EX-10(ii)
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") dated as of July __, 2000, by
and among AMERICAN MILLENNIUM CORPORATION, INC., a New Mexico corporation
("AMCI"), COMPUGRAPHICS CORPORATION, a Florida corporation ("Compugraphics") and
the shareholders (the "Selling Shareholders") of Compugraphics listed on
Schedule A attached hereto.
RECITALS
A. AMCI and the Selling Shareholders deem it desirable and in the best interests
of AMCI and Compugraphics for AMCI to acquire one hundred percent (100%) of all
of the issued and outstanding capital stock of Compugraphics (the "Compugraphics
Capital Stock") from the Selling Shareholders in exchange for shares of the
common voting stock, $.001 par value, of AMCI (the "AMCI Common Stock"), so that
Compugraphics will become a controlled subsidiary of AMCI and the Selling
Shareholders will become additional shareholders of AMCI.
B. For federal income tax purposes, it is intended that the exchange of the
Compugraphics Capital Stock for shares of the AMCI Common Stock qualify as a
type B reorganization under the provisions of Section 368(a)(1)(B) of the United
States Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, and in order to set forth the terms and conditions
of the exchange, the mode of carrying the same into effect, the manner and basis
of exchanging the capital stock and other stock rights of the Selling
Shareholders in Compugraphics for shares of the AMCI Common Stock and such other
details and provisions as are deemed necessary or proper, the parties hereto
hereby agree as follows:
article i
EXCHANGE
1.1 Adoption of Plan of Exchange. Subject to and in accordance with the terms
and conditions of this Agreement, AMCI and the Selling Shareholders hereby adopt
a plan of reorganization pursuant to Section 368(a)(1)(B) of the Code.
1.2 Selling Shareholder Transfers. The Selling Shareholders agree to transfer to
AMCI all of their shares of the common stock, par value $____ per share of
Compugraphics (the "Compugraphics Common Stock"), now owned and hereafter
acquired prior to the Closing Date, all options, warrants or rights of any kind
held by the Selling Shareholders for shares of capital stock in Compugraphics
and all obligations, debts, indentures, bond, chose in action, or other evidence
of indebtedness of Compugraphics to any of the Selling Shareholders.
1.3 AMCI Stock Issues. In exchange for the Selling Shareholders' transfers set
forth in Section 1.2 above, AMCI shall issue to Selling Shareholders Six Hundred
Thousand (600,000) shares of the AMCI Common Stock, in accordance with the
remaining terms of this Agreement. The determination as to the equitable
allocation and distribution of the Six Hundred Thousand (600,000) shares of the
AMCI Common Stock amongst the Selling Shareholders shall be ratable in
accordance with the presently issued and reserved for issuance shares of
Compugraphics, or upon such basis as they have agreed, as evidenced by the
signatures of all of the Selling Shareholders on Schedule A attached hereto.
1.4 Closing Date. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the office of ______________________, on
July 18, 2000, or such other date to be specified by the parties. The date on
which the Closing occurs is herein referred to as the "Closing Date."
1.5 Material Adverse Effect. "Material Adverse Effect" or "Material Adverse
Change" means any effect, change, event, circumstance or condition which when
considered with all other effects, changes, events, circumstances or conditions
would reasonably be expected to materially adversely affect the business,
results of operations or financial condition of AMCI or Compugraphics, in each
case including its respective subsidiaries together with it taken as a whole, as
the case may be. In no event shall any of the following constitute a Material
Adverse Effect or a Material Adverse Change: (i) a change in the trading prices
of AMCI's equity securities between the date hereof and the Closing Date, in and
of itself; (ii) effects, changes, events, circumstances or conditions generally
affecting the industry in which either AMCI or Compugraphics operate or arising
from changes in general business or economic conditions; (iii) effects, changes,
events, circumstances or conditions resulting from any change in law or
generally accepted accounting principles, which affect generally entities such
as AMCI and Compugraphics; (v) any effects, changes, events, circumstances or
conditions (including, without limitation, non-governmental litigation, delays
in customer orders, a reduction in sales, a disruption in supplier, distributor
or similar relationships or a loss of employees) resulting from the announcement
or pendency of any of the transactions contemplated by this Agreement; and (vi)
any effects, changes, events, circumstances or conditions resulting from
compliance by AMCI or Compugraphics with the terms of, or the taking of any
action contemplated or permitted by, this Agreement.
article ii
REPRESENTATIONS AND WARRANTIES
OF COMPUGRAPHICS AND THE SELLING SHAREHOLDERS
Compugraphics and the Selling Shareholders hereby jointly and severally
represent and warrant, subject to the exceptions specifically described in
writing in the respective Sections of the Disclosure Schedule delivered by
Compugraphics and the Selling Shareholders to AMCI and dated as of the date
hereof (the "Compugraphics Disclosure Schedule") as follows:
2.1 Organization and Standing. Compugraphics is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida,
has full requisite corporate power and authority to carry on its business as it
is currently conducted, and to own and operate the assets or properties
currently owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the assets or properties
owned or the nature of the business conducted by it would make such
qualification or licensing necessary, except where the failure to be so
qualified or licensed could not reasonably be expected to have a Material
Adverse Effect on Compugraphics.
2.2 Agreement Authorized and its Effect on Other Obligations. Upon approval and
adoption of this Agreement by the Board of directors of Compugraphics and
execution of this Agreement by the Selling Shareholders, the consummation of the
transactions contemplated hereby will have been duly and validly authorized by
all necessary corporate action on the part of Compugraphics and the Selling
Shareholders, and this Agreement will be a valid and binding obligation of
Compugraphics and the Selling Shareholders and enforceable against Compugraphics
and the Selling Shareholders in accordance with its terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
debtor relief or similar laws affecting the rights of creditors generally, and
(ii) general principles of equity. This Agreement and the consummation of the
transactions contemplated hereby do not conflict with or cause a violation,
breach or default of any term or provision of (i) the certificate of
incorporation or bylaws of Compugraphics or (ii) any indenture, mortgage, deed
of trust, lease, contract or other agreement to which Compugraphics or any of
its subsidiaries or any of the Selling Shareholders is a party or by which any
of them or their properties are bound, other than such violations, breaches or
defaults as could not reasonably be expected to have a Material Adverse Effect
on Compugraphics. At the Closing Date, the consummation of the transactions
contemplated by this Agreement will not conflict with or result in a violation
or breach of any term or provision of, nor constitute a default under, (i) the
certificate of incorporation or bylaws of Compugraphics or (ii) any indenture,
mortgage, deed of trust, lease, contract or other agreement to which
Compugraphics or any of its subsidiaries or any of the Selling Shareholders is a
party or by which any of them or their properties are bound, other than such
violations, breaches or defaults as could not reasonably be expected to have a
Material Adverse Effect on Compugraphics. Section 2.2 of the Compugraphics
Disclosure Schedule lists all holders of any material indebtedness for borrowed
money of Compugraphics as of the date of this Agreement, the lessors of any
material property leased by Compugraphics and the other parties to any Material
Contract (as defined in Section 2.9) to which Compugraphics is a party as of the
date of this Agreement in each case whose consent to the transactions
contemplated hereby is required.
2.3 Capitalization.
2.3.1 Authorized, Issued and Treasury Stock. The capitalization of Compugraphics
consists of __________ shares of preferred stock, par value $___ per share (the
"Compugraphics Preferred Stock"), of which as of ____________, 2000, ___________
shares were issued and outstanding; as of ______________, 2000, no shares of the
Compugraphics Preferred Stock were held in Compugraphics's treasury; and
___________ shares of the Compugraphics Common Stock of which as of __________
2000, ________ shares were issued and outstanding, an additional __________
shares were reserved for issuance in connection with various Compugraphics stock
option and benefit plans and an additional ___________ shares were reserved for
issuance upon exercise of outstanding warrants; as of _________ 2000, _________
shares of Compugraphics Common Stock were held in Compugraphics' treasury.
2.3.2 Status of Shares. All of the outstanding shares of the Compugraphics
Preferred Stock and the Compugraphics Common Stock are validly issued, fully
paid and nonassessable, and were not issued in violation of any preemptive
rights of any stockholder.
2.3.3 List of Outstanding Options, Etc. Section 2.3 of the Compugraphics
Disclosure Schedule sets forth a complete list as of the date of this Agreement
of all outstanding options, warrants or obligations of any kind to issue any
shares of capital stock of Compugraphics, the owners thereof and the amounts
owned.
2.3.4 Selling Shareholders 100% of Outstanding Compugraphics Common Stock. At
the Closing Date, the Selling Shareholders will own one hundred percent (100%)
of all of the issued and outstanding shares of the Compugraphics Common Stock on
a diluted basis, taking into account all outstanding options, warrants or
obligations of any kind to issue any shares of Compugraphics Common Stock. The
number of shares of Compugraphics Common Stock, owned and to be owned prior to
the Closing Date by each Selling Shareholder and the number of outstanding
options, warrants, etc. for each Selling Shareholder is accurately and
completely set forth on Schedule A attached hereto.
2.4 Subsidiaries. Section 2.4 of the Compugraphics Disclosure Schedule lists the
subsidiary corporations or "Affiliates" (herein defined as such term is used in
Rule 145 under the Securities Act) of Compugraphics existing at the date hereof,
and shows as to each of such subsidiary corporations or Affiliates the
percentage of the total outstanding stock or other ownership thereof which is
owned by Compugraphics at such date. All ownership interests in Affiliates and
outstanding shares of stock of the subsidiary corporations owned by
Compugraphics are validly issued, fully paid, and nonassessable, and
Compugraphics has good and valid title thereto free and clear of any mortgage,
pledge, lien, charge, security interest, option, right of first refusal,
preferential purchase right, defect, encumbrance or other right or interest of
any other person (collectively, an "Encumbrance"), except for shares of capital
stock or other similar ownership interests of certain subsidiaries or Affiliates
of Compugraphics that are owned by certain nominee equity holders as required by
the applicable law of the jurisdiction of organization of such subsidiaries or
Affiliates. Each such subsidiary is a corporation duly organized, validly
existing, and in good standing (or equivalent concept with respect to
jurisdictions that do not recognize such concept) under the laws of the
jurisdiction under which it is incorporated and has full requisite corporate
power and authority to own its property and carry on its business as presently
conducted by it and is, or on the Effective Time will be, duly qualified or
licensed to do business and is, or on the Effective Time will be, in good
standing (or equivalent concept with respect to jurisdictions that do not
recognize such concept) as a foreign corporation authorized to do business in
all jurisdictions in which the character of the assets or properties owned or
the nature of the business conducted makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed could not
reasonably be expected to have a Material Adverse Effect on Compugraphics. As
hereinafter used in this Article II, the term "Compugraphics" also includes any
and all of its directly and indirectly held subsidiaries or Affiliates (i.e.,
including, but not limited to, Tow Manager), except where the context indicates
to the contrary; provided, however, that for purposes of Sections 2.7.1 and
2.20, the term "Compugraphics" further includes any corporation, trade, business
or entity under common control with Compugraphics within the meaning of Section
414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.
