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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BRISTOL TECHNOLOGY SYSTEMS, INC.
("BRISTOL")
BRISTOL MERGER CORPORATION
("PURCHASER")
XXXXXXX XXXXXXXXX, XXXX XXXXXXXXX AND XXXX XXXXXXXXX
("SHAREHOLDERS")
AND
AUTOMATED REGISTER SYSTEMS, INC.
("COMPANY")
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
December 12, 1996, by and among BRISTOL TECHNOLOGY SYSTEMS, INC., a Delaware
corporation ("Bristol"); BRISTOL MERGER CORPORATION, a Delaware corporation
("Purchaser"); XXXXXXX X. XXXXXXXXX, XXXX X. XXXXXXXXX and XXXX X. XXXXXXXXX
(each a "Shareholder", and collectively the "Shareholders"); and AUTOMATED
REGISTER SYSTEMS, INC., a Washington corporation ("Company").
RECITALS
A. Bristol owns all of the issued and outstanding capital stock of
Purchaser.
B. The Shareholders own all of the issued and outstanding capital stock of
Company.
C. This Agreement contemplates a forward subsidiary merger of Company with
and into Purchaser in a tax free reorganization pursuant to Code Section
368(a)(2)(D), whereby the Shareholders shall exchange all of their shares of
capital stock of Company (the "Company Shares") for cash, subject to adjustment,
and shares of non-registered, restricted Common Stock of Bristol (the
"Restricted Stock").
D. The parties hereto expect that the merger will further certain of their
business objectives, including, without limitation, increased market share,
reduced administrative costs and volume efficiencies.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties herein contained, the parties hereto do hereby
agree as follows:
ARTICLE 0
CERTAIN DEFINITIONS
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"Approval" has the meaning set forth in Section 2.5(d).
"Audited Closing Income Statement" has the meaning set forth in Section
1.5.
"Audited Closing Balance Sheet" has the meaning set forth in Section
1.5.
"Audited Inventory Value" has the meaning set forth in Section 1.7.
"Book Value" has the meaning set forth in Section 1.7.
"Certificates" has the meaning set forth in Section 1.1.
"Class I Inventory" and "Class II Inventory" have the meanings set forth
in Section 2.4(c).
"Closing Balance Sheet" has the meaning set forth in Section 1.5.
"Closing Date" has the meaning set forth in Section 1.1.
"Closing Income Statement" has the meaning set forth in Section 1.5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Shares" has the meaning set forth in Recital C.
"Confidential Information" means any information concerning the business
and affairs of Company that is not already generally available to the public.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Effective Time" has the meaning set forth in Section 1.1.
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"Employee Benefit Plan" means any (i) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan;
(ii) qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan; (iii) qualified defined benefit retirement plan
or arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan); or (iii) Employee Welfare Benefit Plan or fringe benefit
plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Encumbrance" means any mortgage, pledge, lien, encumbrance, security
interest, charge, option, or other adverse interest, other than (i) mechanic',
materialmen's, and similar liens; (ii) liens for Taxes not yet due and payable
or for Taxes that Company is contesting in good faith through appropriate
proceedings; (iii) purchase money liens and liens securing rental payments under
capital lease arrangements; and (iv) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Account" has the meaning set forth in Section 1.2.
"Escrow Agent" has the meaning set forth in Section 1.2.
"Escrow Agreement" has the meaning set forth in Section 1.2.
"Financial Statements" has the meaning set forth in Section 2.3(a).
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
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"Hazardous Substances" has the meaning set for in Section 2.5(d).
"Knowledge" means that the Shareholders are actually or reasonably should
be aware of the fact or matter in question after a reasonable investigation
concerning the existence of such fact or other matter.
"Leased Premises" has the meaning set forth in Section 2.4(a).
"Leases" has the meaning set forth in Section 2.4(a).
"Liability" means any debt, claim, loss, liability, damage judgment, fine,
penalty, cost, expense or other obligation of any nature, whether known or
unknown, asserted or unasserted, absolute or contingent, liquidated or
unliquidated, or due or to become due, including any Liability for Taxes.
"Materially Adverse Effect" means a materially adverse effect on the
business, financial condition, results of operation, prospects, customers,
suppliers, employee relations, assets or properties of Company.
"Merger" has the meaning set forth in Section 1.1.
"Net Worth" means the difference between (i) the audited aggregate book
value of the assets of Company, and (ii) the audited aggregate book value of the
liabilities of Company as reflected on the Audited Closing Balance Sheet,
provided, that in determining Net Worth for purposes of the Audited Closing
Balance Sheet, Ernst & Young, LLP may (i) make reasonable adjustment to or
establish reasonable reserves for uncollectible accounts receivable, (ii) adjust
the book value of Company's inventory to account for under-or over-valued
inventory, as the case may be; and/or (iii) make any other adjustments that the
auditors deem necessary or appropriate in order to state the Closing Balance
Sheet in accordance with GAAP.
"Net Worth Deficiency" has the meaning set forth in Section 1.5(a)(1).
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"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Personal Property" has the meaning set forth in Section 2.4(b).
"Post-Closing" has the meaning set forth in Section 1.4.
"Post-Closing Date" has the meaning set forth in Section 1.4.
"Pre-Tax Earnings" means audited earnings before income taxes as reflected
on the Audited Closing Income Statement, provided, that in determining Pre-Tax
Earnings for purposes of the Audited Closing Income Statement, Ernst & Young,
LLP may make any adjustments that such accountants deem necessary or appropriate
in order to the state the Audited Closing Balance Sheet in accordance with GAAP.
"Pre-Tax Earnings Deficiency" has the meaning set forth in Section
1.5(a)(2).
"Restricted Shares" has the meaning set forth in Section 1.2.
"Restricted Stock" has the meaning set forth in Recital C.
"Surviving Corporation" has the meaning set forth in Section 1.1.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax, duty or assessment of any
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kind whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE 1
THE BASIC TRANSACTION
1.1 The Merger. On and subject to the terms and conditions of this
Agreement, the Company will merge with and into the Purchaser (the "Merger") on
December 31, 1996 (the "Closing Date"), at such time (the "Effective Time") as
the Purchaser and the Company file Certificates of Merger (the "Certificates")
with the Secretary of State of the States of Delaware and Washington,
substantially in the form of Exhibits "A" and "B" hereto. The Purchaser shall be
the corporation surviving the Merger (the "Surviving Corporation").
1.2 Actions Taken on or Prior to the Closing Date. On or prior to the
Closing Date, the parties hereto shall make their respective delivery
obligations set forth in Article 6, below. If the conditions to close set forth
in Article 5 are satisfied, then the Certificates shall be filed in accordance
with Section 1.1. Immediately thereafter and on the Closing Date (i) Purchaser
shall deposit with Smith, Silbar, Xxxxx, Xxxxxx & Xxxxxxxxx, LLP (the "Escrow
Agent") One Million Twenty-Five Thousand Twenty-Three Dollars ($1,025,023) in
immediately available funds; and (ii) Bristol shall deposit with the Escrow
Agent duly authorized and validly issued certificates representing Six Hundred
Eighty-Three Thousand Three Hundred Forty-Nine Dollars ($683,349) worth of
Restricted Stock, the exact number of shares of which (rounded down to the
nearest whole number of shares) shall be determined by and based upon the
December 30, 1996 closing price of Bristol's publicly traded Common Stock as
reported in the Wall Street Journal (the "Restricted Shares"). Escrow Agent
shall hold the cash and Restricted Shares in an escrow account (the "Escrow
Account") in accordance with an Escrow Agreement substantially in the form of
Exhibit "C" hereto (the "Escrow
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Agreement"); and (ii) and distribute the cash and Restricted Shares in
accordance with the Escrow Agreement and Section 1.4, below.
1.3 Effect of Merger.
1.3.1 General. At the Effective Time, the merger shall have the
effect set forth in Sections 259, 260 and 261 of the Delaware General
Corporation Law. Without limiting the foregoing, the Surviving Corporation may,
at any time after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either Purchaser or
Company in order to carry out and effectuate the transactions contemplated by
this Agreement.
1.3.2 Certificate of Incorporation. The Certificate of Incorporation
of Purchaser in effect at and as of the Effective Time shall remain the
Certificate of Incorporation of the Surviving Corporation.
1.3.3 By-laws. The By-laws of Purchaser in effect at and as of
the Effective Time shall remain the By-laws of the Surviving Corporation.
1.3.4 Directors and Officers. The directors and officers of
Surviving Corporation at and as of the Effective Time, shall be those
individuals holding such titles and positions set forth on Schedule 1.3.4
hereto. Such directors and officers shall be duly and properly appointed and/or
elected by Surviving Corporation in accordance with the Delaware General
Corporation Law and shall serve until such individuals are either re-elected or
removed and replaced at the next annual meetings of the Surviving Corporation's
Board of Directors and shareholders.
1.3.5 Conversion of Company Shares. At and as of the Effective Time,
the Company Shares owned by each Company Shareholder shall be converted into the
right of such Company Shareholder to exchange his Company Shares at the
Post-Closing for cash and Restricted Shares in accordance with Section 1.4,
below. Upon such conversion, no Company Share shall be deemed to be outstanding
or to have any rights attributed to it other than those set forth in this
Section 1.3.5. Each Company Shareholder shall deliver all
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of his Company Shares to the Escrow Agent on or before the Closing Date and such
shares shall be canceled at the Post-Closing.
