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ACQUISITION AND MERGER AGREEMENT
AMONG
XXXXXXX BUSINESS SERVICES, INC.,
WESTERN INDUSTRIAL MANAGEMENT, INC.,
CATCH 55, INC.,
THE SHAREHOLDERS
OF WESTERN INDUSTRIAL MANAGEMENT, INC., AND
CATCH 55, INC.,
XXXXXXX X. XXXXXXXXXX,
AND
THE XXXXXXXXXX FAMILY TRUST
--------------------------------------------------------------------------------
Dated: June 29, 1998
TABLE OF CONTENTS
ARTICLE I
THE MERGER................................. 2
1.1 The Merger........................................................... 2
1.2 Effects of the Merger................................................ 2
1.3 Surviving Corporation................................................ 2
ARTICLE II
PAYMENT TO DISSENTER, CONVERSION OF SHARES
AND TRANSFER OF PROPERTY........................... 3
2.1 Payment to Dissenter................................................. 3
2.2 Conversion of WIMI Common Stock and Catch Common Stock............... 3
2.3 Effect of Conversion................................................. 3
2.4 Share Transfers...................................................... 4
2.5 Missing Certificates................................................. 4
2.6 Transfer of Property................................................. 4
ARTICLE III
CLOSING; OTHER ACTIONS........................... 6
3.1 Closing.............................................................. 6
3.2 Actions at Closing................................................... 6
3.3 Taxes................................................................ 8
3.4 Tax Clearance........................................................ 8
ARTICLE IV
DEFINITIONS................................ 8
4.1 Affiliate............................................................ 8
4.2 Articles of Merger................................................... 8
4.3 Associate............................................................ 8
4.4 Xxxxxxx Common Stock................................................. 8
4.5 Xxxxxxx Financial Statements......................................... 8
4.6 California Secretary................................................. 9
4.7 Catch Certificate.................................................... 9
4.8 Catch Common Stock................................................... 9
4.9 Catch Financial Statements........................................... 9
4.10 CERCLA............................................................... 9
4.11 Closing Date......................................................... 9
4.12 Code................................................................. 9
4.13 Company Certificate(s)............................................... 9
4.14 Company Common Stock................................................. 9
4.15 Company Financial Statements......................................... 9
4.16 Effective Time....................................................... 9
4.17 Employee Plans/Agreements............................................ 9
4.18 Environmental Law.................................................... 9
4.19 ERISA................................................................ 9
4.20 GAAP................................................................. 9
4.21 Governmental Entity.................................................. 9
4.22 Hazardous Substances................................................. 9
i
4.23 Injunction........................................................... 9
4.24 Liens................................................................ 9
4.25 Merger............................................................... 9
4.26 Requisite Regulatory Approvals....................................... 9
4.27 Securities Act.......................................................10
4.28 Surviving Corporation................................................10
4.29 Trade Rights.........................................................10
4.30 WIMI Certificate.....................................................10
4.31 WIMI Common Stock....................................................10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WIMI, CATCH,
DISSENTER, SHAREHOLDERS, AND THE XXXXXXXXXX TRUST............ 10
5.1 Corporate Organization...............................................10
5.2 Capitalization.......................................................11
5.3 Authority; No Violation..............................................11
5.4 Consents and Approvals...............................................12
5.5 Financial Statements.................................................12
5.6 Current Assets.......................................................13
5.7 Absence of Certain Changes...........................................13
5.8 Absence of Undisclosed Liabilities...................................15
5.9 No Litigation........................................................15
5.10 Compliance With Laws.................................................16
5.11 Title to and Condition of Properties.................................18
5.12 Insurance............................................................20
5.13 Contracts and Commitments............................................21
5.14 Employee Benefit Plans...............................................23
5.15 Employee Data and Compensation.......................................24
5.16 Employees and Labor Relations Matters................................25
5.17 Intellectual Property................................................26
5.18 Customer List; Intangibles...........................................26
5.19 Tax Matters..........................................................27
5.20 Banks; Powers of Attorney............................................29
5.21 Adverse Conditions...................................................29
5.22 Investment Representations...........................................29
5.23 Nature of Shares.....................................................30
5.24 Broker's Fees........................................................30
5.25 Attorneys's Fees.....................................................31
5.26 Disclosure...........................................................31
5.27 Knowledge............................................................31
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
XXXXXXX...................................32
6.1 Corporate Organization...............................................32
6.2 Capitalization.......................................................32
6.3 Validity of Shares...................................................32
6.4 Authority; No Violation..............................................32
6.5 Consents and Approvals...............................................33
6.6 Financial Statements.................................................33
6.7 Absence of Certain Changes...........................................34
6.8 Absence of Undisclosed Liabilities...................................35
6.9 No Litigation........................................................35
ii
6.10 Compliance With Laws.................................................35
6.11 Title to and Condition of Properties.................................36
6.12 Adverse Conditions...................................................37
6.13 Broker's Fees........................................................37
6.14 Disclosure...........................................................37
ARTICLE VII
ADDITIONAL AGREEMENTS............................37
7.1 Actions in Connection with Dissenter and Merger......................37
7.2 Transition...........................................................37
7.3 Further Assurances...................................................38
7.4 Cash and Shares Subject to Holdback..................................38
7.5 Limitation of Adjustments............................................43
7.6 Corporate Records, Contracts, Etc....................................44
7.7 Current Financial Information........................................44
7.8 Certain Forbearances by Company......................................44
7.9 Certain Forbearances by Xxxxxxx......................................46
7.10 Preservation of Business and the Property............................47
7.11 Title Report.........................................................47
7.12 Environmental Assessment.............................................48
7.13 Scheduled Company Debt and Fees......................................48
7.14 Knowledge of Xxxxxxx.................................................48
7.15 Materiality..........................................................49
7.16 Rights of Access.....................................................49
ARTICLE VIII
CONDITIONS PRECEDENT............................49
8.1 Conditions to Each Party's Obligation to Effect the Merger...........49
8.2 Conditions to Obligations of Xxxxxxx.................................51
8.3 Conditions to Obligations of Company.................................53
ARTICLE IX
TERMINATION AND AMENDMENT..........................54
9.1 Termination..........................................................54
9.2 Effect of Termination................................................54
9.3 Extension; Waiver....................................................55
ARTICLE X
INDEMNIFICATION...............................55
10.1 Indemnification by Shareholders, Dissenter and
Xxxxxxxxxx Trust.....................................................55
10.2 Time of Representations..............................................56
10.3 Procedure............................................................56
10.4 Restrictions and Limitations.........................................57
ARTICLE XI
GENERAL PROVISIONS..............................58
11.1 Survival of Representations, Warranties, and Agreements..............58
11.2 Expenses.............................................................58
11.3 Notices..............................................................59
11.4 Interpretation.......................................................60
iii
11.5 Counterparts.........................................................60
11.6 Entire Agreement.....................................................60
11.7 Governing Law........................................................61
11.8 Severability.........................................................61
11.9 Confidentiality......................................................61
11.10 Publicity............................................................61
11.11 Assignment...........................................................61
11.12 Default and Remedies.................................................62
11.13 Attorney Fees........................................................62
11.14 Postjudgment Attorneys Fees..........................................62
11.15 Counsel..............................................................62
11.16 Time of Essence......................................................63
EXHIBITS
A Company Disclosure Schedule
SCHEDULES
1.3 List of Directors and Officers of Surviving Corporation
2.5 Form of Affidavit of Lost Certificate and Indemnity
2.6 Liens and Encumbrances - Property
2.6(a) Land
2.6(c) Excluded Items of Personal Property
7.13 Scheduled Company Debt
8.1(d) Form of Employment Agreement
8.1(e) Form of Shareholder's Noncompetition Agreement
iv
ACQUISITION AND MERGER AGREEMENT
--------------------------------
THIS ACQUISITION AND MERGER AGREEMENT, dated this 29th day of June,
1998, is by and among the following parties:
XXXXXXX BUSINESS SERVICES, INC., ("Xxxxxxx")
a Maryland corporation,
0000 XX Xxxxxxx Xxxxxx
Xxxxxxxx XX 00000
EIN: 00-0000000
WESTERN INDUSTRIAL MANAGEMENT, INC., ("WIMI")
a California corporation,
EIN: 00-0000000
CATCH 55, INC., ("Catch")
a California corporation,
EIN: 00-0000000
WIMI and Catch are collectively
referred to as ("Company")
XXXXX X. XXXXXXXXXX and ("Xxxxxxxxxx Trust")
XXXXXXX XXXXXXXXXX, Trustees
of the Xxxxxxxxxx Family
Trust dated January 10, 1994,
0000 Xxxxxxxxx
Xxxxxxxxx XX 00000
EIN: ###-##-####
XXXXX X. XXXXXXXXXX ("X. Xxxxxxxxxx")
0000 Xxxxxxxxx
Xxxxxxxxx XX 00000
SS No.: ###-##-####
XXXXXXXX XXXXXX ("Xxxxxx")
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxx XX 00000
SS No.: ###-##-####
XXXXXXX X. XXXXXXXXXX ("Dissenter")
0000 Xxxxxxx Xxxxxx
Xxxxxxxx XX 00000
SS No.: ###-##-####
XXXXXXXXXX TRUST and XXXXXX
are collectively
referred to as ("WIMI Shareholders")
XXXXXXXXXX TRUST ("Catch Shareholder")
WIMI SHAREHOLDERS and CATCH
SHAREHOLDER are collectively
referred to as ("Shareholders")
B A C K G R O U N D
The boards of directors of Xxxxxxx, WIMI and Catch have determined that
it is in their best interests for Xxxxxxx to
Page 1--ACQUISITION AND MERGER AGREEMENT
acquire WIMI and Catch by merging WIMI and Catch with and into Xxxxxxx, with
Xxxxxxx remaining as the surviving corporation (sometimes hereinafter referred
to as "Surviving Corporation"), under the terms and conditions described in this
agreement (the "Merger"). In connection with the transaction, the Dissenter has
exercised his dissenter's rights and he will receive cash and the Shareholders
will collectively receive Xxxxxxx stock. The total consideration of cash and
Xxxxxxx Common Stock is worth approximately $10,695,656, as calculated in
accordance with Article II.
The parties intend that the Merger constitute (i) a reorganization
within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"), and (ii) a business combination accounted for under the
pooling of interests method.
Capitalized terms not otherwise defined have the meanings given in
Article IV.
A G R E E M E N T
The parties therefore agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Acquisition
and Merger Agreement ("Agreement"), WIMI and Catch will merge with and into
Xxxxxxx at the Effective Time in accordance with the Maryland General
Corporation Law (the "MGCL") and the California General Corporation Law (the
"CGCL"). Xxxxxxx shall be the Surviving Corporation in the Merger, and shall
continue its corporate existence after the Effective Time. Upon consummation of
the Merger, the separate corporate existence of WIMI and Catch shall cease.
1.2 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Section 3-114 of the MGCL and Section 1107
of the CGCL.
1.3 SURVIVING CORPORATION. From and after the Effective Time, the
Articles of Incorporation and Bylaws of the Surviving Corporation shall be the
Articles of Incorporation and Bylaws of Xxxxxxx as in effect prior to the
Effective Time, until the same shall be further amended. From and after the
Effective Time, the directors and officers of the Surviving Corporation shall be
the persons listed on Schedule "1.3," attached hereto, until their successors
shall have been duly elected or until their earlier resignation or removal.
Page 2--ACQUISITION AND MERGER AGREEMENT
ARTICLE II
PAYMENT TO DISSENTER, CONVERSION OF SHARES
AND TRANSFER OF PROPERTY
2.1 PAYMENT TO DISSENTER. Dissenter has exercised his rights as a
dissenting shareholder pursuant to CGCL. Immediately preceding the Effective
Time, Dissenter shall transfer all of his right, title and interest in 382
shares of WIMI Common Stock to WIMI. Substantially simultaneously with the
Effective Time, subject to Section 7.4, Xxxxxxx shall pay to Dissenter $519,095
in exchange for the transfer of Dissenter's WIMI Common Stock to WIMI. Upon
receipt of the aforementioned payment, Dissenter acknowledges and agrees that
all of his rights as a dissenting shareholder under CGCL will be satisfied in
full.
2.2 CONVERSION OF WIMI COMMON STOCK AND CATCH COMMON STOCK. At the
Effective Time, by virtue of the Merger and without any further action on the
part of the parties, 7,118 of the outstanding shares of WIMI Common Stock, which
represents all of the then outstanding WIMI Common Stock, shall be converted
into 850,335 shares of Xxxxxxx Common Stock. At the Effective Time, by virtue of
the Merger and without any further action on the part of the parties, each
outstanding share of Catch Common Stock shall be converted into 33,810 shares of
Xxxxxxx Common Stock. Each Shareholder shall receive the number of shares of
Xxxxxxx Common Stock set forth opposite his or her name below:
Number of Shares
WIMI of Xxxxxxx
Shareholder Common Stock
----------- ------------
Xxxxxxxxxx Trust 806,373
Xxxxxx 43,962
Number of Shares
Catch of Xxxxxxx
Shareholder Common Stock
----------- ------------
Xxxxxxxxxx Trust 33,810
2.3 EFFECT OF CONVERSION. All shares of Xxxxxxx Common Stock into which
shares of Company Common Stock shall have been converted shall be deemed to have
been issued and paid in satisfaction of all rights pertaining to such converted
shares. At the Effective Time, the holders of Company Certificates shall cease
to have any rights with respect to such stock (except such rights as they may
have as dissenting shareholders) and their sole rights shall be with respect to
the Xxxxxxx Common Stock into which their shares of Company Common Stock shall
have been converted by virtue of the Merger.
Page 3--ACQUISITION AND MERGER AGREEMENT
2.4 SHARE TRANSFERS. If any certificate representing shares of Xxxxxxx
Common Stock is to be issued in a name other than that in which the surrendered
Company Certificate is registered, it shall be a condition of issuance that the
Company Certificate shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and that the person requesting such issuance shall pay
to Xxxxxxx in advance any transfer or other taxes required by reason of the
issuance of the Xxxxxxx Common Stock certificate as requested, or required for
any other reason, or shall establish to the satisfaction of Xxxxxxx that such
tax has been paid or is not payable.
2.5 MISSING CERTIFICATES. If any Company Certificate has been lost,
stolen or destroyed, Xxxxxxx shall issue the shares of Xxxxxxx Common Stock if
the holder provides an affidavit to Xxxxxxx in the form set forth in Schedule
"2.5."
2.6 TRANSFER OF PROPERTY. The Xxxxxxxxxx Trust owns the real property,
improvements, fixtures, and certain personal property located at 0000 Xxxxxxxx
Xxxxxx Xxxxx, Xxx Xxxxxxxxxx, Xxxxxxxxxx (together, the "Property"). The
Property is currently subject to a lease with WIMI dated June 20, 1996 (the
"Lease"). To qualify the Merger under the pooling of interests method, the
parties agree that at the Effective Time, the Property shall be transferred to
Xxxxxxx in exchange for 10,497 shares of Xxxxxxx Common Stock, being registered
in the name of and transferred to the Xxxxxxxxxx Trust.
At the Effective Time, the Xxxxxxxxxx Trust shall deliver to Xxxxxxx
such xxxxx xxxxx, bills of sale, endorsements, assignments, and other good and
sufficient instruments of transfer, conveyance and assignment as shall be
effective to vest in Xxxxxxx all right, title and interest in and to the
Property, free and clear of all liens, encumbrances and claims whatsoever,
except as specified in Schedule "2.6," or as listed as an exception contained in
Schedule B, Items 1-16 of that certain preliminary title report issued by
Xxxxxxx Title of California, report number 111142966, dated May 13, 1998
("Preliminary Title Report"). To the extent title to the Property now is subject
to certain security interests and encumbrances other than those specified in
Schedule "2.6" or the Preliminary Title Report, the Xxxxxxxxxx Trust shall be
solely responsible for discharging the entirety of said debts and causing the
proper release of record of all of the security granted therefor prior to or on
the Effective Time, and the Xxxxxxxxxx Trust shall pay any and all prepayment
penalties, debt assumption fees and other costs and fees which may be required
in so doing. Concurrently with such delivery, the Xxxxxxxxxx Trust shall put
Xxxxxxx in actual possession of the Property as of the Effective Time.
Page 4--ACQUISITION AND MERGER AGREEMENT
The Property consists of:
(a) The land described in Schedule "2.6(a)," which is attached
hereto (the "Land"), and all easements, rights and interests appurtenant
thereto;
(b) All of the improvements and fixtures currently situated on
the Land (the "Improvements");
(c) The Xxxxxxxxxx Trust does not own any personal or other
tangible property in connection with the Land or the Improvements. Those items
which are listed and set forth in Schedule "2.6(c)," which is attached hereto
(the "Excluded Items of Personal Property") are items of personal property that
are retained by X. Xxxxxxxxxx or the Xxxxxxxxxx Trust and are not transferred to
Xxxxxxx; and
(d) All of the Xxxxxxxxxx Trust's rights in all of the
following intangible property now or hereafter existing with respect to the
Property (the "Xxxxxxxxxx Trust Intangible Property"):
(i) All leases, licenses and other agreements to
occupy all or any part of the Land or Improvements together with, and subject to
the manner in which the same are to be prorated as of the Effective Time under
this Agreement, all rents, charges, deposits, and other sums due, accrued or to
become due thereunder, and all guaranties by third parties of any tenant's
obligations under such leases, licenses and other agreements;
(ii) All plans and specifications, all building
permits and other permits required in connection with the construction of the
Improvements and all warranties, guaranties and sureties now or thereafter
received in connection with the construction of or equipment on the
Improvements, including, without limitation, all rights of the Xxxxxxxxxx Trust,
under any plans, specifications, drawings, and permits and all architectural,
engineering or construction contracts with respect to the Improvements and all
planned additions and alterations thereto;
(iii) All licenses, permits, approvals, certifi-
xxxxx of occupancy and franchises relating to the zoning, land use, ownership,
operation, occupancy, construction, or maintenance of the Improvements running
to or in favor of the Xxxxxxxxxx Trust or the Improvements, and all deposits to
governmental authorities relating to the Xxxxxxxxxx Trust or the Improvements;
(iv) All service and maintenance contracts and
equipment leases in connection with or used by the Xxxxxxxxxx Trust in the
operation of the Improvements and which are accepted by Xxxxxxx; and
Page 5--ACQUISITION AND MERGER AGREEMENT
(v) All accounts, books, records, studies, docu-
ments, tests, surveys, assessments, audits, appraisals, contracts, contract
rights, claims, and warranties related to the Property.