2.5 Reports and Financial Statements. Compugraphics has previously furnished or
made available to AMCI true and complete copies of (a) Compugraphics's financial
reports prepared for Compugraphics through _____________, 2000, and (b)
Compugraphics's federal tax returns for calendar years ____, ____ and ____. The
financial statements of Compugraphics (collectively, the "Compugraphics
Reports") were, or (if prepared after the date hereof) will be, prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved and fairly present, or will fairly present,
the consolidated financial position for Compugraphics as of the dates thereof
and the consolidated results of their operations and changes in financial
position for the periods then ended (except with respect to interim period
financial statements, for normal year-end adjustments which are not material and
for the absence of footnotes).
2.6 Liabilities. Compugraphics has no liabilities of the type required to be
disclosed in the consolidated financial statements of Compugraphics prepared in
accordance with generally accepted accounting principles applied on a consistent
basis, except for: (i) liabilities disclosed in the financial statements
(including any related notes) contained in the Compugraphics Reports and (ii)
liabilities incurred in the ordinary course of business consistent with past
practices.
2.7 Additional Compugraphics Information. Set forth in Section 2.7 of the
Compugraphics Disclosure Schedule are true, complete and correct lists of the
following items, and Compugraphics agrees that upon the request of AMCI, it will
furnish to AMCI true, complete and correct copies of any documents referred to
in such lists:
2.7.1 Employee Compensation Plans. All bonus, incentive compensation, stock
option, deferred compensation, profit-sharing, retirement, pension, welfare,
severance pay, supplemental income, group insurance, death benefit, or other
fringe benefit plans, arrangements or trust agreements that are in effect as of
the date of this Agreement covering active, former or retired employees of
Compugraphics (collectively, "Compugraphics Plans"), together with copies of the
most recent Internal Revenue Service determination letters that have been
received, if any, with respect to such plans;
2.7.2 Collective Bargaining Agreements. Any collective bargaining agreements of
Compugraphics as of the date of this Agreement with any labor union or other
similar representative of employees, including amendments, supplements, and
understandings; and
2.7.3 Guaranties. All indebtedness of Compugraphics guaranteed by any current or
former shareholder of Compugraphics, or guaranteed by any third party, and all
third party indebtedness, liabilities and commitments of others as to which
Compugraphics is a guarantor, endorser, co-maker, surety, or accommodation maker
(excluding liabilities as an endorser of checks and the like in the ordinary
course of business) and all letters of credit, whether stand-by or documentary,
issued by any third party.
2.8 Certain Agreements. The consummation of the transactions contemplated by
this Agreement will not cause or result in the acceleration or vesting of any
benefits, payments or rights covering active, former or retired employees of
Compugraphics under (i) any Compugraphics Plans or (ii) any other agreements to
which Compugraphics is a party that could reasonably be expected to have a
Material Adverse Effect on Compugraphics.
2.9 No Undisclosed Contracts or Defaults. Except as may be specified in the
Compugraphics Reports, Compugraphics is not a party as of the date of this
Agreement, to, or bound as of the date of this Agreement by, any material
contract or arrangement of a nature required to be disclosed within an annual
report of Compugraphics under generally accepted accounting principles (a
"Material Contract"), nor is Compugraphics in default in any material obligation
or covenant on its part to be performed under any lease or other contract that
is material to the business of Compugraphics.
2.10 Absence of Certain Changes and Events. Except as set forth in the
Compugraphics Reports, other than as a result of the transactions contemplated
by this Agreement, between December 31, 1999 and the date of this Agreement,
there has not been:
2.10.1 Financial Change. Any adverse change in the financial condition, backlog,
operations or business of Compugraphics which could reasonably be expected to
have a Material Adverse Effect on Compugraphics;
2.10.2 Property Damage. Any damage, destruction, or loss to the business or
properties of Compugraphics (whether or not covered by insurance) that could
reasonably be expected to have a Material Adverse Effect on Compugraphics;
2.10.3 Dividends. Any declaration, setting aside, or payment of any dividend or
other distribution in respect of the Compugraphics Common Stock, or any direct
or indirect redemption, purchase or any other acquisition by Compugraphics of
any such stock that could reasonably be expected to have a Material Adverse
Effect on this transaction;
2.10.4 Labor Disputes. Any labor dispute; or
2.10.5 Employment Arrangements. Any increase in compensation, bonus, deferred
compensation, stock options or other consideration of any employee or director
other than in the ordinary course of business consistent with past practice.
2.11 Taxes.
2.11.1 Tax Returns Filed; Taxes Paid. Except with respect to failures which, in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect on Compugraphics, (i) all returns and reports ("Tax Returns") of or with
respect to any and all taxes, charges, fees, levies, assessments, duties or
other amounts payable to any federal, state, local or foreign taxing authority
or agency, including, without limitation, (x) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall profits,
transfer and gains taxes, (y) customs, duties, imposts, charges, levies or other
similar assessments of any kind, and (z) interest, penalties and additions to
tax imposed with respect thereto ("Tax" or "Taxes") which are required to be
filed on or before the Closing by or with respect to Compugraphics have been or
will be duly and timely filed, (ii) all Taxes which have become or will become
due with respect to the period covered by each such Tax Return have been or will
be timely paid in full, (iii) all withholding Tax requirements imposed on or
with respect to Compugraphics have been or will be satisfied in full in all
respects, and (iv) no penalty, interest or other charge is or will become due
with respect to the late filing of any such Tax Return or late payment of any
such Tax.
2.11.2 Open Returns Disclosed. All federal and state income and franchise Tax
Returns of or with respect to Compugraphics with unexpired or extended statutes
of limitations which have been audited by the applicable governmental authority
are set forth in Section 2.11 of the Compugraphics Disclosure Schedule.
2.11.3 Extensions Disclosed. As of the date of this Agreement, there is not in
force any extension of time with respect to the due date for the filing of any
federal or state income or franchise Tax Return of or with respect to
Compugraphics or any waiver or agreement for any extension of time for the
assessment or payment of any federal or state income or franchise Tax of or with
respect to Compugraphics.
2.11.4 Claims Disclosed. There is no claim against Compugraphics for any Taxes,
and no assessment, deficiency or adjustment has been asserted or proposed in
writing with respect to any Tax Return of or with respect to Compugraphics other
than those which could not reasonably be expected to have a Material Adverse
Effect on Compugraphics.
2.11.5 Scheduled Tax Liabilities Sufficient. The total amounts set up as
liabilities for current and deferred Taxes in the financial statements referred
to in Section 2.5 of this Agreement are sufficient to cover in all material
respects the payment of all Taxes, whether or not assessed or disputed, which
are, or are hereafter found to be, or to have been, due by or with respect to
Compugraphics up to and through the periods covered thereby.
2.11.6 Tax Allocation Agreements. There are no Tax allocation or sharing
agreements.
2.11.7 No Tax Liens. Except for statutory liens for current Taxes not yet due,
no material liens for Taxes exist upon the assets of Compugraphics.
2.11.8 Change of Accounting Method. Compugraphics will not be required to
include any amount in income for any taxable period beginning after December 31,
1999, as a result of a change in accounting method for any taxable period or
pursuant to any agreement with any Tax authority with respect to any such
taxable period.
2.11.9 Partnerships; Foreign Corporations. Except as is set forth in Section
2.11.9 of the Compugraphics Disclosure Schedule, as of the date of this
Agreement, none of the property of Compugraphics is held in an arrangement for
which partnership Tax Returns are being filed, and as of the date of this
Agreement, Compugraphics does not own any interest in any controlled foreign
corporation (as defined in section 957 of the Code), passive foreign investment
company (as defined in section 1296 of the Code) or other entity the income of
which is required to be included in the income of Compugraphics.
2.11.10 Safe Harbor Leases; Tax-Exempt Use Property. Except as is set forth in
Section 2.11.10 of the Compugraphics Disclosure Schedule, as of the date of this
Agreement, none of the property of Compugraphics is subject to a safe-harbor
lease (pursuant to section 168(f)(8) of the Internal Revenue Code of 1954 as in
effect after the Economic Recovery Tax Act of 1981 and before the Tax Reform Act
of 1986) or is "tax-exempt use property" (within the meaning of section 168(h)
of the Code) or "tax-exempt bond financed property" (within the meaning of
section 168(g)(5) of the Code).
2.11.11 Actions Preventing Treatment as a Reorganization. Neither Compugraphics
nor, to the knowledge of Compugraphics, any of its Affiliates has taken or
agreed to take any action that would prevent the transactions contemplated
hereby from constituting a reorganization qualifying under the provisions of
Section 368(a) of the Code.
2.12 Intellectual Property. For purposes of this Section 2.12 and Section 2.14,
"Third Party Distributed Software" means the third party software programs
currently being distributed by Compugraphics, whether as integrated or bundled
with any of Compugraphics's software products or as a separate stand-alone
product, and "Internally Developed Software" means all software programs
developed for or on behalf of Compugraphics and currently being distributed by
Compugraphics and all software products or programs under development by
Compugraphics but not currently distributed, other than Third Party Distributed
Software. Third Party Distributed Software and Internally Developed Software
shall collectively be referred to as the "Software Programs."
2.12.1 Ownership. Compugraphics exclusively owns all Internally Developed
Software, including without limitation those Software Programs listed on Section
2.12.1 of the Compugraphics Disclosure Schedule, free and clear of all
mortgages, pledges, liens, security interests, conditional sales agreements,
encumbrances or charges of any kind (other than object code end-user licenses in
the ordinary course of business and Marketing Agreements). Compugraphics
exclusively owns all material patents, trademarks, service marks, trade names
and copyrights (including registrations, licenses and applications pertaining
thereto) and all other material intellectual property rights, trade secrets and
other confidential or proprietary information, processes and formulae embodied
in the Internally Developed Software (the "Intellectual Property"), free and
clear of all mortgages, pledges, liens, security interests, conditional sales
agreements, encumbrances or charges of any kind (other than object code end-user
licenses in the ordinary course of business and Marketing Agreements). Section
2.12 of the Compugraphics Disclosure Schedule contains a complete list of all
registered trademarks and service marks, all reserved trade names, all
registered copyrights and all filed patent applications and issued patents
relating to the Internally Developed Software.
2.12.2 Notices. In no instance has the eligibility of the Internally Developed
Software for protection under applicable copyright law been forfeited to the
public domain by omission of any required notice or any other action.
2.12.3 Protection. The source code and related technical system documentation
for the Internally Developed Software are protected by Compugraphics as trade
secrets in accordance with trade secret protections sufficient to maintain trade
secret status under applicable law. The source code and related technical system
documentation for the Internally Developed Software have been disclosed by
Compugraphics only to (i) employees and contractors who have had a "need to
know" the contents thereof in connection with the performance of their duties to
Compugraphics and who have executed nondisclosure agreements in the form
provided by Compugraphics to AMCI, and (ii) third parties under source code
escrow agreements.