1.3.6 Capital Stock of Purchaser and Bristol. Each share of capital
stock of Purchaser and Bristol, including, but not limited to, each share of
Restricted Stock, issued and outstanding at and as of the Effective Time shall
remain issued and outstanding.
1.3.7 Use of Company's Name. On or promptly after the Closing Date,
Surviving Corporation shall take all necessary and appropriate action to change
its name from Bristol Merger Corporation to Automated Retail Systems, Inc., and
Company and the Shareholders expressly consent to such action and the use of
such name by Surviving Corporation.
1.4 Post-Closing. If the Certificates are filed in accordance with Section
1.1, above, then the parties hereto shall meet (the "Post Closing") at the
Offices of Smith, Silbar, Xxxxx, Xxxxxx & Xxxxxxxxx, LLP, located at 00000 Xxx
Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, commencing at 9:00 a.m.
local time on January 6, 1997, or such other date, place or manner as the
parties shall mutually agree (the "Post-Closing Date"). At the Post-Closing, the
Escrow Agent shall deliver to the Shareholders from the Escrow Account (i) Eight
Hundred Twenty-Five Thousand Twenty Three Dollars ($825,023) in immediately
available funds; and (ii) Five Hundred Sixty Three Thousand Three Hundred
Forty-Nine Dollars ($563,349) worth of Restricted Shares. The cash and
Restricted shares so delivered shall be allocated among the Shareholders in
accordance with Schedule 1.4 hereto.
1.5 Adjustments. Commencing immediately after the Closing Date, Surviving
Corporation shall prepare a balance sheet (the "Closing Balance Sheet") and an
income statement (the "Closing Income Statement") for Company for the fiscal
year ending December 31, 1996. Ernst & Young, LLP shall audit in accordance with
GAAP the Closing Balance Sheet (the "Audited Closing Balance Sheet") and the
Closing Income Statement (the "Audited Closing Income Statement"). Upon
completion of the Audited Closing Balance Sheet and the
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Audited Closing Income Statement, Surviving Corporation shall deliver written
instructions to the Escrow Agent to:
(a) Subject to subparagraphs (1), (2) and (b), below, deliver to the
Shareholders (allocated among the Shareholders in accordance with Schedule 1.4)
Two Hundred Thousand Dollars ($200,000) in cash and One Hundred Twenty Thousand
Dollars ($120,000) worth of Restricted Shares.
(1) If the Net Worth of Company as stated on the Audited
Closing Balance Sheet is less than Six Hundred Forty-Four Thousand Dollars
($644,000) (the "Net Worth Deficiency"), then, at the absolute and sole
discretion of Bristol, (i) the Shareholders shall immediately pay to Surviving
Corporation the amount of the Net Worth Deficiency in immediately available
funds; or (ii) the cash otherwise due the Shareholders under Section 1.5(a),
above, shall be reduced, on a dollar for dollar basis, by the amount of the Net
Worth Deficiency; and
(2) If the Pre-Tax Earnings of Company as stated in the
Audited Closing Income Statement is less than Three Hundred Ninety Thousand
Dollars ($390,000) (the "Pre-Tax Earnings Deficiency"), then the cash and
Restricted Shares otherwise due the Shareholders under Section 1.5(a), above,
shall be reduced (in the ratio of sixty percent (60%) cash and forty percent
(40%) Restricted Shares) by the product of (i) the amount of the Pre-Tax
Earnings Deficiency, times (ii) five (5).
(b) The amount of the cash reductions made pursuant to subparagraphs
(1) and (2), above, if any, shall be paid by the Escrow Agent to Surviving
Corporation and the number of Restricted Shares reduced pursuant to subparagraph
(2), above, if any, shall be delivered by the Escrow Agent to Bristol.
1.6 Additional Adjustments. If the cash adjustments made pursuant to
Section 1.5(a)(1) and (2), above, exceed Two Hundred Thousand Dollars
($200,000), then Bristol and Surviving Corporation shall have the right to
offset the difference, on a dollar for dollar basis, against future payments due
the Shareholders from the Surviving Corporation, under the salary and bonus
provisions set forth
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in the Employment Agreements described in Section 6.2, below.
1.7 Right to Purchase Inventory. If (i) there is a Net Worth Deficiency;
(ii) the Net Worth Deficiency is paid by the Shareholders pursuant to Section
1.5(a)(1)(i) or (ii), above; and (iii) an item of inventory is valued on the
Audited Closing Balance Sheet (the "Audited Inventory Value") in an amount less
than the book value of such item of inventory as stated on the Closing Balance
Sheet, then the Shareholders may, within thirty (30) days of the completion of
the Audited Closing Balance Sheet, purchase such item of inventory from
Surviving Corporation in cash at its Audited Inventory Value and sell such item
of inventory for their own account and the noncompetition provisions of the
Employment Agreements, described in Section 6.2, below, shall not apply to such
sales activities. The Shareholders' right to purchase inventory pursuant to this
Section 1.7 is subject to the prior written approval of the Board of Directors
of Surviving Corporation, which approval may be granted or denied in the Board's
absolute and sole discretion; provided, however, that if the Board denies such
request, then such item of inventory shall, for purposes of the adjustments set
forth in Section 1.5(a)(1), above, be stated on the Audited Closing Balance
Sheet at book value as stated on the Closing Balance Sheet.
1.8 Right to Purchase Accounts Receivable. If (i) there is a Net Worth
Deficiency; (ii) the Net Worth Deficiency is paid by the Shareholders pursuant
to Section 1.5(a)(1)(i) or (ii), above; and (iii) an account receivable is
valued on the Audited Closing Balance Sheet (the "Audited A/R Value") in an
amount less than the book value of such account receivable as stated on the
Closing Balance Sheet, then the Shareholders shall purchase such account
receivable at its Audited A/R Value on the ninetieth (90th) day following
closing; provided, however, if the Surviving Corporation shall realize more than
the Audited A/R Value for any such account within such ninety (90) day period,
the Shareholders shall be entitled to receive from the Surviving Corporation the
full sum of such excess.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF COMPANY AND THE SHAREHOLDERS
Company and the Shareholders represent and warrant to, and agree with,
Bristol, Purchaser and Surviving Corporation that (except for changes
contemplated by this Agreement), each of the following statements is true,
correct and complete as of the date of this Agreement and will be true, correct
and complete as of the Closing Date (each such statement to be made again by
Company and the Shareholders on that date with the Closing Date being
substituted for the date of this Agreement throughout this Article 2):
2.1 Organization and Authority.
(a) Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington, has all requisite
corporate power and authority to carry on its business as currently conducted
and to own or lease and operate its properties, and is duly qualified to do
business as a foreign corporation in each jurisdiction where its business makes
such qualification necessary. Company and each of the Shareholders the requisite
power to enter into this Agreement and to carry out their respective obligations
hereunder.
(b) The copies of the Certificate of Incorporation and the By-laws
of Company which have been heretofore made available to Purchaser and Bristol,
are true copies of such instruments as amended to date, and such instruments are
in full force and effect. The stock certificates, transfer books and minute
books of Company heretofore made available to Purchaser and Bristol are true and
complete and constitute all of the stock certificates, transfer books and minute
books of Company.
(c) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by Company's Board of Directors and the Shareholders, and no other proceedings
on the part of Company are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement is a valid
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and binding obligation of Company and the Shareholders enforceable in accordance
with its terms except as enforcement may be limited to bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors rights generally and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
(d) Except as disclosed in Schedule 2.1(d) attached hereto, there
are no persons or entities of any kind in which Company owns, directly or
indirectly, any shares of capital stock, or any partnership, membership, joint
venture or equitable or similar interest.
(e) Except as set forth on Schedule 2.1(e)(1) attached hereto, no
consent, approval or authorization of, or declaration, filing or registration
with, any third party, including any government or regulatory authority, is
required in connection with the execution and delivery by Company or any of the
Shareholders of this Agreement and the consummation by Company and the
Shareholders of the transactions contemplated hereby. Except as set forth on
Schedule 2.1(e)(2) attached hereto, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
conflict with, result in a breach of, or constitute a default under any of the
terms, conditions, or provisions of the Certificate of Incorporation or By-laws
of Company; (ii) violate any law, order, judgment or decree to which any of
Company's properties or assets are bound; (iii) violate or constitute a default
under (whether after the giving of notice, passage of time or both), or permit
the termination of, or impair any rights or increase any obligations of Company
under, any agreement or instrument to which Company is a party or by which any
part of Company's properties or assets is bound; or (iv) result in the
acceleration of the maturity of any debt or obligation of Company or in the
creation or imposition of any Encumbrance upon any of the property or assets of
Company.