ARTICLE III
CLOSING; OTHER ACTIONS
3.1 CLOSING. The closing of the transactions contemplated by this
Agreement shall occur on June 24, 1998 (the "Closing Date"), or at a time and
date mutually agreed upon by Xxxxxxx and Company, but in no event later than
June 30, 1998. Closing shall occur at such location as Xxxxxxx and Company shall
mutually agree. Closing shall begin on the Closing Date, and shall be conducted
in such manner, as may be agreed by Xxxxxxx and Company, and shall continue
until the Effective Time and until all actions required at closing have been
taken. No assets shall be transferred, nor shall business operations of Company
be commenced by Xxxxxxx until such time as the Merger becomes effective, and all
operations of Company shall be for the benefit of Company and its Shareholders
until that time.
3.2 ACTIONS AT CLOSING. At closing, subject to satisfaction or waiver
of all conditions precedent set forth in this Agreement:
(a) The Dissenter shall surrender to WIMI all of Dissenter's
WIMI Certificates for cancellation at the Effective Time.
(b) Except as allowed by Section 7.4, substantially
simultaneously when the Merger becomes effective, Xxxxxxx shall authorize Xxxxx
X. Xxxxxxxx, acting in a capacity as an escrow holder with respect to a
cashier's check payable to Dissenter, to deliver to Dissenter said cashier's
check in the sum of $467,185.
(c) Substantially simultaneously when the Merger becomes
effective, Xxxxxxx shall authorize Xxxxx X. Xxxxxxxx, acting in a capacity as an
escrow holder with respect to certain funds in his possession, to deliver
Xxxxxxx'x cashier's checks payable to the following parties in the amounts set
forth opposite their names:
Payee Amount
Oxford Mergers & Acquisitions, Inc. $310,000
Xxxxxxxx & Xxxxxx, LLP $113,750
(d) The Shareholders shall surrender the WIMI Certificates and
the Catch Certificates representing all of WIMI's and Catch's capital stock
outstanding immediately prior to
Page 6--ACQUISITION AND MERGER AGREEMENT
the Effective Time to Xxxxxxx for cancellation at the Effective Time.
(e) Except as allowed by Section 7.4, Xxxxxxx shall deliver to
each Shareholder, certificates for the shares of Xxxxxxx Common Stock to which
the Shareholder is entitled hereunder in connection with the Merger.
(f) Except as allowed by Section 7.4, Xxxxxxx shall deliver to
the Xxxxxxxxxx Trust, certificates for the shares of Xxxxxxx Common Stock to
which the Xxxxxxxxxx Trust is entitled hereunder in connection with the
Property.
(g) Company and Xxxxxxx shall cause a copy of the Articles of
Merger to be filed with the Maryland Department and the California Secretary and
shall cause all other actions to be taken required to consummate the Merger.
(h) Immediately after the Merger becomes effective, Xxxxxxx
Title of California, Inc., located at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxxxx (the "Closing Agent"), shall close the purchase and sale of the
Property contemplated hereby. The Xxxxxxxxxx Trust's deed conveying the Property
to Xxxxxxx shall be recorded on the day of the Effective Time, unless otherwise
agreed to by the parties hereto in writing. At least one (1) business day prior
to the Effective Time, each of the parties hereto shall deposit with the Closing
Agent all of the documents, sums and instructions necessary to close such
transaction pursuant to the terms hereof. Said documents shall include, without
limitation, the Xxxxxxxxxx Trust's grant deed, bills of sale, and assignments of
any condemnation awards or insurance proceeds paid or becoming payable with
respect to the Property after the date of this Agreement. The Xxxxxxxxxx Trust
shall pay all of its obligations in the ordinary course and shall also furnish
on the Effective Time evidence of the status of payment of all utility bills (if
any), rent or other obligations under the Lease, so as to enable the parties to
prorate the same outside of the closing escrow; assignments of all construction
warranties which may then exist with respect to the Property; and evidence of
the payment of any and all personal property taxes, if any, which have been
levied on the personal property items located on or associated with the Property
through the Effective Time.
(i) The Xxxxxxxxxx Trust shall be responsible for the payment
of taxes of any kind or nature due by virtue of the conveyance of title to the
Property, pay all penalties and similar charges charged by the then holders of
indebtedness secured by the Property (except for any indebtedness specified in
Schedule "2.6" or the Preliminary Title Report), the premium for purchaser's
title insurance policy, and any sums due with respect to the discharge of any
encumbrances for which the Xxxxxxxxxx Trust
Page 7--ACQUISITION AND MERGER AGREEMENT
is responsible. Xxxxxxx shall pay the documentary transfer tax and all
recordation fees in connection with the filing of the Xxxxxxxxxx Trust's deed.
Each of the parties hereto agrees to pay one-half (1/2) of the escrow charges
assessed by the Closing Agent. Real estate taxes and assessments, general and
special, due in the year of closing, rents, xxxxxxxx for utilities, and similar
charges shall be prorated between the parties hereto as of the Effective Time.
(j) The parties shall each deliver the various other documents
that are described elsewhere in this Agreement evidencing satisfaction of the
conditions to the Merger, and shall take any other actions expressly required by
this Agreement, or reasonably requested by any of them, at or before the
Effective Time in order to consummate the Merger.
3.3 TAXES. Any transfer taxes, income taxes, stamp duties, filing fees,
registration fees, or expenses or other similar taxes, fees, charges, or
expenses incurred by any party in connection with the transfer of the Company
Common Stock and the Property to Xxxxxxx or in connection with any of the
transactions contemplated by this Agreement shall be borne and paid exclusively
by the Dissenter and the Shareholders with respect to the Company Common Stock
and the Xxxxxxxxxx Trust with respect to the Property.
3.4 TAX CLEARANCE. As soon as practicable prior to the Effective Time,
Company shall have obtained a certificate of tax clearance from the California
Franchise Tax Board and caused such certificate to be provided to the California
Secretary.
ARTICLE IV
DEFINITIONS
The following terms have the meanings given below or in the sections
indicated.
4.1 AFFILIATE: The persons and entities specified in the definition of
such term under Rule 405 of the Securities Act.
4.2 ARTICLES OF MERGER: Agreement of Merger, together with other
required documents, if any, which will be filed with the Maryland Department at
the Effective Time and the California Secretary subsequent to the Effective
Time.
4.3 ASSOCIATE: The persons and entities specified in the definition of
such term under Rule 405 of the Securities Act.
4.4 XXXXXXX COMMON STOCK: Common stock, $.01 par value, of Xxxxxxx.
4.5 XXXXXXX FINANCIAL STATEMENTS: See Section 6.6.
Page 8--ACQUISITION AND MERGER AGREEMENT
4.6 CALIFORNIA SECRETARY: The Secretary of State of the state of
California.
4.7 CATCH CERTIFICATE: A certificate for Catch Common Stock.
4.8 CATCH COMMON STOCK. Common stock of Catch.
4.9 CATCH FINANCIAL STATEMENTS. See Section 5.5.
4.10 CERCLA: Comprehensive Environmental Response, Compensation, and
Liability Act of 1980.
4.11 CLOSING DATE: The date of closing of the transactions contemplated
by this Agreement.
4.12 CODE: See Background.
4.13 COMPANY CERTIFICATE(S). Certificates for WIMI Common Stock and
Catch Common Stock.
4.14 COMPANY COMMON STOCK. Common stock of WIMI and Common stock of
Catch.
4.15 COMPANY FINANCIAL STATEMENTS: See Section 5.5.
4.16 EFFECTIVE TIME: The date and time when the Merger becomes
effective as a result of filing the Merger Agreement.
4.17 EMPLOYEE PLANS/AGREEMENTS: See Section 5.14.
4.18 ENVIRONMENTAL LAW: See Section 5.10.
4.19 ERISA: See Section 5.14.
4.20 GAAP: See Section 5.5.
4.21 GOVERNMENTAL ENTITY: See Section 5.4.
4.22 HAZARDOUS SUBSTANCES: See Section 5.10.
4.23 INJUNCTION: See Section 8.1.
4.24 LIENS: See Section 5.11.
4.25 MERGER: See Background.
4.26 REQUISITE REGULATORY APPROVALS: See Section 8.1.
Page 9--ACQUISITION AND MERGER AGREEMENT
4.27 SECURITIES ACT: The Securities Act of 1933, as amended.
4.28 SURVIVING CORPORATION: Xxxxxxx, as the surviving cor- poration in
the Merger.
4.29 TRADE RIGHTS: See Section 5.17.
4.30 WIMI CERTIFICATE: A certificate for WIMI Common Stock.
4.31 WIMI COMMON STOCK: Common stock of WIMI.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WIMI, CATCH,
DISSENTER, SHAREHOLDERS, AND THE XXXXXXXXXX TRUST
Except as set forth in the Company Disclosure Schedule attached as
Exhibit A, at all relevant times WIMI, Catch, the Xxxxxxxxxx Trust, Dissenter,
and each Shareholder, jointly and severally represent and warrant to Xxxxxxx
that:
5.1 CORPORATE ORGANIZATION.
(a) Company is a corporation duly organized and validly
existing under the laws of the state of California. Company has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on Company. Copies of the Articles of Incorporation and
Bylaws of Company that have previously been made available to Xxxxxxx are true,
complete and correct copies of such documents as in effect as of the date of
this Agreement.
(b) Except as set forth in the Company Disclosure Schedule,
Company has no subsidiaries and does not own an interest in any other
corporation, partnership or other organization, whether incorporated or
unincorporated.
(c) A complete copy of Company's minute book has been
delivered to Xxxxxxx. The minutes contained therein correctly reflect the
corporate actions of Company's shareholders and its Board of Directors
(including committees of the Board of Directors of Company) described therein.
(d) The Company has been autonomous and has not been a
subsidiary or division of another corporation within two (2) years before the
plan of combination was initiated.
Page 10--ACQUISITION AND MERGER AGREEMENT
(e) Company and Xxxxxxx are independent of one another and
never have been related.
5.2 CAPITALIZATION. The authorized capital stock of Company and the
number of outstanding shares of Company on the date of this Agreement, are set
forth in the Company Disclosure Schedule. All the shares of Company are owned by
the Dissenter and the Shareholders, free of Liens. All of the issued and
outstanding shares of Company Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights (or each
holder of preemptive rights shall have waived such preemptive rights) with no
personal liability attaching to the ownership thereof. Company does not have and
is not bound by any outstanding subscriptions, options, warrants, calls,
commitments, or agreements of any character calling for the purchase or issuance
of any shares of Company Common Stock or any other equity securities of Company
or any securities representing the right to purchase or otherwise receive any
shares of Company Common Stock or other such equity securities.
The Company has not engaged in any transactions involving changes in
the equity interest of the Company Common Stock in contemplation of effecting
the combination either within two (2) years before the combination is initiated
or between the dates the combination is initiated and consummated.
The Dissenter has exercised his rights as a dissenting shareholder of
WIMI. The surrender of Dissenter's WIMI Common Stock and the payment to
Dissenter therefor, shall be accomplished in accordance with CGCL and this
Agreement.
5.3 AUTHORITY; NO VIOLATION.
(a) Company has full corporate power and corporate authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors and Shareholders of Company. No other
corporate proceedings on the part of Company are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Company and (assuming due
authorization, execution and delivery by Xxxxxxx) constitutes the valid and
binding obligation of Company, enforceable against Company in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by
Company, nor the consummation by Company of the
Page 11--ACQUISITION AND MERGER AGREEMENT
transactions contemplated hereby, nor compliance by Company with any of the
terms or provisions hereof, will (i) violate any provision of the Articles of
Incorporation or Bylaws of Company or (ii) assuming that the consents and
approvals referred to in Sections 5.4 and 6.5 are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree, or
injunction applicable to Company or any of its properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event that, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge, or other encumbrance upon any of the properties or assets of Company
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement, or other instrument or
obligation to which Company is a party, or by which Company or any of its
properties or assets may be bound or affected.
5.4 CONSENTS AND APPROVALS. Except for (i) the filing of the Articles
of Merger with the Maryland Department and the California Secretary pursuant to
the MGCL and the CGCL, respectively, (ii) such filings and approvals as are
required to be made or obtained under federal and state securities laws in
connection with the issuance of the shares of Xxxxxxx Common Stock pursuant to
this Agreement, and (iii) the consents and approvals set forth in Company
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity") or of or with any
third party are necessary in connection with (x) the execution and delivery by
Company of this Agreement and (y) the consummation by Company of the Merger and
the other transactions contemplated hereby.
5.5 FINANCIAL STATEMENTS. Company has previously delivered to Xxxxxxx
copies of (i) the balance sheet of WIMI as of December 31, 1996, and the related
statements of operations, retained earnings and cash flows for the year ended
December 31, 1996, together with the related notes, which were compiled by and
accompanied by the report of Soreno McAdamo Bartells Certified Public
Accountants, Inc., independent public accountants; (ii) internally prepared
balance sheet and statement of income and expense for Catch as of December 31,
1996; and (iii) the unaudited balance sheets of both WIMI and Catch as of
December 31, 1997, and the related unaudited statements of income, for the
12-month period then ended. The above described unaudited balance sheets of
Company as of December 31, 1996, and December 31, 1997, and the related
unaudited statements of income for the 12 months then ended are hereinafter
collectively referred to as the "Company Financial Statements." The Company
Page 12--ACQUISITION AND MERGER AGREEMENT
Financial Statements fairly present the results of the operations and changes in
stockholders' equity and financial position of Company for the respective fiscal
periods or as of the respective dates therein set forth.
The unaudited balance sheet and income statement of Company as at April
30, 1998, for the four (4) month-period then ended (the "Short 1998 Financial
Statements"), fairly presents the financial position of the Company as at April
30, 1998, and the results of operations for the four (4) month-period then ended
and have been prepared in a manner consistent with the Company Financial
Statements. There are no adjustments that would be required on audit of the
Short 1998 Financial Statements that would, individually or in the aggregate,
have a material negative effect upon Company's reported financial condition. All
activity of Company is reported in its financial statements. There are no off
financial statement items and no related party transactions.
As of the Effective Time, the Company shall have a net book value of
not less than $500,000. The Company's net book value shall be equal to its
assets, minus its liabilities determined from the books of Company and in
accordance with GAAP. If, upon completion of the accounting for the period
beginning January 1, 1998, and ending the Effective Time, it is determined that
the net book value of Company is less than $500,000, Shareholders and Dissenter
shall pay to Xxxxxxx an amount equal to the difference between such actual net
book value and $500,000 (the "Deficit"). The Deficit shall be paid to Xxxxxxx,
first, by utilization of the provisions of Section 7.4 relating to cash and
Shares subject to holdback to the extent thereof and next, by cash payment, all
subject to the terms and conditions of this Agreement that may require or limit
the payment of the Deficit.
5.6 CURRENT ASSETS. Other than as disclosed in the Company Financial
Statements, all accounts receivable of Company represent arm's length sales
actually made in the ordinary course of business and are subject to no
counterclaim or setoff and are not in dispute.
5.7 ABSENCE OF CERTAIN CHANGES. Since December 31, 1997, there has not
been:
(a) Any material adverse change in the financial condition,
assets, liabilities, business, prospects, or operations of Company;
(b) Any loss, damage or destruction to the assets of Company
or of any item of the Property, whether covered by insurance or not, which has
or will have a material adverse effect on the financial condition or the
business, prospects or results of operations of Company or the ownership or use
of the Property;
Page 13--ACQUISITION AND MERGER AGREEMENT
(c) Any increase in the compensation, salaries or wages
payable or to become payable to any employee or agent of Company (including,
without limitation, any increase or change pursuant to any bonus, pension,
profit sharing, retirement, or other plan or commitment), or any bonus or other
employee benefit granted, made or accrued;
(d) Any labor dispute or disturbance, other than routine
individual grievances which are not material to the business, financial
condition or results of operations of Company;
(e) Any commitment or transaction by Company (including,
without limitation, any capital expenditure) other than in the ordinary course
of business consistent with past practice or capital expenditure by the
Xxxxxxxxxx Trust with respect to the Property, which commitment, transaction or
capital expenditure resulted or will result in the expenditure of funds in the
aggregate, in excess of $5,000;
(f) Any declaration, setting aside, or payment of any dividend
or any other distribution in respect of capital stock of Company; any
redemption, purchase or other acquisition by Company of any capital stock of
Company, or any security relating thereto, or any other payment to any
Shareholder of Company as such a Shareholder;
(g) Any sale, mortgage or other encumbrance of the Property,
any sale, lease or other transfer or disposition of any properties or assets of
Company, except for sales in the ordinary course of business or the accelerated
retirement of Company debt;
(h) Any indebtedness for borrowed money incurred, assumed or
guaranteed by Company other than in the ordinary course of business;
(i) Any entering into, amendment or termination by Company of
any contract, or any waiver of material rights thereunder, other than in the
ordinary course of business;
(j) Any loan or advance or any grant of credit by Company;
(k) Any issue, sale or delivery of capital stock of Company or
bonds or other debt instruments, or granted any rights calling for the issuance,
sale or delivery of any thereof (including, without limitation, options,
warrants, convertible securities, or similar rights);
(l) Any amendments to the Articles of Incorporation or Bylaws
of Company;
Page 14--ACQUISITION AND MERGER AGREEMENT
(m) Any increase or experience of any adverse change in any
assumption underlying any method of calculating bad debts, contingencies or
other reserves from that reflected in the Company Financial Statements;
(n) Any loss of key employees or key salespersons of Company,
except for Xxxxxx, who has retired as an employee of Company;
(o) Any payment of severance or termination pay to any key
employee, officer or director of Company;
(p) Any change to the methods of accounting or accounting
principles or practices of Company set forth in or reflected by the Company
Financial Statements, except for the recordation of amortization and
depreciation for the periods then ended; or
(q) Any other event or condition specifically related to
Company not in the ordinary course of business which could reasonably be
expected to have a material adverse effect on the financial condition, the
business or the results of operations of Company.
