parties notice in the manner set forth herein.
11.2 CAPTIONS. The title or headings of the various sections,
articles and paragraphs hereof are intended solely for convenience of reference
and are not intended and shall not be deemed for any purpose whatsoever to
modify or explain or place any construction upon any of the provisions of this
Agreement.
11.3 EXHIBITS AND SCHEDULES. All statements contained in any
Exhibit, Schedule, certificate or other instrument delivered by or on behalf of
the parties hereto, or in connection with the transactions contemplated hereby,
are an integral part of this Agreement and shall be deemed representations and
warranties hereunder. All representations, warranties and agreements made by the
-19-
parties to this Agreement or pursuant hereto, shall survive the Closing Date and
any investigations made by or on behalf of the parties. All of the Schedules and
Exhibits hereto shall be attached on or before the Closing Date and at such time
shall become a part of this Agreement and shall be incorporated herein as if
attached on the execution date.
11.4 NUMBER. Throughout this Agreement, wherever the context so
requires, the singular shall include the plural, and the masculine gender shall
include the feminine and neuter genders, and vice versa.
11.5 SEVERABILITY. In the event that any provision in this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
11.6 AMENDMENT OR MODIFICATION. The parties hereto may amend or
modify this Agreement in such manner as may be agreed upon only by a written
instrument executed by such parties.
11.7 COUNTERPARTS. This Agreement is being executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute but one and the same instrument.
11.8 SUCCESSORS AND ASSIGNS. All of the terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective transferees, successors and assigns.
11.9 GOVERNING LAW. The parties hereby agree that this Agreement
shall be construed, enforced and governed by the laws of the State of Nevada.
11.10 ATTORNEYS' FEES. In the event any party hereto shall
institute an action to enforce any rights hereunder, the prevailing party in
such action shall be entitled, in addition to any other relief awarded by the
court, to such reasonable attorneys' fees as the court may award.
11.11 JOINT AND SEVERAL OBLIGATIONS. Each obligation imposed by
this Agreement on Company or the Stockholder, shall be the joint and several
obligation of Company and the Stockholder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year above written.
"PARENT"
CLARION HOUSE, INC.,
a Nevada corporation
By:__________________________________
Xxxxx X. Xxxxxxxxx, President
"SUB"
ROSE ACQUISITION CORP.,
a Delaware corporation
By:__________________________________
Xxxx X. Xxxxxxx, President
"STOCKHOLDER"
_____________________________________
R. Xxxxxxx Xxxx, Jr.
"COMPANY"
ROSE & ASSOCIATES, INC.,
a Delaware corporation
By:__________________________________
R. Xxxxxxx Xxxx, Jr., President
-21-
EXHIBIT A
---------
CERTIFICATE OF MERGER
OF
ROSE & ASSOCIATES, INC.
INTO
ROSE ACQUISITION CORP.
*********
The undersigned corporation organized and existing under and by virtue
of the General Corporation Law of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
NAME: STATE OF INCORPORATION
Rose Acquisition Corp. Delaware
Rose & Associates, Inc. Delaware
SECOND: That an agreement of merger between the parties to the merger
has been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of section 251 of
the General Corporation Law of Delaware.
THIRD: The name of the surviving corporation of the merger is Rose
Acquisition Corp., which shall hereinwith be changed to Rose & Associates, Inc.
FOURTH: That the amendments or changes in the Certificate of
Incorporation of Rose Acquisition Corp., the surviving corporation, as are to be
effected by the merger are as follows:
Article 1 shall be amended to read as follows:
1. The name of the Corporation is Rose & Associates, Inc.
FIFTH: That the executed Agreement of Merger is on file at the
principal place of business of the surviving corporation, the address of which
is 0000 Xxxxx Xxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxxx, XX 00000.
SIXTH: That a copy of the Agreement of Merger will be furnished by the
surviving corporation, on request and without cost, to any stockholder of any
constituent corporation.
SEVENTH: That this Certificate of Merger shall be effective on June 15,
1998.
Dated: June 3, 1998
ROSE ACQUISITION CORP.
By:___________________________
Name: Xxxx X. Xxxxxxx
Title: President
A-1
EXHIBIT B
---------
PROMISSORY NOTE
---------------
$1,900,000 June 15, 1998
FOR VALUE RECEIVED, CLARION HOUSE, INC., a Nevada corporation
("Borrower"), hereby promises to pay to R. Xxxxxxx Xxxx, Jr. ("Holder"), an
individual having an address at c/o Rose & Associates, Inc., 000 Xxxxxx Xxxx,
Xxxxxxxxxx, Xxxxx, Xxxxxxxx 00000, the sum of One Million Nine Hundred Thousand
Dollars ($1,900,000) in immediately available funds and in lawful money of the
United States of America, together with unpaid interest accrued thereon. This
Note shall be non-transferable by Holder except upon the death of Holder to his
estate (or to the heirs or devisees of Holder) or by operation of law.