2.12.4 Personnel. All personnel who during the three years prior to the date
hereof have been employees, agents, consultants and contractors of Compugraphics
and who (on behalf of Compugraphics) have contributed to or participated in the
conception and development of Internally Developed Software and related
technical documentation that is material to the operation of Compugraphics's
business have executed nondisclosure agreements and have executed appropriate
instruments of assignment in favor of Compugraphics as assignee that have
conveyed to Compugraphics, effective, and exclusive ownership of all tangible
and intangible property thereby arising.
2.12.5 Third-Party Software. Section 2.12.5 of the Compugraphics Disclosure
Schedule contains a complete list of material Third Party Distributed Software.
Section 2.12.5 of the Compugraphics Disclosure Schedule lists all license
agreements for the use of all such material Third Party Software and, if any
such software is not licensed, the basis of the use of such software by
Compugraphics. Compugraphics has not taken any action that could, or failed to
take any action, the failure of which could, reasonably be expected to (i) give
rise to the termination by a licensor of Compugraphics's license to distribute
any material Third Party Distributed Software or (ii) materially restrict
Compugraphics's right of use of any material Third Party Distributed Software
under any license agreement or other right of use, in each case subject to any
right Compugraphics may have to receive notice of and/or cure or remedy such
action or failure to act.
2.12.6 No Infringement. The Internally Developed Software and, to
Compugraphics's knowledge as of the date of this Agreement, the Third Party
Distributed Software do not infringe and will not infringe any copyright or
trade secret of any person or entity, and, to Compugraphics's knowledge, no part
of the Internally Developed Software nor the use thereof for their intended
purposes (and to Compugraphics's knowledge as of the date of this Agreement, no
part of the Third Party Distributed Software nor the use thereof for their
intended purposes) infringes or will infringe any valid and subsisting patent or
other exclusionary right of any third party. As of the date of this Agreement,
no written claims have been asserted against Compugraphics by any person or
entity as to the use of any of the Intellectual Property.
2.12.7 Integrity. Except with respect to demonstration or trial copies, no
portion of the Internally Developed Software or, to Compugraphics's knowledge as
of the date of this Agreement, the Third Party Distributed Software contains any
"back door," "time bomb," "Trojan horse," "worm," "drop dead device," "virus" or
other software routines that disable or erase software, hardware, or data
without the consent of the user.
2.12.8 Year 2000. The Software Programs are Year 2000 Compliant. As used in this
Section 2.12.8 and Section 3.15, "Year 2000 Compliant" means that (a) the
performance of the software has not been and will not be adversely affected by
any date change involving dates in the 20th and 21st century and (b) use of the
software will not end abnormally or provide invalid or incorrect results as a
result of date data, specifically including date data which represents or
references different centuries or more than one century, provided that such date
data is in the correct format for such software as specified in the applicable
documentation for such software.
2.13 Intentionally omitted.
2.14 Software Contracts.
2.14.1 End-User Agreements. Section 2.14.1 of the Compugraphics Disclosure
Schedule sets forth a complete example of each of Compugraphics's current
standard end user license agreements with respect to the Internally Developed
Software (the "Standard Licenses"). Section 2.14.1 of the Compugraphics
Disclosure Schedule accurately identifies each license transaction (with
customer name redacted, if desired) which generated $5,000 or more of revenues
during the fiscal year ended December 31, 1999 and during year 2000 through the
date hereof.
2.14.2 Marketing Agreements. Section 2.14.2 of the Compugraphics Disclosure
Schedule sets forth a complete list of all contracts, agreements, licenses, or
other commitments or arrangements in effect with respect to the marketing,
remarketing, distribution, licensing or promotion of the Software Programs or
any other Technical Documentation or the Intellectual Property by any
independent salesperson, distributor, sublicensor or other remarketer or sales
organization (the "Marketing Agreements"), which generated 5% or more of
Compugraphics's revenues during the preceding four fiscal quarters.
2.15 Title to Properties. With minor exceptions which in the aggregate are not
material, and except for merchandise and other property and assets sold, used or
otherwise disposed of in the ordinary course of business for fair value or no
longer necessary for the operation of Compugraphics's business, Compugraphics
has good and valid title to or valid leasehold interests in all its properties,
interests in properties and assets, real and personal, reflected in the most
recent balance sheet of Compugraphics included in the Compugraphics Reports,
free and clear of any Encumbrance of any nature whatsoever, except (i) liens and
Encumbrances reflected in the most recent balance sheet of Compugraphics
included in the Compugraphics Reports, (ii) liens for current taxes or other
governmental charges or levies not yet due and payable, (iii) Encumbrances that
are created, arise or exist under or in connection with any leases or other
contracts or other matters referred to in the Compugraphics Disclosure Schedule,
(iv) Encumbrances that relate to or are created, arise or exist in connection
with, any legal proceeding that is being contested in good faith, and (v) such
imperfections of title, easements and Encumbrances, if any, as do not and will
not materially detract from the value of the property subject thereto or
affected thereby, or otherwise materially impair business operations. All leases
pursuant to which Compugraphics leases (whether as lessee or lessor) any
substantial amount of real or personal property are in good standing, valid and
effective, except as validity or effectiveness may be limited by (i) bankruptcy,
insolvency, reorganization, debtor relief or similar laws affecting the rights
of creditors generally, and (ii) general principles of equity; and there is not,
under any such leases, any existing or prospective default or event of default
or event which with notice or lapse of time, or both, would constitute a default
by Compugraphics and in respect to which Compugraphics has not taken reasonable
steps to prevent a default from occurring. The buildings and premises of
Compugraphics that are used in its business are in good and sufficient operating
condition and repair for the continued conduct of Compugraphics's business on a
basis consistent with past practice, subject to ordinary wear and tear. All
major items of equipment of Compugraphics are in good and sufficient operating
condition and in a state of reasonable maintenance and repair for the continued
conduct of Compugraphics's business on a basis consistent with past practice,
ordinary wear and tear excepted, and are free from any known defects except as
may be repaired by routine maintenance and such minor defects as do not
substantially interfere with the continued use thereof in the conduct of normal
operations.
2.16 Selling Shareholders Are Accredited Investors. The Selling Shareholders are
Accredited Investors as that term is defined in Regulation D (Rule 501, et.
seq.) as promulgated by the Securities and Exchange Commission ("SEC"). Each
Selling Shareholder, on his or its own behalf, hereby represents and warrants to
AMCI and the other Selling Shareholders that he or it:
2.16.1 Independent Due Diligence. Has undertaken such independent due diligence
activities that he or it feels necessary in order to make his or its
determination as to the transactions contemplated in this Agreement;
2.16.2 Sufficient Knowledge and Experience. Has sufficient knowledge and
experience in business and financial matters, or has received competent
professional advice concerning AMCI and the transactions contemplated in this
Agreement, to evaluate the risks thereof;
2.16.3 Understands Risk. Understands that an investment in AMCI involves a risk
of loss of all or a portion of such capital and that there is no guarantee
whatsoever that AMCI or Compugraphics will generate any profits from their
activities; and
2.16.4 No Due Diligence By Counsel or Advisor. Is aware that due diligence
performed by any counsel or accountant for AMCI with respect to his or its
participation as an owner of securities, or rights to own securities, of AMCI,
has been limited in scope and in reasonable reliance on information available
through AMCI's public filings (through the SEC XXXXX system).
2.17 Environmental Compliance.
2.17.1 Environmental Conditions. There are no materials or substances that are
regulated by Applicable Environmental Laws (as defined in Section 2.17.3) on any
real property owned or leased by Compugraphics as a result of the actions of
Compugraphics or, to its knowledge, of any third party or otherwise, that could
reasonably be expected to have a Material Adverse Effect on Compugraphics.
2.17.2 Permits, etc. Compugraphics has in full force and effect all
environmental permits, licenses, approvals and other authorizations required
under Applicable Environmental Laws to conduct its operations and is operating
in material compliance thereunder.
2.17.3 Compliance. Compugraphics's operations and use of its assets do not
violate any applicable federal, state or local law, statute, ordinance, rule,
regulation, order or notice requirement pertaining to (a) the condition or
protection of air, groundwater, surface water, soil, or other environmental
media, (b) the environment, including natural resources or any activity which
affects the environment, or (c) the regulation of any pollutants, contaminants,
waste, substances (whether or not hazardous or toxic), including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
Act (49 U.S.C. Section 9601 et seq.), the Hazardous Materials Transportation Act
(49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 1609 et seq.), the Clean Water Act (33 U.S.C. 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(17 U.S.C. Section 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. Section
201 and Section 300f et seq.), the Rivers and Harbors Act (33 U.S.C. Section 401
et seq.), the Oil Pollution Act (33 U.S.C. Section 2701 et seq.) and analogous
state and local provisions, as any of the foregoing may have been amended or
supplemented from time to time (collectively the "Applicable Environmental
Laws"), except for violations which, either singly or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on Compugraphics.
2.17.4 Environmental Claims. No written notice has been served on Compugraphics
from any entity, governmental agency or individual regarding any existing,
pending or threatened investigation or inquiry related to alleged violations
under any Applicable Environmental Laws, or regarding any claims for remedial
obligations or contribution under any Applicable Environmental Laws, other than
any of the foregoing which, either singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Compugraphics or
which have been cured or corrected in all material respects.
2.17.5 Renewals. Compugraphics does not know of any reason it would not be able
to renew any of the permits, licenses, or other authorizations required pursuant
to any Applicable Environmental Laws to operate and use any of Compugraphics's
assets for their current purposes and uses.
2.17.6 Environmental Documents. There are no environmental orders or decrees
material to current operations conducted by Compugraphics and there have not
been any environmental audits, assessments, investigations or reviews conducted
within the last five years on any property owned, leased or used by
Compugraphics.
2.18 Compliance with Other Laws. Compugraphics is not in violation of or in
default with respect to the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.) as amended ("OSHA"), or any other applicable law or any
applicable rule, regulation, or any writ or decree of any court or any
governmental commission, board, bureau, agency, or instrumentality, or
delinquent with respect to any report required to be filed with any governmental
commission, board, bureau, agency or instrumentality, except for violations or
defaults which, either singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Compugraphics.
2.19 Finder's Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Compugraphics and its
advisors directly with AMCI and its advisors, without the intervention on behalf
of Compugraphics of any other person as the result of any act of Compugraphics,
and so far as is known to Compugraphics, without the intervention on behalf of
Compugraphics of any other person in such manner as to give rise to any valid
claim against any of the parties hereto for a brokerage commission, finder's fee
or any similar payments, other than financial advisory fees to be paid by AMCI
to Arkad Co., L.L.C. in connection with the negotiation and finalization of this
transaction.