5.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
specifically disclosed in the most recent balance sheet included in the Company
Financial Statements, Company does not have any liabilities, accrued,
contingent, or otherwise, other than commercial liabilities and obligations
incurred since the date of such balance sheet in the ordinary course of business
consistent with past practice, which individually or in the aggregate would have
a material adverse effect on the business, financial condition or results of
operation of Company.
5.9 NO LITIGATION.
(a) Except as specifically set forth in the Company Disclosure
Schedule, there are no claims, actions, suits, arbitrations, proceedings, or
investigations pending or threatened against the Company or relating to the
Property before or by any governmental or nongovernmental department,
commission, board, bureau, agency or instrumentality, or any other person,
including, without limitation, any notices, demands, letters, or claims under
any applicable Environmental Law. There are no outstanding or unsatisfied
judgments, orders, decrees, or stipulations to which the Company is a party that
involve the transactions contemplated hereby or that would alone or in the
aggregate have a material adverse effect upon the business, assets or financial
condition of the Company or materially and adversely affecting the Property, or
that could reasonably be expected to have a material adverse effect upon the
business prospects of the Company or any of its assets, or the Property.
Page 15--ACQUISITION AND MERGER AGREEMENT
(b) Except as specifically set forth in the Company Disclosure
Schedule, there is no threatened civil or criminal litigation or notice of
violation or administrative action arising out of the business activities of the
Company relative to the Company's operations and/or its ownership, control or
operation of the Company's assets, or the Xxxxxxxxxx Trust's ownership, control
or operation of the Property, including, without limitation, any threatened
litigation, notice or proceeding relating in any way to any applicable
Environmental Law. To the knowledge of the Company, the Shareholders and the
Dissenter, as to the Company, and the Xxxxxxxxxx Trust, as to the Property,
there is no valid basis for any material claim, action, suit, arbitration,
proceeding, or investigation, other than as specifically set forth in the
Company Disclosure Schedule, adverse to the Company or the operation of the
Property by or before any governmental or nongovernmental department,
commission, board, bureau, agency or instrumentality, or any other person, court
or tribunal, including, without limitation, any such circumstances based on any
violation or alleged violation or arising out of any Environmental Law or any
circumstances which could reasonably be expected to interfere with or prevent
continued compliance with any Environmental Law.
5.10 COMPLIANCE WITH LAWS.
(a) Except for failures to comply with the Laws (as
hereinafter defined) which either individually or in the aggregate would not
have a material adverse effect on the business, financial condition or results
of operations of Company or the operation or use of the Property, Company and
the Xxxxxxxxxx Trust, as the case may be (including all of its operations,
practices, properties and assets), are in compliance with all applicable
federal, state, local, and foreign laws, ordinances, orders, rules, and
regulations (collectively, "Laws") including, without limitation, those
applicable to discrimination in employment, occupational safety and health, wage
and hour, collective bargaining, employment, trade practices, environmental
protection, competition, pricing, product warranties, zoning, building,
sanitation, employment, retirement, labor relations, and advertising. Company,
Shareholders, Dissenter, and the Xxxxxxxxxx Trust have not received notice of
any violation or alleged violation of any Laws. Company, Shareholders,
Dissenter, and the Xxxxxxxxxx Trust are not subject to liability for past or
continuing violations of any Laws, which liability would have a material adverse
effect on the business, financial condition or results of operation of Company
or the Property. All reports and returns required to be filed by Company,
Shareholders, Dissenter, or the Xxxxxxxxxx Trust with any Governmental Entity
have been filed, and were accurate and complete except for such inaccuracies or
omissions which either individually or in the aggregate would not have a
material adverse effect on the business, financial condition or results of
operation of Company or the
Page 16--ACQUISITION AND MERGER AGREEMENT
operation, use or value of the Property.
(b) The Company, with respect to its operation, has and the
Xxxxxxxxxx Trust, with respect to the Property, has all material licenses,
permits, approvals, authorizations, and consents of all Governmental Entities
and all certification organizations which are required for the conduct of its
business (as presently conducted) and the use of the Property, respectively. All
licenses, permits, approvals, authorizations, and consents which Company and the
Xxxxxxxxxx Trust have obtained (the "Licenses") are in full force and effect.
Except for failures to comply with the Licenses which either individually or in
the aggregate would not have a material adverse effect on the business,
financial condition or results of operations of Company or the use of the
Property, Company and the Xxxxxxxxxx Trust, respectively are and have been in
compliance in all respects with the Licenses.
(c) Except for small amounts of toner, flux remover and PC
board cleaner, which are used in the ordinary course of Company's business and
to the best knowledge of Shareholders, Dissenter, Company, and the Xxxxxxxxxx
Trust, and specifically excluding employee's actions while working at third
party sites away from the Company facilities or the Property, no material amount
of any Hazardous Substance (as defined below) has been discharged, released,
used, or emitted into the air, water, surface water, ground water, land surface,
or sub-surface strata from or upon the Property or any facility of Company or
under the direction or control of any employee or agent of Company or the
Xxxxxxxxxx Trust, except in accordance with applicable Environmental Law (as
defined below) in all material respects. For the purposes of this Agreement,
"Hazardous Substance" means any substance, whether liquid, solid or gas, listed,
identified or designated as hazardous or toxic under any applicable
Environmental Law, (i) which, applying criteria specified by any applicable
Environmental Law, is hazardous or toxic, or (ii) the use or disposal of which
is regulated under any applicable Environmental Law. For the purposes of this
Agreement, "Environmental Law" means any federal, state, provincial or local
statute, law, ordinance, rule, regulation, order, consent, decree, judicial or
administrative decision or directive of the United States or other jurisdiction
now existing relating to (A) pollution or protection of the environment,
including natural resources, (B) exposure of persons, including employees, to
Hazardous Substances or other products, materials or chemicals, (C) protection
of the public health or welfare from the effects of products, by-products,
waste, emissions, discharges, or releases of chemical or other substances from
industrial or commercial activities, or (D) regulation of the manufacture, use
or introduction into commerce of substances, including, without limitation,
formulation, packaging, labeling, distribution, transportation, handling,
storage, and disposal.
Page 17--ACQUISITION AND MERGER AGREEMENT
(d) In connection with the business of the Company, directly
or indirectly, neither the Company, Shareholders, Dissenter, nor the Xxxxxxxxxx
Trust has transported (directly or indirectly) any Hazardous Substances to any
location that is listed or proposed for listing under CERCLA or on any similar
state list, or is the subject of federal, state or local enforcement actions or
investigations or remedial actions.
(e) Company, Shareholders, Dissenter, and the Xxxxxxxxxx Trust
have provided to Xxxxxxx all information, including, without limitation, all
studies, analyses and test results in the possession, custody or control of
Company, Shareholders, Dissenter, and the Xxxxxxxxxx Trust relating to
properties owned or leased by Company and the Xxxxxxxxxx Trust which describe:
(i) environmental conditions on, under or about such properties; and (ii)
Hazardous Substances used, managed, handled, transported, treated, generated,
stored, or released by any person at any time on any such properties.
5.11 TITLE TO AND CONDITION OF PROPERTIES.
(a) Except as set forth in the Company Disclosure Schedule and
in the Company Financial Statements, Company has good and marketable title to
all its material assets, free and clear of all mortgages, liens (statutory or
otherwise), security interests, claims, pledges, equities, options, conditional
sales contracts, assessments, levies, easements, covenants, reservations,
restrictions, exceptions, limitations, charges, or other encumbrances of any
nature whatsoever (collectively, "Liens"). All tangible assets of Company are
located at facilities owned or leased by Company and all tangible assets located
at such facilities are either owned or leased by Company.
(b) The Xxxxxxxxxx Trust has good and marketable title to the
Property, free and clear of all Liens, charges and encumbrances, except as
indicated on Schedule "2.6" or the Preliminary Title Report; taxes and
assessments, general and special, not due and payable as of the Effective Time;
rights of the public to parts, if any, lying in streets and rights-of-way
existing on the date of this Agreement; rights reserved in federal patents or
state deeds which do not impair Xxxxxxx'x intended use of the Property; building
and use restrictions general to the district in which the Property is located
existing on the date of this Agreement; and building and zoning regulations
applicable to the Property on the date of this Agreement. To the Xxxxxxxxxx
Trust's knowledge, no person adversely possesses or has obtained any
prescriptive easement in any portion of the Property. To the Xxxxxxxxxx Trust's
knowledge, there are no encroachments, easements, setbacks, rights-of-way or
streams that are not of public record.
Page 18--ACQUISITION AND MERGER AGREEMENT
(c) The existing use and condition of the Property is not a
nonconforming use and does not violate any subdivision, zoning, building,
health, environmental, personal disabilities, fire or safety statute, ordinance,
regulation or code in any material respect. As of the date hereof, neither the
Xxxxxxxxxx Trust nor, to the Xxxxxxxxxx Trust's knowledge, any of the Xxxxxxxxxx
Trust's agents and employees have received any written notice from any
governmental agency alleging violations of any building codes, building or use
restrictions, zoning ordinances, or rules and regulations. To the Xxxxxxxxxx
Trust's knowledge, all licenses, permits and other approval required for the
construction and operation of the Improvements have been issued and are in good
standing.
(d) There is no pending nor, to the Xxxxxxxxxx Trust's
knowledge, contemplated eminent domain, condemnation or other governmental
taking of the Property or any portion thereof.
(e) To the Xxxxxxxxxx Trust's knowledge, there are no special
or general assessments which have been levied against or are proposed for the
Property.
(f) To the Xxxxxxxxxx Trust's knowledge, there exist no
material defaults under any management, maintenance or service contracts
executed in connection with the Property.
(g) The Xxxxxxxxxx Trust warrants that it is not a "foreign
person" as defined in Section 1445 of the Code.
(h) To the Xxxxxxxxxx Trust's knowledge, there are no material
defects in any portions of the Improvements or to the Xxxxxxxxxx Trust's
knowledge, are the Improvements infested with termite or other insects or
animals. Conditions caused by ordinary wear and tear and depreciation shall not
be considered material defects for the purposes of this representation.
(i) The Xxxxxxxxxx Trust has not received any formal or
informal notice from any insurance company of any defect or inadequacies in the
Property which would adversely affect the insurability of the Improvements, or
which would increase the cost of any insurance beyond that which would
ordinarily and customarily be charged for like use property in the vicinity of
the Property.
(j) To the Xxxxxxxxxx Trust's knowledge, the surface and
subsurface condition of the Land is such that it will support the Improvements
without present need for additional subsurface excavation, fill, footing,
caissons, or other installations and, to the best of the Xxxxxxxxxx Trust's
knowledge, the Improvements have been constructed in a manner which is
compatible with the soil conditions at the time of construction.
Page 19--ACQUISITION AND MERGER AGREEMENT
(k) To the Xxxxxxxxxx Trust's knowledge, no part of the Land
is within a wetland or other regulated environmentally sensitive area or a flood
plain or a special flood hazard area is designated by the applicable Federal
Emergency Management Agency Flood Insurance Rate Map.
5.12 INSURANCE. Company and the Xxxxxxxxxx Trust now have insurance
coverage to fully protect, indemnify and reimburse them from and against losses
or damage arising from fire, theft or other casualties, liability for injury to
or death of any person, and for damage to any property, workers' compensation
and in general such other insurance as may be usual or customary in the
business. All assets of Company or on the owned or leased premises of Company
and the Property are covered by such fire, casualty, general liability, and
other insurance policies issued by reputable companies in amounts, scope and
coverage which are adequate and reasonable in light of existing conditions. The
Company Disclosure Schedule sets forth a correct and complete list and
description of all of the policies of insurance and fidelity or surety bonds
carried by Company. Company has not failed to give any notice or present any
claim under any insurance policy. Company and the Xxxxxxxxxx Trust have not
received any notices nor has Company or the Xxxxxxxxxx Trust failed to act on
any recommendations by any insurance company that issued a policy, by any Board
of Fire Underwriters or other body exercising similar functions or by any
governmental authority requiring or recommending any repairs or other work to be
done on or with respect to any of the properties and assets of Company or the
Property or requiring or recommending any equipment or facilities to be
installed on or in connection with any of the properties or assets of Company or
the Property. The workers' compensation and unemployment insurance ratings and
contributions of Company, as disclosed to Xxxxxxx, are true and accurate.
Company has timely filed all workers' compensation applications, forms, returns,
and documents required to be filed and shall have paid or made provision for
payment by the Effective Time all premiums, charges and assessments that have
accrued, or are due, or may become due as of, or after the Effective Time
(including charges or assessments determined by audit after the Effective Time),
plus any such amounts that may become due for that payroll period which may
extend beyond the Effective Time. No audit, examination or investigation is
presently being conducted or threatened by any carrier or former carrier of
Company's workers' compensation coverage other than the annual workers'
compensation audit. All information, applications, reports, or instruments
submitted to Company's workers' compensation carrier (past or present) were
truthful, accurate and contained no information that was misleading or omitted
from the information necessary to make the same not misleading to such carrier
regarding issues concerning Company's experience rating and the status of
Shareholders stock ownership and identification of the true owners of such
stock.
Page 20--ACQUISITION AND MERGER AGREEMENT
5.13 CONTRACTS AND COMMITMENTS.
(a) The Company owns no real property. The Company Disclosure
Schedule contains a complete and accurate list of all real property leaseholds
or other interests owned by the Company. The Company has given Xxxxxxx true and
complete copies of all real property leases, and copies of all title insurance
policies, abstracts, and surveys in its possession relating to such leases.
Except as disclosed on the Company Disclosure Schedule, the Company's leaseholds
are free and clear from all encumbrances of any kind whatsoever and are not
subject to any rights-of-way, building or land use restrictions, exceptions,
variances or zoning laws that might impair the Company's ability to continue to
use such property as it is now used. To the best of Company's knowledge, the
buildings, structures, fixtures, and equipment used by the Company are
structurally sound, are in good operating condition and repair, and are adequate
for the uses to which they are put, and none of such buildings, structures,
fixtures, or equipment is in need of maintenance or repairs, except for
ordinary, routine maintenance and repairs that are not material in nature or
cost. The buildings, structures, fixtures, and equipment are sufficient for the
continued conduct of the Company's business after the Effective Time in
substantially the same manner as before the Effective Time, and to the knowledge
of the Company, the Dissenter and the Shareholders comply in all material
respects with all zoning, health, building, occupancy, personal disability,
seismic and any applicable Environmental Law, ordinances and regulations.
(b) The Company Disclosure Schedule to this Agreement is a
complete and accurate schedule describing all equipment and all other tangible
personal property owned by, in possession of, or used by the Company, including
leases of personal property and vehicles. All vehicles or equipment listed in
the Company Disclosure Schedule that are required to be licensed are now
licensed. Except as stated in the Company Disclosure Schedule, no personal
property used by the Company in connection with its business that is valued for
purposes of the 1997 Company Financial Statement (net of depreciation) in excess
of $1,000, is held under any lease, security agreement, conditional sales
contract, or other title retention or security agreement, or is located other
than at the Company's office locations. Except as separately noted on the
Company Disclosure Schedule, the Company's machinery and equipment are in normal
operating condition, free from any known defects except such minor defects as do
not substantially interfere with the continued use thereof in the conduct of
normal operations, ordinary wear and tear and obsolescence excepted.
(c) Each lease, license, rental agreement, contract of sale,
or other agreement to which the Company's real and personal property is subject,
is valid and in good standing, the Company
Page 21--ACQUISITION AND MERGER AGREEMENT
has performed all material obligations imposed upon it thereunder, and neither
the Company nor, to the knowledge of the Dissenter and the Shareholders, any
other party thereto is in default thereunder in any material respect, nor is
there any event which, with or without the giving of notice or lapse of time, or
both, would constitute a default thereunder by the Company or, to the knowledge
of the Shareholders and the Dissenter, any other party thereto. The Company has
not received notice, and the Company is not otherwise aware, that any party to
any such lease, license, rental agreement, contract of sale, or other agreement
intends to cancel, terminate or refuse to renew the same or to exercise or
decline to exercise any option or other right thereunder. No real or personal
property is subject to any lease, license, contract of sale, or other agreement
that could reasonably be expected to have a material adverse effect upon the
business, properties or financial condition of the Company. Neither the
Shareholders, the Dissenter nor the Company have agreed with any other person to
assign or encumber any lease or sublet any leased property. No lease has been
subordinated to any Lien or encumbrance. There exist no agreements to provide
any notices to any third parties except as stated in a lease or other contract
provided to Xxxxxxx and, to the knowledge of the Shareholders, all addresses for
notices continue to be accurate.