2.2 Capitalization. The authorized capital stock of the Company consists
of five hundred (500) shares of common stock, $100 par value per share, of which
the number of issued shares which are issued and outstanding are listed on
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Schedule 2.2 attached hereto. All outstanding capital stock of Company was duly
authorized and validly issued, and is fully paid and nonassessable. Company does
not have outstanding, and is not bound by, any option, warrant or other right,
call or commitment to issue, or any obligation or commitment to purchase, any of
its capital stock or any securities convertible into or exchangeable for any of
its authorized capital stock. Each of the Shareholders (i) is the sole legal and
beneficial owner of that number of Company Shares set forth opposite such
Company Shareholder's name on Schedule 2.2(1) hereto; (ii) is in possession of
the certificates representing such shares; (iii) owns such shares free and clear
of all Encumbrances with respect thereto; and (iv) has the full power, authority
and right to exchange, surrender and cancel such shares in accordance with this
Agreement and to perform his obligations hereunder with respect to the exchange,
surrender and cancellation of such shares. Except as set forth on Schedule
2.2(2) attached hereto, there are no buy-sell agreements, shareholders'
agreements or similar agreements relating to any of the shares of the capital
stock of Company.
2.3 Financial Matters.
(a) Attached hereto as Schedule 2.3(a)(1) are the unaudited balance
sheets of Company at December 31, 1993, at December 31, 1994, at December 31,
1995, and at October 31, 1996, the related statements of income, shareholders'
equity and cash flows for the annual and 10-month period then ended,
respectively, and the related notes to such financial statements (all of such
financial statements and notes being hereinafter referred to as the "Financial
Statements"). Except as set forth in Schedule 2.3(a)(2) attached hereto, the
Financial Statements (including the notes thereto) (i) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby; (ii) present fairly and accurately the financial condition of
Company as of such dates and the results of operations of Company for such
periods; and (iii) are correct and complete, and are consistent with the books
and records of Company (which books and records are correct and complete).
(b) The Net Worth of Company as reflected on the Audited Closing
Balance Sheet shall not be less than Six Hundred Forty-Four Thousand Dollars
($644,000); provided;
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however, that if the Net Worth as so reflected is less than such amount, then
Purchaser's and Bristol's only remedies for such breach shall be as provided in
Section 1.5 and 1.6, above.
(c) The Pre-Tax Earnings of Company as reflected on the Audited
Closing Income Statement shall not be less than Three Hundred Ninety Thousand
Dollars ($390,000); provided; however, that if the Pre-Tax Earnings as so
reflected is less than such amount, then Purchaser's and Bristol's only remedies
for such breach shall be as provided in Section 1.5 and 1.6, above.
(d) Company does not have any Liability, other than those which (i)
are set forth in the Financial Statements; (ii) have been specifically disclosed
in the Schedules hereto by reference to the specific Section of this Agreement
to which such disclosure relates; (iii) have been incurred since the date of the
most recent Financial Statements in the Ordinary Course of Business in amounts
and on terms consistent, individually and in the aggregate, with Company's past
practice; or (vi) are expressly contemplated by this Agreement.
(e) Since the date of the most recent Financial Statements, (i)
Company has operated its businesses only in the Ordinary Course of Business;
(ii) except as set forth on Schedule 2.3(e)(ii), there has not occurred any
event, condition or circumstance that has had or is likely to have a Materially
Adverse Effect on Company; (iii) Company has not issued or sold, or contracted
to sell, any of its capital stock, notes, bonds or other securities, or any
option to purchase the same, or entered into any agreement with respect thereto;
(iv) Company has not incurred any property damage, destruction or similar loss
in an aggregate amount exceeding Five Thousand Dollars ($5,000) whether or not
covered by insurance; (v) Company has not suffered any loss or any prospective
loss, of any significant supplier, distributor, licenser, contractor or customer
or altered any contractual arrangement with any such supplier, distributor,
licenser, contractor or customer; (vi) except as set forth on Schedule
2.3(e)(vi), Company has not incurred any
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Liability, made any expenditure, sold any assets or properties; except in each
case in the Ordinary Course of Business, consistent with past practices and at
arms-length; (vii) except as set forth on Schedule 2.3(e)(vii), there has been
no declaration, setting aside or payment of any dividend or other distribution
in respect of the capital stock of Company, and Company has not redeemed,
repurchased or otherwise acquired any of its capital stock or securities
convertible into or exchangeable for its capital stock or entered into any
agreement to do so; (viii) except as disclosed on Schedule 2.3(e)(viii) attached
hereto, Company has not made any prepayments on any of its Liabilities,
securities or other obligations, other than trade payables in the Ordinary
Course of Business; (ix) except as disclosed on Schedule 2.3(d)(ix) attached
hereto and except for increases in the Ordinary Course of Business, there has
not been any increase in the rate of compensation payable or to become payable
to any of Company's officers or employees or any increase in the amounts paid or
payable to such officers or employees under any bonus, insurance, pension or
other benefit plan, or any arrangements theretofore made for or with any of such
officers or employees; (x) Company has not adopted or amended any benefit plan,
agreement, trust, fund or other arrangement for the benefit of employees except
as required by Tax laws; and (xi) except as required by applicable law, there
has been no change in any accounting principle, procedure or practice followed
by Company or in the method of applying such principle, procedure or practice
(f) Attached as Schedule 2.3(f) is a list containing all
compensation, of any nature, paid or to be paid to each Shareholder by Company
in fiscal year 1996.
2.4 Assets.
(a) Company does not own any real property. Schedule 2.4(a) attached
hereto contains a list of all real property leased by Company (the "Leased
Premises"), together with copies of each of the leases (the "Leases"), including
the name of the landlord or sublandlord, a description of the Leased Premises,
the commencement and expiration dates of the current term, the security
deposited by Company with the landlord or sublandlord, if any, and the monthly
rental (including all base rent and all additional rents). Each Lease is in full
force and effect and has not been assigned,
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modified, supplemented or amended, and neither Company nor the landlord or
sublandlord under any Lease is in default under any of the Leases, and no
circumstance or state of facts exists which, with the giving of notice or
passage of time, or both, would permit the landlord or sublandlord under any
Lease to terminate any Lease. Surviving Corporation's rental rate under its
Lease Agreement with Xxxxxxxxx Properties, as described in Section 6.2, below,
for its primary office facility is at fair market value.
(b) Schedule 2.4(b) attached hereto contains a list of all personal
property (other than inventory and other than items with a book value of less
than $10,000) ("Personal Property") and real property improvements (including
fixtures but excluding items with a book value of less than $10,000) owned by
Company. All Personal Property and real property improvements of Company are in
good condition and repair and are adequate for the uses to which they are being
put or would be put in the Ordinary Course of Business, and such Personal
Property and real property improvements are not in need of maintenance or repair
except for routine maintenance and repair and as otherwise disclosed on Schedule
2.4(b).
(c) The inventory of Company is comprised of two types: (i)
inventory held for sale to customers ("Class I Inventory"), which inventory is
identified on Schedule 2.4(c)(i) attached hereto; and (ii) inventory of
products, parts and supplies held for customer support and service ("Class II
Inventory"), which inventory is identified on Schedule 2.4(c)(ii) attached
hereto. Each item of Class I Inventory is in good and marketable condition and
fit for the purpose for which it was produced or manufactured, and each item of
Class II inventory is fairly and reasonably valued on the balance sheet of the
most recent Financial Statements and is not obsolete, damaged or defective
(except for obsolescence, damages or defects which in the aggregate are not
likely to have a Materially Adverse Effect on Company).
(d) The accounts receivable of Company reflected on the balance
sheet of the most recent Financial Statements have arisen from the rendering of
services in the Ordinary
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Course of Business and are not in dispute or subject to any setoffs, discounts,
credits, reductions or counterclaims whatsoever and, with usual and ordinary
collection efforts, will be paid in full, net of reserves reflected on such
balance sheet, within ninety (90) days after the Closing Date, without resort to
legal action.
(e) Company owns, licenses or otherwise has the full right to use,
all patents, trademarks, trade names, service marks, copyrights, technology,
know-how and processes and confidential information used in the conduct of its
business. Schedule 2.4(e)(1) attached hereto contains a list of all registered
and unregistered patents, trademarks, trade names, service marks and copyrights
used by Company, all applications therefor and all licenses and other agreements
relating thereto, which are owned by Company or used in the business of Company.
Except as set forth in Schedule 2.4(e)(2), no consent of any third party will be
required for the use thereof upon completion of the transactions contemplated by
this Agreement. No claims are currently being asserted by any person or entity
with respect to the use of any such patents, trademarks, service marks, trade
names, copyrights, technology, know-how or processes or Confidential Information
or challenging or questioning the validity or effectiveness of any such license
or agreement, nor, to the Knowledge of Company, is there any basis for any such
claims. The perpetual use of such patents, trademarks, trade names, service
marks, copyrights, technology, know-how or processes or Confidential Information
by Company and, to the Knowledge of Company, does not infringe on the rights of
any person or entity, and, to the Knowledge of Company, there is no infringing
use of Company's patents, trademarks, trade names, service marks or copyrights
by others.
(f) Schedule 2.4(f) attached hereto contains a list of all written
and oral agreements (other than the Leases) that either are not terminable at
will or may involve more than Thirty Thousand Dollars ($30,000) during the term
thereof and to which Company is a party or by which Company or any of Company's
assets or properties are bound. Each such agreement is legally binding and in
full force and effect, and there is no existing or alleged default or event of
default under any such agreement, nor does there exist any event or condition
which, with notice or lapse of time
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or both, would constitute such a default or event of default by Company. Copies
of all documents listed in Schedule 2.4(f) have been delivered to Purchaser and
Bristol, and are true and complete in all respects and include all amendments
and supplements thereto and modifications thereof.