2.20 Compliance with ERISA. Compugraphics has made available to AMCI a copy of
each Compugraphics Plan, any related summary plan description, trust agreement
and annuity or insurance contract, if any, and each plan's most recent annual
report filed with the Internal Revenue Service, if any, and: (i) each
Compugraphics Plan has been maintained and administered in material compliance
with its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations, and is, to the extent required by
applicable law or contract, fully funded without having any deficit or unfunded
actuarial liability; (ii) all required contributions under any such plans have
been made and the applicable funds have been funded in accordance with the terms
thereof and no past service funding liabilities exist thereunder; (iii) each
Compugraphics Plan that is required or intended to be qualified under applicable
law or registered or approved by a governmental agency or authority has been so
qualified, registered or approved by the appropriate governmental agency or
authority, and, to the knowledge of Compugraphics, nothing has occurred since
the date of the last qualification, registration or approval to materially and
adversely affect, or cause, the appropriate governmental agency or authority to
revoke such qualification, registration or approval; (iv) to the extent
applicable, the Compugraphics Plans comply, in all material respects, with the
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Code, and any Compugraphics Plan intended to be qualified
under Section 401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified and, to the knowledge of Compugraphics, nothing has
occurred to cause the loss of such qualified status; (v) no Compugraphics Plan
is covered by Title IV of ERISA or Section 412 of the Code; (vi) there are no
pending or, to the knowledge of Compugraphics, anticipated material claims
against or otherwise involving any of the Compugraphics Plans and no suit,
action or other litigation (excluding claims for benefits incurred in the
ordinary course of Compugraphics Plan activities) has been brought against or
with respect to any Compugraphics Plan; (vii) all material contributions,
reserves or premium payments, required to be made as of the date hereof to the
Compugraphics Plans have been made or provided for; (viii) Compugraphics has not
incurred any liability under subtitle C or D of Title IV of ERISA with respect
to any "single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by Compugraphics; (ix) Compugraphics has
not incurred any withdrawal liability under Subtitle E of Title IV of ERISA with
respect to any "multiemployer plan," within the meaning of Section 4001(a)(3) of
ERISA; (x) Compugraphics has substantially performed all obligations, whether
arising by law or by contract, required to be performed by it in connection with
the Compugraphics Plans; (xi) to the knowledge of Compugraphics, no act,
omission or transaction has occurred which would result in imposition on
Compugraphics of (a) a civil penalty assessed pursuant to subsections (c), (i)
or (l) of Section 502 of ERISA, (b) breach of fiduciary duty liability damages
under Section 409 of ERISA or (c) a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code; (xii) in connection with the consummation of the
transactions contemplated by this Agreement, no payments have or will be made
hereunder, under the Compugraphics Plans or otherwise by Compugraphics which, in
the aggregate, would result in imposition of the sanctions imposed under
Sections 280G and 4999 of the Code; and (xiii) Compugraphics has no obligations
for retiree health and life benefits under any Compugraphics Plan, except as set
forth on Section 2.20 of the Compugraphics Disclosure Schedule, and there are no
restrictions on the rights of Compugraphics to amend or terminate any such
Compugraphics Plan without incurring any liability thereunder.
2.21 Investigations; Litigation. Except as may be required pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the rules and
regulations promulgated thereunder (collectively, "HSR") and any applicable
comparable foreign laws and regulations, (i) no investigation or review by any
governmental entity with respect to Compugraphics or any of the transactions
contemplated by this Agreement is pending or, to Compugraphics's knowledge is,
as of the date of this Agreement, threatened, nor, as of the date of this
Agreement, has any governmental entity indicated to Compugraphics an intention
to conduct the same, and (ii) except as set forth in the Compugraphics Reports,
as of the date of this Agreement, there is no action, suit or proceeding pending
or, to Compugraphics's knowledge, threatened against or affecting Compugraphics
at law or in equity, or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
which either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect on Compugraphics.
2.22 Product Warranty. There are no existing liabilities or, to the knowledge of
Compugraphics, likely liabilities, arising from claims regarding the performance
or design of the products and services sold by Compugraphics either in the past
or at present for which adequate reserves have not been established on the most
recent balance sheet in the Compugraphics Reports that in the aggregate could
reasonably be expected to have a Material Adverse Effect on Compugraphics.
2.23 Pooling. Neither Compugraphics, nor the Selling Shareholders, nor to the
knowledge of Compugraphics and the Selling Shareholders, any of Compugraphics's
Affiliates has taken or agreed to take any action that would prevent
Compugraphics from being a "poolable entity" in accordance with generally
accepted accounting principles.
2.24 Inapplicability of Certain Statutes. Compugraphics is not subject to any
state takeover law that might apply to the transactions contemplated hereby.
article iii
REPRESENTATIONS AND WARRANTIES OF AMCI
AMCI represents and warrants, subject to the exceptions specifically described
in writing in the respective sections of the Disclosure Schedule delivered by
AMCI to Compugraphics and the Selling Shareholders dated as of the date hereof
(the "AMCI Disclosure Schedule") as follows:
3.1 Organization and Standing. AMCI is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Mexico, has
full requisite corporate power and authority to carry on its business as it is
currently conducted, and to own and operate the properties currently owned and
operated by it and is duly qualified or licensed to do business and is in good
standing as a foreign corporation authorized to do business in all jurisdictions
in which the character of the properties owned or the nature of the business
conducted by it would make such qualification or licensing necessary, except
where the failure to be so qualified or licensed could not reasonably be
expected to have a Material Adverse Effect on AMCI. As hereinafter used in this
Article III, the term "AMCI" also includes any and all of its directly and
indirectly held subsidiaries, except where the context indicates to the
contrary; provided, however, that for purposes of Section 3.9, the term "AMCI"
further includes any corporation, trade, business or entity under common control
with AMCI within the meaning of Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA.
3.2 Agreement Authorized and its Effect on Other Obligations. The consummation
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of AMCI and this Agreement is a valid
and binding obligation of AMCI enforceable against AMCI in accordance with its
terms, except as enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, debtor relief or similar laws affecting the rights of creditors
generally, and (ii) general principles of equity. At the Closing Date, the
consummation of the transactions contemplated hereby will not conflict with or
result in a violation or breach of any term or provision of, nor constitute a
default under (i) the certificate of incorporation or bylaws of AMCI or (ii) any
indenture, mortgage, deed of trust, lease, contract or other agreement to which
AMCI or any of its subsidiaries is a party or by which any of them or their
properties are bound, other than such violations, breaches or defaults as could
not reasonably be expected to have a Material Adverse Effect on AMCI.
3.3 Capitalization. The capitalization of AMCI consists of Ten Million
(10,000,000) shares of preferred stock, par value $_____ per share, of which at
the date hereof, no shares were issued or outstanding; and Sixty Million
(60,000,000) shares of AMCI Common Stock, par value $.001 per share, of which as
of the date hereof, 21,873,473 shares were issued and outstanding as of June 5,
2000, an additional _______________ shares were reserved for issuance in
connection with various AMCI benefit plans and an additional ______________
shares were reserved for issuance upon exercise of outstanding warrants, an
additional Eight Million (8,000,000) shares were reserved for issuance in
connection with an agreement with six private investors executed by AMCI on June
8, 2000; at _________ 2000, _________ shares of AMCI Common Stock were held in
AMCI's treasury. Section 3.3 of the AMCI Disclosure Schedule sets forth a
complete list as of the date of this Agreement of all outstanding options,
warrants or obligations of any kind to issue any shares of capital stock of
AMCI.
3.4 Reports and Financial Statements. AMCI has previously furnished or made
available (through the SEC XXXXX system) to Compugraphics true and complete
copies of its filings, including the quarterly and annual reports filed by AMCI
with the SEC pursuant to the Securities and Exchange Act of 0000 (xxx "Xxxxxxxx
Xxx"). The consolidated financial statements of AMCI and its subsidiaries
included in AMCI's most recent report on Form 10-K and most recent report on
Form 10-Q, and any other reports filed with the SEC by AMCI under the Exchange
Act subsequent thereto (the "AMCI Reports") were, or (if filed after the date
hereof) will be, prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved and fairly
present, or will fairly present, the consolidated financial position for AMCI
and its subsidiaries as of the dates thereof and the consolidated results of
their operations and changes in financial position for the periods then ended
(except with respect to interim period financial statements, for normal year-end
adjustments which would not have a Material Adverse Impact on AMCI and for the
absence of footnotes).
3.5 Liabilities. AMCI has no liabilities of the type required to be disclosed in
the consolidated financial statements of AMCI prepared in accordance with
generally accepted accounting principles applied on a consistent basis, except
for: (i) liabilities disclosed in the financial statements (including any
related notes) contained in the AMCI Reports and (ii) liabilities incurred in
the ordinary course of business consistent with past practices.
3.6 No Undisclosed Defaults. Except as may be specified in the AMCI Reports,
AMCI is not in default in any material obligation or covenant on its part to be
performed under any lease or other contract that is material to the business of
AMCI and its subsidiaries taken as a whole, other than such defaults as could
not reasonably be expected to have a Material Adverse Effect on AMCI.
3.7 Absence of Certain Changes and Events in AMCI. Except as set forth in the
AMCI Reports, other than as a result of the transactions contemplated by this
Agreement, between December 31, 1999 and the date of this Agreement, there has
not been:
3.7.1 Financial Change. Any adverse change in the financial condition,
operations, or business of AMCI which could reasonably be expected to have a
Material Adverse Effect on AMCI; 3.7.2 Property Damage. Any damage, destruction,
or loss to the business or properties of AMCI (whether or not covered by
insurance) that could reasonably be expected to have a Material Adverse Effect
on AMCI;
3.7.3 Dividends. Any declaration, setting aside, or payment of any dividend or
other distribution in respect of AMCI's capital stock, or any direct or indirect
redemption, purchase or any other acquisition of such stock, except as set forth
in this Agreement; or
3.7.4 Labor Disputes. Any labor dispute.
3.8 Finder's Fee. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by AMCI and its advisors
directly with Compugraphics or its advisors, without the intervention on behalf
of AMCI of any other person as the result of an act of AMCI and, so far as known
to AMCI, without the intervention on behalf of AMCI of any other person in such
manner as to give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder's fee, or any similar payments, other than
financial advisory fees to be paid by AMCI to Arkad Co., L.L.C. in connection
with the negotiation and finalization of this transaction.