(d) Except as set forth in the Company Disclosure Schedule,
Company has no agreement, understanding, contract, or commitment (written or
oral) with Dissenter, any Shareholder or relative of Dissenter or any
Shareholder or any officer, employee or agent of Company.
(e) Except as listed on the Company Disclosure Schedule,
Company is not obligated under any loan agreement, promissory note, letter of
credit, or other evidence of indebtedness as a signatory, guarantor, or
otherwise.
(f) Except as listed on the Company Disclosure Schedule,
Company has not guaranteed the payment or performance of any person, firm or
corporation, agreed to indemnify any person (except as provided herein) or act
as a surety, or otherwise agreed to be contingently or secondarily liable for
the obligations of any person.
(g) Company, Dissenter and the Shareholders are not a party to
nor are they bound by any agreement requiring Company, Dissenter or the
Shareholders to assign any interest in any trade secret or proprietary
information, or prohibiting or restricting Company, Dissenter or the
Shareholders from competing in any business or geographical area or soliciting
customers or otherwise restricting them from carrying on its business anywhere
in the world.
Page 22--ACQUISITION AND MERGER AGREEMENT
(h) Except as listed on the Company Disclosure Schedule,
Company has no lease, license, contract, or commitment of any nature involving
consideration or other expenditure in excess of $1,000, or involving performance
over a period of more than 180 days.
(i) Company is not in default under any lease, agreement,
contract, or commitment, the affect of which would have a material adverse
effect on the business, financial condition or results of operation of Company,
nor has any event or omission occurred which through the passage of time or the
giving of notice, or both, would (x) constitute a default thereunder or cause
the acceleration of any of the obligations of Company or (y) result in the
creation of any Lien on any of the assets owned, used or occupied by Company,
the effect of either of which would have a material adverse effect on the
business, financial condition or results of operation of Company. No third party
is in default under any lease, agreement, contract, or commitment to which
Company is a party, which failure to perform by the third party would have a
material adverse effect on the business, financial condition or results of
operation of Company, nor has any event or omission occurred which, through the
passage of time or the giving of notice, or both, would constitute a default by
a third party under a contract or commitment to which Company is a party which
event or omission would give rise to termination or right of termination thereof
and the termination of which would have a material adverse effect on the
business, financial condition or results of operation of Company.
5.14 EMPLOYEE BENEFIT PLANS. The Company Disclosure Schedule contains a
correct and complete list and a brief description of all pension, profit
sharing, retirement, bonus, executive or deferred compensation, stock options,
stock purchase, stock appreciation right, excess benefit, major medical,
disability, thrift savings, hospitalization, and other fringe or employee
benefit plans, programs and arrangements, or other plan or arrangement,
commitment or practice of Company providing benefits to any person, and any
employment or consulting contracts, "golden parachutes," severance agreements or
plans, vacation and sick leave plans including, without limitation, all
"employee benefit plans" [as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")], all employee manuals, and
all written or binding oral statements of policies, practices or understandings
relating to employment, which are provided to, are provided for the benefit of,
or relate to, any persons employed or formerly employed by Company. The items
described in the foregoing sentence are hereinafter sometimes referred to
collectively as "Employee Plans/Agreements." True and correct copies of all
written Employee Plans/Agreements, including all amendments thereto, have
heretofore been provided to Xxxxxxx. Company is in compliance with and has made
all payments due under all Employee Plans/Agreements and, with respect
Page 23--ACQUISITION AND MERGER AGREEMENT
to the Employee Plans/Agreements, Company is in compliance with all applicable
federal and state laws and regulations, the failure to comply with which would
have a material adverse effect on the business, financial condition or results
of operation of Company.
5.15 EMPLOYEE DATA AND COMPENSATION. Company has two (2) distinctly
different types of employees. One group consists of employees who currently
perform the function of operating Company (the "Staff Employees"). The other
group of employees are those who perform services for the customers of Company
in the capacity of a temporary employee or a leased employee (the "Temporary
Employees"). Reference to employees, without reference to "staff" or
"temporary," shall include both Staff Employees and Temporary Employees. The
following information shall be either on the Company Disclosure Schedule or
maintained at its existing situs where the operations of Company occur, in
either written or accessible electronic form. Company certifies that all such
information is complete, accurate and readily accessible to Xxxxxxx:
(a) A list of the Company Temporary Employees, all data from
the Temporary Employees' employment applications and the Temporary Employees'
work history ("Temporary Employee
Files");
(b) A list of all of Company's Temporary Employees who
received any form of compensation from Company during the period of January 1,
1996, through the Effective Time ("Written
Temporary Employee List");
(c) A written list of all of Company's Staff Employees ("Staff
Employee List");
(d) The originals and legible copies of all Staff Employees'
employment applications, complete personnel files and work history while
employed by Company ("Staff Employee Files");
(e) The names, title and current salaries of all officers,
directors and Staff Employees of Company;
(f) The wage rates and commission schedules (or ranges, if
applicable) for each class of exempt and nonexempt, salaried and hourly Staff
Employees of Company;
(g) All scheduled or contemplated increases in Staff Employee
compensation or bonuses;
(h) All scheduled or contemplated Staff Employee promotions;
(i) All vacation time due each Staff Employee; and
Page 24--ACQUISITION AND MERGER AGREEMENT
(j) All sick time due each Staff Employee.
5.16 EMPLOYEES AND LABOR RELATIONS MATTERS. Except as otherwise
provided in the Company Disclosure Schedule:
(a) Shareholders, Dissenter and Company are not aware that any
executive or key employee of Company or any group of employees of Company has
any plans to terminate employment with Company;
(b) Company has complied in all material respects with all
labor and employment laws, including provisions thereof relating to wages,
hours, equal opportunity, collective bargaining, and the payment of social
security and other taxes;
(c) The Company is in compliance with the terms and provisions
of the Immigration and Nationality Act, as amended (the "Immigration Act"), in
all material respects. For each employee (as defined in 8 C.F.R. ss.
274a.1(f)(1996) of the Company for whom compliance with the Immigration Act by
the Company is required, the Company has obtained and retained a complete and
true copy of each such employee's Form I-9 (Employment Eligibility Verification
Form) as required by 8 C.F.R. ss. 274a2(b)(2)(1996). The Company has not been
cited, fined, served with a Notice of Intent to Fine or with a Cease and Desist
Order, nor, to the Company's or the Shareholders' knowledge, has any action or
administrative proceeding been initiated or threatened against the Company, by
reason of any actual or alleged failure to comply with the Immigration Act;
(d) There is no unfair labor practice charge, complaint or
other action against Company pending or threatened before the National Labor
Relations Board and Company is not subject to any order to bargain by the
National Labor Relations Board;
(e) There is no labor strike, dispute, request for
representation, slowdown, or stoppage pending or threatened against Company;
(f) No questions concerning representation have been raised or
are threatened with respect to employees of Company;
(g) No grievance that might have a material adverse effect on
Company and no arbitration proceeding arising out of or under any collective
bargaining agreement is pending and no basis exists for any such grievance or
arbitration proceeding;
(h) To the best of Dissenter's, Shareholders' and Company's
knowledge, no employee of Company is subject to any noncompetition,
nondisclosure, confidentiality, employment, consulting, or similar agreements
with persons other than Company
Page 25--ACQUISITION AND MERGER AGREEMENT
relating to the present business activities of Company; and
(i) Company does not have any collective bargaining or union
contracts agreement in effect or being negotiated.
5.17 INTELLECTUAL PROPERTY. The Company Disclosure Schedule contains a
correct and complete list and a brief description of all United States and
foreign trademarks, service marks, trade names, copyrights, including
registrations and application, patent and patent applications, if any, and
employee covenants and agreements respecting intellectual property ("Trade
Rights") in which Company now has any interest, specifying whether such Trade
Rights are owned, controlled, used or held (under license or otherwise) by
Company, and also indicating which of such Trade Rights are registered. All
Trade Rights registrations and all pending registrations and applications have
been properly made and filed and all annuity, maintenance, renewal, and other
fees relating to registrations or applications are current. In order to conduct
the business of Company as such is currently being conducted, Company does not
require any Trade Rights that it does not already have. Company is not
infringing and has not infringed on any Trade Rights of another in the operation
of its business, nor is any other person infringing on the Trade Rights of
Company. Company has not granted any license or made any assignment of any Trade
Rights and no other person has any right to use any Trade Rights owned or held
by Company. Company does not pay any royalties or other consideration for the
right to use any Trade Rights of others. Company, Dissenter and the Shareholders
are not aware of any inquiries or investigations challenging or threatening to
challenge the right, title and interest of Company with respect to its continued
use and right to preclude others from using any Trade Rights of Company. Company
has not been presented with claims nor served in any litigation challenging or
threatening to challenge the right, title and interest of Company with respect
to its continued use and right to preclude others from using any Trade Rights of
Company. All Trade Rights of Company, if any, are valid, enforceable and in good
standing, and there are no equitable defenses to enforcement based on any act or
omission of Company.
5.18 CUSTOMER LIST; INTANGIBLES.
(a) The Company Disclosure Schedule contains a correct and
complete list and a brief description of all the customers of Company for 1996
and 1997 and the dollar volume of business done with each listed party during
such periods. Except as set forth in the Company Disclosure Schedule, the
Company, Dissenter and Shareholders have no knowledge or information of any
facts indicating, nor any other reason to believe, that any of the customers
listed will not continue to be customers of the businesses of Company after the
Effective Time at substantially the same volume of business.
Page 26--ACQUISITION AND MERGER AGREEMENT
(b) Except as otherwise provided in the Company Disclosure
Schedule, the Company is the sole owner of each of the Company's customer lists,
processes, know-how, computer programs and routines, and other technical data
relating to the Company (the "Intangibles") free and clear of any Liens,
encumbrances, restrictions or legal or equitable claims of others. The
Shareholders, Dissenter and the Company have taken all reasonable security
measures to protect the secrecy, confidentiality and value of these Intangibles;
any of its employees and any other person who, either alone or in concert with
others, developed, invented, discovered, derived, programmed or designed these
Intangibles, who have knowledge of or access to information relating to them,
have been put on notice and, if appropriate, have entered into agreements that
these Intangibles are proprietary to the Company and are not to be divulged or
misused.
5.19 TAX MATTERS.
(a) Company and the plan administrator of all Employee
Plans/Agreements have timely filed all federal, state and other tax returns
(including foreign and informational returns) of every nature required to be
filed by it and has paid all taxes (whether or not requiring the filing of
returns) including all deficiencies, assessments, additions to tax, penalties
and interest of which notice has been received, to the extent such taxes or
other amounts have become due. The information contained in such returns is true
and correct in all material respects. All tax liabilities have been fully and
properly reflected in the Company Financial Statements. The unpaid taxes of
Company, including taxes attributable to all periods ending or prior to the
Effective Time which are not yet due and payable, do not exceed the accrued
liability on the financial statements of Company for the liability. No audit,
examination, inquiry, or investigation is presently being conducted or
threatened nor has any such occurred by any taxing authority. Company's tax
returns have not been examined by the Internal Revenue Service, the California
State Franchise Tax Board or any other taxing authority. There are no
outstanding agreements or waivers extending the statutory period of limitation
for any federal or state tax return of Company for any period. Company has made
all required deductions and payments and has properly prepared and delivered all
required documents in connection with the withholding of taxes from the wages
and other compensation of its employees. Company has filed and paid all
sales/use tax returns for all states and foreign countries in which it has
responsibility to do so. The Company does not engage in any activity which
requires it to collect sales or use taxes. The information contained in the
sales/use tax returns is true and correct in all material respects. There are no
security interests or Liens on any of the assets of the Company or the Property
that arose in connection with any failure (or alleged failure) to pay any tax.
Page 27--ACQUISITION AND MERGER AGREEMENT
(b) Any bonuses or other compensation or amounts paid or
payable by Company, including amounts payable as a result of the transaction
contemplated by this Agreement, has not resulted in and will not result in
payments to "Disqualified Individuals" [as defined in Section 280G(c) of the
Code] of Company which, individually or in the aggregate, will constitute
"Excess Parachute Payments" [as defined in Section 280G(b) of the Code]
resulting in the imposition of the excise tax under Section 4999 of the Code or
the disallowance of deductions under Section 280G of the Code.
(c) The Shareholders and Dissenter jointly and severally agree
to indemnify Xxxxxxx for any tax liability of Company attributable to periods
prior to the Effective Time in excess of the reserves for taxes set forth in the
Company Financial Statements.
(d) With respect to claims resulting from or arising out of a
breach of the representations and warranties set forth in this Section 5.19, due
to the improper inclusion in income, the improper deduction from income, or the
improper taking of a credit against taxes of any amount in one or more years, as
a result of which Company becomes entitled to exclude from income, deduct from
income, or receive a credit against taxes, as the case may be, (the
"Adjustments"), any such amount in any other taxable year or years of Company
with respect to which (i) the applicable statute of limitations has not run or,
(ii) if such statute of limitations has run, Sections 1311 through 1314 of the
Code may be applied advantageously by Company or Xxxxxxx, Xxxxxxx shall be
entitled to damages for such breach only to the extent of the net amount of such
claims after giving effect to the Adjustments and any penalty or interest
payments associated therewith.
(e) Company has never filed a consolidated, combined or
unitary tax return with any other person or entity. There is no unpaid tax,
interest, penalty, or addition to tax due or claimed to be due from, or any
unpaid tax deficiency, determination or assessment outstanding against, Company,
or any basis therefor known to Company. There are no tax liens on, pending
against or threatened against Company or its assets, other than liens for
property taxes not yet due. Company has not filed and will not file, at any time
before the Effective Time, a consent under ss.341(f)(1) of the Code.
(f) The Company has delivered to Xxxxxxx its federal, state
and local income tax returns for periods ending December 31, 1996, and December
31, 1997, all of which have been filed and which fairly present the income tax
condition and results of operation of Company as of such date. The Company is
taxed as a 'C' Corporation.
Page 28--ACQUISITION AND MERGER AGREEMENT
5.20 BANKS; POWERS OF ATTORNEY. The Company Disclosure Schedule
contains a correct and complete list showing:
(a) The name of each bank at which Company has an account, a
line of credit, or a safe deposit box; the numbers of all bank accounts and safe
deposit boxes; and the name of each person authorized to draw thereon or have
access thereto; and
(b) The name of each person holding a power of attorney from
Company and a summary of the terms thereof.
5.21 ADVERSE CONDITIONS. There are no conditions with respect to the
markets, services, facilities, or personnel of Company which might have a
material adverse effect on the business, financial condition or results of
operation of Company other than such conditions as may affect the staffing
industry as a whole.
5.22 INVESTMENT REPRESENTATIONS.
(a) For a reasonable time before the execution of this
Agreement, each Shareholder and Dissenter have been given the opportunity to ask
questions and receive answers concerning Xxxxxxx and Xxxxxxx Common Stock, and
to obtain any additional information that Xxxxxxx possesses or can acquire
without unreasonable effort or expense that is necessary to verify the accuracy
of information furnished to such Shareholder and Dissenter. Each Shareholder and
Dissenter have received any such additional information that such Shareholder
has requested.
(b) Each Shareholder and Dissenter have sufficient knowledge
and experience in financial and business matters to be capable of evaluating the
merits and risks of an investment in the Xxxxxxx Common Stock and has the
ability to bear the economic risk of that investment.
(c) None of the Shareholders or Dissenter have relied on any
representation of Xxxxxxx regarding the value of Xxxxxxx Common Stock or Company
Common Stock. Each Shareholder and Dissenter have made his or her own
independent analysis of the value of Xxxxxxx Common Stock, Company Common Stock,
and the consideration he or she is receiving in connection with the Merger.
(d) Each Shareholder is acquiring the Xxxxxxx Common Stock for
such Shareholder's own account and not on behalf of any other person. Each
Shareholder is acquiring the Shares without a view to any distribution thereof
in a transaction that would violate the federal securities laws or the
securities laws of any other applicable jurisdiction.
Page 29--ACQUISITION AND MERGER AGREEMENT
(e) Each Shareholder makes the warranties in this Section 5.22
only as to himself or herself, and not with respect to any other Shareholder.
5.23 NATURE OF SHARES. Each Shareholder is aware that:
(a) At the Effective Time, the shares of Xxxxxxx Common Stock
to be issued in connection with the Merger will not be registered under federal
securities laws. Therefore, until the registration described in paragraph (b)
below becomes effective, such shares must be held and may not be transferred,
unless an exemption from such registration with respect to such transfer is
available. The shares will bear substantially the following legend until such
time as Xxxxxxx'x counsel advises that such legend is no longer required:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE FEDERAL SECURITIES ACT OF 1933 (THE "1933
ACT"). THEY MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE 1933 ACT OR
UNLESS THE ISSUER IS FURNISHED A SATISFACTORY OPINION OF
COUNSEL THAT REGISTRATION IS NOT REQUIRED AS TO SUCH TRANSFER.