(g) Schedule 2.4(g) attached hereto contains a list of (i) every
bank, savings and loan or other financial institution in which Company has any
accounts or lock boxes and the corresponding account identification number, if
any; (ii) the names of the persons authorized to make withdrawals therefrom or
have access thereto; and (iii) each person who holds a power of attorney for
Company.
(h) Schedule 2.4(h) attached hereto contains a list of the ten (10)
largest customers of Company measured by the revenues from such customers during
the current fiscal year of Company, showing the approximate total xxxxxxxx by
Company to each such customer during such period. There has not been any
materially adverse change in the business relationship of Company with any
customer named in Schedule 2.4(h). Except for the customers named in Schedule
2.4(h), Company did not have any customer who accounted for more than two
percent (2%) of the aggregate sales or services of Company during the most
recently ended fiscal year of Company. No person or entity that was a customer
of Company at any time during the past twelve (12) months was at such time
controlled by, in control of or under common control with Company or any of the
Shareholders.
(i) Schedule 2.4(i) attached hereto contains a list of the ten (10)
largest suppliers of the Company measured by payments to such suppliers during
the current fiscal year of Company. There has not been any materially adverse
change in the business relationship of Company with any supplier named in
Schedule 2.4(i). Except as set forth on Schedule 2.4(i)(2), no person or entity
that was a supplier of Company at any time during the past twelve (12) months
was at such time controlled by, in control of or under common control with
Company or any of the Shareholders.
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(j) Schedule 2.4(j) attached hereto contains a list of insurance
policies in force currently or at any time during the past two (2) years and
relating to Company or its assets or properties, including in each instance the
name of the carrier, the term of the policy, the periods for which it has been
continuously in effect, the annual premium and the general scope of coverage.
Such insurance is and was sufficient in type to protect Company as it currently
conducts its business and as it has conducted its business during the past two
(2) years and the premiums for such insurance policies are fully paid. None of
the policies provides for the assessment of additional or retroactive premiums,
and there are no loans outstanding against any of such policies. No notice of
cancellation or non-renewal with respect to, or disallowance of any claim under,
any insurance policy listed or required to be listed on Schedule 2.4(j) or
binder listed or required to be listed in Schedule 2.4(j) has been received by
Company. No claim or event which forms the basis of a claim has occurred which
could cause Company's insurers to substantially increase the cost of insurance
for Company.
(k) Except as set forth on Schedule 2.4(k) attached hereto, all
assets and properties purported to be owned by Company are owned free and clear
of all Encumbrances. Company rightfully possesses or has the right to use all
assets and properties necessary to conduct its business.
2.5 Legal Matters.
(a) Except as set forth on Schedule 2.5(a) attached hereto, there is
no action, suit, proceeding or investigation pending, or, to the Knowledge of
Company or the Shareholders, threatened, at law or in equity, before any
arbitrator or court or other governmental authority, nor any outstanding
judgment, decree, injunction, charge, award or order, against or in any manner
involving Company or any of Company's assets or properties, or the Company
Shares.
(b) Company has complied with all judgments, orders, rulings,
statutes, laws, permits, licenses, franchises, ordinances and other governmental
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authorizations, approvals and regulations applicable to it or any of its
operations, properties or assets. Company has all licenses and permits and other
governmental authorizations and approvals required for the operation of its
business and the use of its assets and properties.
(c) Company has filed or caused to be filed all federal, state,
local and foreign income and other Tax Returns required under applicable law to
be filed on or before the Closing Date, Company has paid or made provision for
all Taxes and other charges which have or may become due for the periods covered
by such Tax Returns, all such Tax Returns are true, correct and complete in all
respects. None of the Tax Returns of Company is currently under investigation or
audit, nor to the Knowledge of Company of the Shareholders is an investigation
or audit pending, and, except as set forth on Schedule 2.5(c)(1) attached
hereto, there has not been an investigation or audit of the Tax Returns of
Company during the past seven (7) years. There are no outstanding agreements or
waivers extending the statutory period of limitations applicable to any Tax
Return for any period. The accounting treatment of all items of income, gain,
loss, deduction and credit as reported on all Tax Returns and estimates filed by
or on behalf of Company are true and complete, and all deferred Taxes and all
Taxes due for the period ending on the Closing Date have been accrued on the
Balance Sheet of the most recent Financial Statements through the date thereof.
Company has never been, nor is Company currently, a party to any agreement
relating to the sharing of any liability for, or payment of, Taxes with any
third party. Schedule 2.5(c)(2) attached hereto (i) lists all federal, state,
local and foreign income Tax Returns filed with respect to Company for taxable
periods ended on or after December 31, 1990; (ii) indicates those Tax Returns
that have been audited, if any; (iii) and indicates those copies of all income
Tax Returns, examination reports and statements of deficiencies assessed against
or agreed to by Company since December 31, 1990. No claim has ever been made by
an authority in a jurisdiction where Company does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. There are no Encumbrances
on any of the assets of Company that arose in connection with any failure (or
alleged failure) to pay any Tax. All Taxes owed by Company or which Company is
obligated to withhold from amounts owing to any employee,
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independent contractor, stockholder or creditor or third party have been paid.
There are no unresolved claims concerning Company's Tax Liability, and no basis
for any such claim exists.
(d) No solid, hazardous or toxic wastes, substances or materials, as
those terms are used in the Clean Air Act, Resource Conservation and Recovery
Act of 1976, as amended, the Hazardous Materials Transportation Act or the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(CERCLA), as amended by the Superfund Amendments and Reauthorization Act of 1986
(XXXX), or in any other federal, state or local law or ordinance governing
hazardous, toxic or solid wastes, materials or substances, and no asbestos,
polychlorinated biphenyls, urea formaldehyde foam, explosives, infectious or
biological wastes or radioactive materials (all of the above being collectively
referred to herein as "Hazardous Substances") have been or are unlawfully
stored, treated, disposed of, managed, generated, manufactured, produced,
released, emitted or discharged, in or under the Leased Premises by Company so
as to (i) require, under any applicable law or treaty, a governmental approval,
consent, waiver, exemption, variance, franchise, order, permit, authorization,
right or license (an "Approval"), unless such Approval has been obtained and
remains in full force and effect; or (ii) render the Leased Premises in
noncompliance with or in violation of any applicable law, regulation, or permit
or subject to any obligation, Liability, order or requirements for remediation.
No governmental or private action, suit or proceeding concerning or arising out
of the use, storage, treatment, discharge, disposal, handling, manufacturing,
processing, treatment, transportation, release or threat of release of any
Hazardous Substance at, under or in connection with Company's business or the
Leased Premises, or to enforce or impose liability under environmental pollution
laws, common law or laws relating to the protection of worker and work place
health and safety has been instituted, initiated or, to the Knowledge of
Company, threatened against or with respect to Company or the Shareholders or
the Leased Premises as a result of the Company's or the Shareholders' acts or
omissions.
(e) Product Warranty.Product Warranty. Each product manufactured,
sold, or delivered by Company has been in conformity with
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all applicable contractual commitments and all express and implied warranties,
and Company has no Liability (and there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability) for replacement or
repair thereof or other damages in connection therewith, subject only to the
reserve for product warranty claims set forth on the face of the balance sheet
of the most recent Financial Statements (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of Company. No product manufactured, sold, or delivered
by Company is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale. Schedule 2.5(e) includes
copies of the standard terms and conditions of sale for Company (containing
applicable guaranty, warranty, and indemnity provisions).
(f) Product Liability. Product Liability. Company has no Liability
(and there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of them
giving rise to any Liability) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product
manufactured, sold, or delivered by Company.
(g) Health and Safety. Except as set forth in Schedule 2.5(g),
Company has received no notice of any violation, nor, to the Knowledge of
Company and the Shareholders, is there any basis for any assertion of a
violation by Company, of the Occupational Safety and Health Act of 1970, as
amended, together with all other laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings and changes thereunder)
of federal, state and local governments (and all agencies thereof) concerning
public health and safety or employee health and safety laws.
2.6 Employment Matters
(a) None of Company's employees belongs to a labor union in
connection with his or her employment by Company nor has there been any request
by any employee to be represented by a union in such connection.
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(b) Except as identified on Schedule 2.6(b) attached hereto, no
officer, manager or key employee of Company has indicated within the past twelve
(12) months that he or she may terminate his or her employment with Company
(regardless of whether such indication was formal or informal).
(c) Schedule 2.6(c) attached hereto sets forth the names of all
Company's directors and officers, and the names of all persons whose
compensation from Company during the current year will exceed Thirty Thousand
Dollars ($30,000).
(d) Schedule 2.6(d) attached hereto contains a list of each pension,
retirement, profit-sharing, deferred compensation, bonus or other incentive
plan, employee program, arrangement, agreement or understanding, medical,
vision, dental or other health plan, life insurance plan, severance plan or any
other employee benefit plan to which Company or any entity under common control
with the Company contributes or is a party or is bound and under which current
or former employees of Company are eligible to participate or derive a benefit.
(e) Schedule 2.6(e) lists each Employee Benefit Plan that Company
maintains or to which Company contributes. With respect to any such Employee
Benefit Plan:
(1) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code, and other applicable laws.