3.9 Compliance With ERISA. AMCI represents to Compugraphics as to all its bonus,
incentive compensation, stock option, deferred compensation, profit-sharing,
retirement, pension, welfare, severance pay, supplemental income, group
insurance, death benefit, or other fringe benefit plans, arrangements or trust
agreements covering active, former or retired employees of AMCI (collectively,
the "AMCI Plans"), any related summary plan, trust agreement and annuity or
insurance contract, if any, and each plan's most recent annual report filed with
the Internal Revenue Service, if any, the most recent reports with respect to
such plans, trust agreements and annuity or insurance contracts filed with any
governmental agency, all Internal Revenue Service determination letters that
have been received with respect to such plans that: (i) each AMCI Plan has been
maintained and administered in material compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations, and is, to the extent required by applicable law or contract, fully
funded without having any deficit or unfunded actuarial liability; (ii) all
required contributions under any such plans have been made and the applicable
funds have been funded in accordance with the terms thereof and no past service
funding liabilities exist thereunder; (iii) each AMCI Plan that is required or
intended to be qualified under applicable law or registered or approved by a
governmental agency or authority has been so qualified, registered or approved
by the appropriate governmental agency or authority, and nothing has occurred
since the date of the last qualification, registration or approval to adversely
affect, or cause, the appropriate governmental agency or authority to revoke
such qualification, registration or approval; (iv) to the extent applicable, the
AMCI Plans comply, in all material respects, with the requirements of ERISA and
the Code, and any AMCI Plan intended to be qualified under Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so qualified and
nothing has occurred to cause the loss of such qualified status; (v) no AMCI
Plan is covered by Title IV of ERISA or Section 412 of the Code; (vi) there are
no pending or anticipated material claims against or otherwise involving any of
the AMCI Plans and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of AMCI Plan activities) has been
brought against or with respect to any AMCI Plan; (vii) all material
contributions, reserves or premium payments, required to be made as of the date
hereof to the AMCI Plans have been made or provided for; (viii) AMCI has not
incurred any liability under subtitle C or D of Title IV of ERISA with respect
to any "single-employer plan," within the meaning of Section 4001(a) of ERISA,
currently or formerly maintained by AMCI; (ix) AMCI has not incurred any
withdrawal liability under Subtitle E of Title IV of ERISA with respect to any
"multiemployer plan," within the meaning of Section 4001(a)(3) of ERISA; (x)
AMCI has substantially performed all obligations, whether arising by law or by
contract, required to be performed by it in connection with the AMCI Plans; (xi)
no act, omission or transaction has occurred which would result in imposition on
AMCI of (a) a civil penalty assessed pursuant to subsections (c), (i) or (l) of
Section 502 of ERISA, (b) breach of fiduciary duty liability damages under
Section 409 of ERISA or (c) a tax imposed pursuant to Chapter 43 of Subtitle D
of the Code; (xii) in connection with the consummation of the transactions
contemplated by this Agreement, no payments have or will be made hereunder,
under the AMCI Plans or otherwise by AMCI which, in the aggregate, would result
in imposition of the sanctions imposed under Sections 280G and 4999 of the Code;
and (xiii) AMCI does not have any obligations for retiree health and life
benefits under any AMCI Plan, except as may be set forth on the AMCI Disclosure
Schedule, and there are no restrictions on the rights of AMCI to amend or
terminate any such AMCI Plan without incurring any liability thereunder.
3.10 Investigations; Litigation. Except as may be required pursuant to HSR and
any applicable comparable foreign laws and regulations, (i) no investigation or
review by any governmental entity with respect to AMCI in connection with any of
the transactions contemplated by this Agreement is pending or, to AMCI's
knowledge is, as of the date of this Agreement, threatened, nor, as of the date
of this Agreement, has any governmental entity indicated to AMCI an intention to
conduct the same and (ii) except as set forth in the AMCI Reports, as of the
date of this Agreement, there is no action, suit or proceeding pending or, to
AMCI's knowledge, threatened against or affecting AMCI or its subsidiaries at
law or in equity, or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, which either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on AMCI.
3.11 Actions Preventing Treatment as a Reorganization. Neither AMCI nor, to the
knowledge of AMCI, any of its Affiliates has taken or agreed to take any action
that would prevent the transactions contemplated hereby from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
3.12 Pooling. Neither AMCI, nor to the knowledge of AMCI, any of its Affiliates
has taken or agreed to take any action that would prevent the transactions
contemplated hereby from being treated as a "pooling of interests" in accordance
with generally accepted accounting principles and the Regulations of the SEC (a
"Pooling Transaction").
3.13 AMCI Common Stock. The AMCI Common Stock to be issued in connection with
the transactions contemplated hereby has been duly authorized by all necessary
corporate action, and when issued in accordance with this Agreement, will be
validly issued, fully paid and nonassessable and not subject to preemptive
rights.
3.14 Environmental Compliance.
3.14.1 Environmental Conditions. There are no materials or substances that are
regulated by Applicable Environmental Laws (as defined in Section 2.17.3) on any
real property owned or leased by AMCI as a result of the actions of AMCI or, to
its knowledge, of any third party or otherwise, that could reasonably be
expected to have a Material Adverse Effect on AMCI.
3.14.2 Permits, etc. AMCI has in full force and effect all environmental
permits, licenses, approvals and other authorizations required under Applicable
Environmental Laws to conduct its operations and is operating in material
compliance thereunder.
3.14.3 Compliance. AMCI's operations and use of its assets do not violate any
applicable federal, state or local law, statute, ordinance, rule, regulation,
order or notice requirement pertaining to (a) the condition or protection of
air, groundwater, surface water, soil, or other environmental media, (b) the
environment, including natural resources or any activity which affects the
environment, or (c) the regulation of any pollutants, contaminants, waste,
substances (whether or not hazardous or toxic), including, without limitation,
the Comprehensive Environmental Response Compensation and Liability Act (49
U.S.C. Section 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 1609 et seq.), the Clean Water Act (33 U.S.C. 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(17 U.S.C. Section 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. Section
201 and Section 300f et seq.), the Rivers and Harbors Act (33 U.S.C. Section 401
et seq.), the Oil Pollution Act (33 U.S.C. Section 2701 et seq.) and analogous
state and local provisions, as any of the foregoing may have been amended or
supplemented from time to time (collectively the "Applicable Environmental
Laws"), except for violations which, either singly or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on AMCI.
3.14.4 Environmental Claims. No written notice has been served on AMCI from any
entity, governmental agency or individual regarding any existing, pending or
threatened investigation or inquiry related to alleged violations under any
Applicable Environmental Laws, or regarding any claims for remedial obligations
or contribution under any Applicable Environmental Laws, other than any of the
foregoing which, either singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on AMCI or which have been cured or
corrected in all material respects.
3.14.5 Renewals. AMCI does not know of any reason it would not be able to renew
any of the permits, licenses, or other authorizations required pursuant to any
Applicable Environmental Laws to operate and use any of AMCI's assets for their
current purposes and uses.
3.14.6 Environmental Documents. There are no environmental orders or decrees
material to current operations conducted by AMCI and there have not been any
environmental audits, assessments, investigations or reviews conducted within
the last five years on any property owned, leased or used by AMCI.
3.15 Compliance with Other Laws. AMCI is not in violation of or in default with
respect to the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.) as amended ("OSHA"), or any other applicable law or any applicable rule,
regulation, or any writ or decree of any court or any governmental commission,
board, bureau, agency, or instrumentality, or delinquent with respect to any
report required to be filed with any governmental commission, board, bureau,
agency or instrumentality, except for violations or defaults which, either
singly or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect on AMCI.
3.16 Investigations; Litigation. Except as may be required pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the rules and
regulations promulgated thereunder (collectively, "HSR") and any applicable
comparable foreign laws and regulations, (i) no investigation or review by any
governmental entity with respect to AMCI or any of the transactions contemplated
by this Agreement is pending or, to AMCI's knowledge is, as of the date of this
Agreement, threatened, nor, as of the date of this Agreement, has any
governmental entity indicated to AMCI an intention to conduct the same, and (ii)
except as set forth in the AMCI Reports, as of the date of this Agreement, there
is no action, suit or proceeding pending or, to AMCI's knowledge, threatened
against or affecting AMCI at law or in equity, or before any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, which either individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on AMCI.
3.17 Product Warranty. There are no existing liabilities or, to the knowledge of
AMCI, likely liabilities, arising from claims regarding the performance or
design of the products and services sold by AMCI either in the past or at
present for which adequate reserves have not been established on the most recent
balance sheet in the AMCI Reports that in the aggregate could reasonably be
expected to have a Material Adverse Effect on AMCI.
article iv
OBLIGATIONS PENDING CLOSING DATE
4.1 Agreements of Compugraphics and the Selling Shareholders. Compugraphics and
the Selling Shareholders agree that from the date hereof to the Closing Date,
except (i) to the extent AMCI shall otherwise consent in writing (which consent
shall not be unreasonably withheld or delayed) or (ii) as set forth or referred
to in the section of the Compugraphics Disclosure Schedule corresponding to the
respective section of this Article IV, they shall: 4.1.1 Maintenance of Present
Business. Other than as contemplated by this Agreement, operate Compugraphics's
business only in the usual, regular, and ordinary manner in an effort to
maintain the goodwill Compugraphics now enjoys and, to the extent consistent
with such operation, use all reasonable efforts to preserve intact
Compugraphics's present business organization, keep available the services of
Compugraphics's present officers and employees, and preserve Compugraphics's
relationships with customers, suppliers, jobbers, distributors, and others
having business dealings with Compugraphics, and in connection therewith
Compugraphics shall not substantially and adversely deviate from its licensing
and pricing practices;
4.1.2 No Delay. Not take any action or enter into any transaction which would
materially affect the ability of Compugraphics to, or materially delay
Compugraphics's ability to, complete the transactions contemplated by this
Agreement;
4.1.3 Maintenance of Books and Records. Maintain Compugraphics's books of
accounts and records in the usual, regular, and ordinary manner, in accordance
with generally accepted accounting principles applied on a consistent basis;
4.1.4 Compliance with Law. Duly comply with all laws applicable to Compugraphics
and to the conduct of Compugraphics's business, except where the failure to
comply with such laws would not have a Material Adverse Effect on Compugraphics;
4.1.5 Compliance with Agreement. At the expense of Compugraphics, take all
commercially reasonable actions as may be necessary, advisable or proper (i) to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement, (ii) to insure that the
representations and warranties made by Compugraphics and the Selling
Shareholders herein are true and correct at the Closing Date such that the
condition contained in Section 5.2.1 would be satisfied, (iii) to fully perform
all covenants made by them herein and (iv) to satisfy timely all other
obligations imposed upon them by this Agreement;
4.1.6 Inspection. Upon reasonable advance notice, permit AMCI and its officers
and authorized representatives, during normal business hours, to inspect its
records and to consult with its officers, employees, attorneys, and agents for
the purpose of determining the accuracy of the representations and warranties
hereinabove made and the compliance with covenants contained in this Agreement;
provided, however, that Compugraphics and the Selling Shareholders shall not be
required to permit any inspection, or to disclose any information, that in the
reasonable judgment of Compugraphics and the Selling Shareholders would (i)
result in the disclosure of any trade secrets of third parties, (ii) violate any
obligation of Compugraphics with respect to confidentiality, (iii) jeopardize
protections afforded Compugraphics and/or the Selling Shareholders under the
attorney-client privilege or the attorney work product doctrine, or (iv)
materially interfere with the conduct of Compugraphics's business; and
4.1.7 Maintenance of Intellectual Property. Not take any action that would, or
not fail to take any action the failure of which would, materially and adversely
affect Compugraphics's Intellectual Property.
4.1.8 Compugraphics To Add or Substitute Director. Compugraphics shall have
taken such action as necessary to, simultaneous with the closing of this
transaction, either add AMCI's, Chief Executive Officer, Xxxxxx X. Xxxxxxx, as
an additional member of Compugraphics' board of directors or as a replacement
for an existing director.