(b) Xxxxxxx will use its reasonable best efforts, at Xxxxxxx'x
expense (other than underwriting discounts and commissions and fees of
Shareholders' counsel, if any), to (i) file a registration statement on Form S-3
covering all of the shares of Xxxxxxx Common Stock received in the Merger and as
specified in Sections 2.2 and 2.6 hereof with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933 within 15 days following
the Effective Time and (ii) cause such registration statement to be declared
effective by the SEC as soon as practicable following such filing and to remain
in effect until the earlier of (x) the sale of all the shares of Xxxxxxx Common
Stock so registered (other than any shares transferred to Xxxxxxx pursuant to
Section 7.4 hereof) and (y) the expiration of three (3) years following the
effective date of the Form S-3 filing.
5.24 BROKER'S FEES. The Shareholders and Dissenter have employed Oxford
Mergers & Acquisitions, Inc., as their agent and broker in connection with the
Merger. The amount due and owing to Oxford Mergers & Acquisitions, Inc., upon
consummation of the Merger shall not exceed $310,000 for any and all claims,
costs, fees, commissions, or charges by said agent and broker for a brokerage
commission, finder's fee or other like payment. Xxxxxxx has agreed to pay Oxford
Mergers & Acquisitions, Inc., an amount not to exceed $310,000 on behalf of the
Shareholders and Dissenter upon consummation of the Merger. The Shareholders and
Dissenter hereby agree to indemnify and defend Xxxxxxx against
Page 30--ACQUISITION AND MERGER AGREEMENT
any such claims, costs, fees, or charges made by Oxford Mergers & Acquisitions,
Inc., in excess of $310,000.
5.25 ATTORNEYS'S FEES. The Shareholders and Dissenter have employed
Xxxxxxxx & Xxxxxx, LLP, as their attorneys in connection with the Merger. The
amount due and owing to Xxxxxxxx & Xxxxxx, LLP, upon consummation of the Merger
shall not exceed $113,750 for any and all claims, costs, fees, or charges by
said attorneys for attorneys fees' or other like payment. Xxxxxxx has agreed to
pay Xxxxxxxx & Xxxxxx, LLP, an amount not to exceed $113,750 on behalf of the
Shareholders and Dissenter upon consummation of the Merger. The Shareholders and
Dissenter hereby agree to indemnify and defend Xxxxxxx against any such claims,
costs, fees, or charges made by Xxxxxxxx & Xxxxxx, LLP, in excess of $113,750.
5.26 DISCLOSURE. No representation or warranty by the Company,
Dissenter or the Shareholders in this Agreement, nor any statement, certificate,
schedule, or exhibit hereto furnished or to be furnished by or on behalf of the
Dissenter, Shareholders or Company pursuant to this Agreement, nor any document
or certificate delivered to Xxxxxxx pursuant to this Agreement or in connection
with transactions contemplated hereby, contains any untrue statement of material
fact or omits or shall omit a material fact necessary to make the statements
contained therein not misleading in light of the circumstances in which they are
made.
5.27 KNOWLEDGE. Each Shareholder and Dissenter have been involved in
various aspects of the operation and management of WIMI since the purchase by
FHN Investments, Inc., of all of the issued and outstanding stock of WIMI on or
about October 12, 1993. The Catch Shareholder has been involved in various
aspects of the operation and management of Catch since its formation. The use of
the terms "to the best of Dissenter's and Shareholders' knowledge" or "to the
Dissenter's and Shareholders' knowledge" (and variants thereof) in this
Agreement shall be deemed to include knowledge that Dissenter and each
Shareholder, as an active participant in the day-to-day operations of the
Company, would be expected to have by reason of continued involvement with the
Company with the assurance that such knowledge is based on a diligent inquiry
and the good faith conscientious exercise of such person's responsibility.
The Xxxxxxxxxx Trust has been involved in the various aspects of the
ownership, use and operation of the Property. The use of the terms "to the best
of the Xxxxxxxxxx Trust's knowledge" or "to the Xxxxxxxxxx Trust's knowledge"
(and variants thereof) in this Agreement shall be deemed to include knowledge
that the Xxxxxxxxxx Trust, as an active owner of the Property, would be expected
to have by reason of continued involvement with the Property with the assurance
that such knowledge is based on a diligent inquiry and the good faith
conscientious exercise of
Page 31--ACQUISITION AND MERGER AGREEMENT
such person's responsibility.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
XXXXXXX
Except as set forth in the reports and other documents of Xxxxxxx on
file with the SEC under the Securities Exchange Act of 1934, which contains
information that is not materially inconsistent with the following, Xxxxxxx
hereby represents and warrants to Company, Dissenter and each Shareholder as
follows:
6.1 CORPORATE ORGANIZATION. Xxxxxxx is a corporation duly organized and
validly existing under the laws of the state of Maryland. Xxxxxxx has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on it.
6.2 CAPITALIZATION. The authorized capital stock of Xxxxxxx consists of
20.5 million shares of Xxxxxxx Common Stock and 500,000 shares of preferred
stock, $.01 par value. At the close of business on April 30, 1998, 6,780,813
shares of Xxxxxxx Common Stock and no shares of preferred stock were
outstanding. Rights to acquire Xxxxxxx Common Stock are also outstanding under
various employee benefit plans and agreements, and other warrants to acquire
Xxxxxxx Common Stock.
6.3 VALIDITY OF SHARES. When issued in accordance with this Agreement,
the Xxxxxxx Common Stock to be issued to the Shareholders in connection with the
Merger shall be validly issued, fully paid and nonassessable.
6.4 AUTHORITY; NO VIOLATION.
(a) Xxxxxxx has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of Xxxxxxx. No other corporate proceedings on the part of
Xxxxxxx are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Xxxxxxx and (assuming due authorization, execution and
delivery by Company and the Shareholders) constitutes valid and binding
obligations of Xxxxxxx, enforceable against Xxxxxxx in accordance with its
Page 32--ACQUISITION AND MERGER AGREEMENT
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by
Xxxxxxx nor the consummation by Xxxxxxx of the transactions contemplated hereby,
nor compliance by Xxxxxxx with any of the terms or provisions hereof, will (i)
violate any provision of the Articles of Incorporation or Bylaws of Xxxxxxx or
(ii) assuming that the consents and approvals referred to in Sections 5.4 and
6.5 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree, or injunction applicable to Xxxxxxx
or any of its properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event that, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien, pledge, security interest, charge, or other
encumbrance upon any of the respective properties or assets of Xxxxxxx under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement, or other instrument or
obligation to which Xxxxxxx is a party, or by which it or any of its properties
or assets may be bound or affected.
6.5 CONSENTS AND APPROVALS. Except for (i) the filing of the Articles
of Merger with the Maryland Department and the California Secretary pursuant to
the MGCL and the CGCL, respectively; (ii) the consent of Xxxxx Fargo Bank,
National Association, which consent is required for the transaction contemplated
by this Agreement, under that certain credit accommodation agreement dated May
30, 1997, and which consent has been obtained and available for inspection, and
(iii) such filings and approvals as are required to be made or obtained under
federal or state securities laws in connection with the issuance of the shares
of Xxxxxxx Common Stock pursuant to this Agreement, no consents or approvals of
or filings or registrations with any Governmental Entity or with any third party
are necessary in connection with (A) the execution and delivery by Xxxxxxx of
this Agreement and (B) the consummation by Xxxxxxx of the Merger and the other
transactions contemplated hereby.
6.6 FINANCIAL STATEMENTS. Xxxxxxx has previously delivered to Company
copies of the balance sheets of Xxxxxxx as of December 31, for the years 1997,
1996, and 1995, and the related statements of income, changes in stockholders'
equity and cash flows for the years 1997, 1996, and 1995, in each case
accompanied by the audit report of Price Waterhouse LLP, independent public
accountants, with respect to Xxxxxxx. The financial
Page 33--ACQUISITION AND MERGER AGREEMENT
statements referred to in this Section 6.6 including the related notes (the
"Xxxxxxx Financial Statements") fairly present the results of operations and
changes in stockholders' equity and financial position of Xxxxxxx for the
respective periods or as of the respective dates therein set forth; each of the
Xxxxxxx Financial Statements has been prepared in accordance with GAAP
consistently applied during the periods involved, except in each case as
indicated in such statements or in the notes thereto.
6.7 ABSENCE OF CERTAIN CHANGES. Since December 31, 1997, there has not
been:
(a) any material adverse change in the financial condition,
assets, liabilities, business, prospects, or operations of Xxxxxxx;
(b) any loss, damage or destruction to the assets of Xxxxxxx,
whether covered by insurance or not, which has or will have a material adverse
effect on the financial condition or the business, prospects or results of
operations of Xxxxxxx;
(c) any material increase in the compensation, salaries or
wages payable or to become payable to any employee or agent of Xxxxxxx or
(including, without limitation, any material increase or change pursuant to any
bonus, pension, profit sharing, retirement, or other plan or commitment), or any
bonus or other employee benefit granted, made or accrued;
(d) any labor dispute or disturbance, other than routine
individual grievances which are not material to the business, financial
condition or results of operations of Xxxxxxx;
(e) any commitment or transaction by Xxxxxxx (including,
without limitation, any capital expenditure) other than in the ordinary course
of business consistent with past practice;
(f) any sale, lease or other transfer or disposition of any
properties or assets of Xxxxxxx, except for sales in the ordinary course of
business;
(g) any indebtedness for borrowed money incurred, assumed or
guaranteed by Xxxxxxx other than in the ordinary course of business;
(h) any entering into, amendment or termination by Xxxxxxx of
any contract, or any waiver of material rights thereunder, other than in the
ordinary course of business;
Page 34--ACQUISITION AND MERGER AGREEMENT
(i) any loan or advance or any grant of credit by Xxxxxxx
other than in the ordinary course of business; or
(j) any other event or condition specifically related to
Xxxxxxx not in the ordinary course of business which would have a material
adverse effect on the assets or the business of Xxxxxxx taken as a whole.
6.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
specifically disclosed in the most recent balance sheet included in the Xxxxxxx
Financial Statements, to the best of Xxxxxxx'x knowledge, Xxxxxxx does not have
any liabilities, accrued, contingent, or otherwise, other than commercial
liabilities and obligations incurred since the date of such balance sheet in the
ordinary course of business consistent with past practice, none of which has or
will have a material adverse effect on the business, financial condition or
results of operations of Xxxxxxx taken as a whole.
6.9 NO LITIGATION. There is no action, claim, demand, citation,
summons, subpoena, suit, arbitration proceeding, investigation, or inquiry
pending or threatened against Xxxxxxx, its directors (in such capacity), its
business, or any of its assets which if successfully concluded against it would
have a material adverse effect on the financial condition of its business,
prospects or results or operation.
6.10 COMPLIANCE WITH LAWS.
(a) Except for failures to comply with the Laws, which either
individually or in the aggregate would not have a material adverse effect on the
business, financial condition or results of operations of Xxxxxxx, Xxxxxxx is,
in compliance with all Laws including, without limitation, those applicable to
federal and state securities laws and regulations, discrimination in employment,
occupational safety and health, trade practices, environmental protection,
competition, pricing, employment, retirement, labor relations, and advertising.
Xxxxxxx has not received notice of any violation or alleged violation of any
Laws. All reports, specifically including, but not limited to, all filings with
the SEC and all returns required to be filed by Xxxxxxx with any Governmental
Entity have been filed, and were accurate and complete when filed in all
material respects.
(b) Xxxxxxx has all material Licenses which are required for
the conduct of its business (as presently conducted), and all such Licenses are
in full force and effect. Except for failures to comply with the Licenses which
either individually or in the aggregate would not have a material adverse effect
on the business, financial condition or results of operations of Xxxxxxx,
Xxxxxxx is and has been in compliance in all respects with the Licenses.
Page 35--ACQUISITION AND MERGER AGREEMENT
(c) No material amount of any Hazardous Substance has been
discharged, released, used, or emitted into the air, water, surface water,
ground water, land surface or subsurface strata from or upon any facility of
Xxxxxxx or under the direction or control of any employee or agent of Xxxxxxx,
except in accordance with applicable Environmental Law in all material respects.
(d) Xxxxxxx has not transported (directly or indirectly) any
Hazardous Substances to any location that is listed or proposed for listing
under CERCLA or on any similar state list, or is the subject of federal, state
or local enforcement actions or investigations or remedial actions.
(e) Xxxxxxx offers various qualified employee benefit plans to
its employees, including its worksite employees. These qualified employee
benefit plans include a savings plan [the "401(k) Plan"] under Section 401(k) of
the Code, a cafeteria plan under Code Section 125, a group health plan, a group
life insurance plan, a group disability insurance plan, and an employee
assistance plan. Generally, qualified employee benefit plans are subject to
provisions of both the Code and ERISA. In order to qualify for favorable tax
treatment under the Code, qualified plans must be established and maintained by
an employer for the exclusive benefit of its employees.
A definitive judicial interpretation of "employer" in the
context of a Professional Employer Organization ("PEO") arrangement has not been
established. The tax exempt status of Xxxxxxx'x 401(k) Plan and cafeteria plan
is subject to continuing scrutiny and approval by the Internal Revenue Service
(the "IRS") and depends upon Xxxxxxx'x ability to establish Xxxxxxx'x
employer-employee relationship with PEO employees. The issue of whether
Xxxxxxx'x tax-qualified benefit plans can legitimately include worksite
employees under Xxxxxxx'x coverage has not yet been resolved. If the worksite
employees cannot be covered by the plans, then the exclusive benefit requirement
imposed by the Code would not be met by the plans as currently administered and
the plans could be disqualified.
In the event the tax exempt status of Xxxxxxx'x benefit plans
were to be discontinued and the benefit plans were to be disqualified, such
actions could have a material adverse effect on Xxxxxxx'x business, financial
condition, and results of operations. Xxxxxxx is not presently able to predict
the likelihood of disqualification nor the resulting range of loss, in light of
the lack of public direction from the IRS or Congress.
6.11 TITLE TO AND CONDITION OF PROPERTIES. Except for those exceptions
to title which either individually or in the aggregate would not have a material
adverse effect on the business, financial condition or results of operations of
Xxxxxxx, Xxxxxxx has good and marketable title to all its material assets, free
and
Page 36--ACQUISITION AND MERGER AGREEMENT
clear of all Liens. All tangible assets of Xxxxxxx are located at facilities
owned or leased by Xxxxxxx and all tangible assets located at such facilities
are either owned or leased by Xxxxxxx.
6.12 ADVERSE CONDITIONS. There are no conditions known to Xxxxxxx with
respect to the markets, services, facilities, or personnel of Xxxxxxx which
would materially adversely affect its business or prospects.
6.13 BROKER'S FEES. Neither Xxxxxxx nor any of its officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement.
6.14 DISCLOSURE. No representation or warranty by Xxxxxxx in this
Agreement, nor any statement, certificate, schedule or exhibit hereto furnished
or to be furnished by or on behalf of Xxxxxxx pursuant to this Agreement, nor
any document or certificate delivered to Company or the Shareholders pursuant to
this Agreement or in connection with transactions contemplated hereby, contains
or shall contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not misleading
in light of the circumstances under which they are made.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 ACTIONS IN CONNECTION WITH DISSENTER AND MERGER. Each party shall
use its reasonable best efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
which may be imposed on such party with respect to the Dissenter and, subject to
the condi- tions set forth in this Agreement, to consummate the transactions
contemplated by this Agreement; (b) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
which may be imposed on such party with respect to the Merger and, subject to
the conditions set forth in this Agreement, to consummate the transactions con-
templated by this Agreement, and (c) to obtain (and to cooperate with the other
parties to obtain) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by any party in connection with the Merger and the other
trans- actions contemplated by this Agreement.
7.2 TRANSITION. Prior to the Effective Time, Xxxxxxx and Company shall
consult with one another and cooperate as reasonably requested by Xxxxxxx to
facilitate the integration of their respective operations as promptly as
practicable after the Effective Time. Such cooperation shall include (without
limita-
Page 37--ACQUISITION AND MERGER AGREEMENT
tion), if requested, communicating with employees, consulting regarding material
contracts, renewals, and capital commitments to be entered into by Company or
the Shareholders, making arrangements for employee training, and taking action
to facilitate an orderly conversion of accounting and data processing operations
to occur promptly following the Effective Time.
7.3 FURTHER ASSURANCES. From time to time after the Effective Time, as
and when requested by Xxxxxxx, Xxxxxxxxxx Trust, Dissenter, Shareholders and the
officers and directors of Company last in office prior to the Effective Time
shall execute and deliver such deeds and other instruments of transfer and shall
take or cause to be taken such further actions as shall be reasonably necessary
in order to vest or perfect in Xxxxxxx or to confirm of record or otherwise to
Xxxxxxx, to the extent such officers and directors have the power to do so,
title to and possession of the Property, all the properties, interests, assets,
rights, privileges, immunities, powers, franchises, and authorities of Company.
7.4 CASH AND SHARES SUBJECT TO HOLDBACK.
(a) When paid or issued at or after the Effective Time, ten
percent (10%) of the cash ("Holdback Cash") to be received by the Dissenter or
ten percent (10%) of the shares of Xxxxxxx Common Stock ("Holdback Shares") to
be received by the Shareholders, as to the Company, and the Xxxxxxxxxx Trust, as
to the Property, will be retained by Xxxxxxx. The purpose of the retention of
the Holdback Cash and the Holdback Shares is to ease the burden of settlement of
the contingencies if a problem arises; provided, however, any settlement shall
not be limited, in amount, by the Holdback Cash or by the value of the Holdback
Shares and shall be limited, in amount, only as set forth in Section 10.4(b).
(b) When issued at or after the Effective Time, the
Shareholders and the Xxxxxxxxxx Trust shall deliver to Xxxxxxx stock powers
endorsed in blank relating to the Holdback Shares. The Holdback Cash, the
Holdback Shares and the stock powers shall be held by Xxxxxxx subject to the
terms and conditions of this Section 7.4.