(2) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan Descriptions)
have been filed or distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and
of Code Sec. 4980B have been met with respect to each such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
(3) All contributions (including all employer contributions
and employee salary reduction contributions)
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which are due and have been paid to each such Employee Benefit Plan which is an
Employee Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such Employee
Pension Benefit Plan or accrued in accordance with the past custom and practice
of Company. All premiums or other payments for all periods ending on or before
the Closing Date have been paid with respect to each such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
(4) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan" under Code
Sec. 401(a) and has received, within the last two years, a favorable
determination letter from the Internal Revenue Service.
(5) The market value of assets under each such Employee
Pension Benefit Plan which is an Employee Pension Benefit Plan equals or exceeds
the present value of all vested and nonvested liabilities thereunder determined
in accordance with PBGC methods, factors, and assumptions applicable to an
Employee Pension Benefit Plan terminating on the date for determination.
(6) Company has delivered to Purchaser and Bristol correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan.
(f) With respect to each Employee Benefit Plan that Company
maintains or ever had maintained or to which it contributes, ever has
contributed, or ever has been required to contribute:
(1) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan has been completely or partially terminated or been the subject of
a reportable event as to which notices would be required to be filed with the
PBGC. No proceeding by the PBGC to terminate any such Employee Pension Benefit
Plan has been instituted or, to the
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Knowledge of the Shareholders and the directors and the officers (and employees
with responsibility for employee benefit matters) of Company threatened.
(2) There have been no prohibited transactions with respect to
any such Employee Benefit Plan. No fiduciary has any Liability for breach of
fiduciary duty or other failure to act or comply in connection with the
administration or investment of the assets of any such Employee Benefit Plan. No
action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or, to the Knowledge of the
Shareholders and the directors and officers (and employee with responsibility
for employee benefits matters) of Company, threatened. The Shareholders and the
directors and officers (and employees with responsibility for employee benefits
matters) of Company have no Knowledge of any basis for any such action, suit,
proceeding, hearing or investigation.
(3) Company has not incurred, and the Shareholders and the
directors and officers (and employees with responsibility for employee benefit
matters) of Company have no reason to expect that Company will incur, any
Liability to the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal liability) or under the Code with
respect to any such Employee Benefit Plan which is an Employee Pension Benefit
Plan.
(g) Company does not contribute to, never has contributed to, and
has never been required to contribute to any multiemployer plan or has any
Liability (including withdrawal liability) under any multiemployer plan.
(h) Company does not maintain, nor ever has maintained or
contributed to and has never been required to contribute to any Employee Welfare
Benefit Plan providing medical, health, or life insurance or other welfare-type
benefits for current or future retired or terminated employees, their spouses,
or their dependents (other than in accordance with Code Sec. 4980B).
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2.7 Continuity of Interest. The Shareholders have no present plan,
intention or arrangement to dispose of any of the Restricted Shares in a manner
that would cause the Merger to violate the continuity of shareholder interest
requirement set forth in Treasury Regulation Section 1.368-1.
2.8 Tax Free Reorganization. This Agreement and the transactions
contemplated herein qualify, in all respects, as a tax free reorganization
pursuant to Code Section 368(a)(2)(D); provided, however, that Purchaser's and
Bristol's only remedies for a breach of this Section 2.8 shall be as set forth
in Section 4.6, below.
2.9 Pacific Retail Liabilities. Neither Company, Surviving Corporation or
Bristol is or will be liable or otherwise responsible for any Liabilities
arising from or in any way related to Pacific Retail, a Washington corporation
("Pacific Retail") or the acquisition by Company of Pacific Retail's assets.
2.10 Brokers. No broker, finder or investment banker has acted directly or
indirectly for Company, any of its officers or directors, or the Shareholders in
connection with this Agreement or the transactions contemplated hereby, and no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Company or the
Shareholders.
2.11 Disclosure. No representation or warranty by Company or any of the
Shareholders in this Agreement or in any other certificate or document delivered
to Purchaser and Bristol and their representatives contains any untrue statement
of a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact which has not been
disclosed to Purchaser and Bristol which has had or is likely to have a
Materially Adverse Effect on Company.
ARTICLE 3
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REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND BRISTOL
Purchaser and Bristol hereby represent and warrant to, and agrees with,
Company and the Shareholders that (except for changes contemplated by this
Agreement), each of the following statements is true, correct and complete as of
the date of this Agreement and will be true correct and complete as of the
Closing Date (each such statement to be made again by Purchaser and Bristol on
that date with the Closing Date being substituted for the date of this Agreement
throughout this Article 3):
3.1 Organization and Authority.
(a) Purchaser and Bristol are corporations duly organized, validly
existing and in good standing under the laws of the State of Delaware, have all
requisite corporate power and authority to carry on their respective businesses
as currently conducted and to own or lease and operate their respective
properties, and are duly qualified to do business as a foreign corporations in
each jurisdiction where their respective businesses makes such qualification
necessary. Purchaser and Bristol have the requisite power to enter into this
Agreement and to carry out their respective obligations hereunder.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by Purchaser's and Bristol's Board of Directors, and no other proceedings on the
part of Purchaser or Bristol are necessary to authorize this Agreement and the
transactions contemplated hereby, and this Agreement is a valid and binding
obligation of Purchaser and Bristol enforceable in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(c) Except as set forth on Schedule 3.1(c)(1) attached hereto, no
consent, approval or authorization of, or declaration, filing or registration
with, any third
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party, including any government or regulatory authority, is required in
connection with the execution and delivery by Purchaser and Bristol of this
Agreement and the consummation by Purchaser and Bristol of the transactions
contemplated hereby. Except as set forth on Schedule 3.1(c)(2) attached hereto,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) conflict with, result in a breach of
or constitute a default under any of the terms, conditions or provisions of the
Certificate of Incorporation or By-laws of Purchaser or Bristol; (ii) violate
any law, order, judgment or decree to which any of Purchaser's or Bristol's
properties or assets are bound; (iii) violate or constitute a default under
(whether after the giving of notice, passage of time or both), or permit the
termination of, or impair any rights or increase any obligations of Purchaser or
Bristol under, any agreement or instrument to which Purchaser or Bristol is a
party or by which any part of Purchaser's or Bristol's properties or assets are
bound; or (iv) result in the acceleration of the maturity of any debt or
obligation of Purchaser or Bristol, or in the creation or imposition of any
Encumbrance upon any of the properties or assets of Purchaser or Bristol.
3.2 Brokers. No broker, finder or investment banker has acted directly or
indirectly for Purchaser or Bristol, or any of their officers or directors in
connection with this Agreement or the transactions contemplated hereby, and no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Purchaser or Bristol.
3.3 Disclosure. No representation or warranty by Purchaser or Bristol in
this Agreement or in any other certificate or document delivered to the
Shareholders and their representatives contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading.
ARTICLE 4
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COVENANTS
4.1 General. Each of the parties hereto shall use its best efforts to take
all action and to do all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the conditions to close set forth in Article 5,
below).
4.2 Notices and Consents. Company shall give all notices to third parties
and will use its best efforts to obtain any third party consents that are
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
4.3 Regulatory Matters and Approvals. Each of the parties shall give all
notices to, make any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Sections 2.1(e) and 3.1(c), above,
or elsewhere in this Agreement.
4.4 Continuity of Interest. The Shareholders shall not dispose of any of
the Restricted Shares in a manner that would cause the Merger to violate the
continuity of shareholder interest requirement set forth in Treasury Regulation
Section 1.368-1. Any Company Shareholder desiring to dispose of any the
Restricted Shares shall provide written notice to Bristol, not less than 60 days
prior to the intended date of disposition, specifying the number of Restricted
Shares the Company Shareholder proposes to dispose.
4.5 Continuity of Business. Purchaser shall continue at least one
significant historical business line of Company, or use at least a significant
portion of Company's historical business assets in a business, in each case in
accordance with Treasury Regulation Section 1.368-1(d).
4.6 Tax Free Reorganization. The Shareholders shall assume any and all
Liability, including any and all Tax Liability, caused by, arising from, or
related to the failure of this Agreement and the transactions contemplated
herein to qualify, in all respects, as a tax-free
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reorganization pursuant to Code Section 368(a)(2)(D), including any and all
Liability incurred by Purchaser, Surviving Corporation and/or Bristol as a
result of such failure (reduced by the net present value of any tax benefits
which may accrue to Purchaser, Surviving Corporation or Bristol, as the case may
be). In addition to all other remedies provided to Purchaser, Surviving
Corporation, and Bristol, whether in this Agreement, at law, in equity or
otherwise, such parties shall also have the right to offset any such Liability
from and against the salaries and/or bonus provisions set forth in the
Shareholders' Employment Agreements described in Section 6.2, below; and (ii)
the rental payments set forth in the Lease Agreement described in Section 6.2,
below.
4.7 Registration and Listing of Restricted Shares. After the second
anniversary of the Post-Closing Date, Bristol shall forthwith use its best
efforts to cause the Restricted Shares to be (i) registered with the Securities
and Exchange Commission; and (ii) approved for listing and transfer on NASDAQ
stock exchange.