4.2 Agreements of AMCI, Compugraphics and the Selling Shareholders. Each party
agrees to take (or not to take, as the case may be) the following actions after
the date hereof:
4.2.1. Xxxx-Xxxxx-Xxxxxx; Securities Laws. Each party shall promptly file such
materials as may be required under HSR, if applicable, with respect to the
transactions contemplated hereby and shall cooperate with the other party to the
extent necessary to assist the other party in the preparation of such filings.
Each party shall promptly make and effect all other registrations, filings and
submissions required to be made or effected by it pursuant to the Securities
Act, the Exchange Act and any other applicable legal requirements with respect
to the transactions contemplated hereby. Without limiting the generality of the
foregoing, each party agrees to (i) promptly provide all information requested
by any governmental entity in connection with the transactions contemplated
hereby or any of the other transactions contemplated by this Agreement; (ii)
promptly take, and cause its Affiliates to take, all actions and steps necessary
to obtain any antitrust clearance or similar clearance, if applicable, from the
Federal Trade Commission, the Department of Justice, any state attorney general,
any foreign competition authority or any other governmental entity in connection
with the transactions contemplated by this Agreement; (iii) give the other party
prompt notice of the commencement of any investigation, action or legal
proceeding by or before any governmental entity with respect to the transactions
contemplated hereby or any of the other transactions contemplated by this
Agreement; (iv) keep the other party informed as to the status of any such
investigation, action or legal proceeding, and (v) promptly inform the other
party of any communication to or from the Federal Trade Commission, the
Department of Justice or any other governmental entity regarding the
transactions contemplated hereby. Each party will consult and cooperate with the
other parties and will consider in good faith the views of the other parties in
connection with any analysis, appearance, presentation, memorandum, brief,
argument, opinion or proposal made or submitted in connection with any
investigation, action or legal proceeding under or relating to HSR or any other
federal or state or foreign antitrust, competition or fair trade law. In
addition, except as may be prohibited by any governmental entity or by any law,
rule or regulation, in connection with any investigation, action or legal
proceeding under or relating to HSR or any other federal or state or foreign
antitrust, competition or fair trade law or any other similar investigation,
action or legal proceeding, each party hereto will permit authorized
representatives of the other party to be present at each meeting or conference
relating to any such investigation, action or legal proceeding and to have
access to and be consulted in connection with any document, opinion or proposal
made or submitted to any governmental entity in connection with any such
investigation, action or legal proceeding;
4.2.2 Notice of Material Development. Each party will promptly notify the other
parties in writing of (i) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of such party
contained in this Agreement untrue or inaccurate and which would reasonably be
expected to result in a Material Adverse Effect, (ii) any Material Adverse
Effect on such party and (iii) any material breach by such party of any covenant
or agreement contained in this Agreement;
4.2.3 Pooling. Each party shall use all reasonable efforts to cause the
transactions contemplated hereby to be treated for financial accounting purposes
as a Pooling Transaction, and shall not take, and shall use all reasonable
efforts to prevent any affiliate of such party from taking, any actions which
could prevent the transactions contemplated hereby from being treated for
financial accounting purposes as a Pooling Transaction; and
4.2.4 Tax Treatment. No party shall (before or after the Closing Date) take any
action or fail to take any action which action or failure to act would prevent,
or would reasonably be likely to prevent, the transactions contemplated hereby
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
4.3 Additional Agreements of Compugraphics. Compugraphics agrees that from the
date hereof to the Closing Date, except (i) to the extent AMCI shall otherwise
consent in writing (which consent shall not be unreasonably withheld or delayed)
or (ii) as set forth or referred to in the section of the Compugraphics
Disclosure Schedule corresponding to the respective section of this Article IV,
it will:
4.3.1 Prohibition of Certain Employment Contracts. Not enter into any contracts
of employment which (i) cannot be terminated on notice of 14 days or less
without the payment of severance compensation or (ii) provide for any increase
in compensation, including, without limitation, any modification of any stock
option agreements, outside the ordinary course of business consistent with past
practice, or severance payments or benefits covering a period beyond the
termination date (other than those which AMCI has previously approved) except as
contemplated by this Agreement or as may be required by law;
4.3.2 Prohibition of Certain Loans. Not incur any indebtedness for borrowed
money except for borrowings incurred in the ordinary course of business
consistent with past practices;
4.3.3 Prohibition of Certain Commitments. Not enter into commitments of a
capital expenditure nature which would exceed Five Thousand Dollars ($5,000), in
the aggregate, except as may be necessary for the maintenance of existing
facilities and equipment in good operating condition and repair in the ordinary
course of business and except as may be required by law;
4.3.4 Intentionally omitted;
4.3.5 Maintenance of Insurance. Maintain insurance on its properties and with
respect to the conduct of its business of such kinds and in such substantially
similar amounts as presently carried by it, which insurance may be added to from
time to time in its discretion; provided, that if during the period from the
date hereof to and including the Closing Date any of its property or assets are
damaged or destroyed by fire or other casualty, the obligations of AMCI and
Compugraphics under this Agreement shall not be affected thereby (subject,
however, to the provision that the coverage limits of such policies are adequate
in amount to cover the replacement value of such property or assets and loss of
profits during replacement, less commercially reasonable deductibles, if of
material significance to the assets or operations of Compugraphics) but it shall
promptly notify AMCI in writing thereof and proceed with the repair or
restoration of such property or assets in such manner and to such extent as may
be approved by AMCI, and upon the Closing Date all proceeds of insurance and
claims of every kind arising as a result of any such damage or destruction shall
remain the property of Compugraphics;
4.3.6 Compugraphics Acquisition Proposals - No Solicitation. Not directly or
indirectly, or authorize or permit any of its respective agents to: (i) solicit,
initiate, facilitate or knowingly encourage (including by way of furnishing
information) any inquiry or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any acquisition or purchase by a third party
(other than AMCI or an affiliate of AMCI) of a substantial amount of assets of,
or any equity interest in, Compugraphics or any merger, consolidation, business
combination, sale of securities, recapitalization, liquidation, dissolution or
similar transaction involving Compugraphics (in each case, other than as
permitted by Section 4.1.1, Section 4.3.8 or any other provision of this
Agreement) (collectively, "Compugraphics Transaction Proposals") or agree to or
endorse any Compugraphics Transaction Proposal or (ii) propose, enter into or
participate in any discussions or negotiations regarding any Compugraphics
Transaction Proposal, or furnish to another person (other than AMCI or a
representative of AMCI) any information with respect to its business, properties
or assets for the purpose of facilitating any Compugraphics Transaction
Proposal.
4.3.7 No Amendment to Certificate of Incorporation, etc. Not amend its
certificate of incorporation or bylaws or other organizational documents or
merge or consolidate with or into any other corporation or change in any manner
the rights of its capital stock;
4.3.8 No Issuance, Sale, or Purchase of Securities. Not issue or sell, or issue
options or rights to subscribe to, or enter into any contract or commitment to
issue or sell (upon conversion or otherwise), any shares of its capital stock or
subdivide or in any way reclassify any shares of its capital stock, or acquire,
or agree to acquire, any shares of its capital stock;
4.3.9 Prohibition on Dividends, Cash or Property Distributions. Not declare or
pay any dividend on shares of its capital stock or make any other distribution
of cash or other assets to the holders thereof;
4.3.10 Union Contracts and Compugraphics Plans. Not (i) enter into or modify any
collective bargaining agreement with any labor union or other similar
representative of employees, (ii) increase the compensation or benefits of any
employee of Compugraphics or any of its subsidiaries other than in the ordinary
course of business, (iii) except as contemplated by this Agreement, amend or
terminate any Compugraphics Plan, or (iv) enter into or adopt any new employee
benefit plan, policy or arrangement.
4.4 Additional Agreements of AMCI. AMCI agrees that from the date hereof to the
Closing Date, it will:
4.4.1 Maintenance of Present Business. Other than as contemplated by this
Agreement, operate its business in the usual, regular, and ordinary manner;
4.4.2 No Delay. Not take any action or enter into any transaction which would
materially affect the ability of AMCI to, or materially delay AMCI's ability to,
complete the transactions contemplated by this Agreement;
4.4.3 Consultation. Upon reasonable advance notice, permit Compugraphics and its
officers and authorized representatives, during normal business hours, to
consult with its officers, employees, attorneys and agents for the purpose of
determining the accuracy of the representations and warranties hereinabove made
and the compliance with covenants contained in this Agreement; provided,
however, that AMCI shall not be required to permit any inspection, or to
disclose any information, that in the reasonable judgment of AMCI would (i)
result in the disclosure of any trade secrets of third parties, (ii) violate any
obligation of AMCI with respect to confidentiality, (iii) jeopardize protections
afforded AMCI under the attorney-client privilege or the attorney work product
doctrine, or (iv) materially interfere with the conduct of AMCI's business;
4.4.4 Issuance of AMCI Common Stock - Rule 144 Restrictions. Take all action
reasonably necessary to cause the "issuance" of AMCI Common Stock to the Selling
Shareholders in connection with the transactions contemplated hereby, subject to
the restrictions of Rule 144 under the Securities Act of 1933 ("Securities
Act"). AMCI also shall take any action reasonably required to be taken under
state blue sky or securities laws and under other applicable laws, rules and
regulations in connection with the issuance of the AMCI Common Stock pursuant to
the transactions contemplated hereby. The parties understand and agree that
notwithstanding this Section 4.4.4, the AMCI Common Stock issued to the Selling
Shareholders is subject to the registration rights with respect to such shares
pursuant to Section 7 hereof.
4.4.5 Compliance with Agreement. At its expense, take all commercially
reasonable actions as may be necessary, advisable or proper (i) to consummate
and make effective, in the most expeditious manner practicable, the transactions
contemplated hereby and the other transactions contemplated by this Agreement,
(ii) to insure that the representations and warranties made by it herein are
true and correct at the Closing Date such that the condition contained in
Section 5.1.1 would be satisfied, (iii) to fully perform all covenants made by
it herein and (iv) to satisfy timely all other obligations imposed upon it by
this Agreement.
Article v
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1 Conditions Precedent to Obligations of AMCI. The obligations of AMCI to
consummate and effect the transactions contemplated hereby shall be subject to
the satisfaction of the following conditions, or to the waiver thereof by AMCI
in the manner contemplated by Section 6.4 before the Closing Date:
5.1.1 Representations and Warranties of Compugraphics and the Selling
Shareholders True at Closing Date. The representations and warranties of
Compugraphics and the Selling Shareholders herein contained shall be, in all
respects, true as of and at the Closing Date with the same effect as though made
at such date, except as affected by transactions permitted or contemplated by
this Agreement and except for those representations and warranties that address
matters only as of a particular date (which shall remain true and correct as of
such particular date), provided that any inaccuracies in such representations
and warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and are not reasonably
expected to result in, a Material Adverse Effect on Compugraphics (it being
understood that any materiality qualifications contained in such representations
and warranties shall be disregarded for this purpose); and Compugraphics shall
have performed and complied, in all material respects, with all covenants
required by this Agreement to be performed or complied with by Compugraphics and
the Selling Shareholders before the Closing Date.