Interest on this Note shall accrue from the date hereof at the rate
specified below until April 15, 1999, on which date all such accrued interest
shall be due and payable. Thereafter, principal on this Note shall be payable in
installments on the fifteenth day of each month, commencing May 15, 1999 and
ending on December 15, 2007, as specified in Schedule A to this Note, together
with accrued interest payable on each installment payment date; provided,
however, that if during the Measuring Period, as hereafter defined, Borrower
shall have aggregate revenues for such entire period of less than $45,000,000,
then Borrower shall be released from its obligation to pay all installments of
principal payable on this Note on the first day of the month following the end
of the Measuring Period and thereafter. The "Measuring Period" shall mean the
period from July 1, 1999 through June 30, 2002 if Borrower's new manufacturing
facility is fully operational, with occupancy permit and all other necessary
permits and all required equipment in place, on or before April 1, 1999. If such
conditions are not met by April 1, 1999, the beginning and ending dates of the
Measuring Period shall be deferred for the period of time after April 1, 1999
(rounded up to the next full month) which elapses before such conditions are
satisfied. This Note shall be prepayable at any time without penalty.
Borrower shall pay interest on the unpaid principal balance of this
Note from the date hereof until fully paid computed on the basis of the actual
number of days elapsed over a 360-day year, at a rate per annum equal to 10% per
annum. Borrower shall pay interest on overdue principal at the rate of 12% per
annum; it shall pay interest, to the extent permitted by applicable law, on
overdue installments of interest at the rate of 12% per annum.
Payments of principal and interest shall be made in lawful money of the
United States of America to the Holder at the address shown above in immediately
available funds. Any payments due hereunder which fall due on a day which is not
a Business Day shall be payable on the first succeeding Business Day and such
extension of time shall be included in the computation of interest due
hereunder.
B-1
Borrower shall pay all costs and expenses (including reasonable
attorneys' fees) incurred by the Holder in collecting upon or enforcing this
Note.
Holder at his option may extend the time for payment of this Note,
postpone the enforcement hereof, or grant any other indulgences without
affecting or diminishing Holder's right of recourse against Borrower, which
right is expressly reserved.
Borrower waives presentment for payment, demand, protest, notice of
protest and notice of dishonor hereof, and all other notices to which it may be
entitled.
This Note shall be governed by the laws of the State of Illinois.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its
duly authorized officer as of this 15th day of June, 1998.
CLARION HOUSE, INC.
By:___________________________
Name: Xxxxx X. Xxxxxxxxx
Title: President
B-2
SCHEDULE A
----------
AMORTIZATION SCHEDULE
I, Xxxx X. Xxxxxxx, Secretary of Rose Acquisition Corp., a corporation
organized and existing under the laws of the State of Delaware, hereby certify,
as such Secretary, that the Agreement of Merger to which this Certificate is
attached, after having been first duly signed on behalf of the said corporation
and having been signed on behalf of Rose & Associate, Inc., a corporation of the
State of Delaware, was duly adopted pursuant to section 228 of the General
Corporation of Delaware by the unanimous written consent of the stockholders
holding 100 shares of the capital stock of the corporation, same being all of
the shares issued and outstanding having voting power, which Agreement of Merger
was thereby adopted as the act of the stockholders of said Rose Acquisition
Corp. as the duly adopted agreement and act of the said corporation.
WITNESS my hand on this 3rd day of June, 1998.
_________________________
Name: Xxxx X. Xxxxxxx
Title: Secretary
I, R. Xxxxxxx Xxxx, Jr., Secretary of Rose & Associates, Inc.., a
corporation organized and existing under the laws of the State of Delaware,
hereby certify, as such Secretary, that the Agreement of Merger to which this
Certificate is attached, after having been first duly signed on behalf of the
said corporation and having been signed on behalf of Rose Acquisition Corp., a
corporation of the State of Delaware, was duly adopted pursuant to section 228
of the General Corporation of Delaware by the unanimous written consent of the
stockholders holding 100 shares of the capital stock of the corporation, same
being all of the shares issued and outstanding having voting power, which
Agreement of Merger was thereby adopted as the act of the stockholders of said
Rose & Associates, Inc. as the duly adopted agreement and act of the said
corporation.
WITNESS my hand on this 3rd day of June, 1998.
__________________________
Name: R. Xxxxxxx Xxxx, Jr.
Title: Secretary