(c) The total aggregate amount of the Holdback Cash and the
Holdback Shares held pursuant to paragraphs (d) and (e) below is ten percent
(10%) of the cash and shares received by the Dissenter, the Shareholders and the
Xxxxxxxxxx Trust at the Effective Time.
(d) In the event of a breach by Company, the Dissenter or any
of the Shareholders, with respect to the Company, or the Xxxxxxxxxx Trust, with
respect to the Property, of one or more of the representations, warranties or
covenants contained herein,
Page 38--ACQUISITION AND MERGER AGREEMENT
Xxxxxxx shall have the authority to transfer to itself all or a portion of the
Holdback Cash and the number of shares of Xxxxxxx Common Stock, valued at
$11.375 per share, equal to the amount of damages suffered by Xxxxxxx as a
result of the breach, up to a maximum of $669,566 or 62.6 percent of the cash
and shares of Xxxxxxx Common Stock subject to holdback (total consideration
$10,695,656 x 10% = $1,069,566 - $400,000 = $669,566).
Any transfer to Xxxxxxx of the Holdback Cash or the Holdback
Shares due to a breach, shall be apportioned in accordance with the provisions
of Section 10.4(f), except that the obligations and liabilities established in
this Section 7.4 shall be substituted for the indemnity obligations established
in Article X.
Prior to the transfer of the Holdback Cash and the Holdback
Shares to itself, as allowed in this paragraph (d), Xxxxxxx shall give written
notice to the Shareholders, the Dissenter, the Xxxxxxxxxx Trust, or all of them,
as the party or parties impacted by the transfer of the Holdback Cash and the
Holdback Shares ("Noticed Party"), which notice shall set forth the specific
breach of a representation, warranty or covenant, the amount of damages giving
rise to the adjustment and the date which the transfer of the Holdback Cash and
the Holdback Shares will occur should the Noticed Party have no objection
thereto.
If the Noticed Party should object to the basis of the
adjustment or the amount of the damages, the Noticed Party shall make such
objection, in writing, within seven (7) days of receipt of Xxxxxxx'x notice
("Disputed Claim").
For a period of 30 days after delivery of the Disputed Claim,
the independent accountants of Xxxxxxx and the Noticed Party shall attempt to
resolve, in writing, all of the differences with respect to each matter
specified in the Disputed Claim, in which case any such resolution of the
Disputed Claim shall be final and binding on the parties.
If, at the end of such 30-day period, the accountants of
Xxxxxxx and the Noticed Party have not resolved, in writing, all of the
differences with respect to any such matter, then each unresolved matter
("Remaining Disputed Claims") shall be submitted to and reviewed by a neutral
"big six" accounting firm mutually agreeable to the parties (the "Neutral
Accountant"). The parties shall establish a schedule and time line which
requires resolution of the Disputed Claim that arises out of a matter described
in this paragraph (d) within a reasonable time after appointment of the Neutral
Accountant. The Neutral Accountant shall consider only the Remaining Disputed
Claims and shall act promptly to resolve in writing all Remaining Disputed
Claims and its decisions with respect to the Remaining Disputed Claims shall be
final and binding on the Noticed Party and
Page 39--ACQUISITION AND MERGER AGREEMENT
Xxxxxxx; provided that no such resolution of the Remaining Disputed Claims shall
require payment of an amount greater than the highest amount or less than the
lowest amount suggested for such resolution by either the Noticed Party or
Xxxxxxx. The Neutral Accountant shall notify the Noticed Party and Xxxxxxx of
its resolution of the Remaining Disputed Claims and shall prepare a written
explanation reflecting the resolution of the Remaining Disputed Claims promptly
after such resolution and shall deliver it to the Noticed Party and Xxxxxxx.
The Noticed Party and Xxxxxxx shall each be responsible for
and shall each pay one-half (1/2) of the fees and expenses incurred in
connection with the Neutral Accountant.
In lieu of the transfer of the Holdback Shares as permitted by
this paragraph (d), the Shareholders or the Xxxxxxxxxx Trust may pay cash to
Xxxxxxx equal to the amount of damages provided such payment is made on or
before the date of the proposed transfer of the Holdback Shares allowed by this
paragraph (d).
(e) In the event that Company's dispute regarding state
unemployment tax rate for calendar years 1996 and 1997 ("Pending Tax Claim")
with the Employment Development Department of the state of California ("EDD")
should be resolved in a manner that requires Xxxxxxx to make any payments for
any taxes, penalties, interest, costs, or fees to EDD or others, including costs
and attorneys fees (including those attorneys fees incurred by Xxxxxxx in the
defense of the Pending Tax Claim after the Effective Time) (the "Damages"),
Xxxxxxx shall have the authority to transfer to itself, all or a portion of the
Holdback Cash and the number of shares of Xxxxxxx Common Stock, valued at
$11.375 per share, equal to the amount of Damages suffered by Xxxxxxx as a
result of the payment of the Pending Tax Claim up to a maximum of $400,000 of
Damages. The estimated loss contingency relating to the Damages is $400,000,
including legal fees that may be incurred after the Effective Time.
Any transfer to Xxxxxxx of the Holdback Cash or the Holdback
Shares due to a breach, shall be apportioned in accordance with the provisions
of Section 10.4(f), except that the obligations and liabilities established in
this Section 7.4 shall be substituted for the indemnity obligations established
in Article X.
Upon resolution of the Pending Tax Claim and prior to
Xxxxxxx'x payment of Damages, Xxxxxxx shall provide the Dissenter and the
Shareholders with written notice of the resolution and the amount of the
Damages. Other than the Dissenter's and the Shareholders' assertion of lack of
good faith by Xxxxxxx in the resolution of the Pending Tax Claim, Xxxxxxx shall
have authority to finalize the Pending Tax Claim and pay the Damages.
Page 40--ACQUISITION AND MERGER AGREEMENT
If Shareholders or Dissenter should assert a lack of good
faith by Xxxxxxx in the resolution of the Pending Tax Claim, the Shareholders or
Dissenter shall make such objection, in writing, within seven (7) days of
receipt of Xxxxxxx'x notice ("Good Faith Claim").
For a period of 30 days after delivery of the Good Faith
Claim, the independent accountants of Xxxxxxx and the Shareholders or Dissenter
shall attempt to resolve, in writing, the differences with respect to the single
issue of Xxxxxxx'x good faith settlement of the Pending Tax Claim, in which case
any such resolution of the Good Faith Claim shall be final and binding on the
parties.
If, at the end of such 30-day period, the accountants of
Xxxxxxx, the Shareholders and the Dissenter have not resolved, in writing, the
issue of good faith, the matter shall be submitted to and reviewed by the
Neutral Accountant [as defined at 7.4(d) above]. The parties shall establish a
schedule and time line which requires resolution of the Good Faith Claim within
a reasonable time after appointment of the Neutral Accountant. The Neutral
Accountant shall consider only whether Xxxxxxx acted in good faith in resolving
the Pending Tax Claim and shall act promptly to resolve, in writing, the good
faith issue and its decisions with respect to the Good Faith Claim shall be
final and binding on the Shareholders or the Dissenter and Xxxxxxx. The Neutral
Accountant shall notify the Shareholders or the Dissenter and Xxxxxxx of its
resolution of the Good Faith Claim and shall prepare a written explanation
reflecting the resolution of the Good Faith Claim promptly after such resolution
and shall deliver it to the Shareholders or the Dissenter and Xxxxxxx.
The Shareholders or Dissenter and Xxxxxxx shall each be
responsible for and shall each pay one-half (1/2) of the fees and expenses
incurred in connection with the Neutral Accountant.
In lieu of the transfer of the Holdback Shares as permitted by
this paragraph (e), the Shareholders or the Xxxxxxxxxx Trust may pay cash to
Xxxxxxx equal to the amount of Damages provided such payment is made on or
before the date of the proposed transfer of the Holdback Shares.
(f) The time period for providing a notice for a claim
relating to a breach of the general management representations, warranties and
covenants described in paragraph (d) above is: (i) the date of the audit opinion
of Xxxxxxx'x December 31, 1998, financial statements containing combined
operations for those items expected to be encountered in the audit process, and
(ii) one (1) year from the Effective Time for other items not encountered in the
audit process. As each of the two (2) time periods specified passes, Xxxxxxx'x
authority to make transfers to itself pursuant to paragraph (d) above shall then
terminate.
Page 41--ACQUISITION AND MERGER AGREEMENT
(g) There is no time period for settling the Pending Tax
Claim.
(h) With respect to the Holdback Cash and the Holdback Shares
described in paragraph (d), upon expiration of the relevant time period
described in paragraph (f), and transfer to itself of any of such Holdback Cash
and such Holdback Shares pursuant to paragraph (d), Xxxxxxx shall release the
balance of such Holdback Cash to the Dissenter and the balance of such Holdback
Shares, if any, to the Shareholders and the Xxxxxxxxxx Trust, together with the
related stock powers endorsed by the Shareholders in blank. Upon such release,
said shares shall cease to be Holdback Shares for purposes of this Agreement and
shall be free of all restrictions and limitations other than those imposed by
federal or state securities laws or by agreements other than this Agreement.
(i) With respect to the Holdback Cash and the Holdback Shares
described in paragraph (e), upon final resolution of the Pending Tax Claim and
transfer to itself of any of such Holdback Cash and such Holdback Shares
pursuant to paragraph (e), Xxxxxxx shall release the balance of such Holdback
Cash to the Dissenter and such Holdback Shares, if any, to the Shareholders,
together with the related stock powers endorsed by the Shareholders in blank.
Upon such release, said shares shall cease to be Holdback Shares for purposes of
this Agreement and shall be free of all restrictions and limitations other than
those imposed by federal or state securities laws or by agreements other than
this Agreement.
(j) As long as the Holdback Shares shall stand in the name of
the Shareholders and the Xxxxxxxxxx Trust, such Shareholders and Xxxxxxxxxx
Trust shall be entitled to vote the Holdback Shares.
(k) If, at any time or from time to time, with respect to the
Holdback Shares, the Shareholders and the Xxxxxxxxxx Trust shall receive or
become entitled to receive any dividend or other distribution (other than a cash
or stock dividend which may be retained by the Shareholders and the Xxxxxxxxxx
Trust as long as the Holdback Shares remain in the name of the Shareholders and
the Xxxxxxxxxx Trust), whether in securities or other property, by way of
liquidation, stock split, spin-off, split-up, or reclassification, combination
of shares or the like, or in case of a reorganization, consolidation or merger,
the Shareholders and the Xxxxxxxxxx Trust shall immediately deliver all such
securities or property to Xxxxxxx subject to the provisions of this Section 7.4.
Xxxxxxx may endorse, in Xxxxxxx'x name or in the name of the Shareholders and
the Xxxxxxxxxx Trust, any and all instruments by which any payment on the
Holdback Shares may be made and may take such action as Xxxxxxx may xxxx
appropriate from time to time, in Xxxxxxx'x name or in the name of the
Page 42--ACQUISITION AND MERGER AGREEMENT
Shareholders and the Xxxxxxxxxx Trust, to enforce collection of the Holdback
Shares. For such purpose, the Shareholders and the Xxxxxxxxxx Trust appoint
Xxxxxxx the attorney-in-fact of the Shareholders and the Xxxxxxxxxx Trust, under
a power coupled with an interest, with full power of substitution.
(l) As long as the obligations of Section 7.4 of this
Agreement remain in effect with respect to the Holdback Cash and the Holdback
Shares, the Dissenter, the Shareholders and the Xxxxxxxxxx Trust will not
transfer, whether by sale, gift or otherwise, any ownership interest in the
Holdback Cash and the Holdback Shares without Xxxxxxx'x prior written approval.
7.5 LIMITATION OF ADJUSTMENTS.
(a) If an event or adjustment should occur that results in the
transfer of Holdback Cash or Holdback Shares (or the payment in cash in lieu of
the transfer of Holdback Shares) to Xxxxxxx pursuant to Section 7.4 or an
indemnity payment to Xxxxxxx pursuant to Article X, and such event or adjustment
should also result in a charge to the income statement of the Company and
therefore, a reduction of book value of the Company as of the Effective Time,
then such charge caused by such event or adjustment shall not also be considered
as grounds for a breach of Section 5.5, as it relates to minimum book value.
If such event or adjustment does not result in the transfer of
Holdback Cash, Holdback Shares or an indemnity payment, then such event or
adjustment may be considered as grounds for a breach of Section 5.5. If the book
value of the Company as of the Effective Time results in a Deficit due to an
event or adjustment, the Deficit shall be determined and paid in accordance with
Section 5.5.
(b) If an event or adjustment should occur that results in the
transfer of Holdback Cash or Holdback Shares (or the payment in cash in lieu of
the transfer of Holdback Shares) to Xxxxxxx pursuant to Section 7.4, an
indemnity payment to Xxxxxxx pursuant to Article X (the "Claim") and Xxxxxxx'x
payment of the underlying obligation, then the amount of the Claim will be
reduced to the after-tax amount after taking into consideration the applicable
combined federal and California state income tax effect, if any, caused by
Xxxxxxx'x payment, if made, of the Claim. If Xxxxxxx'x payment of the Claim is
not deductible for federal and California state income tax purposes, then the
amount of the Claim shall be determined on a pre-tax basis. [For example: if a
Claim of $300,000 is paid by Xxxxxxx and Xxxxxxx'x applicable combined federal
and California state income tax rate ("Rate") is 40 percent, the required
transfer of Holdback Cash, Holdback Shares or cash shall be equal to $180,000
($300,000 x 40% = $120,000 tax benefit to Xxxxxxx). If the facts are the same,
except that Xxxxxxx'x Rate is 20 percent, the required
Page 43--ACQUISITION AND MERGER AGREEMENT
transfer would be $240,000 ($300,000 x 20% = $60,000 tax benefit to Xxxxxxx). If
the facts are the same, except that Xxxxxxx'x Rate is zero percent (0%), the
required transfer would be $300,000 ($300,000 x 0% = $0 tax benefit to Xxxxxxx.]
7.6 CORPORATE RECORDS, CONTRACTS, ETC. Company, the Shareholders and
the Dissenter covenant that from the date hereof through the Effective Time:
(a) Company will promptly furnish Xxxxxxx complete and
accurate copies of minutes of any meetings of the directors or shareholders of
Company held after the date of this Agreement, and of any resolutions adopted by
such directors or shareholders pursuant to written consents after such date.
(b) Company will promptly make available to Xxxxxxx complete
and accurate copies of all contracts and agreements involving an amount in
excess of $5,000 entered into by Company or after the date hereof.
(c) Company and the Xxxxxxxxxx Trust will identify to Xxxxxxx
on a weekly basis, and otherwise from time to time as Xxxxxxx may reasonably
request, any actual or potential adverse developments concerning the business of
Company and the Property and will provide Xxxxxxx with such information
regarding such matters as Xxxxxxx may reasonably request.
7.7 CURRENT FINANCIAL INFORMATION.
(a) Company, the Shareholders and the Dissenter covenant that
pending the Effective Time, Company shall promptly provide Xxxxxxx copies of all
regularly prepared monthly financial statements or reports of Company for the
months ending between December 31, 1997, and the Effective Time. Such financial
statements or reports shall be verified by the Chief Financial Officer of
Company and will be prepared in accordance with GAAP consistently applied,
except for normal recurring year-end adjustments, which will not be material and
that statements of cash flows, statements of changes in shareholders' equity and
footnotes may be omitted.
(b) Xxxxxxx, at Xxxxxxx'x sole cost and expense, shall engage
Price Waterhouse LLP, to prepare and deliver to Xxxxxxx audited financial
statements for Company as of the day before the Effective Time.
7.8 CERTAIN FORBEARANCES BY COMPANY. Company the Dissenter and each
Shareholder covenant that without the prior written consent of Xxxxxxx, Company
has not and shall not, on or after December 31, 1997:
Page 44--ACQUISITION AND MERGER AGREEMENT
(a) other than borrowings under its usual credit line in the
ordinary course of business consistent with past practice, incur any
indebtedness for borrowed money, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other individual,
corporation or other entity, or make any loan or advance;
(b) adjust, split, combine, or reclassify any capital stock;
make, declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations, convertible into or exchangeable for any
shares of its capital stock, or grant or issue any stock appreciation rights or
grant or issue to any individual, corporation or other entity any right to
acquire any shares of its capital stock; or issue any additional shares of
capital stock or securities or obligations convertible into or exchangeable for
shares of its capital stock;
(c) sell, transfer, mortgage, encumber, or otherwise dispose
of any of its properties or assets to any individual, corporation or other
entity, or cancel, release or assign any indebtedness to any such person or any
claims held by any such person;
(d) make any material investment either by purchase of stock
or securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity;
(e) enter into any contract or agreement that involves an
amount in excess of $5,000 or that will have a term in excess of 180 days or
terminate or materially modify any contract or agreement that involves an amount
in excess of $5,000 or that has a remaining term in excess of 180 days, or
commit to any capital expenditure, or make any capital expenditure not committed
to prior to December 31, 1997, in excess of $5,000;
(f) increase in any manner the compensation or fringe benefits
of any of its employees other than regularly scheduled increases for
nonmanagerial employees in the ordinary course of business consistent with past
practice or pay any pension or retirement allowance not required by any existing
plan or agreement to any such employees or become a party to, amend or commit
itself to any pension, retirement, profit-sharing or welfare benefit plan or
agreement or employment agreement with or for the benefit of any employee, other
than amendments required to comply with applicable legal requirements, or
accelerate the vesting of any stock options or other stock-based compensation;
(g) solicit, encourage or authorize any individual,
corporation or other entity to solicit from any third party any
Page 45--ACQUISITION AND MERGER AGREEMENT
inquiries or proposals relating to the disposition of the Company's business or
assets, or the acquisition of its voting securities, or the merger of it with
any corporation or other entity other than as provided by this Agreement (and
Company, the Dissenter, and each Shareholder shall promptly notify Xxxxxxx of
all of the relevant details relating to all inquiries and proposals which any of
them may receive relating to any of such matters) or participate in any
negotiations concerning or otherwise facilitate any such transaction;
(h) settle any claim, action or proceeding involving material
money damages, except in the ordinary course of business consistent with past
practice;
(i) take any action that would prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section 368 of the
Code;
(j) amend the Company's Certificate of Incorporation or
Bylaws;
(k) take any action that is intended or may reasonably be
expected to result in any of their representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set forth
in Article VIII not being satisfied or in a violation of any provision of this
Agreement, except, in every case, as may be required by applicable law;
(l) take any action that would adversely affect or delay its
ability to obtain any necessary approvals of any Governmental Entity or other
governmental authority required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement; or
(m) agree to, or make any commitment to, take any of the
actions prohibited by this Section 7.8.