5.1.2 No Material Litigation. No suit, action or other legal proceeding shall
have been commenced by any United States federal or state governmental entity
with respect to the transactions contemplated hereby and shall be pending before
any court or governmental agency of competent jurisdiction which would
reasonably be expected to have a Material Adverse Effect on Compugraphics.
5.1.3 Xxxx-Xxxxx-Xxxxxx, etc. All waiting periods which may be required by HSR
and any applicable comparable European and Japanese laws and regulations shall
have expired with respect to the transactions contemplated by this Agreement, or
early termination with respect thereto shall have been obtained without the
imposition of any governmental request or order requiring the sale or
disposition or holding separate (through a trust or otherwise) of particular
assets or business of AMCI, its Affiliates or any component of Compugraphics or
other actions as a precondition to the expiration of any waiting period or the
receipt of any necessary governmental approval or consent.
5.2 Conditions Precedent to Obligations of Compugraphics and the Selling
Shareholders. The obligations of Compugraphics and the Selling Shareholders to
consummate and effect the transactions contemplated hereby shall be subject to
the satisfaction of the following conditions, or to the waiver thereof by
Compugraphics and the Selling Shareholders in the manner contemplated by Section
6.4 before the Closing Date:
5.2.1 Representations and Warranties of AMCI True at Closing Date. The
representations and warranties of AMCI herein contained shall be, in all
respects, true as of and at the Closing Date with the same effect as though made
at such date, except as affected by transactions permitted or contemplated by
this Agreement and except for those representations and warranties that address
matters only as of a particular date (which shall remain true and correct as of
such particular date), provided that any inaccuracies in such representations
and warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and are not reasonably
expected to result in, a Material Adverse Effect on AMCI (it being understood
that any materiality qualifications contained in such representations and
warranties shall be disregarded for this purpose); and AMCI shall have performed
and complied, in all material respects, with all covenants required by this
Agreement to be performed or complied with by AMCI before the Closing Date.
5.2.2 No Material Litigation. No suit, action or other legal proceeding shall
have been commenced by any United States federal or state governmental entity
with respect to the transactions contemplated hereby and shall be pending,
before any court or governmental agency of competent jurisdiction which would
reasonably be expected to have a Material Adverse Effect on AMCI.
5.2.3 Xxxx-Xxxxx-Xxxxxx, etc. All waiting periods which may be required by HSR
or any applicable comparable laws and regulations shall have expired with
respect to the transactions contemplated by this Agreement, or early termination
with respect thereto shall have been obtained without the imposition of any
governmental request or order requiring the sale or disposition or holding
separate (through a trust or otherwise) of particular assets or businesses of
AMCI, its Affiliates or any component of Compugraphics or other actions as a
precondition to the expiration of any waiting period or the receipt of any
necessary governmental approval or consent.
article vi
TERMINATION AND ABANDONMENT
6.1 Termination. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time (whether before or after the approval
and adoption thereof by the stockholders of Compugraphics) before the Closing
Date upon the following conditions:
6.1.1 By Mutual Consent. By mutual written consent of AMCI and Compugraphics.
6.1.2 By AMCI Because of Conditions Precedent. By AMCI, if (i) there has been a
breach by Compugraphics and/or the Selling Shareholders of its representations,
warranties, covenants, or agreements set forth in this Agreement if, as a result
of such breach, the conditions set forth in Section 5.1.1 would not be
satisfied, and (ii) Compugraphics or the Selling Shareholders fail to cure such
breach within three (3) business days after written notice thereof from AMCI
(except that no cure period shall be provided for any breach by Compugraphics or
the Selling Shareholders which by its nature cannot be cured).
6.1.3 By AMCI Because of Material Adverse Change. By AMCI, if there has been
since December 31, 1999, a Material Adverse Change unknown to AMCI with respect
to Compugraphics which condition or event shall not have been ameliorated such
that it no longer constitutes a Material Adverse Change within three (3)
business days following receipt by Compugraphics of notice from AMCI (except
that no cure period shall be provided for any Material Adverse Change which by
its nature cannot be cured).
6.1.4 By Selling Shareholders Because of Conditions Precedent. By the Selling
Shareholders if (i) there has been a breach by AMCI of any of its
representations, warranties, covenants or agreements set forth in this Agreement
if, as a result of such breach, the conditions set forth in Section 5.2.1 would
not be satisfied, and (ii) AMCI fails to cure such breach within three (3)
business days after written notice thereof from Compugraphics or the Selling
Shareholders (except that no cure period shall be provided for any breach by
AMCI which by its nature cannot be cured).
6.1.5 By Selling Shareholders Because of Material Adverse Change. By the Selling
Shareholders, if there has been since April 30, 2000, a Material Adverse Change
with respect to AMCI which condition or event shall not have been ameliorated
such that it no longer constitutes a Material Adverse Change within three (3)
business days following receipt by AMCI of notice from Compugraphics (except
that no cure period shall be provided for any Material Adverse Change which by
its nature cannot be cured).
6.1.6 By AMCI or Selling Shareholders Because of Statute or Order. By AMCI or
the Selling Shareholders if (i) a statute, rule, regulation or executive order
shall have been enacted, entered or promulgated after the date of this Agreement
(and shall remain in effect) prohibiting the consummation of the transactions
contemplated hereby substantially on the terms contemplated hereby or (ii) an
order, decree, ruling or injunction shall have been entered by a court of
competent jurisdiction after the date of this Agreement (and shall not have been
vacated, withdrawn or overturned) permanently restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby
substantially on the terms contemplated hereby and such order, decree, ruling or
injunction shall have become final and non-appealable; provided, that the party
seeking to terminate this Agreement pursuant to this Section 6.1.7 shall have
used its reasonable best efforts to remove such order, decree, ruling or
injunction.
6.1.7 By AMCI or Selling Shareholders If Transactions Contemplated Hereby Not
Effective by July 31, 2000. By either AMCI or the Selling Shareholders, if all
conditions to consummation of the transactions contemplated hereby shall not
have been satisfied or waived on or before July 31, 2000, other than as a result
of a breach of this Agreement by the breaching party.
6.1.8 By AMCI or Selling Shareholders If Transactions Contemplated Hereby Cannot
be Accounted for as a Pooling. By AMCI or the Selling Shareholders if the
transactions contemplated hereby cannot for financial reporting purposes be
accounted for as a "pooling of interests"; provided, however, this provision
shall not be available to a party which has taken or has permitted any of its
Affiliates to take any action or which has failed to take or has permitted any
of its Affiliates to fail to take any action, that either alone or in
combination with actions previously taken, disqualifies the transactions
contemplated hereby from such accounting treatment.
6.2 Termination by Board of Directors. An election of AMCI to terminate this
Agreement and abandon the transactions contemplated hereby as provided in
Section 6.1 shall be exercised on behalf of AMCI by its board of directors. An
election of Compugraphics to terminate this Agreement and abandon the
transactions contemplated hereby as provided in Section 6.1 shall be exercised
on behalf of Compugraphics by its board of directors.
6.3 Effect of Termination. In the event of the termination and abandonment of
this Agreement pursuant to and in accordance with the provisions of Section 6.1
hereof, this Agreement shall become void and have no effect, without any
liability on the part of any party hereto (or its stockholders or controlling
persons or directors or officers), except (i) the provisions of Section 4.3.6
shall survive such termination and abandonment and (ii) neither party shall be
released or relieved from any liability arising from any willful breach by such
party of any of its representations, warranties, covenants or agreements as set
forth in this Agreement.
6.4 Waiver of Conditions. Subject to the requirements of any applicable law, any
of the terms or conditions of this Agreement may be waived at any time by the
party which is entitled to the benefit thereof, by action taken by its board of
directors.
6.5 Expense on Termination. If the transactions contemplated hereby is abandoned
pursuant to and in accordance with the provisions of Section 6.1 hereof, all
expenses will be paid by the party incurring them.
article vii
ADDITIONAL AGREEMENTS
7.1 Registration Rights. The shares of AMCI Common Stock issued to the Selling
Shareholders under this Agreement shall have the registration rights provided
for in this section 7.2. Any and all shares issued under this Agreement are
hereafter referred to as the "Registrable Stock" and the Selling Shareholders
are hereafter referred to as the "Holders".
7.1.1 Mandatory Registration. AMCI hereby agrees, notwithstanding any provision
herein to the contrary, subject only to the restrictions set forth hereinbelow
to (i) file a registration statement relating to all shares issued to the
Holders within ninety (90) days of closing (the "Mandatory Registration").
7.1.2 Right to Piggyback. Whenever AMCI proposes to register any of its
securities under the Securities Act and the registration form to be used may be
used for the registration of any of the Registrable Stock in connection with the
resale thereof by the Holders (a "Piggyback Registration"), AMCI will (i) give
no less than fifteen (15) days prior written notice to all Holders of its
intention to effect such a registration (the "Registration Notice"), and (ii)
include in such registration all Registrable Stock issued prior to the date
fifteen (15) days following the date of the Registration Notice in accordance
with the priorities set forth in this Section 7.1.
7.1.3 Piggyback Expenses. All expenses incident to AMCI's performance of or
compliance with this Section 7.1, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for AMCI and all independent certified public
accountants, underwriters (excluding discounts and commissions relating to
Registrable stock) and other persons or entities retained by AMCI in connection
with the Registrable Stock or any Piggyback Registration will be paid by AMCI.
Holders shall pay for fees and disbursements of counsel retained by Holders (or
any of them) and, if the Piggyback Registration is an underwritten offering,
shall pay all underwriting discounts and commissions relating to the sale of
Registrable Stock.
7.1.4 Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of AMCI and the managing
underwriters advise AMCI in writing that in their opinion the number of
securities to be included in such registration exceeds the number which can be
sold in such offering, AMCI will include in such registration (i) first, the
securities that AMCI proposes to sell and Registrable Stock prorata among AMCI
and the Holders on the basis of the number of shares which AMCI proposes to
register and the number of shares of Registrable Stock issued to Holders prior
to the date of the Registration Notice; provided, however, that in no event will
the Registrable Stock issued to the Holders prior to the date of the
Registration Notice exceed fifty percent (50%) of the securities being sought
for underwritten primary registration if AMCI is unable to register all of the
securities for which AMCI sought underwritten primary registration.
7.1.5 Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of AMCI's securities
and the managing underwriters advise AMCI in writing that in their opinion the
number of securities to be included in such registration exceeds the number
which can be sold in such offering, AMCI will include in such registration (i)
first, the Registrable Stock of the Holders acquired pursuant to this Agreement
prior to the date of the Registration Notice prorata among the Holders, (ii)
second, the securities requested to be included therein by the other holders
(other than the Holders) requesting such registration, and (iii) third, the
other securities requested to be included in such registration, if any.
7.1.6 Selection of Underwriters. The Holders shall have no right to select or
participate in the selection of any investment banker(s) or manager(s) to
administer any offering.