4.8 Operation of Business. From the date of this Agreement, Company shall
not engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the generality of the
foregoing:
(a) Company shall not authorize or effect any change in its
Certificate of Incorporation or By-laws;
(b) Company shall not grant any options, warrants, or other rights
to purchase or obtain any of its capital stock or issue, sell, or otherwise
dispose of any of its capital stock;
(c) Except as set forth on Schedule 4.8(c), Company shall not
declare, set aside, or pay any dividend or distribution with respect to its
capital stock (whether in cash or in kind), or redeem, purchase, or otherwise
acquire any of its capital stock;
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(d) Company shall not issue any note, bond or other debt security or
create, incur, assume, or guarantee any indebtedness for borrowed money or
capitalized lease obligation;
(e) Company shall not impose, or allow to be imposed, any
Encumbrance upon any of its assets;
(f) Company shall not make any capital investment in, make any loan
to, or acquire the securities or assets of any person, except as provided in
Section 4.8, below;
(g) Company shall not make any change in the terms and
conditions of employment for any of its directors, officers, and employees;
and
(h) Company shall not commit to do any of the foregoing.
4.9 Acquisition of Pacific Retail Assets. Prior to the Closing, Company
shall acquire all of the assets and effect the assignment and/or other transfer
of all product manufacturing agreements of Pacific Retail in a manner and
pursuant to agreements reasonably acceptable to Purchaser and Bristol.
4.10 Release of Company from Loan Obligations. The Shareholders shall use
their best efforts to have Company released from any guarantee and/or security
obligations incurred in connection with the loans incurred by Xxxxxxxxx
Properties in connection with its purchase of the building which serves as
Company's principal office. Bristol and/or Surviving Corporation shall have the
right to cure any default under such loans and offset such payments against the
rent obligations set forth in the Lease Agreement described in Section 6.2,
above.
4.11 Full Access. Company shall permit representatives of Bristol and
Purchaser to have full access to all personnel, premises, properties, books,
records (including tax records), accounts, contracts, and documents of or
pertaining to Company. Purchaser and Bristol shall treat and hold as such any
Confidential Information they receive from Company in the course of the due
diligence investigation contemplated by this section 4.10, shall not
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use any of the Confidential Information except in connection with the
transactions contemplated by this Agreement, and, if this Agreement is
terminated for any reason whatsoever, shall return to Company all tangible
embodiments (and all copies) thereof which are in their possession.
4.11 Notice of Developments. Each party hereto shall give prompt written
notice to the other of any material adverse development causing a breach of any
of its own representations and warranties in Articles 2 and 3, above, or the
breach of any of its own covenants in this Article 4. No disclosure by any party
pursuant to this Section 4.11, however, shall be deemed to amend or supplement
the Schedules hereto or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
4.12 Exclusivity. Company shall not solicit, initiate, or encourage the
submission of any proposal or offer from any person or entity relating to the
acquisition of all or substantially all of the capital stock or assets of
Company.
ARTICLE 5
CONDITIONS TO CLOSE
5.1 Conditions to Obligations of Bristol and Purchaser to Close. The
obligations of Bristol and Purchaser to consummate the transactions to be
performed by them on or prior to the Closing Date are subject to the
satisfaction of the following conditions:
(a) This Agreement and the Merger shall have been approved by the
Board of Directors and the Shareholders of Company;
(b) The representations and warranties set forth in Article 2,
above, shall be true and correct in all material respects on and as of the
Closing Date;
(c) Company and the Shareholders shall have performed and complied
with all of their covenants hereunder in all material respects through the
Closing Date;
(d) Company shall have obtained all third party consents that are
necessary, proper or advisable to
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consummate and make effective the transactions contemplated by this Agreement;
(e) Company and the Shareholders shall have made their respective
delivery obligations set forth in Article 6, below;
(f) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement;
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation; or (iii) affect adversely the right of
Surviving Corporation to own the former assets and to operate the former
businesses of Company, and no such injunction, judgment, order, decree ruling or
charge shall be in effect;
(g) Company shall have completed and delivered the Schedules to this
Agreement and the information contained in such Schedules shall be satisfactory
to Purchaser and Bristol in their absolute and sole discretion;
(h) Bristol and Purchaser shall have completed their due diligence
investigation of Company and shall be satisfied with the results of such
investigation in their absolute and sole discretion; and
(i) All actions to be taken by Company in connection with the
consummation of the transactions contemplated herein and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated herein shall be satisfactory in form and substance to Bristol and
Purchaser in their absolute and sole discretion.
Bristol and Purchaser may waive any condition specified in this Section 5.1 if
they execute a writing so stating on or prior to the Closing Date.
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5.2 Conditions to Obligations of Company and the Shareholders to Close.
The obligations of Company and the Shareholders to consummate the transactions
to be performed by them on or prior to the Closing Date are subject to
satisfaction of the following conditions:
(a) The representations and warranties set forth in Article 3,
above, shall be true and correct in all material respects on and as of the
Closing Date;
(b) Bristol and Purchaser shall have performed and complied with all
of their covenants hereunder in all material respects through the Closing Date;
(c) Bristol and Purchaser shall have made their respective delivery
obligations set forth in Article 6, below;
(d) There shall not be any injunction, judgment, order, decree,
ruling or charge in effect against Bristol or Purchaser preventing the
consummation of any of the transactions contemplated by this Agreement; and
(e) All actions to be taken by Bristol and Purchaser in connection
with the consummation of the transactions contemplated by this Agreement and all
certificates, instruments, and other documents required to effect the
transactions contemplated by this Agreement shall be reasonably satisfactory in
form and substance to Company and the Shareholders.
Company and the Shareholders may waive any condition in this Section 5.2 if they
execute a writing so stating on or prior to the Closing Date.
ARTICLE 6
DELIVERIES ON OR PRIOR TO THE CLOSING DATE
6.1 Deliveries Subject to Filing of Certificates. All deliveries to be
made pursuant to this Article 6 shall, to the extent appropriate, be prepared in
such a manner so as
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to become effective only upon the filing of the Certificates in accordance with
Section 1.1, above.
6.2 Mutual Deliveries. On or prior to the Closing Date, (i) Purchaser and
the Shareholders shall deliver to each other the Shareholders' respective
employment agreements in substantially the forms set forth as Exhibits "X-0",
"X-0", and "D-3," attached hereto; (ii) Purchaser and the Shareholders shall
deliver to each other the Escrow Agreement; (iii) Purchaser and Company shall
deliver to each other the Certificates; (iv) Purchaser and Xxxxxxxxx Properties
shall deliver to each other that certain Lease Agreement set forth as Exhibit
"E" hereto; and (v) Purchaser and Pacific Retail shall deliver to each other
that certain Software License and Development Agreement set forth as Exhibit
"F"" hereto.
6.3 Deliveries by Company. On or prior to the Closing Date, the
Shareholders shall have caused Company to deliver to Purchaser and Bristol (i) a
certificate stating that the representations and warranties of Company contained
in this Agreement are true and correct on and as of the Closing Date as though
made at and as of that date (except where such representation and warranty is
made as of a date specifically set forth therein); (ii) a copy of the
incorporation and By-laws of Company as then in effect, an incumbency
certificate, and resolutions of the Board of Directors and shareholders of
Company approving the Agreement and authorizing the performance of the
transactions contemplated hereby, all as certified by the Secretary of Company;
(iii) a long-form good standing certificate dated as of or within fifteen (15)
business days of the Closing ate from the Secretary of State of the State of
Washington; (iv) the legal opinion of Company's counsel in the form attached
hereto as Exhibit "G;" (v) the resignations, effective as of the Closing Date,
of each director and officer of Company; and (vi) such other documents as
Purchaser may reasonably request for the purposes of consummating the
transactions contemplated hereby.
6.4 Deliveries by the Shareholders. On or prior to the Closing Date, each
Company Shareholder shall deliver to the Escrow Agent the certificate
representing all of the Company Shares, duly endorsed for surrender and
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cancellation, and shall deliver to Purchaser (i) a certificate stating that the
representations and warranties of such person contained in this Agreement are
true and correct on and as of the Closing Date as though made at and as of that
date (except where such representation and warranty is made as of a date
specifically set forth therein); (ii) his resignation as a director and officer
of Company; and (iv) such other documents as Purchaser may reasonably request
for the purposes of consummating the transactions contemplated hereby.
6.5 Deliveries by Purchaser. On or prior to the Closing Date, Purchaser
shall deliver to the Shareholders (i) a certificate stating that the
representations and warranties of Purchaser contained in this Agreement are true
and correct on and as of the Closing Date as though made at and as of that date
(except where such representation and warranty is made as of a date specifically
set forth therein); (ii) a copy of the Certificate of Incorporation and By-laws
of Purchaser as then in effect, an incumbency certificate, and resolutions of
the Board of Directors of Purchaser approving the Agreement and authorizing the
performance of the transactions contemplated hereby, all as certified by the
Secretary of Purchaser; (iii) a long-form good standing certificate dated as of
or within fifteen (15) business days of the Effective Date from the Secretary of
State of the State of Delaware; and (v) such other documents as the Shareholders
may reasonably request for the purposes of consummating the transactions
contemplated hereby. Immediately after the Effective Time and on the Closing
Date, Purchaser shall deliver to the Escrow Agent One Million Twenty-Five
Thousand Twenty-Three Dollars ($1,025,023) in immediately available funds.