7.9 CERTAIN FORBEARANCES BY XXXXXXX.
During the period from the date of this Agreement to the Effective
Time, except as expressly contemplated or permitted by this Agreement, Xxxxxxx
shall not, without the prior written consent of Company:
(a) take any action that would prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section 368 of the
Code;
Page 46--ACQUISITION AND MERGER AGREEMENT
(b) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions of the Merger set forth
in Article VIII not being satisfied or in a violation of any provision of this
Agreement, except, in every case, as may be required by applicable law;
(c) take any action that would adversely affect or delay its
ability to obtain any necessary approvals of any Governmental Entity or other
governmental authority required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement; or
(d) agree to, or make any commitment to, take any of the
actions prohibited by this Section 7.9.
7.10 PRESERVATION OF BUSINESS AND THE PROPERTY. Company, Shareholders,
Dissenter, and the Xxxxxxxxxx Trust covenant that pending the Effective Time,
Company, each Shareholder, Dissenter, and the Xxxxxxxxxx Trust:
(a) will carry on Company's business and manage the Property,
the Company's assets and properties diligently and substantially in the same
manner heretofore;
(b) will continue to adhere to its existing policies and
practices concerning the conduct of its business;
(c) will use its best efforts to preserve its business
organization intact, to keep available its present employees, and to preserve
its present relationships with providers, customers and others having business
dealings with it; and
(d) will use its best efforts not to do or fail to do anything
that will cause breach of or a default in any contract, agreement, commitment,
or obligation to which it is a party or by which it may be bound.
7.11 TITLE REPORT. Within five (5) days after the date of this
Agreement, the Xxxxxxxxxx Trust shall order a title insurance commitment from
the Closing Agent for an Extended ALTA form of owner's policy of title insurance
(the "Title Report"). The Title Report shall be accompanied by legible copies of
all special exceptions listed therein. Xxxxxxx shall have until ten (10) days
after its receipt of such Title Report and copies in which to notify the
Xxxxxxxxxx Trust in writing of Xxxxxxx'x disapproval of any exceptions shown in
the Title Report. Any special assessments shown on the Title Report which are
objected to by Xxxxxxx shall be included in Xxxxxxx'x notice. The Xxxxxxxxxx
Trust shall have until five (5) days prior to the
Page 47--ACQUISITION AND MERGER AGREEMENT
Effective Time to cause such exception to be removed of record and from the
Title Report.
7.12 ENVIRONMENTAL ASSESSMENT. Prior to the Effective Time, Xxxxxxx may
obtain, at its option and expense, an environmental assessment of the Company's
operating and leased properties, including the Land and Improvements, the
results of which shall be made available to the Company, Shareholders, the
Dissenter, and the Xxxxxxxxxx Trust. If the environmental assessment indicates
that environmental remediation may reasonably be required or that liability for
environmental remediation may reasonably be incurred, then Xxxxxxx may request
the Shareholders, the Dissenter or the Xxxxxxxxxx Trust to pay for such
remediation or liability and to deposit in an escrow account before the
Effective Time funds sufficient to cover the estimated costs of such remediation
or liability. The Shareholders, the Dissenter or the Xxxxxxxxxx Trust shall pay,
after the completion of the remediation or final determination of liability, any
excess of the actual cost over the funds so deposited. If the Shareholders, the
Dissenter or Xxxxxxxxxx Trust decline to be responsible for such remediation or
liability, then either the Shareholders, the Dissenter, Xxxxxxxxxx Trust or
Xxxxxxx may terminate this Agreement and if the Agreement is not so terminated,
then the provisions of this Section 7.12 are deemed waived by the parties with
respect to a Pre-effective Time assessment.
7.13 SCHEDULED COMPANY DEBT AND FEES. Schedule "7.13," attached hereto
contains a list of all Company indebtedness and fees that are outstanding as of
the Effective Time (the "Scheduled Company Debt"). Substantially simultaneously
with the Effective Time, Xxxxxxx shall pay, or shall authorize Xxxxx X.
Xxxxxxxx, acting in a capacity as an escrow holder with respect to certain funds
in his possession, to deliver Xxxxxxx'x cashier's checks payable to the
following parties in the amounts set forth opposite their names:
Payee Amount
----- ------
Xxxxxxx X. Xxxxxxxxxx (Dissenter) $467,185
Oxford Mergers & Acquisitions, Inc. $310,000
Xxxxxxxx & Xxxxxx, LLP $113,750
Xxxxxxx will pay the remaining items of Scheduled Company Debt in accordance
with their respective terms.
7.14 KNOWLEDGE OF XXXXXXX. The liability of the Company, the Xxxxxxxxxx
Trust, the Dissenter, and Shareholders for any breach of the representations,
warranties or covenants contained herein shall not be affected or limited by any
knowledge or
Page 48--ACQUISITION AND MERGER AGREEMENT
imputed knowledge that Xxxxxxx has as of the date hereof or the Effective Time,
except for actual knowledge by Xxxxxxx of the information, which actual
knowledge must be established by clear and convincing proof and except for
knowledge of the information expressly set forth on the Company Disclosure
Schedule or in this Agreement.
7.15 MATERIALITY. The terms "material" and "material adverse effect" as
used in this Agreement shall mean any single condition or effect with a
financial impact exceeding $10,000 or which when aggregated with other
conditions or effects has a financial impact exceeding $25,000 in the aggregate.
7.16 RIGHTS OF ACCESS. Company, the Shareholders, the Dissenter, and
the Xxxxxxxxxx Trust covenant that until the Effective Time, Company will give
Xxxxxxx and its representatives, including its counsel and certified public
accountants, full access during normal business hours to the Property, all
properties, documents, contracts, books, and records of Company, including any
information with respect to its business affairs and properties as Xxxxxxx from
time to time may reasonably request.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) All regulatory approvals required to consummate the
transactions contemplated hereby ("Requisite Regulatory Approvals") shall have
been obtained without the imposition of any conditions that are in Xxxxxxx'x
reasonable judgment unduly burdensome and shall remain in full force and effect,
and all other material consents or approvals of any third party required in
connection with the consummation of the Merger as set forth in the Company
Disclosure Schedule shall have been obtained.
(b) No order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall be in effect. No statute,
rule, regulation, order, injunction, or decree shall have been enacted, entered,
promulgated, or enforced by any Governmental Entity which prohibits, restricts
or makes illegal consummation of the Merger.
(c) Xxxxxxx shall have received an opinion of Price Waterhouse
LLP, and Company shall have received an opinion of Soreno McAdamo Bartells
Certified Public Accountants, Inc., in form
Page 49--ACQUISITION AND MERGER AGREEMENT
and substance reasonably satisfactory to Xxxxxxx and Company, respectively,
dated as of the Effective Time, substantially to the effect that, on the basis
of facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will be treated for federal income tax purposes as part of a reorganization
within the meaning of Section 368 of the Code and that accordingly:
(i) no gain or loss will be recognized by Xxxxxxx or
Company as a result of the Merger;
(ii) no gain or loss will be recognized by the
Shareholders with respect to the receipt of Xxxxxxx Common Stock pursuant to the
Merger; provided, however, no opinion shall be required regarding the
recognition of gain or loss by the (x) Xxxxxxxxxx Trust with respect to the
receipt of Xxxxxxx Common Stock in exchange for the Property and (y) Dissenter
with respect to the receipt of cash in connection with Dissenter's disposition
of his WIMI Common Stock; and
(iii) the tax basis of the Xxxxxxx Common Stock
received by the Shareholders in the Merger will be the same as the tax basis of
the Company Common Stock surrendered in exchange therefor.
In rendering such opinions, the accountants may require and
rely upon representations contained in certificates of officers of Xxxxxxx,
Company and others. The opinion of Price Waterhouse LLP, will not be provided
to, or be relied upon by, parties other than Xxxxxxx. The opinion of Soreno
McAdamo Bartells Certified Public Accountants, Inc., will not be provided to, or
be relied upon by, parties other than Company, Dissenter, Shareholders, or the
Xxxxxxxxxx Trust.
(d) Xxxxxxx shall have entered into an employment agreement
with Xxxxx X. Xxxxxxxxxx substantially the same as the form attached as Schedule
"8.1(d)."
(e) Dissenter and each Shareholder is or was a key employee of
Company. Dissenter and each Shareholder acknowledges that by virtue of his or
her current or former position with the Company, he or she has developed
considerable expertise in the business operations of the Company and has had
access to extensive confidential information with respect to the Company. At
closing, effective at the Effective Time, Dissenter and each Shareholder shall
have executed and delivered to Xxxxxxx a separate covenant not to compete
("Shareholder's Noncompetition Agreement") restricting Dissenter's and
Shareholder's ability to compete with Xxxxxxx for a period not to extend beyond
the later of (i) four (4) years from the Effective Time or (ii) with respect to
Dissenter or any particular Shareholder, four (4)
Page 50--ACQUISITION AND MERGER AGREEMENT
years from the date of termination of employment of Dissenter or any such
Shareholder who becomes an employee of Xxxxxxx as of the Effective Time. A copy
of the form of the Shareholder's Noncompetition Agreement is attached hereto,
marked as Schedule "8.1(e)."
(f) The appropriate parties shall have executed an Articles of
Merger in form sufficient for filing with the Maryland Department and the
California Secretary.
8.2 CONDITIONS TO OBLIGATIONS OF XXXXXXX. The obligation of Xxxxxxx to
effect the Merger is also subject to the satisfaction or waiver by Xxxxxxx, at
or prior to the Effective Time, of the following conditions:
(a) The representations and warranties of Company, the
Shareholders, the Dissenter, and the Xxxxxxxxxx Trust set forth in this
Agreement shall be true and correct in all material respects as of the Closing
Date as though made on and as of the Closing Date. Xxxxxxx shall have received a
certificate signed by the Xxxxxxxxxx Trust, the Dissenter, each Shareholder, and
signed on behalf of Company by the Chief Executive Officer, Chief Financial
Officer of Company and the Xxxxxxxxxx Trust to the foregoing effect.
(b) Company, the Shareholders, the Dissenter, and the
Xxxxxxxxxx Trust shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date, and Xxxxxxx shall have received a certificate signed on behalf of Company
by the Chief Executive Officer and the Chief Financial Officer of Company, by
each of the Shareholders, the Dissenter, and the Xxxxxxxxxx Trust to such
effect.
(c) Xxxxxxx shall have received a satisfactory opinion of its
counsel, Xxxx Xxx Xxxxxx, of Miller, Nash, Wiener, Hager & Xxxxxxx, 000 XX Xxxxx
Xxxxxx, 00xx Xxxxx, Xxxxxxxx, Xxxxxx 97204- 3699, in form and substance
reasonably satisfactory to Xxxxxxx, to the effect that the issuance of shares of
Xxxxxxx Common Stock in the Merger does not require registration under the
Securities Act. Such counsel may rely upon certificates of the parties and upon
the representations and warranties of the parties in this Agreement and any
document or agreement referred to in this Agreement or delivered in connection
with the transactions contemplated hereby. The opinion of Xxxx Xxx Xxxxxx, of
Miller, Nash, Wiener, Hager & Xxxxxxx, will not be provided to, or be relied
upon by, parties other than Xxxxxxx.
Page 51--ACQUISITION AND MERGER AGREEMENT
(d) Xxxxxxx shall obtain good and marketable title to the
Property free and clear of all claims, Liens and encumbrances or interests of
any person or entity, including, without limitation, claims or obligations
arising in any fashion from the conduct of Company's business prior to the
Effective Time, except for the Liens, charges and encumbrances contemplated by
Schedule "2.6" (provided that the Liens and encumbrances not listed on Schedule
"2.6" shall be discharged and released in full at or prior to the Effective
Time), the Preliminary Title Report and except for any exceptions and any
indebtedness accepted by Xxxxxxx pursuant to Schedule "2.6" and the Preliminary
Title Report. In addition, the Xxxxxxxxxx Trust shall assign to Xxxxxxx all
warranties, warranty payments, appeal rights, proceeds, and awards and all other
Xxxxxxxxxx Trust Intangible Property, all in form and substance acceptable to
Xxxxxxx.
(e) The Xxxxxxxxxx Trust shall deliver to Xxxxxxx an ALTA
extended owner's policy of title insurance, with a zoning rider, on the Land
issued by the Closing Agent insuring good and marketable title in the amount of
$332,000, subject to no exceptions other than the items specified in Section
8.2(d) and matters commonly preprinted as general exceptions in such policies.
(f) Xxxxxxx shall receive from the Xxxxxxxxxx Trust an
affidavit in form and substance satisfactory to Xxxxxxx as to the applicability
of Section 1445 of the Code.
(g) Xxxxxxx shall have received the written resignations of
all the directors and officers of Company, effective as of the Effective Time.
(h) Xxxxxxx shall have received a satisfactory opinion from
Xxxxx X. Xxxxxxxx, of Xxxxxxxx & Xxxxxx, LLP, 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxxxx 00000, counsel to Company.
(i) The Shareholders and the Dissenter shall have surrendered
to Xxxxxxx the Company Certificates representing all the outstanding shares of
Company capital stock for cancellation.
(j) Each Shareholder and the Xxxxxxxxxx Trust shall have
executed and delivered to Xxxxxxx a letter confirming that he or she does not
intend to sell the Xxxxxxx Common Stock he or she receives pursuant to this
Agreement, in order to comply with requirements for treating the Merger as a
pooling of interests.
(k) During the period from the date of this Agreement to the
Effective Time, there shall not have been any material adverse change (or
development involving a prospective material adverse change) in the business
operations, earnings, assets, properties, or condition (financial or otherwise)
of Company or
Page 52--ACQUISITION AND MERGER AGREEMENT
the Property and there shall not have been any material loss involving or damage
to the Property, any of Company's properties or assets, and Xxxxxxx shall have
received a certificate dated the Effective Time to such effect signed by
Company, each of the Shareholders, the Dissenter, and the Xxxxxxxxxx Trust.
(l) Xxxxxxx shall have received such other evidence of the
accuracy of Company's, the Shareholders', the Dissenter's, and the Xxxxxxxxxx
Trust's representations and warranties, of compliance with Company's, the
Shareholders', the Dissenter's, and the Xxxxxxxxxx Trust's covenants and of the
satisfaction of the foregoing conditions as may be reasonably requested by
Xxxxxxx.
(m) Xxxxxxx shall have received an opinion from Price
Waterhouse LLP, to the effect that Xxxxxxx may account for the Merger as a
pooling of interests.
(n) A party may utilize a single certificate if all
information and certifications by each of the multiple certificates required by
this Section 8.2 is included in the single or omnibus certificate.
8.3 CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of Company to
effect the Merger is also subject to the satisfaction or waiver by Company at or
prior to the Effective Time of the following conditions:
(a) The representations and warranties of Xxxxxxx set forth in
this Agreement are true and correct as of the Closing Date as though made on and
as of the Closing Date. Company shall have received certificates signed on
behalf of Xxxxxxx by an executive officer to the foregoing effect.
(b) Xxxxxxx shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and Company shall have received certificates signed on behalf
of Xxxxxxx by an executive officer to such effect.
(c) The Shareholders shall have received a satisfactory
opinion from Xxxxxxx X. Xxx, of Brownstein, Rask, Arenz, Sweeney, Xxxx & Grim,
LLP, 0000 XX Xxxx Xxxxxxxx, Xxxxxxxx, Xxxxxx 00000, counsel to Xxxxxxx.
(d) Xxxxxxx shall have prepared and signed the written
instructions to its transfer agent regarding the delivery of Xxxxxxx Common
Stock as described in Sections 3.2(b) and 3.2(c) above.
(e) Company, the Shareholders and Dissenter shall have
received such other evidence of the accuracy of Xxxxxxx'x
Page 53--ACQUISITION AND MERGER AGREEMENT
representations and warranties, of compliance with its covenants and of
satisfaction of the foregoing conditions as Company may reasonably request.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after any of the parties have obtained
approval of the matters presented in connection with the Merger:
(a) By mutual consent of Xxxxxxx and Company in a written
instrument, if the Board of Directors of each so determines.
(b) By either Xxxxxxx or Company (i) if any Governmental
Entity which must grant a Requisite Regulatory Approval has denied approval and
such denial has become final and nonappealable or (ii) any Governmental Entity
of competent jurisdiction shall have issued an order enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement.