7.2 Holdback Agreements. In connection with any underwritten Piggyback
Registration, each Holder agrees not to effect any public sale or distribution
of equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7) days prior
to and the ninety (90) day period beginning on the effective date of any such
underwritten Piggyback Registration in which any shares of Registrable Stock are
included, unless the underwriters managing the registered public offering
otherwise agree and such sale or distribution otherwise complies with Regulation
240.10b-6 of the Exchange Act; provided, however, that the Holders may elect, at
their option, to not have the underwriter sell the Registrable Stock the Holders
have registered and to otherwise determine the method and timing of the sale of
the securities so registered without regard to the holdback provisions hereof.
7.3 Registration Procedures. Whenever Registrable Stock will be registered
pursuant to this Agreement, the Company will use its best efforts to effect the
registration and the sale of such Registrable Stock in accordance with the
intended method of disposition thereof, and pursuant thereto, the Company will
as expeditiously as possible:
7.3.1 Prepare and file with the SEC a registration statement filed pursuant to
the Securities Act on Form X-0, X-0, X-0, XX-0 or SB-2 or any similar
registration statement pursuant to which Registrable Stock may be registered (a
"Registration Statement") with respect to such Registrable Stock and use its
best efforts to cause such Registration Statement to become effective (provided
that, no less than ten (10) days before filing a Registration Statement or
prospectus or any amendments or supplements thereto, the Company will furnish to
the counsel or counsels of Holders copies of all such documents proposed to be
filed);
7.3.2 Prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than two (2) years and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement;
7.3.3 Furnish to each Holder such number of copies of such Registration
Statement, each amendment and supplement thereto, the prospectus included in
such Registration Statement (including each preliminary prospectus) and such
other documents as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Stock owned by such Holder;
7.3.4 Use its best efforts to register or qualify such Registrable Stock under
such other securities or blue sky laws of such jurisdictions as any Holder
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in such jurisdictions of Registrable Stock owned by such Holder
(provided that the Company will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any such
jurisdiction);
7.3.5 Notify each Holder, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such Registration Statement
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading, and, at the request of any such
Holder, the Company will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the Holders of Registrable Stock such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
7.3.6 Cause all such Registrable Stock to be listed on each securities exchange
on which similar securities issued by the Company are then listed, if any; and
7.3.7 Provide a transfer agent and registrar for all such Registrable Stock not
later than the effective date of such Registration Statement;
7.3.8 Make available for inspection during normal business hours by any Holder,
any underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by any such
Holder or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such Holder, underwriter, attorney, accountant or
agent in connection with such Registration Statement.
7.4 Indemnification. The Company agrees to indemnify, to the extent permitted by
law, each Holder against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained in
any Registration Statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein, except insofar as the same are
caused by or contained in any information furnished to the Company by Holders
(or any of them) expressly for use therein or which Holders (or any of them)
failed to provide after being so requested or by any Holder's failure to deliver
a copy of the Registration Statement or prospectus or any amendments or
supplements thereto after the Company has furnished such Holder with a
sufficient number of copies of the same or which is otherwise attributable of
the negligence or willful misconduct of any Holder.
7.4.1 In connection with any Registration Statement in which any Holder is
participating, each such Holder will furnish to the Company in writing, within
fifteen (15) days after written request therefor, such information and
affidavits as the Company reasonably requests for use in connection with any
such Registration Statement or prospectus and, to the extent permitted by law,
will indemnify the Company, its directors and officers, each person or entity
who controls the Company (within the meaning of the Securities Act), against any
losses, claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained or required to be contained
in the Registration Statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained or required to be contained in any information or
affidavit so furnished or required to be so furnished in writing by such Holder.
7.4.2 Any person or entity entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification, and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim, with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without the indemnifying party's consent (but such
consent will not be unreasonably withheld). An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
7.4.3 The indemnification provided for under this section will remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling person or entity of
such indemnified party and will survive the transfer of securities. The Company
and Holders also agree to make such provisions, as are reasonably requested by
any indemnified party, for contribution to such party in the event the Company's
or any Holder's indemnification, as the case may be, is unavailable for any
reason.
7.5 Holders Shares Possibly Subject to 120 Day Lock-Up Restrictions. Each
Holder's shares of the Company under this agreement shall, if requested by an
underwriter of a primary offering of the Company's securities, agree that he
will not sell or otherwise transfer or dispose of his shares of the Company's
common stock during the period beginning seven days prior to and ending 120 days
following the effective date of a registration statement of the Company filed
under the Securities Act of 1933, as amended. The restrictions agreed to herein
shall be binding upon any assignee of person acquiring Securities hereunder.
7.6 Employee Benefit Plans of Compugraphics. AMCI shall take all actions
necessary or appropriate to permit the employees of Compugraphics and its
subsidiaries (the "Compugraphics Employees") to continue to participate from and
after the Closing Date in the Compugraphics Plans maintained by Compugraphics
and its subsidiaries immediately prior to the Closing Date. Notwithstanding the
foregoing, AMCI may permit or cause any such Compugraphics Plan to be terminated
or discontinued on or after the Closing Date, provided that AMCI shall take all
actions necessary or appropriate to permit the Compugraphics Employees
participating in such Compugraphics Plan to immediately thereafter participate
in the comparable AMCI Plan maintained by AMCI or any of its subsidiaries for
their similarly situated employees. If the Compugraphics Plan that is terminated
or discontinued by AMCI is a group health plan, then AMCI shall permit each
Compugraphics Employee participating in such group health plan to be covered
under an AMCI Plan that (i) provides medical and dental benefits to each such
Compugraphics Employee effective immediately upon the cessation of coverage of
such individuals under such group health plan, (ii) credits such Compugraphics
Employee, for the year during which such coverage under such AMCI Plan begins,
with any deductibles and co-payments already incurred during such year under
such group health plan, and (iii) waives any preexisting condition restrictions
to the extent necessary to provide immediate coverage and to the extent such
restrictions were not applicable under such group health plan. AMCI and the AMCI
Plans shall recognize each Compugraphics Employee's years of service and level
of seniority with Compugraphics and its subsidiaries for purposes of terms of
employment and eligibility, vesting and benefit determination under the AMCI
Plans (other than benefit accruals under any defined benefit pension plan).
7.7 Stock Options and Warrants. AMCI and Compugraphics hereby agree that all
outstanding options, warrants or obligations of any kind to issue any shares of
capital stock of Compugraphics held by persons other than the Selling
Shareholders will be terminated as soon as practicable after the Closing Date
and replaced with comparable options, warrants and obligations for shares of
AMCI Common Stock.
7.8 Employment of Xxx Xxxxxx. Simultaneous with Closing, AMCI shall advance One
Hundred Fifty Thousand Dollars ($150,000.00) to Compugraphics and Compugraphics
simultaneous therewith pay, as a signing bonus, One Hundred Fifty Thousand
Dollars ($150,000.00) to Xxx Xxxxxx in exchange for the execution by Xxx Xxxxxx
of a five year employment agreement with Compugraphics to serve as its Chief
Executive Officer in a form to be mutually agreed between AMCI, Compugraphics
and Xxx Xxxxxx for an annual base salary of Ninety Five Thousand Dollars
($95,000) per year payable in accordance with the past payroll practices of
Compugraphics.
article viii
GENERAL PROVISIONS
8.1 Entirety. This Agreement embodies the entire agreement among the parties
with respect to the subject matter hereof, and all prior agreements among the
parties with respect thereto are hereby superseded in their entirety.
8.2 Counterparts. Any number of counterparts of this Agreement may be executed
and each such counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one instrument.
8.3 Notices and Waivers. Any notice or waiver to be given to any party hereto
shall be in writing and shall be delivered by overnight courier, sent by
facsimile transmission or first class registered or certified mail, postage
prepaid.
IF TO AMCI
Addressed to: With a copy to:
American Millennium Corporation, Inc. Xxxxxx X. Xxxxxxxx, Esq.
0000 Xxxxx Xxxxxx, Xxxxx 000 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, CEO Telephone: 000-000-0000
Telephone: 000-000-0000 Facsimile: 000-000-0000
Facsimile: 000-000-0000 Email: xxxxxx@xxxxxx.xxx
Email: xxxxxxxx@xxxxxxxxxxx.xxx
IF TO COMPUGRAPHICS
Addressed to: With a copy to:
Compugraphics Corporation __________________________
0000 Xxxxxxxx Xx. __________________________
Xxxx Xxxxxx, Xxxxxxx 00000 __________________________
Attention: Xx. Xxx Xxxxxx, CEO Attention: _______________
Telephone: 000-000-0000 Telephone: _______________
Facsimile: 000-000-0000 Facsimile: _______________
Email: xxxxxx@xxxxxxxx.xx.xxx Email: ___________________
IF TO SELLING SHAREHOLDERS
At the addresses and facsimile numbers listed on Schedule A opposite each
Selling Shareholder.
Any communication so addressed and mailed by first-class registered or certified
mail, postage prepaid, shall be deemed to be received on the fifth business day
after so mailed, and any communication so addressed and if delivered by
overnight courier, facsimile or email to such address shall be deemed to be
received (i) in the case of delivery by overnight courier, on the second
business day after such communication is delivered to the overnight courier
service, and (ii) in the case of delivery by facsimile or email, upon delivery
during normal business hours on any business day.
8.4 Termination of Representations, Warranties, etc. The respective
representations, warranties, covenants and agreements contained in this
Agreement shall expire with, and be terminated and extinguished by, the closing
at the time of the consummation thereof; provided, however, that this Section
8.4 shall not limit or otherwise effect any covenant or agreement of the parties
hereto which by its terms contemplates performance after the closing or after
termination of this Agreement.
8.5 Captions. The captions contained in this Agreement are solely for convenient
reference and shall not be deemed to affect the meaning or interpretation of any
article, section, or paragraph hereof.
8.6 Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
8.7 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
8.8 Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Mexico without regard
to applicable principles of conflicts of law.
8.9 Public Announcements. The parties agree that before or after the closing
they shall consult with each other before the making of any public announcement
regarding the existence of this Agreement, the contents hereof or the
transactions contemplated hereby, and to obtain the prior approval of the other
party as to the content of such announcement, which approval shall not be
unreasonably withheld. However, the foregoing shall not apply to any
announcement or written statement which, upon the written advice of counsel, is
required by law, rule or regulation to be made, except that the party required
to make such announcement shall, whenever practicable, consult with and solicit
prior approval from such other party concerning the timing and content of such
legally required announcement or statement before it is made.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of
Reorganization to be duly executed as of the date first above written.
AMERICAN MILLENNIUM CORPORATION, INC., a New Mexico corporation
/s/ Xxxxxx X. Xxxxxxx
By:
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
COMPUGRAPHICS CORPORATION, a Florida corporation
/s/ Xxxxxx Xxxxxx
By:
Name: Xxxxxx Xxxxxx
Title: President
SELLING SHAREHOLDERS
/s/ Xxxxxx Xxxxxx (100% of Stock)
SCHEDULE A
TO
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
AMERICAN MILLENNIUM CORPORATION, INC.
COMPUGRAPHICS CORPORATION
AND
THE FOLLOWING SHAREHOLDERS ("SELLING SHAREHOLDERS")
No. of Shares No. of Shares
Name and Address Owned To Be Issued Options1 Owned Warrants Owned
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