6.6 Deliveries by Bristol. On or prior to the Closing, Bristol shall
deliver to the Shareholders (i) a certificate stating that the representations
and warranties of Bristol contained in this Agreement are true and correct on as
of the Closing Date as though made at and as of that date (except where such
representation and warranty is made as of a date specifically set forth
therein); (ii) a copy of the Certificate of Incorporation and Bylaws of Bristol
as then in effect, an incumbency certificate, and resolutions of the Board of
Directors of Bristol approving the Agreement and authorizing the performance of
the transactions
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contemplated hereby, all as certified by the Secretary of Bristol; (iii) a
long-form good standing certificate dated as of or within fifteen (15) business
days of the Closing Date from the Secretary of State of the State of Delaware;
and (iv) such other documents as the Shareholders may reasonably request for the
purposes of consummating the transactions contemplated hereby. Immediately after
the Effective Time and on the Closing Date, Bristol shall deliver to the Escrow
Agent the Restricted Shares.
6.7 Waivers. A party may waive any conditions specified in this Article 4
if it executes a writing so stating on or before the Closing Date.
ARTICLE 7
INDEMNITIES
7.1 Indemnity by Bristol and Purchaser.
(a) Bristol and Purchaser hereby expressly and unequivocally agree
to indemnify, defend and hold harmless the Shareholders, their respective
officers, directors, employees, agents, stockholders, affiliates, attorneys,
representatives and related entities (for purposes of this Section 7.1, the
"Indemnified Parties") from and against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, guaranties, liabilities, actions,
suits, damages and deficiencies, including without limitation, interest,
penalties, reasonable attorneys' fees and all amounts paid in settlement of any
claim, action or suit (all such claims, demands, losses, costs, expenses, etc.
being referred to herein collectively as "Claims") which are asserted against
any Indemnified Party or which any Indemnified Party incurs or suffers, whether
as a result of third party claims or otherwise, and which arise out of, result
from or relate to (i) any failure by Bristol and Purchaser to fully perform in a
timely manner any agreement, covenant or obligation of Bristol and Purchaser
hereunder, or (ii) the existence or non-existence of any fact or circumstance
which is different from or inconsistent with or a breach of any representation
or warranty of Bristol and Purchaser made herein, or (iii) the acts, omissions,
statements, misstatements or other business, properties and affairs of Bristol
and Purchaser; provided, however, that
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any insurance proceeds payable to the Shareholders with respect to any
indemnification claim hereunder shall reduce Purchaser's and Bristol's
indemnification obligations, dollar for dollar.
(b) The indemnities provided for herein shall not require payment as
a condition precedent to recovery.
7.2 Indemnity by the Shareholders.
(a) The Shareholders hereby expressly and unequivocally agree to
indemnify, defend and hold harmless Bristol, Purchaser and Surviving
Corporation, and Bristol's, Purchaser's and Surviving Corporation's officers,
directors, employees, agents, affiliates, attorneys, representatives and related
entities (for purposes of this Section 7.2, the "Indemnified Parties") from and
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, actions, suits, damages and deficiencies, including
without limitation, interest and penalties, reasonable attorneys' fees and all
amounts paid in settlement of any claim, action or suit (all such claims,
demands, losses, costs, expenses, etc. being referred to herein collectively as
"Claims") which are asserted against any Indemnified Party or which any
Indemnified Party incurs or suffers, whether as a result of third party claims
or otherwise, and which arise out of, result from or relate to (i) any failure
by Company and/or the Shareholders to fully perform in a timely manner any
agreement, covenant or obligation of Company and the Shareholders hereunder;
(ii) the existence or non-existence of any act or circumstance which is
different from or inconsistent with or a breach of any representation or
warranty of Company and the Shareholders made herein; or (iii) the acts,
omissions, statements, misstatements or other business, properties and affairs
of Company and the Shareholders; and (4) the acts, omissions, statements,
misstatements, or other business properties and affairs, including all
Liabilities of, Pacific Retail; provided, however, that any insurance proceeds
payable to Bristol or Surviving Corporation with respect to any indemnification
claim hereunder shall reduce the Shareholders' indemnification obligations,
dollar for dollar.
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(b) The indemnities provided for herein shall not require payment as
a condition precedent to recovery.
7.3 Defense of Claims. If any party receives notice of the commencement of
any action or of the existence of any Claim or a written assertion of any facts
by a third party with respect to any matter that would give rise to a Claim
hereunder or otherwise suffers a loss for which it is entitled to be indemnified
pursuant to Section 7.1 or Section 7.2 of this Agreement, then that party (the
"Indemnified Party") shall give the third party (the "Indemnifying Party")
reasonable notice thereof and shall permit the other party to have reasonable
access to relevant information in its possession or control regarding such
Claim. The Indemnifying Party shall have the right to take all reasonable
action, at its own expense, as it deems desirable in order to minimize or
eliminate such Claim. In the event of a Claim requesting solely monetary
damages, the Indemnifying Party shall have the right, at its own expense, to
appoint counsel to handle the defense of such matter and the exclusive right to
prosecute, defend, compromise, settle or pay such Claim provided that the
Indemnifying Party acknowledges in writing its obligations and Liability for
such Claim as between the parties hereto or procures from the person making the
Claim a full and complete release of the Indemnified Parties which is
satisfactory in form and substance to counsel for the Indemnified Parties. If
the foregoing acknowledgments or releases are not furnished to the Indemnified
Parties, then they may appoint associate counsel to participate in the defense
of such matter at the expense of the Indemnifying Parties. If the person
asserting the Claim requests relief other than or in addition to monetary
damages, then the Indemnifying Party may not settle any aspects of such Claim
requesting relief other than monetary damages without the Indemnified Parties'
prior written consent, which consent shall be subject only to their obligation
to act in good faith.
7.4 Parties to Litigation.
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(a) Company and the Shareholders agree not to assert any Claim of
the type described in Section 7.1, above, other than for indemnity or
contribution, against the individual officers and directors of the Surviving
Corporation, Bristol or Purchaser, or any of them, unless (i) such a Claim is
based upon good faith allegations of intentional misconduct of such officers and
directors, or any of them, for any actions taken or omissions made at any time
by such officers and directors in their respective capacities, or (ii) it is
determined that the such officers and directors, or any of them, are
indispensable parties to any lawsuit in which such Claims asserted, or (iii) a
court determines on its own motion that such officers and directors, or any of
them, are necessary parties to any lawsuit in which such Claim is asserted;
provided, however, that with respect to a claim of the type described in clause
(i) of this subparagraph (a), Company and the Shareholders must plead with
specificity the alleged intentional misconduct of such officers and directors,
or any of them.
(b) Bristol, Purchaser and Surviving Corporation agree not to assert
any Claim of the type described in Section 7.2, above, other than for indemnity
or contribution, against the individual officers and directors of Company and
the Shareholders, or any of them, unless (i) such a Claim is based upon good
faith allegations of intentional misconduct of such officers and directors, or
any of them, or (ii) it is determined that such officers and directors, or any
of them, are indispensable parties to any lawsuit in which such Claim is
asserted, or (iii) a court determines on its own motion that such officers and
directors, or any of them, are necessary parties to any lawsuit in which such
Claim is asserted; provided, however, that with respect to a Claim of the type
described in clause (i) of this subparagraph (b), Bristol and Purchaser must
plead with specificity the alleged intentional misconduct of such officers and
directors, or any of them.
(c) In the event that Company and the Shareholders or Bristol,
Purchaser and Surviving Corporation shall establish in a court of competent
jurisdiction that the other party hereto shall have intentionally and in bad
faith violated the provisions of this Section 7.4, then Company and the
Shareholders or Bristol, Purchaser and Surviving Corporation, as the case may
be, shall be entitled
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to recover from the other reasonable costs and exposes, including attorneys'
fees, incurred by it (i) in defending the action in which such claim was
asserted and (ii) in establishing such violation.
7.5 Remedies Not Exclusive. The remedies provided in this Article 7 shall
be in addition to, and not in lieu of, any other remedies which a party may have
at law, in equity or otherwise.
ARTICLE 8
TERMINATION
8.1 Termination of Agreement. This Agreement and the transactions
contemplated herein may be terminated as follows:
(a) By the mutual written consent of the parties hereto at any time
prior to the Effective Time;
(b) By Bristol and/or Purchaser by giving oral or written notice to
Company and the Shareholders at any time prior to the Effective Time (i) in the
event Company or any Company Shareholder has breached any representation,
warranty, or covenant contained in this Agreement; or (ii) in the event of the
failure of a condition to close set forth in Section 5.1, above; and
(c) By Company and/or the Shareholders by giving oral or written
notice to Bristol and Purchaser at any time prior to the Effective Time (i) in
the event Bristol and/or Purchaser has breached any material representation,
warranty, covenant contained in this Agreement in any material respect; or (ii)
in the event of the failure of a condition set forth in Section 5.2, above.
8.2 Effect of Termination. If any Party terminates this Agreement pursuant
to Section 8.1, above, then all rights and obligations of the parties hereto
shall terminate without any Liability of any party to any other party (except
for any Liability of any party then in breach);
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provided, however, that the confidentially provisions contained in Section 4.9,
above, shall survive any such termination.