(c) By any party if the Merger shall not have been consummated
on or before June 30, 1998, unless the failure of the Merger to occur by such
date shall be due to the breach by the party seeking to terminate this Agreement
of any representation, warranty, covenant, or other agreement of such party set
forth herein.
(d) By either Xxxxxxx or Company [provided that the
terminating party (or, with respect to Company, the Shareholders, or the
Dissenter) is not then in material breach of any representation, warranty,
covenant, or other agreement contained herein] if there shall have been a
material breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the part of the
other party (or, with respect to Company, the Shareholders, or the Dissenter)
which breach is not cured within ten (10) days following written notice to the
party committing such breach, or which breach, by its nature, cannot be cured
prior to the Effective Time.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
and have no effect, and none of the parties shall have any liability of any
nature whatsoever hereunder, except (i) Sections 9.2, 11.1 [but only with
respect to termination under Section 9.1(d)], and 11.2 shall survive any
termination of this Agreement, and (ii) notwithstanding anything to the contrary
contained in this Agreement, no party shall be relieved or released from any
liabilities or damages arising out of its
Page 54--ACQUISITION AND MERGER AGREEMENT
intentional or willful breach of any provision of this Agreement.
9.3 EXTENSION; WAIVER. At any time prior to the Effective Time, Xxxxxxx
and Company may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY SHAREHOLDERS, DISSENTER AND XXXXXXXXXX TRUST.
(a) Subject to the limitations set forth in Section 10.4, the
Shareholders and the Dissenter jointly and severally agree to defend, indemnify
and hold harmless Xxxxxxx and the Company, their successors and assigns, and
their respective officers, directors, affiliates, employees, controlling
persons, and agents and to hold each such party harmless against and in respect
of any and all losses, damages, costs, and expenses, including attorneys' fees
incurred by any such party by reason of (i) a breach of any of the
representations or warranties made in this Agreement by the Company, the
Shareholders or the Dissenter; (ii) the conduct of the Company before the
Effective Time; or (iii) breach of undertakings in this Agreement or any other
document, supplement, instrument, agreement, letter, amendment, or assignment
related to or executed by the Company, the Shareholders or the Dissenter in
connection herewith, or in any officers' certificate or other certificate
delivered on behalf of them to Xxxxxxx at closing or in connection with this
Agreement. This indemnification obligation shall not terminate upon the death of
any one of the Shareholders or the Dissenter and shall continue to be an
obligation of each of their estates, heirs, successors, and assigns.
(b) Subject to the limitations set forth in Section 10.4, the
Xxxxxxxxxx Trust agrees to indemnify and hold harmless Xxxxxxx, its successors
and assigns, and its officers, directors, affiliates, employees, controlling
persons, and agents and to hold Xxxxxxx harmless against and in respect of any
and all losses, damages, costs, and expenses, including attorneys' fees incurred
by Xxxxxxx by reason of (i) a breach of any of the representations or warranties
made in this Agreement in connec-
Page 55--ACQUISITION AND MERGER AGREEMENT
tion with the Property by the Xxxxxxxxxx Trust; (ii) the conduct of the
Xxxxxxxxxx Trust in connection with the Property before the Effective Time; and
(iii) breach of undertakings in this Agreement or any other document,
supplement, instrument, agreement, letter, amendment, or assignment related to
or executed by the Xxxxxxxxxx Trust in connection with the Property, in
connection herewith, or in any certificate delivered on behalf of the Xxxxxxxxxx
Trust to Xxxxxxx at closing or in connection with this Agreement. This
indemnification obligation shall not terminate upon the termination of the
Xxxxxxxxxx Trust and shall continue to be an obligation of the Xxxxxxxxxx
Trust's distributees, beneficiaries, heirs, successors, and assigns.
10.2 TIME OF REPRESENTATIONS. For purposes of the indemnifications made
in this Article X, all representations and warranties shall be deemed to have
been made on and as of the Effective Time.
10.3 PROCEDURE.
(a) If Xxxxxxx or the Company are threatened with any claim by
a third party, or any claim by a third party is presented to or any action or
proceeding begun against Xxxxxxx or the Company that may give rise to the right
of indemnification hereunder, Xxxxxxx (the "Indemnitee") shall give written
notice thereof promptly (and no later than the last survival date of the
representation and warranty for the breach of which indemnification is sought)
to the Shareholders, the Dissenter, the Xxxxxxxxxx Trust, or all of them, as the
party or parties bearing the indemnification obligation (the "Indemnifying
Party").
(b) The Indemnifying Party shall have the right to participate
in the defense of such claim, action or proceeding, and, to the extent the
Indemnifying Party so desires, jointly with any other Indemnifying Party
similarly notified, to assume the defense thereof with counsel mutually
satisfactory to such parties and the Indemnitee. If the Indemnifying Party and
the Indemnitee agree upon mutually satisfactory counsel to assume the defense,
the Indemnifying Party shall assume the expense of such counsel's fees and shall
no longer assume the expense of the Indemnitee's attorneys' fees. If the
Indemnifying Party undertakes to compromise or defend any such liability, the
Indemnifying Party shall so notify the Indemnitee in writing promptly of its
intention to do so, and the Indemnitee shall cooperate with the Indemnifying
Party and its counsel in the compromising of or the defending against any such
liabilities or claims, at the expense of the Indemnifying Party. Such
cooperation shall include, but shall not be limited to, the provisions to the
Indemnifying Party of reasonable access to the Indemnitee's business records,
research, documents, and employees as they relate to the defense of any
indemnified claim.
Page 56--ACQUISITION AND MERGER AGREEMENT
(c) In response to a bona fide settlement offer, the
Indemnifying Party may settle the monetary portion of an indemnifiable matter
which it has duly elected to contest without the consent of the Indemnitee
unless such settlement has an adverse effect upon the Indemnitee, in which case
such matters shall be settled only with the consent of the Indemnitee. However,
the Indemnifying Party may not agree to a settlement involving injunctive or
other equitable relief without obtaining the prior written consent of the
Indemnitee.
10.4 RESTRICTIONS AND LIMITATIONS.
(a) The Indemnitee shall not be indemnified for breaches
herein unless and until the aggregate of all claims brought in good faith
against the Indemnitee shall exceed $10,000, which shall act as a threshold to
discourage the pursuing of insubstantial claims, and not as a deductible. The
Indemnitee shall be entitled to recover the entire amount of any claim or
claims, subject to the foregoing and the limits set forth in Section 10.4.
However, there shall be no threshold amount with respect to any claims arising
out of (i) any breach of the representations, warranties or covenants contained
in Section 5.11(b) through 5.11(k), Section 5.14 to the extent such liabilities
arise out of a member of the Company's Employee Plans/Agreements; or (ii) tax
matters.
(b) The total amount of indemnification payments and the total
amount of all transfers or payments from the Shareholders, the Dissenter and the
Xxxxxxxxxx Trust to Xxxxxxx for any breach of a representation, warranty,
covenant, or any other obligation contemplated in this Article X or under any
provision of this Agreement, shall not exceed $2,200,000.
(c) The liability for any breach of the Shareholder's
Noncompetition Agreements shall be only that of the breaching party. The
Holdback Cash and Holdback Shares shall not be utilized to satisfy an obligation
arising out of a breach of the Shareholder's Noncompetition Agreements.
(d) Claims for indemnification against the Shareholders and
the Dissenter for a breach of one or more of the representations, warranties or
covenants of the Company, the Shareholders or the Dissenter shall be made on or
before (i) the date the audit of Xxxxxxx'x December 31, 1998, financial
statements containing combined operations for those items expected to be
encountered in the audit process is completed, but no later than one (1) year
after the Effective Time and (ii) one year from the Effective Time for other
items. However, there shall be no time limitation with respect to any claims
arising out of the Pending Tax Claim as described in Section 7.4(e).
Page 57--ACQUISITION AND MERGER AGREEMENT
(e) Claims for indemnification against the Xxxxxxxxxx Trust
for a breach of one or more of the representations, warranties or covenants of
the Xxxxxxxxxx Trust shall be made on or before (i) the date the audit of
Xxxxxxx'x December 31, 1998, financial statements containing combined operations
for those items expected to be encountered in the audit process is completed,
but not later than one (1) year after the Effective Time and (ii) one year from
the Effective Time for other items.
(f) Notwithstanding the foregoing provisions regarding the
Shareholders' and the Dissenter's indemnity set forth above, the Shareholders'
and the Dissenter's obligation to indemnify, defend and hold Xxxxxxx harmless
shall be proportional. To the extent that Xxxxxxx is unable to recover the
indemnity obligations from either Xxxxxx or Dissenter in any amount, then X.
Xxxxxxxxxx and/or the Xxxxxxxxxx Trust hereby guarantee full payment and
performance and X. Xxxxxxxxxx and/or the Xxxxxxxxxx Trust shall make full
payment, performance and satisfaction of the uncollected or uncollectible
amount, even if such amount should exceed the proportional obligation of X.
Xxxxxxxxxx and the Xxxxxxxxxx Trust (as hereinafter determined). The proportion
of the indemnification obligation among the Shareholders, the Dissenter and the
Xxxxxxxxxx Trust shall be determined as to each Shareholder, the Dissenter and
the Xxxxxxxxxx Trust by the following computation: each Shareholder's, the
Dissenter's or the Xxxxxxxxxx Trust's indemnity obligation shall be equal to the
amount of the indemnity obligation multiplied by a fraction, the numerator being
the amount of consideration delivered respectively to such Shareholder, the
Dissenter or the Xxxxxxxxxx Trust pursuant to Sections 2.1, 2.2 and 2.6, and the
denominator being the total consideration delivered to all Shareholders, the
Dissenter and the Xxxxxxxxxx Trust pursuant to Sections 2.1, 2.2 and 2.6.
ARTICLE XI
GENERAL PROVISIONS
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS. The
representations, warranties, covenants, and agreements in this Agreement,
including any rights arising out of any breach of such representations,
warranties, covenants, and agreements, shall survive until the later of (a) the
date the audit of Xxxxxxx'x December 31, 1998, financial statements is completed
or (b) the date which is one year after the Effective Time.
11.2 EXPENSES. Xxxxxxx shall pay the fees for accounting services
performed by Price Waterhouse LLP, in connection with the Merger. All other
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense or as set forth in this Agreement.
Page 58--ACQUISITION AND MERGER AGREEMENT
11.3 NOTICES. All notices under this Agreement shall be in writing and
shall be deemed given when delivered personally, when sent by fax (with prompt
confirmation by mail), four (4) business days after mailed by certified mail
(return receipt requested), or one (1) business day after being sent by a
recognized overnight courier, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to Xxxxxxx to:
Xxxxxxx Business Services, Inc.
0000 XX Xxxxxxx Xxxxxx
Xxxxxxxx XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
with copies to:
Xxxxxxx X. Xxx
Brownstein, Rask, Arenz, Sweeney,
Xxxx & Grim, LLP
0000 XX Xxxx Xxxxxxxx
Xxxxxxxx XX 00000
Facsimile: (000) 000-0000
If to Company before the Effective Time, to:
Western Industrial Management, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx XX 00000
Facsimile: (---) --------
Attention: Xxxxx X. Xxxxxxxxxx
with copies to:
Xxxxx X. Xxxxxxxx
Xxxxxxxx & Xxxxxx, LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx XX 00000
Facsimile: (000) 000-0000
If to Company, a Shareholder, Dissenter, or the
Xxxxxxxxxx Trust after the Effective Time, to:
Western Industrial Management, Inc.
0000 Xxxxxxxxx
Xxxxxxxxx XX 00000
Page 59--ACQUISITION AND MERGER AGREEMENT
Catch 55, Inc.
0000 Xxxxxxxxx
Xxxxxxxxx XX 00000
Xxxxxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxx XX 00000
Xxxxxxx X. Xxxxxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxxx XX 00000
Xxxxx X. Xxxxxxxxxx
0000 Xxxxxxxxx
Xxxxxxxxx XX 00000
Xxxxx X. Xxxxxxxxxx and
Xxxxxxx Xxxxxxxxxx, Trustees
of the Xxxxxxxxxx Family
Trust dated January 10,
1994, 0000 Xxxxxxxxx Xxxxxxxxx XX 00000
11.4 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits, or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. Exhibits and
Schedules referenced in this Agreement are part of this Agreement as if fully
set forth in this Agreement. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes," and "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." No provision of this Agreement
shall be construed to require any person to take any action that would violate
any applicable law, rule or regulation.
11.5 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement, and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart. Facsimile transmission of a signed original shall
have the same effect as delivery of the original.
11.6 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof other than the agreements
specifically referred to herein.
Page 60--ACQUISITION AND MERGER AGREEMENT
11.7 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Oregon, without regard to any
applicable conflicts of law rules thereof.
11.8 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provision of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
11.9 CONFIDENTIALITY. All information, data and material furnished to
Xxxxxxx by Company prior to the date of this Agreement or hereafter furnished to
Xxxxxxx by Company are confidential. Except for disclosures which may be
necessary to satisfy conditions of this Agreement, Xxxxxxx agrees that Xxxxxxx
will not, and no agent representing Xxxxxxx to whom such information, data and
material may be furnished will, disclose or otherwise make available, at any
time, any such information, data or material to any other person whomsoever who
does not have a confidential relationship with Xxxxxxx; that Xxxxxxx and
Xxxxxxx'x representatives will protect such information, data and material with
a high degree of care to prevent the disclosure thereof; and that if, for any
reason, the transaction is not consummated, all information, data and material
concerning Company obtained by Xxxxxxx and its representatives, and all copies
thereof, will be delivered to Company. Xxxxxxx agrees that, except in connection
with enforcement of its rights under this Agreement, neither Xxxxxxx nor
Xxxxxxx'x representative will use any of the information, data or material in
any manner that may be adverse to the interests of Company.
11.10 PUBLICITY. Except as otherwise required by applicable law or the
rules of the National Association of Securities Dealers, Inc., all press
releases and other public communications relating to the proposed acquisition
shall be made exclusively by Xxxxxxx (and in this regard, Xxxxxxx and the
Shareholders agree not to disclose details associated with the acquisition of
Company, except as Xxxxxxx may deem necessary or desirable as a result of the
fact that Xxxxxxx is a publicly-traded corporation). The press releases and
public communications shall be subject to Company's prior approval unless
Xxxxxxx is required by law or rule to make certain disclosures or announcements
and Company will not approve or join in such disclosure or announcement.
11.11 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations shall be assigned by any of the
Page 61--ACQUISITION AND MERGER AGREEMENT
parties hereto without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by the parties and their respective successors
and assigns. This Agreement (including the documents and instruments referred to
herein) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
11.12 DEFAULT AND REMEDIES. If any party defaults in the performance of any
term, covenant, condition, or obligation under this Agreement, the nondefaulting
party may pursue any and all remedies available to such party. The rights and
remedies provided herein are cumulative and not exclusive of any other right or
remedy provided by law.
11.13 ATTORNEY FEES. In the event any party shall seek enforcement of any
covenant, warranty, indemnity, or other term or provision of this Agreement, the
party that prevails in such enforcement proceeding shall be entitled to recover
such reasonable costs and attorney fees which shall be determined by the
arbitrator, court (including any appellate court), review and in any claim
enforcement in the United States Bankruptcy courts.
11.14 POSTJUDGMENT ATTORNEYS FEES. If the services of an attorney are
required by any party to enforce a judgment rendered in connection with this
Agreement, the judgment creditor shall be entitled to reasonable attorneys fees,
costs and other expenses, and such fees, costs and expenses shall be recoverable
as a separate item. This provision shall be severable from all other provisions
of this Agreement, shall survive any judgment, and shall not be deemed merged
into the judgment.
11.15 COUNSEL. Each party has been represented by its counsel in connection
with the negotiation and preparation of this Agreement and, consequently, each
party hereby waives the application of any rule of law to the effect that any
provision of this Agreement will be interpreted or construed against the party
whose counsel prepared the same.
Page 62--ACQUISITION AND MERGER AGREEMENT
11.16 TIME OF ESSENCE. Time is expressly declared to be strictly of the
essence of this Agreement and the performance of each and every provision
hereof.
The parties have executed this Agreement as of the date stated above.
XXXXXXX BUSINESS SERVICES, INC.
By --------------------------------
Title: ---------------------------
WESTERN INDUSTRIAL MANAGEMENT, INC.
By ------------------------------
Title: -------------------------
CATCH 55, INC.
By --------------------------------
Title: ---------------------------
-----------------------------------
Xxxxx X. Xxxxxxxxxx, Trustee
of the Xxxxxxxxxx Family Trust
Dated January 10, 1994
-----------------------------------
Xxxxx X. Xxxxxxxxxx
-----------------------------------
Xxxxxxxx Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxxxx
Page 63--ACQUISITION AND MERGER AGREEMENT
Schedules
---------
SCHEDULE "1.3" List of Directors and Officers of Surviving
Corporation
SCHEDULE "2.5" Affidavit and Indemnity Agreement
SCHEDULE "2.6" Schedule of Exceptions
SCHEDULE "2.6(a)" Land Descriptions
SCHEDULE "2.6(c)" Excluded items of Personal Property
SCHEDULE "7.13" Scheduled Company Debt
SCHEDULE "8.1(d)" Employment Agreement - Xxxxx X. Xxxxxxxxxx
SCHEDULE "8.1(e)" Shareholder's Noncompetition Agreement - Xxxxx X.
Xxxxxxxxxx
SCHEDULE "8.1(e)" Shareholder's Noncompetition Agreement - Xxxxxxxx
Xxxxxx