ARTICLE 9
GENERAL PROVISIONS
9.1 Publicity. After the Effective Time and except as may otherwise be
required by law, Bristol and the Shareholder shall jointly determine the timing
and content of any proposed press release or public announcement and all
announcements to Company's customers, suppliers, licensers, licensees or
employees relating to the transactions contemplated by this Agreement and no
such press release or announcement shall be made without the prior written
consent of the other party.
9.2 Complete Agreement; Modifications. This Agreement and any documents
referred to herein or executed in connection herewith constitute the parties'
entire agreement with respect to the subject matter hereof and supersede all
agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
9.3 Additional Documents. Each party hereto agrees to execute, acknowledge
and deliver any and all further documents, instruments, certificates, agreements
and other writings and to perform such other actions which may be or become
necessary or expedient to effectuate and carry out this Agreement.
9.4 Notices. Unless otherwise specifically permitted by this Agreement,
all notices under this Agreement shall be in writing and shall be delivered by
personal service, telecopy, federal express or comparable overnight service or
certified mail (if such service is not available, then by first class mail),
postage prepaid, to such address as may be designated from time to time by the
relevant party. Any notice sent by certified mail shall be deemed to have been
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given three (3) days after the date on which it is mailed. All other notices
shall be deemed given when received. No objection may be made to the manner of
delivery of any notice actually received in writing by an authorized agent of a
party. The initial address of the parties shall be as follows:
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IF TO BRISTOL: WITH A COPY TO:
Bristol Technology Systems, Inc. Xxxxxxx X. Xxxx, Esq.
18201 Xxx Xxxxxx, Suite 305 Smith, Silbar, Xxxxx,
Xxxxxx, XX 00000 Xxxxxx & Xxxxxxxxx, LLP
Attn: Mr. Xxxxxxx Xxxxxx 00000 Xxx Xxxxxx
Xxxxxxxxx Xxxxx 000
Xxxxxx, XX 00000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
IF TO PURCHASER: WITH A COPY TO:
[Same as to Bristol] Xxxxxxx X. Xxxx, Esq.
[Same as above]
IF TO THE SHAREHOLDERS: WITH A COPY TO:
X/X Xxxxxxx Xxxxxxxxx Xxxxxx Xxxxx, Xxx.
0000 Xxxxx Xxxxxxx Xxxxxxxxx Xxxxxxx &
Xxxxxxx, Xxxxxxxxxx Xxxxxxx
One Union Square
Tel: (000) 000-0000 Suite 2424
Fax: (000) 000-0000 000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
9.5 Parties. Except as expressly indicated herein to the contrary, none of
the provisions of this Agreement shall be for the benefit of, or enforceable by,
any third-party beneficiary. None of the parties may assign any of his or its
rights under this Agreement without the prior written consent of the others,
which consent shall not be unreasonably withheld. Except to the extent provided
herein to the contrary, this Agreement and the respective rights, obligations
and remedies hereunder shall be binding upon and inure to the benefit of the
parties, their respective successors and permitted assigns.
9.6 Governing Law; Jurisdiction. This Agreement, the respective rights,
obligations and remedies of the parties hereunder, the interpretation hereof and
all disputes,
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controversies and Liabilities arising out of or related to this Agreement or the
relationship between the parties created hereby shall be governed by and
construed in accordance with the internal laws of the State of California,
without reference to its principles of conflict of laws. The parties hereby
agree that any action, suit, arbitration or other proceeding arising out of or
related to this Agreement, any agreement, instrument or document to be delivered
by any party on or prior to the Closing Date or the relationship between the
parties created hereby or thereby shall be conducted only in Orange County,
California. Each party hereby irrevocably consents and submits to the personal
jurisdiction of and venue in the United States District Court for the Central
District of California in any legal action, equitable suit or other proceeding
arising out of or related to this Agreement, any agreement, instrument or
document to be delivered by any party on or prior to the Closing Date or the
relationship between the parties created hereby or thereby.
9.7 Attorneys' Fees. Should any litigation or arbitration be commenced
(including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provision of this Agreement or the rights
and duties of any person or entity hereunder, the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the reasonable attorneys' fees and court costs incurred by reason of
or in connection with such litigation or arbitration.
9.8 Post-Judgment Attorneys' Fees. The prevailing party in any legal
action or other proceeding between the parties regarding this Agreement or
subject to the matter hereof shall be entitled, in addition to and separately
from the amounts recoverable under Section 9.7, to the payment by the losing
party of the prevailing party's reasonable attorneys' fees, court costs, and
litigation expenses incurred in connection with (i) any appellate review of the
judgment rendered in such action or of any other ruling in such action; and (ii)
any proceeding to enforce, collect or execute upon a judgment in such action. It
is the intent of the parties that the provisions of this Section 9.8 be distinct
and severable from the other rights of the parties
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under this Agreement, shall survive the entry of judgment in any action and
shall not be merged into such judgment.
9.9 Successors and Assigns. Neither this Agreement nor any rights or
obligations hereunder may be assigned, transferred or delegated by operation of
law or otherwise, without the prior written consent of the other parties hereto.
Subject to the above, this Agreement shall inure to the benefit of the parties'
respective successors and assigns.
9.10 Survival of Warranties. Each representation and warranty contained
herein shall survive the Closing Date for a period of forty-two (42) months
following the Closing Date; provided, however, that the representations and
warranties of each Shareholder shall expire on the earlier of (i) one and
one-half (1 1/2) years following the termination of such Shareholder's
Employment Agreement; or (ii) forty-two (42) months following the Closing Date.
The right to indemnification pursuant to this Agreement shall survive any
investigation made by the parties of their representatives, lenders or investors
or the receipt of any opinion or certificate.
9.11 Joint and Several Liability. Notwithstanding any provision of this
Agreement to the contrary, other than a termination of an individual
Shareholder's representations and warranties pursuant to Section 9.10, above,
the Liability of the Shareholders for the representations and warranties made
by, and the covenants and indemnification obligations imposed upon Company and
the Shareholders or any of them under this Agreement shall be joint and several.
The Liability of Company shall terminate at the Effective Time.
9.12 Remedies Not Exclusive. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy will be cumulative and will be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. The election of any one or more remedies will not
constitute a waiver of the right to pursue other available remedies.
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9.13 Expenses. Each party shall pay all of the costs and expenses incurred
by such party in connection with the authorization, preparation, execution and
performance of this Agreement, including, without limitation, all fees and
expenses of its agents, representatives, counsel and accountants.
9.14 Waivers Strictly Construed. With regard to any power, remedy or right
provided herein or otherwise available to any party hereunder (i) no waiver or
extension of time shall be effective unless expressly contained in a writing
signed by the waiving party; and (ii) no alteration, modification or impairment
shall be implied by reason of any previous waiver, extension of time, delay or
omission in exercise, or by any other indulgence.
9.15 Rules of Construction. The Article and Section headings in this
Agreement are inserted only as a matter of convenience, and in no way define,
limit, or interpret the scope of this Agreement or of any particular Article or
Section . Throughout this Agreement, as the context may require, the singular
tense and number includes the plural, and the plural tense and number includes
the singular. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the content requires otherwise. The word "including" shall
mean including without limitation. The parties intend that each representation,
warranty, or covenant contained herein shall have independent significance.
9.16 Severability. If any provision, clause or application of this
Agreement is determined by a court of competent jurisdiction arbitrator to be
invalid or
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unenforceable for any reason whatsoever, (i) this Agreement shall remain binding
and in full force and effect to the maximum extent permitted under applicable
law, except for such invalidated or unenforceable provision, clause or
application; (ii) the parties shall negotiate in good faith to provide
adjustments to ameliorate any injustice or frustration of purpose resulting
therefrom in a manner consistent with the original intent of the parties; and
(iii) in the event that the parties are unable to agree upon such adjustments,
then the invalid or unenforceable provision, clause or application shall be
modified and reformed by such court or arbitrator so that it is valid and
enforceable in a manner that comes the closest to expressing the original
intention of the parties with respect thereto, and each party hereto agrees to
be bound by any such modification and reformation with the same force and effect
as if such modification and reformation were contained in this his Agreement in
the first instance.
9.17 Funds. Any requirement in this Agreement to pay immediately available
funds may be satisfied by delivery of a certified or cashier's check in the
applicable amount or by wiring to an account designated by the recipient the
applicable amount.
9.18 Exhibits and Schedules. All Exhibits and Schedules attached hereto
are hereby incorporated in and made a part of this Agreement as if fully set
forth herein.
9.19 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
first set forth above.
"BRISTOL" "COMPANY"
BRISTOL TECHNOLOGY SYSTEMS, AUTOMATED REGISTER
INC., a Delaware corporation SYSTEMS, INC., a
Washington corporation
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By:________________________ By:______________________
Xxxxxxx X. Xxxxxx, Name:
President Title:
"PURCHASER" "SHAREHOLDERS"
BRISTOL MERGER CORPORATION,
a Delaware Corporation _________________________
XXXXXXX XXXXXXXXX
By:____________________________
Xxxxxxx X. Xxxxxx, President
_________________________
XXXXXXXX XXXXXXXXX
_________________________
XXXX XXXXXXXXX
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